Tobacco Giants Sue State Over Cigarette Fee

In a hand delivered lawsuit two tobacco industry powerhouses say the state’s newly passed cigarette price increase is illegal.

Tobacco giants Phillip Morris USA and RJ Reynolds are suing Oklahoma over a recently passed $1.50 fee on cigarettes. The suit was delivered to Gov. Mary Fallin, Attorney General Mike Hunter, the leaders of both chambers of the legislature and the Oklahoma Tax Commission.

The two corporations, along with several Oklahoma distributors and residents, allege calling the increase a "fee" instead of a tax was just "misbranding."  They also alleged the passage of the fee was “unlawful” and the damage it could do to business was "irreparable."  

The price hike also means high stakes. Estimates show more than $250 million were projected to be raised by the so-called fee. If it's deemed illegal, tens of millions of dollars already on the way to mental health services or Medicaid would have to be halted potentially putting lives in danger.

"It's now is up to the state Supreme Court to decide the matter, and I hope the justices will deal with it expeditiously," Fallin said in support of Hunter via a statement. 

But some lawmakers were still angry. 

“The legislature is obviously at fault here,” Rep. Jason Dunnington (D-Oklahoma City) said. “We knowingly did something that wasn't going to hold constitutional muster and that's probably the most frustrating thing about it.”

The case could force a special session, costing tens of thousands of dollars.

“I don't think there's any doubt we'll be back at the capitol in session again,” Dunnington said.