In a prior update, we discussed the ongoing legal challenges to the U.S. Food and Drug Administration’s (FDA) March 2020 rule on a graphic-warning requirement for cigarettes. Initially slated to take effect June 18, 2021, the rule would require 11 new textual, health warning statements accompanied by color, “photorealistic” images displayed on the top
State Taxation of Remote Sellers: US Supreme Court Declines Review of First Post-Wayfair Decision from a State Supreme Court
In determining whether the commerce clause of the U.S. Constitution prohibits a state’s taxation of a remote seller, the U.S. Supreme Court for decades has upheld a tax if (1) there is a substantial nexus between the taxing state and the taxpayer; (2) the tax is fairly apportioned; (3) the tax does not discriminate against interstate commerce; and (4) the tax is fairly related to the taxing state’s provision of services to the taxpayer.[1]
What kind of nexus is substantial enough to allow a state to tax a business’s sales in interstate commerce? In its 2018 decision in South Dakota v. Wayfair, Inc., the U.S. Supreme Court held that a business’s physical presence in the taxing state is not required.[2] Describing the remote-seller litigants as “large, national companies that undoubtedly maintain an extensive virtual presence,” the Court held that substantial nexus was clear in view of “both the economic and virtual contacts” that the remote-seller litigants had with South Dakota.[3] The U.S. Supreme Court recited the general rule that substantial nexus exists when a taxpayer has availed itself of the substantial privilege of carrying on business in the taxing state, and it appeared to describe “virtual contacts” and “virtual presence” as follows: “Between targeted advertising and instant access to most consumers via any internet-enabled device, ‘a business may be present in a State in a meaningful way without’ that presence ‘being physical in the traditional sense of the term.’”[4] Wayfair left many questions unanswered, including whether (and, if so, how) “virtual contacts” and “virtual presence” may be required for a substantial nexus to tax in compliance with the commerce clause.Continue Reading State Taxation of Remote Sellers: US Supreme Court Declines Review of First Post-Wayfair Decision from a State Supreme Court
Minnesota Department of Revenue Revokes and Replaces Guidance on Remote Sellers’ Tobacco Tax Responsibilities
The Department has issued updated guidance addressing remote sellers’ cigarette and tobacco tax responsibilities after the Minnesota Legislature’s mid-2021 amendments to the State’s cigarette and tobacco tax and tobacco product delivery sales statutes, Congress’ late-2020 amendment of the Jenkins Act, and a 2018 decision of the U.S. Supreme Court on permissible state taxation of remote sales.
On May 9, 2022, the Minnesota Department of Revenue (the “Department”) issued Revenue Notice # 22‑02 on remote sellers’ tax payment responsibilities under the State’s cigarette and tobacco tax and tobacco product delivery sales statutes. The notice applies to all delivery sales after December 31, 2021, and it revokes and replaces the Department’s earlier notice on these subjects.
Continue Reading Minnesota Department of Revenue Revokes and Replaces Guidance on Remote Sellers’ Tobacco Tax Responsibilities
FDA Set to Propose Maximum Nicotine Level in Cigarettes
The US Food and Drug Administration (FDA) recently announced plans to publish a proposed rule that would establish a maximum nicotine level in cigarettes and certain “other combusted tobacco products.” At the moment, it is not clear what “other combusted products” FDA might have in mind. According to the Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions, FDA is targeting May 2023 to issue the proposed rule, but that could always change.
Continue Reading FDA Set to Propose Maximum Nicotine Level in Cigarettes
Virginia Enacts Tobacco Products Tax Law Applicable to Remote Retail Sales of Cigars and Pipe Tobacco
New Virginia law addresses excise taxation and other requirements regarding remote retail sales of cigars and pipe tobacco to consumers in the Commonwealth.
On April 27, 2022, the Virginia General Assembly passed House Bill 1199 and Senate Bill 748 regarding the application of the Commonwealth’s tobacco products tax on “remote retail sales” of cigars and pipe tobacco and related requirements.
Continue Reading Virginia Enacts Tobacco Products Tax Law Applicable to Remote Retail Sales of Cigars and Pipe Tobacco
Vermont Continues Its Crackdown on Online ENDS Sellers
Last year we reported that Vermont Attorney General T.J. Donovan’s office settled with several online sellers over alleged violations of the state’s delivery sales ban of electronic nicotine delivery systems (ENDS) (the Delivery Sale Ban) and that we expected Vermont’s scrutiny to continue. As predicted, Attorney General Donovan’s office recently announced two more settlements with online sellers, resulting in a total of 23 settlements with online ENDS sellers for a total of $833,750 in civil penalties dating back to December 2020.
Continue Reading Vermont Continues Its Crackdown on Online ENDS Sellers
State Licensing and Excise Tax Considerations for Tobacco Companies
While it is always a good idea to focus on maintaining a healthy regulatory compliance program, the start of a new year seems like a particularly good time to review your tobacco company’s corporate hygiene with respect to state regulatory compliance. In this blog post, we provide a general overview of the state tobacco licensing and excise tax framework throughout the U.S. in a Q&A format. We also provide some general guidance about how to approach such laws and regulations. Tobacco companies, especially those operating in multiple states, should incorporate an appropriate state licensing and excise tax strategy into their compliance programs. Noncompliance with the myriad of state licensing and excise tax laws could have a significant impact on a tobacco company’s ability to operate and sell its products.
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California Passes CBD Law That Conflicts With FDA Guidance
Governor Gavin Newsome recently signed California Assembly Bill 45 (AB 45) into law, which, among other things, allows hemp-derived cannabidiol (CBD) to be included in any food, beverages, and dietary supplements sold in California. This is not only a break from California’s prior position prohibiting CBD from being included in such products even as the State began to tax and regulate its cannabis industry, but it is also in stark contrast with the U.S. Food and Drug Administration’s (FDA’s) current position on the issue.
Continue Reading California Passes CBD Law That Conflicts With FDA Guidance
Delta-8’s 2018 Farm Bill Honeymoon May Be Slowly Coming to an End
The term tetrahydrocannabinol (THC) is most often associated with the delta-9 THC cannabinoid, which is one of over 100 cannabinoids found in both high-THC marijuana and low-THC hemp. Delta-9 THC is also the cannabinoid most often responsible for getting cannabis users “high” and is the cannabinoid that has been explicitly prohibited by the federal Controlled Substances Act (CSA).
Continue Reading Delta-8’s 2018 Farm Bill Honeymoon May Be Slowly Coming to an End
Vermont Settles with Online Retailers for Violations of Delivery Sale and Consumer Protection Laws
Vermont Attorney General T.J. Donovan recently announced that his office settled violations of the state’s delivery sale law with three online electronic nicotine delivery system (ENDS) sellers. Since December 2020 and including these most recent settlements, the state has collected $472,500 from 13 companies for such violations, signaling the state’s growing desire to enforce this law against online ENDS sellers.
Continue Reading Vermont Settles with Online Retailers for Violations of Delivery Sale and Consumer Protection Laws