CA7: Cigarette sales in Chicago is “closely regulated” and subject to inspection

The sale of cigarettes in Chicago has been closely regulated since 1941 and required a license since 1900. Defendant was a prior offender of the ordinance in selling untaxed or individual cigarettes, and the city decided to inspect the cigarettes in his convenience store. Defendant did not raise the closely regulated industry argument until a reply brief in the district court, so it is reviewed for plain error [the outcome likely would have been the same if fully briefed]. In the search, the inspectors found a handgun and defendant was a felon. There was also a bottle of 1500 hydrocodone tablets. United States v. Hamad, 2016 U.S. App. LEXIS 9 (7th Cir. Jan. 4, 2016):

Similarly, it is not because Hamad owns a convenience store that he is subject to the Cigarette Ordinance but because his business sells cigarettes. He makes no argument that the cigarette or tobacco industry is not closely regulated, except to complain in conclusory fashion that the search here was made in enforcement of tax collection, not cigarette regulation. In fact, there is a long history of regulation and licensing of cigarette sales in Chicago. A Chicago ordinance prohibited the sale of cigarettes by any person without a license as early as 1900, a mere twenty years after cigarettes began to be produced commercially in the United States. See Gundling v. City of Chicago, 177 U.S. 183, 20 S. Ct. 633, 44 L. Ed. 725 (1900) (upholding the constitutionality of the Chicago ordinance requiring a license for cigarette sellers). The State of Illinois has also long regulated cigarette sales, enacting a Cigarette Tax Act in 1941 that permitted warrantless searches of cigarettes in a place of business and allowed inspectors to seize packages of contraband cigarettes. See 35 ILCS 130/18. Given that cigarettes have been regulated in Chicago for at least 115 years, indeed for most of their existence as a mass produced product, the district court did not commit plain error in treating retail cigarette sales as closely regulated.

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The court did not plainly err in concluding that the Ordinance adequately advised owners of commercial premises selling cigarettes that the search is being made pursuant to the law. The plain language of the Ordinance informs cigarette sellers that they must allow inspections of their books and inventory related to cigarette sales. See Burger, 482 U.S. at 711 (concluding that a statute allowing inspections of vehicle dismantling businesses on a regular basis is an adequate substitute for a warrant because it alerts business owners that inspections are not discretionary acts by a government official but are conducted pursuant to statute). As for the scope of the inspection, the Ordinance limits the time of inspection for books and records to regular business hours but arguably imposes no similar limit on the time to inspect and audit cigarette inventory. This omission is not fatal, however, because the court reasonably read the “regular business hours” limit to cover both the inspection of books and the auditing of inventory. More importantly, the search here did occur during regular business hours: Marshall purchased a pack of unstamped cigarettes immediately before the inspection took place. See Burger, 482 U.S. at 711. In Burger, the Court found that a statute allowing inspection of vehicle dismantling businesses was adequately limited in time where it allowed inspections during regular and usual business hours. 482 U.S. at 711-12. The Cook County Ordinance is therefore adequately limited in time.