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• Ark. court says revised law on cigarette sales constitutional 

The Arkansas Supreme Court on Thursday ruled that a revised state law that prohibits wholesale cigarette sales below cost is constitutional.

McLane Southern Inc., whose parent McLane Co. lost a similar lawsuit three years ago involving a 1951 law, argued that legislative revisions in 2003 violated both state and federal constitutional protections against governmental interference.

The Unfair Cigarette Sales Act set minimum costs for cigarettes to prevent a company from trying to undercut its competitors unfairly. The law said a company cannot sell below its costs, defined as the cost of the cigarettes plus 2.75 percent.

The revised law, Act 627 of 2003, increased the markup to 4 percent, which McLane Southern said was arbitrary and capricious. In addition, the wholesaler said the law was "irrational" in presuming that selling below cost or offering rebates were signs of predatory intent.

McLane Southern, based in Brookhaven, Miss., sued the Arkansas Tobacco Control Board on July 17, 2003, asking Pulaski County Circuit Judge James Moody Jr. to declare the revised law unconstitutional.

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