TALLAHASSEE, Fla. – An appeals court Tuesday said the Florida Department of Business and Professional Regulation failed to properly go through a rule-making process before deciding that certain types of tobacco wraps should be taxed as tobacco products.
The 2-1 ruling by a panel of the 1st District Court of Appeal is part of long-running legal questions about taxing tobacco wraps, which are often known as “blunt wraps.”
Grabba-Leaf, LLC challenged the department over a memorandum that said “whole leaf” tobacco wraps would be taxed as tobacco products. That memorandum came after another court decision said a different type of wrap was not taxable as a tobacco product.
The court majority agreed with Grabba-Leaf that the department should have gone through a rule-making process instead of only issuing the memorandum.
“Because the policy and practice set forth in the memo alters the department’s tax policy, makes new distinctions between taxable and non-taxable tobacco wraps, and includes taxing whole leaf tobacco products that aren’t clearly covered by the applicable statutory definition, we conclude that the department’s statement constitutes an unadopted rule,” said the ruling, written by Judge Timothy Osterhaus and joined by Judge James Wolf.
But Judge Susan Kelsey dissented, saying that the department was carrying out the earlier court decision, which involved a type of “homogenized” wrap that combines tobacco and other products.
“Nothing changed for other products, including the whole tobacco leaves at issue in this case,” Kelsey wrote. “They were taxable under the plain language of the statute from the inception of the state’s taxation of them, and they remain so. The agency is not required to promulgate rules upon issuance of this kind of an appellate court decision and is not required to promulgate rules when it acts within the plain meaning of the taxing statute.”