Missouri companies sue over 'stacking' marijuana taxes

FILE – An employee at the Good Leaf Dispensary measures out marijuana for a customer on the reservation Mohawks call Akwesasne, on March 14, 2022, in St. Regis, N.Y. Pot is a popular topic on ballots again this November election. Arkansas, Maryland, Missouri, North Dakota and South Dakota have measures on their ballots to amend their constitutions and legalize recreational marijuana for those 21 and older. (AP Photo/Seth Wenig, File)

by: James Dornbrook - Kansas City Business Journal

Posted: Oct 17, 2023 / 03:45 PM CDT

Updated: Oct 17, 2023 / 03:45 PM CDT

A lawsuit filed by a Kansas City lawyer who runs a seed-to-sale marijuana operation could set a precedent for the way local sales taxes are collected on cannabis products.

Chris McHugh, an attorney with Joseph Hollander & Craft LLC in Kansas City, also is president and CEO of St. Joseph-based cannabis operation Vertical Enterprise.

McHugh filed a lawsuit in September to fight back against a practice known as “stacking,” in which both St. Joseph and Buchanan County passed 3% sales taxes on marijuana sales and both are trying to collect them from dispensaries within the city limits. Enforcement of the sales taxes in Buchanan County started Sept. 1.

The issue extends beyond Buchanan County. A similar suit has been filed in St. Louis County, and the dispute appears headed for the Kansas City area.

On April 4, Jackson County voters approved a 3% county sales tax on marijuana, while many cities in the county also charge 3% sales taxes.

McHugh argues the practice is unconstitutional because the amendment that legalized adult use marijuana in Missouri only allowed for 3% total local sales taxes and stacking results in 6%, on top of the 6% the state is allowed to charge.

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