Last year the International Premium Cigar and Pipe Retailers Association, the National Association of Tobacco Outlets, Iwan Ries & Co., the Cigar Association of America, the Illinois Association of Wholesale Distributors, the Illinois Retail Merchants Association, and Arangold Corporation d/b/a Arango Cigar Co., filed a lawsuit against the City of Chicago in the Circuit Court of Cook County. The lawsuit’s claim is that Chicago is preempted by Illinois state law from adopting an Other Tobacco Products (OTP) tax.
The OTP tax, adopted by the City Council in March 2016, includes a tax of $0.20 per large cigar tax and $.60 per ounce tax on pipe tobacco. The additional tax burden, on top of existing Cook County and State taxes, would have been devastating to 22 IPCPR members’ businesses located in Chicago.
Today the Circuit Court of Cook County reached a decision regarding the legality of the tax. By a plain reading and examination of the statute, the City’s home rule authority to tax OTP is preempted by Illinois state law and the adoption of such a tax was declared illegal.