NACS sent an Amicus Brief to the Texas Supreme Court in a case regarding the taxation of nicotine products that do not contain tobacco.
While a dozen states have laws that apply taxes to products made of tobacco, none of them apply that tax to nicotine products, like pouches, that don’t have any tobacco in them. Texas’ Comptroller is trying to change its interpretation of the law so that nicotine products without tobacco are subject to the tobacco tax. Tobacco and nicotine product manufacturer RJR Vapor sued to oppose it. NACS’ brief supports Reynolds’ position in the case. McLane Company also filed a brief in support of Reynolds’ position.
NACS’ opinion is that the Comptroller’s position would undermine clarity and certainty about what these tax laws mean.
NACS wrote in the brief:
“As the leading voice of the industry, NACS writes separately to explain how the long-understood distinction between products made of tobacco and products made from tobacco provides crucial clarity for convenience store owners who make business decisions dependent upon state tax rules. In addition, with its members on the front lines of the effort to prevent youth nicotine consumption—and having advocated in favor of federal laws to ensure minors could not obtain such products—NACS seeks to explain how hewing to the tax statute’s plain text will not impair its members’ efforts to prevent sales to young people, which are already prohibited under federal law. …
Clear and predictable taxation rules are essential for convenience stores, many of which are small businesses. Stores base their investment, site, and product mix decisions on these rules. Until now, the tax rules were clear, anchored in a long-established distinction between laws governing products made of tobacco—which must, at a minimum contain tobacco—and products made from tobacco—which can be tobacco-free. This well-understood divide is reflected in both Texas’s law and the law of other States across the country.”
The case will be argued in the Texas Supreme Court on October 8.