Missouri’s marijuana tax system is making headlines for its consumer-friendly structure. In an article published on MoCannTrade.org, the website of the Missouri Cannabis Trade Association, I recently shared my expert insights on the topic.
With years of experience as a CPA specializing in cannabis accounting, I have worked closely with numerous cannabis operators across Missouri, helping them navigate the complexities of the state of Missouri’s evolving tax landscape. This article explores how Missouri’s tax system stands out compared to neighboring states, offering a significant advantage for cannabis operators and consumers alike.
Lower Cannabis Taxes Compared to Illinois
With excise taxes on adult-use cannabis up to 22% lower than in Illinois, Missouri is emerging as a highly competitive market. One key feature of Missouri’s tax structure is “tax stacking,” which allows counties and municipalities to each add a 3% excise tax on adult-use cannabis. This means the total tax rate could reach as high as 12%, depending on local policies. This approach supports local revenue while keeping consumer costs manageable, helping Missouri maintain an appealing environment for cannabis businesses.
Changes in Neighboring States
Neighboring states are also seeing changes in their cannabis landscapes, which could impact Missouri’s market. Kentucky is set to launch a medical-only cannabis program in 2025 with no retail taxes planned, while Arkansas and Nebraska are in the midst of legal battles over potential expansions in their cannabis laws. These shifts could reshape the regional market for cannabis operators.
Navigating Dual Track Tax Payments
Cannabis operators in Missouri pay taxes on two tracks: a 6% State Adult Use tax and a 4% State Medical tax, both handled online through the state’s portal. However, managing the County/Municipal taxes requires extra attention, as these are processed using form 53-1, either manually or via the MyTax portal. Importantly, these local taxes only apply to recreational cannabis, leaving medical sales and non-cannabis accessories exempt. Keeping track of these tax distinctions is critical for compliance.
Tax Filing: Penalties and Incentives
Missouri’s marijuana tax system has some quirks worth noting. Unlike other taxes, there are no penalties, deadlines, or interest for late payments on the State Medical or Adult Use Marijuana Tax. However, this leniency doesn’t apply to County/Municipal taxes, which offer a 2% credit for timely filing but impose 5% penalties for late payment or filing.
Supporting Community Initiatives
The revenue generated from these taxes funds essential programs such as the Division of Cannabis Regulation, the expungement of criminal records, veteran services, and drug treatment programs. This integration of tax dollars back into the community reinforces Missouri’s commitment to a sustainable and supportive cannabis market.
How Does Missouri’s Marijuana Tax Structure Compare?
Curious how Missouri’s marijuana taxes stack up against those in neighboring states? The full article includes a tax chart comparing Missouri and its eight neighboring states and a deeper dive into the tax stacking system and its challenges.
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Sarah Bantz
Sarah Bantz, CPA, is a senior accountant in Smith Patrick’s growing cannabis accounting and business advisory division. Her experience includes: tax planning for cannabis-based businesses, 280(e) calculations, cannabis business payroll, cash flow management, internal controls and cash handling, and product inventory. The Smith Patrick CPA team helps marijuana industry clients make informed, strategic data-driven decisions, while also keeping their back office humming with updated and accurate financial data.
About Smith Patrick CPAs
Smith Patrick CPAs is a boutique, St. Louis-based, CPA firm dedicated to providing personal guidance on taxes, investment advice and financial service to forward-thinking businesses and financially active individuals. For over 30 years, our firm has focused on providing excellent service to business owners and high-net worth families across the country. Investment Advisory Services are offered through Wealth Management, LLC, a Registered Investment Advisor.