A question or potential concern was communicated by a MoCannTrade member and licensee about whether or not medical marijuana facilities could qualify for the manufacturer’s sales and use tax exemptions. To ensure clarity on behalf of that member and the industry as a whole, MoCannTrade met with Missouri Department of Revenue (DOR) leadership. MoCannTrade wanted to get clarification on this important tax benefit, because for some facilities this opportunity could realize a one-time or even annualized savings of five to six figures+.
Listed below is DOR's response, along with supporting documentation and forms to help facilitate this process for MMJ cultivation or manufacturing facilities in MO. Via DOR Senior Counsel Thom Houdek: “There is no prohibition to a marijuana facility to qualify as a manufacturer due to their specific industry or category of product produced. 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.”
For our members' purposes, we have highlighted the FAQ directly from the DOR website on this specific matter, along with some important links to the relevant state laws and rules to provide additional guidance and clarity on the process and requirements to qualify. Keep in mind, it is the facility or taxpayer's responsibility to ensure qualification for these benefits and exemptions with DOR making the final determinations.
Does Missouri offer a sales tax exemption for manufacturers?
Yes. 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.
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, and the 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 144.054 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.
For additional MO exemptions info, please refer to Section 144.030 RSMo which also highlights exemptions for Electrical energy used in the actual primary manufacture, processing, compounding, mining or producing of a product, or electrical energy used in the actual secondary processing or fabricating of the product, or a material recovery processing plant as defined in subdivision (4) of this subsection, in facilities owned or leased by the taxpayer. Keeping in mind, it is the facility or taxpayers responsibility to ensure it qualifies for these benefits.
Additional rules and FAQ reference on manufacturer’s sales and use tax exemptions:
- Link to: Missouri Form 149 – Sales and Use Tax Exemption Certificate Form
- Link to: Rules of Department of Revenue Division 10—Director of Revenue Chapter 111—Sales/Use Tax—Machinery and Equipment Exemptions
- Link to: Rules of Department of Revenue Division 10—Director of Revenue Chapter 110—Sales/Use Tax—Exemptions
- Link to: Rules of Department of Revenue Division 10óDirector of Revenue Chapter 107óSales/Use Tax Exemption Certificates
- Link to: Mo Department of Revenue FAQs page
Missouri DOR also provided a direct contact number for their General Counsel's office should any facility or reseller have questions about the process or program elgibility: 573-751-0961