Kansas City will be able to impose a new tax on recreational marijuana sales, plus new taxes and fees on short-term rental properties, as a result of Tuesday’s election.
Kansas City voters supported a 3% local tax on retail marijuana sales, with 73% voting in favor and 27% against, in final unofficial returns. Voters also approved municipal marijuana taxes with overwhelming support in Independence, Blue Springs, Gladstone, Liberty, Riverside, Lee’s Summit, Raytown and multiple other cities.
Kansas City’s tax is expected to take effect 90 to 120 days after passage, according to the mayor’s office.
So far, marijuana sales in Missouri are booming. Preliminary estimates indicated this new tax would generate about $3 million annually for Kansas City government in the first few years, growing to $10 million per year after the fifth year.
The ballot language specified that the money would be spent on trash and neighborhood cleanups, homelessness solutions and violence prevention programs.
Jackson County and Cass County voters also supported 3% countywide taxes. But there’s still a legal question about whether county taxes can be “stacked” on top of the city taxes or whether they can only be imposed in unincorporated areas. That question over Missouri’s recreational marijuana constitutional provision is likely to be resolved in court.
Platte and Clay counties did not seek a marijuana tax in their jurisdictions.
Questions 2 and 3
Two other Kansas City ballot measures were prompted by the proliferation of short-term rentals such as Airbnbs, some of which have negatively affected the quality of life in residential neighborhoods.
The city has exercised little regulation or oversight while more than 4,000 short-term rentals cropped up over the past four years. Meanwhile, City Council received a flood of complaints from neighborhood leaders about noise, trash, traffic and disruptive parties caused by unruly short-term rentals.
Question 2 on the ballot called for subjecting short-term rentals to a 7.5% tax, similar to what hotels and motels already pay. Supporters said this would level the playing field. Voters approved the tax with 61% in favor and 39% opposed.
Question 3 called for increasing the occupancy fee for hotels and motels from $1.50 per night per room to $3. It requires short-term rentals to pay that fee as well. Voters approved the measure with 62% in favor versus 38% opposed.
These extra costs would be paid by visitors using the accommodations, not by local residents.
City officials said the revenue would help support the city’s convention and tourism activities, including marketing and promotion, and would cover some of the costs to improve enforcement of the short-term rental regulations.
The city estimates the fee could generate $4.5 million annually and taxing short-term rentals could generate about $2 million to $3 million per year.
