Michigan v. Shami (Opinion on Application)Annotate this Case
Defendant Samer Shami was charged with violating the Tobacco Products Tax Act (TPTA) for possessing, acquiring, transporting, or offering for sale tobacco products with an aggregate wholesale price of $250 or more as a manufacturer without a license in violation of MCL 205.423(1) and MCL 205.428(3). Defendant was the manager of Sam Molasses, a retail tobacco store owned by Sam Molasses, LLC. Investigation revealed that the labels on several plastics tubs of tobacco in the store’s inventory did not match those listed on the invoices from tobacco distributors. Defendant explained that he had mixed two or more flavors of tobacco to create a new “special blend,” which was then placed in the plastic tubs and relabeled. Defendant also explained that he repackaged bulk tobacco from a particular distributor by taking the packets of tobacco out of the boxes, inserting them into metal tins, and placing his own label on the tins, which were then sold at the store. The issue presented in this case for the Michigan Supreme Court's review was whether an individual who combined two different tobacco products to create a new blended product or repackages bulk tobacco into smaller containers with a new label was considered to be a manufacturer of a tobacco product and must have the requisite license. The Court of Appeals held that, in either instance, such a person was a manufacturer. According to that Court, manufacturing simply requires a change from the original state of an object or material into a state that makes it more suitable for its intended use, and a person who changes either the form or delivery method of tobacco constitutes a manufacturer for purposes of the TPTA. Although the Supreme Court agreed with the Court of Appeals’ conclusion that an individual combining two different tobacco products to create a blended product, relabeling that new mixture, and making it available for sale to the public is a manufacturer of a tobacco product, the Court disagreed with the Court of Appeals that merely repackaging bulk tobacco into smaller containers renders an individual a manufacturer under the TPTA. Therefore, the Court affirmed in part and reversed in part the judgment of the Court of Appeals. This case was remanded to the Circuit Court for further proceedings.