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Tax on roll-your-own cigarettes survives

Post by Jordan Schrader / The News Tribune on July 10, 2012 at 11:24 am |
January 28, 2013 6:30 pm

The companies suing to halt the Legislature’s new tax on “roll-your-own” cigarettes have thrown in the towel.

Both sides agreed to have the lawsuit dismissed, which the Franklin County Superior Court and state Supreme Court did July 3. It might be another nail in the coffin for stores whose machines sell discount, tax-free cigarettes.

The decision appears to be tied to a new law passed by Congress placing the stores under federal regulation. President Barack Obama signed the law Friday, which could make the stores’ operation so difficult that they will close even without the new state tax that treats roll-your-own the same as other cigarettes.

The state revenue department said under the federal law, the stores would have to start paying federal taxes and obtain cigarette manufacturing licenses that none of them have.

The roll-your-own industry was challenging the state law as a violation of voter-imposed rules requiring two-thirds majorities in the Legislature to raise taxes. The law was shaping up as a potential test of the constitutionality of the two-thirds requirement.

But the Supreme Court had allowed the law to go into effect as scheduled July 1, and now it will be permanent.

UPDATE 2:10 p.m.: Chris Weiss, lead attorney for the roll-your-own smokes coalition, confirmed the federal law was indeed the reason his clients sought the dismissal — which doesn’t preclude the lawsuit being resumed in the future.

“For right now, while everyone looks to see what the federal law (will do), the state lawsuit is not going to go forward,” Weiss said.

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