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Sparks Continue to Fly in Oklahoma Cigarette Fee Debate

4 min readBy: Courtney Shupert

The drama surrounding Oklahoma’s cigarette fee has dragged on into summer. As we’ve outlined previously, SB 845 created a fee rather than a taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. on cigarettes to surmount constitutional constraints. Whether the “fee” terminology aligns with the actual nature of the imposition is a matter of significant dispute. In June, tobacco companies, local distributors, and convenience stores jointly filed a lawsuit (Naifeh v. State of Oklahoma) claiming the cigarette fee is unconstitutional. The case was assigned to the Oklahoma Supreme Court in late June and remains a source of debate as numerous companies and organizations file briefs for and against the cigarette fee. All court briefings are available online, under Case No. 116102.

The Law in Question

Under the Oklahoma constitution, revenue-raising measures are not allowed to be passed during the last five days of the legislative session and require three-fourths approval in both chambers. SB 845 sought to circumnavigate these provisions by labeling the charge a “fee” as opposed to a tax. The bill passed on the last day of the legislative session in May with a simple majority vote.

The cigarette fee was designed to discourage cigarette consumption and pay for health care. It would place a $1.50 fee on each 20-pack of cigarettes to be paid by wholesalers. In concert with the current state cigarette taxes, this would bring total cigarette taxes and fees to $2.53 per pack in Oklahoma, well above the national average. The bill was signed into law by Governor Mary Fallin (R) on May 31 and is set to go into effect in late August.


  • In response to the initial lawsuit, the Oklahoma solicitor general filed a brief in support of the cigarette fee, claiming the law primarily functions as a health initiative to deter harmful behavior, rather than raise revenue. The brief outlines the law as a regulatory fee to change human behavior and claims that any revenues raised from the law are incidental, and not the main goal of the policy. Also, the brief encourages the court not to give weight to statements by individual legislators saying the cigarette fee is a tax (the petitioners rely on these legislative testimonies in the initial lawsuit).
  • On July 21, the original companies filing the lawsuit filed a response brief to the solicitor general. The petitioners argue tying the imposition to just one of the state’s four “objective characteristics” of a fee is insufficient to overcome the revenue bill limitations. Furthermore, they take aim at the state’s fallback position that, even if the legislation is in fact a revenue bill, the new impost on cigarettes is not a revenue component in that the law’s primary purpose is to promote public health. Noting that the cigarette fee is the second largest revenue increase adopted in session, the affected companies dispute this categorization and question its relevance.
  • The National Association of Manufacturers filed an amicus brief arguing that the fee should be held unconstitutional on grounds that it is principally a revenue-raising bill and “the revenue it creates is not merely incidental.” The brief also notes the importance of constitutional requirements for revenue bills, such as majority consent for taxation by representation.
  • Additionally, the cigarette wholesaler McLane Company, Inc. filed a July 21 amicus brief in opposition of the cigarette fee. The McLane brief argues that the “incidental” revenue from the fee is not independent from the fee’s regulatory purpose. Finally, the brief argues that even if the fee discourages tobacco consumption, it is still a revenue bill and thus is not exempt from constitutional requirements.
  • According to a July 21 amicus brief by the Oklahoma State Medical Association, the fee should remain in place. Comprised of doctors across the state, the association presents research outlining the negative health effects of smoking. Additionally, the brief supports the fee as a way to reduce the “prevalence…health harms, and economic cost of smoking.”
  • Oklahoma gubernatorial candidate Gary Richardson (R) filed a lawsuit this summer challenging the constitutionality of a series of revenue bills quickly passed at the end of the 2017 legislative session, similar to the cigarette fee. The cigarette fee is not the only item that was hurried through the legislature to provide temporary patches to long-term budget issues.


The Oklahoma cigarette fee affects many consumers and businesses. As such, the hot debate surrounding the passage and constitutionality of the fee reflects a variety of interests. However, there are additional economic concerns. The revenue instability of sin taxes makes the cigarette fee a questionable means of funding health-care programs for the long haul. As younger generations forgo smoking and a growing number of adult smokers give up cigarettes, revenues from the cigarette fee to fund health care will decline. The cigarette fee will be paid only by smokers even though the revenues from the fee will go to fund health care for all Oklahomans. Given that health care costs are rising even as tobacco consumption is falling, this imposition—be it a fee or a tax—will not suffice as a long-term solution to Oklahoma’s financial challenges.