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Tobacco companies bring suit over tax law

Commonwealth Brands Inc. has joined with The Corr-Williams Company, a Mississippi tobacco and grocery wholesale distributor, in filing an action in Mississippi state court challenging a recently enacted amendment to the Mississippi tobacco tax law.

The challenged portion of the law imposes a tax on cigarettes manufactured by companies, such as Commonwealth Brands, that are not parties to a Tobacco Settlement Agreement with Mississippi. The tax is applied not only to cigarettes sold in Mississippi, but also to cigarettes held by Mississippi distributors for shipment into retail stores in other states.

Commonwealth Brands maintains that the legislation, as passed in the 2009 legislative session, violates the U.S. Constitution by imposing an unfair burden on tobacco products in interstate commerce. The new law threatens jobs in Mississippi by penalizing those manufacturers and distributors who choose to use Mississippi-based facilities to distribute cigarettes for retail sales in other states, the suit claims.

The action does not challenge the fee insofar as it is imposed on cigarette sales in Mississippi.

Jonathan Cox, CEO and President of Commonwealth Brands said, “Commonwealth Brands believes that the tax unfairly burdens sales outside Mississippi. Approximately 80 percent of the cigarettes Commonwealth Brands ships to Mississippi distributors are actually destined for retail sales in other states. The new tax applies to these out-of-state sales even though the products will only be held in Mississippi for a short period and will never be sold by a Mississippi retail establishment.

“The Mississippi Legislature overstepped its authority when it imposed a Mississippi tax on cigarettes sold to consumers in other states and penalized Mississippi-based distributors and the tobacco manufacturers who use them.”

Steve Carmody, legal counsel for the Corr-Williams Company said, “The Corr-Williams Company is a Mississippi-based distribution company that has been doing business in the State of Mississippi for over 108 years. Corr-Williams employs over 150 employees and pays millions of dollars in state tobacco taxes each year. The new law severely impairs Corr-Williams’ ability to operate and conduct business as a Mississippi corporation in other states.”


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