Chicago’s Tobacco Tax Deemed Illegal by Court

A legal process that has gone on for nearly three-and-a-half years came to an end today, as the Illinois Supreme Court ruled that an additional tobacco tax implemented by the city of Chicago was invalid and goes against state law.

The court ruled 5-1 in favor of Iwan Ries & Co. and the appellants, with Chief Justice Burke not taking part in the decision or discussion.

The case dates back to 2016 when the city of Chicago enacted an ordinance that imposed a tax on what are collectively referred to as “other tobacco products,” or OTP, things such as cigars, pipe tobacco, and other non-cigarette forms of tobacco. The city was seeking a tax of 20 cents per large cigar and little cigar, $1.80 per ounce of smokeless tobacco and roll-your-own tobacco, and 60 cents per ounce of pipe tobacco.

The plaintiffs, led by Chicago retailer Iwan Ries & Co., argued that city was not allowed to impose the tax due to existing state laws that limit the authority of home rule units to impose certain taxes, including those on cigarettes and tobacco products.

Specifically, state law says that a home rule charter city can adopt a tax on cigarettes or tobacco products provided that the city adopted such a tax on cigarettes or tobacco products prior to July 1, 1993. The City of Chicago enacted a cigarette tax before July 1, 1993, but not an OTP tax, which in the group’s opinion prevents them from being able to adopt an OTP tax.

The store was joined in its lawsuit by the National Association of Tobacco Outlets (NATO), the Cigar Association of America (CAA), the Illinois Association of Wholesale Distributors, the Illinois Retail Merchants Association, the International Premium Cigar and Pipe Retailers Association (IPCPR), and Arangold Corporation–which is better known as Arango Cigar Co.

 

Correction: The original version of this article indicated that the vote was 4-1 when it was 5-1. That has been corrected and we regret the error.