Christmas came a little early for the premium cigar and pipe industry in Chicago as the Illinois Supreme Court ruled on Dec. 19 that an additional tobacco tax levied by the “Windy City” was invalid and in violation of state law.
Originally passed by the Chicago City Council in 2016, the law levied additional taxes on cigars, pipe tobacco, smokeless tobacco and roll-your-own cigarette tobacco. The city ordinance taxed cigars at 20 cents per unit, $1.80 per ounce of smokeless tobacco and roll-your-own tobacco and 60 cents per ounce of pipe tobacco.
Chicago retailer Iwan Ries & Co. sued Chicago and was later joined by Arango, the National Association of Tobacco Outlets (NATO), the Cigar Association of America (CRA) and the Premium Cigar Association (PCA), as well as a number of statewide business associations. They argued that state law prohibits local municipalities from levying additional tobacco taxes after July 1, 1993. The City of Chicago had enacted a cigarette tax before July 1, 1993, but it did not have an additional tax on other tobacco products.
The court ruled 5 to 1 in favor of Iwan Ries et al., stating, “We agree with plaintiffs that the statute allows only those municipal taxes on cigarettes or other tobacco products enacted prior to July 1, 1993…Allowing unlimited future taxes on all tobacco-based products for those municipalities that merely imposed a single tax on one tobacco product prior to July 1, 1993, as the City [of Chicago] argues, undermines the legislative purpose [to prevent additional taxes on tobacco products].”
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