Prior to the recent amendment, California taxed “tobacco products” which were defined as “all forms of cigars, smoking tobacco, chewing tobacco, snuff, and any . . . products made of, or containing at least 50 percent, tobacco.” This meant that certain products, such as blunt wraps, or cigar wraps, may not be subject to these tobacco taxes. In the past, we have successfully argued against the taxability of similar products in many states.

The amended law eliminated the 50% threshold and casts a much wider net in its determination as to whether a product is a tobacco product for tax purposes. The new definition of “tobacco products” provides that “a product containing, made, or derived from tobacco . . . that is intended for human consumption,” will be subject to tax. With the elimination of a minimum tobacco composition, any product containing any amount of tobacco that is intended for human consumption can be taxed. This change would seemingly include blunt wraps in its definition.

Arguably, it seems blunt wraps are now taxable after the amendment, but were not taxable prior. While distributors may be subjected to California’s 28% tax on a go forward basis, distributors should hustle to get their refund claims filed as the statute of limitations is ticking.

If you or your company has been paying tax on blunt wraps over the past several years please call for a free consultation.

Gerald “Jerry” Donnini II is a shareholder of the Law Offices of Moffa, Sutton, & Donnini, P.A. Mr. Donnini concentrates in the area of state and Federal tax matters, with a heavy emphasis on the tobacco, alcohol, motor fuel and related industries. He also handles a myriad of multi-state state and local tax issues. Mr. Donnini is a co-author for CCH’s Expert Treatise Library: State Sales and Use Tax and writes extensively on multi-state tax issues for SalesTaxSupport.com.  For more information please call us at 888-966-8216