The question of how much to tax medical marijuana is one of the key differences among the three proposals voters will be choosing from in November.
All three ballot initiatives would levy a tax on medical marijuana. Proposition C would set the tax at 2 percent, New Approach Missouri’s Amendment 2 would tax its product at 4 percent, and the “Find the Cures” initiative, or Amendment 3, at 15 percent.
Those amounts do not include other taxes that could be levied in addition.
The campaign for “Find the Cures” differentiates itself from the other two initiatives by enshrining a 15 percent flat tax in the text of the constitutional amendment, the idea being that other taxes could not be added on top of it.
But according to experts, it is unclear how a court would rule on the legality of the flat tax concept.
The main point of contention is whether or not, in the event that the “Find the Cures” initiative passes with the most votes, Amendment 3’s dedicated 15-percent sales tax will be enshrined in the Missouri constitution, or will be deemed unconstitutional and subject to state, local and use taxes on top of the 15 percent sales tax.
The text of Amendment 3 states that, “No taxes or fees shall be imposed on the sale of medical marijuana except as provided in this Article.”
It also states if that is ruled to be unconstitutional, “the taxes imposed pursuant to this section are separate from and in addition to any general state and local sales and use taxes that apply to retail sales of tangible personal property.”
Eapen Thampy, lobbyist with Heartland Priorities who represents the Better Way Missouri PAC, which has sought to legalize medical marijuana through the state legislature, said that in Missouri, “we don’t tax medicine,” but “all of these proposals would tax medicine.”
Thampy said Better Way Missouri supports candidates who support marijuana reform but “has not taken a position of support or opposition to any initiative.”
The taxes that would be levied on medical marijuana sold in Missouri, Thampy said, could include state taxes, local sales taxes and taxes imposed in special tax districts.
New Approach Missouri spokesman Jack Cardetti said he believes that, ultimately, “all of the initiatives will be subject to the same state and local taxes, the difference being that [Amendment 3] is the highest medical marijuana tax in the nation at 15 percent.
New Approach Missouri said in a press statement last week that the higher tax could result in “pricing many cancer and epilepsy patients out of the market.”
Marcus Leach, campaign manager for Amendment 3, said that New Approach Missouri is missing the point.
“Ultimately, what matters to a consumer, is what we call the point of sales tax, which is the final amount of all of those things combined that show on your receipt when you purchase a product.”
Leach said that “the point of sales tax includes TIF taxes, transportation and development district taxes, community improvement district taxes… there are ten or eleven different layers of taxes in different parts of Missouri.
“Amendment 3 however is just a flat retail tax that strictly prohibits other entities, local districts, states and counties from stacking on top of it. So, a patient knows that there is no way that it will exceed 15 percent,” Leach said.
Experts said it’s unclear what would occur if Amendment 3’s flat tax were challenged.
“I am not aware of any constitutional provision that would bar use of the initiative to enact a constitutional amendment that imposes one tax in lieu of all others,” said James Layton, attorney at law with Teuth Keeney, who taught law at the MU and served in the Missouri Attorney General’s Office for more than 20 years.
“But I don’t know of any instance in which that has been attempted,” Layton said. “There have been taxes imposed through initiative petitions — most notable, perhaps, the conservation sales tax that has been in place since the 1970s. But that was in addition to, not in place of, other sales taxes.”
Brad Bradshaw, the primary backer of Amendment 3, said it “has been looked at by multiple lawyers, including a retired Supreme Court judge. It is not going to be a problem, it will stand, it is constitutional law, it is a flat tax, and it will stand any constitutional challenge, and there will be no additional taxes.” Bradshaw declined to state who those experts were.
Peverill Squire, professor of political science at MU with a focus on state government, legislative institutions and elections, said the issue of whether or not Amendment 3’s dedicated point of sale tax would be deemed unconstitutional is up in the air.
“That’s probably the best we can say at this point.”
“It’s one of the great unknowns, and because we have so many other marijuana initiatives on the ballot, I think it’s going to be confusing for voters,” Squire said.
The fact that there have not been, at least as far as Squire is concerned, many debates over this issue, there is no frame of reference to work with. “When you don’t have sort of a track record of how the courts might respond to these kinds of things, it’s hard to guess as to how a particular court would receive it,” Squire added.
“I think there would be a great deal of skepticism, but until you’ve heard the arguments and had the briefs submitted, it’s not really clear how any court would respond.”
Supervising editor is Mark Horvit, email@example.com.