99-008

Response February 10, 1999

REQUEST LETTER

January 5, 1999

Attention: Mr Richard McKeown, Chairman

Dear Mr McKeown:

Re: Request for an Advisory Opinion: Taxability on Herbal Cigarettes

Please accept this letter as our formal request for a written advisory opinion on the taxability of a new product called PRODUCT, which is a Tobacco Free - Herbal Cigarette.

Based on the information provided by the supplier, this herbal cigarette is made from all natural, non-tobacco ingredients including Cornsilk, Yerba Santa, Licorice, Mullein, Coltsfoot, and Horehound. These ingredients are used to market king size, filter cigarettes.

PRODUCT cigarettes are sold in DISCRIPTION. It is our understanding that the U.S. Bureau of Alcohol, Tobacco and Firearms has ruled that they do not require one of the four approved U.S. Surgeon General warnings.

The definition of cigarette is set forth in subparagraph (1) of Section 59-14-102 of the Utah Cigarette and Tobacco Tax Laws, that "Cigarette" means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape, and whether or not such tobacco is flavored, adulterated, or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco. Since the PRODUCT do not have any tobacco content, we would appreciate your advisory opinion on the taxability of this product.

We enclose a sample pack of the PRODUCT for your reference. Should you have any further questions, please feel free to contact me at (604)273-7721.

Yours truly,

NAME

POSITION

RESPONSE LETTER

February 10, 1999

COMPANY

ADDRESS

RE: Advisory Opinion - Herbal Cigarettes and Utah=s Cigarette Tax

Dear NAME,

We have received your request for an advisory opinion on whether Utah=s Cigarette and Tobacco Tax and Licensing Act (AAct@) imposes a Acigarette tax@ on your new product, a tobacco-free, herbal cigarette called PRODUCT.

You have correctly stated in your letter that the definition of Acigarette@ in Utah Code Ann. '59-14-102 requires a product to contain at least some portion of tobacco before it is considered to be a Acigarette@ for purposes of the Act. You have further stated and your product package confirms that your new product does not contain tobacco. Assuming that your Natural American Spirit product does not contain any tobacco, this product is not a Acigarette@ as defined by the Act. Accordingly, this product is not subject to the cigarette or tobacco taxes imposed by the Act.

Please contact us if you have any other questions.

For the Commission,

Joe B. Pacheco, CPA

Commissioner

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