Springfield City Council plans to put a 3% recreational marijuana sales tax on the ballot in the Aug. 8 election.
Council at a special meeting on Monday directed City Attorney Rhonda Lewsader to draft a bill for them to vote on during its next regular meeting on May 22. Time is of the essence, as the deadline to get an issue on the ballot for the Aug. 8 election is May 30.
Taxation of recreational weed is a move that was adopted by many cities and counties in the April 4 election. These included Christian, Dade, Lawrence, Polk and Webster counties and the cities of Monett, Mount Vernon and Ozark, as reported previously by Springfield Business Journal.
Council sorted out the parameters of the bill at its meeting yesterday. Council members will seek the entire 3% taxation on adult-use marijuana permitted by the amendment, and funds will go toward public safety, mental health, substance abuse and housing initiatives, officials said.
City Manager Jason Gage offered what he called a “really, really rough” estimate of revenue from the tax with a figure of $1.3 million per year. He said staff tried to determine that figure from an early starting place.
“We really don’t have a lot to extrapolate from,” he said. “I think you could potentially see it be two to three times that amount.”
In February, SBJ reported recreational weed had pushed monthly marijuana sales to $103 million in the state during the first month of adult-use sales. With recreational marijuana legalized, the state also recently exceeded $1 billion in legal weed sales.
Where to allocate funds made up the bulk of the discussion at the council meeting. Councilmember Matthew Simpson said the survey for how to use American Rescue Plan Act provides guidance, prioritizing public safety first.
Councilmember Craig Hosmer said it is clear what the city’s chief problems are.
“We know what our chronic problems have been in the city of Springfield for at least the 10 years I’ve been on council,” he said. “It’s homelessness; it’s alcohol and drug abuse; it’s law enforcement problems.”
He added that most communities that passed taxes already have allocated some of the funding to law enforcement, which will face challenges, including the hiring of drug recognition experts, that will incur cost and burden.
Councilmember Brandon Jenson made the case for allocating money toward homelessness.
“The second-highest response was for homeless and housing services, and we often see drug addiction comingled with issues of housing stability,” he said. “Within our proposed budget, we’re allocating $34.6 million of general revenue to public safety, and as far as I’m aware $0 of general revenue to housing and homeless issues directly.”
Simpson agreed that addressing housing, homelessness and substance abuse prevention are upstream solutions to public safety.
Passage by Missouri voters of Amendment 3 in November 2022 allowed recreational use of marijuana; medical use was approved by the state’s voters in November 2018. Amendment 3 authorized a 6% state tax on the sale of recreational marijuana, and it also allows cities and counties to levy an additional tax of up to 3%. Taxation measures must be approved by voters. Medical marijuana sales are taxed at 4% by the state.
If council is successful in getting the measure on the August ballot and voters approve the tax, the city will begin receiving revenue in 2024. Quick certification of a positive vote and communication with the Missouri Department of Revenue could bring revenue to the city as early as January 2024, but if there is a delay, revenue would come at the start of the next quarter, April 1.
Greene County also is considering its own 3% tax, Mayor Ken McClure told council. Lewsader said the Department of Revenue has not determined whether taxes are “stackable.”
“If you just look at the plain language, to me it says any local government can propose one,” she said. That means both the city and the county should be able to propose a tax.
At some point there may be court involvement to settle the question, she said.
Joseph “Chip” Sheppard, an attorney with Carnahan Evans PC who specializes in cannabis law and helped to draft Amendment 3, told SBJ he is working with numerous city and county clients all around the state.
“If any county attempts to ‘stack’ a 3% tax on top of a tax that’s already being charged within a city, it will almost certainly result in litigation,” he said.
He added that it was never the intent of the drafters of Amendment 3 to allow a 6% total local tax.
“We think the language in the amendment is clear in this regard,” he said. “Article XIV’s definition of ‘local government’ plainly reflects the drafters’ intent to only allow one such 3% tax to be imposed on any licensee’s retail sales.”
That section of the amendment uses the word “either” to refer to a village, town or city or a county. The amendment notes county taxation would refer to the unincorporated portion of a county.
“Any other interpretation cannot withstand even modest scrutiny,” he said.
Councilmember Derek Lee noted putting an item alone on the August ballot would cost the city upwards of $200,000. He questioned whether it was necessary to move so quickly.
McClure noted that the measure would bring in over $100,000 per month, and waiting would result in a delay of three months in collecting revenue.
“It’s not really a technical question as much as it is a preferential question,” Gage said.
The measure will be sponsored by the council as a whole at its May 22 meeting.
Adrianna Norris became a first-time business owner with the opening of Finley River Chiropractic; PaPPo’s Pizzeria & Pub launched its newest location; and Huey Magoo’s opened its second store in the Ozarks.