912 N.W.2d 526
Mich.2018Background
- Defendant Samer Shami managed Sam Molasses, a hookah-tobacco retail store that was not licensed as a tobacco-product manufacturer.
- Treasury inspectors found tubs of hookah tobacco whose labels did not match distributor invoices; Shami admitted he mixed two or more flavors to create a "special blend," relabeled the tubs, and sold them.
- Inspectors also found tobacco packets removed from distributor boxes and placed into branded metal tins labeled "360."
- Shami was charged under the Tobacco Products Tax Act (TPTA) for possessing/offering for sale tobacco as a manufacturer without a license (MCL 205.423(1); MCL 205.428(3)).
- The district court bound Shami over for trial (probable cause), the circuit court granted his motion to quash, and the Court of Appeals reversed, holding both blending and repackaging constituted manufacturing. The Michigan Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether combining two different tobacco products to create a blended product constitutes "manufacture" or "produce" under the TPTA | Shami’s blending produced a new tobacco product and thus made him a manufacturer required to be licensed | Blending does not transform raw materials into a new product; ingredients were already usable so conduct is not "manufacturing" | Blending two or more different tobaccos to create a new custom blend is "produce" (to give being, form, or shape) and makes one a manufacturer under MCL 205.422(m)(i); bindover affirmed |
| Whether repackaging distributor packets into tins with new labels constitutes manufacturing under the TPTA | Repackaging and relabeling changes form/delivery and therefore constitutes manufacturing | Repackaging merely changes container/label; the tobacco itself remains unchanged and suitable for use, so not manufacturing | Repackaging/relabeling alone does not "manufacture" or "produce" a new tobacco product; Court of Appeals reversed on this point |
| Whether district court abused discretion in bindover on manufacturing charge | Treasury: testimony and Shami’s admissions provided probable cause that he produced a new tobacco product | Shami: no manufacturing because no raw-material transformation; thus insufficient probable cause | District court did not abuse its discretion in binding Shami over regarding the blended-product manufacturing allegation |
| Vagueness / retroactivity arguments raised by Shami | Shami: TPTA is unconstitutionally vague; decision should be prospective | State: TPTA provides adequate notice; decision should be retroactive | Vagueness claim waived; Court rejects prospective-only application and gives decision full retroactive effect |
Key Cases Cited
- People v Seewald, 499 Mich 111 (discussing probable-cause bindover standard)
- Spectrum Health Hospitals v. Farm Bureau Mut. Ins. Co. of Mich., 492 Mich 503 (use of plain and ordinary meaning; consult dictionary in statutory interpretation)
- Trentadue v Buckler Automatic Lawn Sprinkler Co., 479 Mich 378 (framework for prospective-only application of judicial decisions)
- Lincoln v General Motors Corp., 461 Mich 483 (principles governing retroactivity)
- Hyde v Univ. of Mich. Bd. of Regents, 426 Mich 223 (limits on prospective application)