Illinois Supreme Court Strikes Down Tobacco Tax

Today, the Illinois Supreme Court issued a ruling striking down a Chicago, Illinois ordinance that imposed local excise taxes on numerous tobacco products including cigars, smokeless tobacco, pipe tobacco, and roll-your-own cigarette tobacco. Originally passed by the Chicago City Council in 2016, the ordinance sought to impose local excise taxes of $.20 per cigar, $1.80 per ounce on smokeless tobacco products, $.60 per ounce on pipe tobacco, and $1.80 per ounce on roll-your-own cigarette tobacco.

A broad cross section of the industry commenced litigation seeking to have the Chicago tobacco product taxes ordinance overturned by the courts. The plaintiffs included the Cigar Association of America, the National Association of Tobacco Outlets, Inc., Iwan Ries & Co. (a Chicago tobacco and cigar store), the Illinois Association of Wholesale Distributors, the Illinois Retail Merchants Association, the International Premium Cigar and Pipe Retailers Association, and Arangold Corporation, dba Arango Cigar Co.

In the ruling, the Illinois Supreme Court held that Illinois state law specifically precludes a home rule city such as Chicago from adopting an excise tax on either cigarettes or other tobacco products unless the city had already adopted such a tax before July 1, 1993. While the City of Chicago had adopted a local tax on cigarettes prior to July of 1993, the city had not adopted a local excise tax on any other kind of tobacco product. As the Illinois Supreme Court states in the opinion, “we agree with plaintiffs that the statute allows only those municipal taxes on cigarettes or other tobacco products enacted prior to July 1, 1993” and that “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].” 

In responding to the court ruling, Premium Cigar Association executive director Scott Pearce stated that “this decision confirms our long-held belief that the City of Chicago exceeded its authority in adopting excise taxes on other tobacco products. Retail stores can now focus on offering their customers the tobacco products they prefer without an unnecessary and burdensome local excise tax.”

A copy of the Illinois Supreme Court decision accompanies this release.