Rejecting a lower court's ruling this week, a Missouri appellate court determined that a marijuana retail tax on dispensaries cannot be stacked and collected by both a local municipality and county entities.

In a Tuesday opinion, authored by Judge John P. Torbitzky for the Eastern District of the Missouri Court of Appeals, the three-judge panel reversed the St. Louis County Circuit Court's holding that St. Louis County and St. Charles County were authorized to impose a sales tax on marijuana dispensaries located in incorporated areas within their counties.

In Robust Missouri Dispensary 3 v. St. Louis County, the court sided with plaintiff Robust Missouri Dispensary 3, concluding that only one local government is permitted under state law to impose an additional 3% sales tax on the retail sale of marijuana. Judges Robert M. Clayton III and Michael S. Wright concurred.

"The constitutional provision authorizes 'any local government' to impose a three percent sales tax on marijuana sold at retail after putting the issue to a vote. A 'local government' is defined as 'in an incorporated area, a village, town, or city and, in the case of an unincorporated area, a county.' The definition of 'local government' unambiguously provides that, in an incorporated area, the municipality is the 'local government' authorized to impose a sales tax while in unincorporated areas the county is the 'local government' authorized to impose a sales tax," Torbitzky wrote.

Following legalization of recreational marijuana in Missouri, legislation required licensed retail marijuana businesses to collect a 6% state tax on the retail sale of nonmedical marijuana. Florissant city voted to impose a 3% sales tax on retail sales of marijuana. St. Louis County similarly passed a proposition to impose a 3% sales tax on retail sales of marijuana sold in the county.

Robust, which operates a dispensary in Florissant, an incorporated city in St. Louis County, collected and remitted the sales tax imposed by Florissant. However, the Missouri Department of Revenue issued Robust a sales tax change notification letter, informing the company that "it was required to remit the three percent St. Louis County sales tax in addition to the three percent sales tax imposed by Florissant," according to the opinion.

Robust filed a declaratory judgment suit against the county and director of revenue, seeking a declaration that Article XIV of the Missouri Constitution doesn't authorize a county to impose an additional sales tax when the dispensary is located within the boundaries of an incorporated village, town or city. The plaintiff further sought an injunction prohibiting the director of revenue from collecting St. Louis County sales tax. St. Charles County later filed a motion to intervene, looking to defend the lawfulness of the tax ordinance after a similar law was passed in that county.

Robust, St. Louis County and St. Charles County each filed motions for summary judgment. The trial court held that the 3% tax can be simultaneously collected by both the county and municipal entities.

On Tuesday, the appellate court disagreed, finding the taxes cannot be "stacked" by more than one entity.

While Article XIV, Section 2.6(5) of the state's constitution grants the relevant "local government" the power to impose a 3% tax, the appellate court determined that the county wasn't a "local government," as that term is used in Article XIV, Section 2, within an incorporated area. The court concluded that the definition of "local government" depends on whether an area is incorporated or unincorporated, noting that Article XIV, Section 2.2(12) states that "local government" regarding an incorporated area means a village, town or city. However, in the case of an unincorporated area, the phrase means a county. Therefore, in an incorporated area such as Florissant, the village, town or city is the "local government," not the county.

The counties argued "that Article XIV, § 2.2(12) makes both the incorporated municipality and the county in which the incorporated entity is located the local governments because the provision uses the conjunction 'and.'" The appellate court concluded that that argument failed because it discounts the phrase “in the case of an unincorporated area” that appears immediately before “the county.”

"Were this court to read Article XIV, § 2.2(12) as the counties urge, the phrase would be rendered superfluous. Second, the counties’ argument forgets that the provision contains a list of the entities that can be a local government within an incorporated area," Torbitzky said, noting that the list doesn't include a county but includes a “village, town, or city,” which are the three types of incorporated municipal entities recognized by state law.

"Article XIV, § 2.6(5) provides 'the governing body of any local government is authorized to impose, by ordinance or order, an additional sales tax in an amount not to exceed three percent on all tangible personal property retail sales of adult use marijuana sold in such political subdivision.' While 'any' can relate to either singular or plural nouns, in this amendment, it modifies the singular noun 'subdivision.' Consistent with the constitutional definition of 'local government,' the word 'any' refers to the singular local government with taxing authority, not all local governments in general," Torbitzky said.

In a statement, St. Charles County executive Steve Ehlmann said the government plans to ask the Missouri Supreme Court to reconsider the ruling.

"People voted to approve this tax because the language read ‘any’ local government could assess the tax and the industry led others to believe that included counties,” Ehlmann said. “When the County Council asked the voters to approve the tax, we heard nothing from anyone in the industry. This constitutional amendment was written by the marijuana industry, and they could have made it clear counties were excluded but that would have created opposition to their proposal."

Since the law took effect, St. Charles County said it has raised more than $1.4 million, which will be used to fund school resource officers when funding runs out next year.

Neither Robust's attorney, Eric M. Walter of Armstrong Teasdale in St. Louis, nor St. Louis County representatives immediately responded to requests for comment.