In Global Hookah Distribs. v. Florida, No. 1D20-822 (Apr. 12, 2021), a case before the First District Court of Appeal of Florida, Global Hookah Distributors (Global) unsuccessfully sought a refund of tobacco excise taxes it paid to the State of Florida. Global’s argument rested principally on its lack of a substantial “nexus” with the State. It argued that “because it is a North Carolina corporation—with its only connection to Florida being that it delivers goods here through a common carrier—it lacked a substantial nexus with the state, which is required under the Commerce Clause; and thus, Florida could not legally impose the [tobacco excise] taxes on Global’s sale of tobacco in the state.”
The Florida appellate court disagreed, reasoning that the State’s tobacco excise taxes are a “regulatory measure,” as opposed to a revenue-raising measure like sales taxes, thereby alleviating the Commerce Clause’s constraints on state regulation of interstate commerce. Despite the court’s own acknowledgment that, under the statute, “[n]o surcharge shall be imposed by this section upon tobacco products not within the taxing power of the state under the Commerce Clause of the United States Constitution,” it was the court’s determination that the tobacco excise tax was enacted pursuant to the State’s “police power to protect the health of its citizens.” Therefore, the State could constitutionally impose tobacco excise taxes on a tobacco distributor lacking a physical presence in Florida.
To our knowledge, this is the only case in which a court found that a state could constitutionally impose tobacco taxes on a tobacco distributor lacking a physical presence in the state. It is possible this opinion may embolden state taxing authorities to collect tobacco taxes from remote sellers or other out-of-state distributors, even in the absence of a law implementing the Supreme Court’s decision in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 201 L. Ed. 2d 403 (2018).