On December 5, 2011, the U.S. District Court for the District of Columbia issued a preliminary injunction blocking enforcement of the Prevent All Cigarette Trafficking Act’s (“PACT Act”) provisions which prohibit remote sales of cigarettes and smokeless tobacco unless the applicable state and local taxes are paid in advance.

Last week, the U.S. Supreme Court declined a request by Vibo Corporation, Inc. d/b/a General Tobacco (“General Tobacco”) to review the Supreme Court of Arkansas’ decision upholding a lower’s court’s order that, among other things, directed General Tobacco to pay almost $300 million to satisfy an MSA backpayment obligation and refused to stay the proceedings pending arbitration ( the “Backpayment Decision”).   

Last month, a New York federal court upheld the Department of Agriculture’s (“USDA”) computation of delinquent tobacco buy-out assessments against Native Wholesale Supply (“NWS”) under the Fair and Equitable Tobacco Reform Act of 2004 (“FERTA”).  

After years of political wrangling, in 2010 New York state taxing authorities instituted a regime to tax cigarette sales on Native American reservations.  After courts rejected various challenges to the new regime, taxing authorities appeared poised to enforce the new requirements.  But they didn’t.

What is and is not a cigarette has become increasingly difficult as states attempt to subject more and more cigars to their generally higher cigarette tax rate.  To clarify these issues, in November, the Tennessee Department of Revenue has recently issued a guidance document (“Notice #11-15”)[1]  to assist wholesalers and manufacturers in ensuring that tobacco products, particularly little cigars, are taxed correctly.