In the recent election, Missouri voters narrowly defeated (by a margin of 50.8% to 49.2%) a ballot initiative that would have raised state excise taxes on all tobacco products, would have regulated cigarette rolling machines and would have increased the amount of money that nonparticipating manufacturers are required to place into escrow accounts.

The initiative would have raised cigarette excise taxes from 17 cents per pack to 90 cents per pack. (Missouri’s cigarette tax remains the lowest in the country.) The measure also would have raised the excise tax for other tobacco products, from 10% of the manufacturer’s sale price (also among the lowest in the country) to 35% for roll-your-own tobacco and 25% for other products.

Finally, the initiative would have eliminated the so-called “allocable share refund” that nonparticipating manufacturers (non-signatories to the 1998 tobacco Master Settlement Agreement) can obtain for their annual escrow deposits. Missouri is the only MSA state that has not eliminated the allocable share refund, despite repeated legislative efforts to do so. The initiative also would have imposed bonding requirements for nonparticipating manufacturers and required nonparticipating manufacturers to make quarterly escrow payments.

For questions and/or comments, please contact Bryan Haynes, Troutman Sanders Tobacco practice partner, at 804.697.1420 or by email.