Does Missouri offer a sales tax exemption for medical marijuana manufacturers?

In case anyone missed it, it’s expensive to get medical marijuana facilities up and running – yet it looks as if the state of Missouri will not prevent facilities to utilize manufacturing sales tax exemptions.

Replacement machinery, equipment, and parts, and the materials and supplies solely required for the installation or construction of such replacement machinery, equipment, and parts, used directly in manufacturing, mining, fabricating or producing a product which is intended to be sold ultimately for final use or consumption are exempt from sales tax in Missouri.

This is a welcome turn as marijuana facilities regularly struggle to receive the same treatment as comparable non-plant touching medical facilities. Federally, medical marijuana facilities are exempt from federal program perks and benefits.

Section 144.054 RSMo, exempts purchases of machinery, equipment, materials, and chemicals used or consumed in manufacturing, processing, compounding, mining, or producing any product or used in research and development related to manufacturing, processing, compounding, mining, or producing any product from state tax and local use tax, but not local sales tax.

MoCannTrade Executive Director Andrew Mullins reached out to DOR for clarification on this tax benefit, sharing infused product manufacturers could realize a one-time or even annualized savings of five to six figures by utilizing the exemption.

“There is no prohibition to a marijuana facility to qualify as a manufacturer due to their specific industry or category of product produced,” said DOR Senior Counsel Thom Houdek. “Medical cannabis manufacturing facilities will have to follow the same procedures as any other business claiming a manufacturing exemption and it will be determined on a case by case basis, as it would be for any other business.”

Materials and supplies are also exempt when they are required solely for the operation, installation, or construction of the machinery and equipment purchased and used to establish a new or to replace or expand existing, material recovery processing plants in the state of Missouri.

Parts, materials, and supplies are also exempt when they are solely required for the installation or construction of such machinery and equipment purchased and used to establish new or to expand existing manufacturing, mining or fabricating plants in the state of Missouri if such machinery and equipment is used directly in manufacturing, mining or fabricating a product which is intended to be sold ultimately for final use or consumption.

Section 144.030 RSMo provides additional exemptions information, including exemptions for electrical energy used in the actual primary manufacturing or processing.

This is considered a win for operators, especially those pinching every penny while aggressively moving ahead to market to get patients medicine.

Additional rules and FAQ reference on manufacturer’s sales and use tax exemptions: