Discount Cigarette Companies Claim Colorado Bill Breaches the Commerce Clause

Three discount cigarette manufacturers filed a complaint against Colorado in the District of Colorado on Thursday claiming that a provision in the state’s House Bill 20-1427 which mandates a minimum price for cigarettes sold in the state is unconstitutional under the Commerce Clause of the Constitution. 

The plaintiffs, Liggett Group LLC, Vector Tobacco Inc., and Xcaliber International LTD., LLC, also claimed that the bill was “rushed through” the General Assembly in Colorado and did not comply with Colorado’s requirements for passing a bill. 

Section 10 of the Colorado bill, which is the section involved in the suit, was reportedly added to a legislative ballot referral in a “‘back-room’ deal to ensure that Philip Morris USA, Inc., by far the largest premium cigarette manufacturer in the country, would not spend millions of dollars to defeat the bill.” The larger bill was focused on imposing increased taxes on cigarettes and other nicotine products. 

The plaintiffs claimed that this addition to the bill imposing a fixed minimum price will harm interstate commerce and benefit premium cigarette manufacturers at the expense of discount manufacturers like the plaintiffs. It would also reportedly benefit in-state retailers who woul sell fewer discount cigarettes and sell them at a higher profit. The plaintiffs, however, will reportedly lose sales and profits.  

The complaint also claimed the addition to the bill is unfair to Colorado consumers because it imposes higher taxes and prices on those who buy discount cigarettes, which typically includes low-income consumers. It said that a smoker who purchases discounted products would be charged an additional $800 a year with Section 10 of the bill, which is over twice the increase for those who purchase premium brands. 

The companies, represented by Kasowitz Benson Torres LLP and Maven Law Group, asked the court for an injunction stopping the enforcement of section 10 and a judgment that the section is void.