Court Opinion

ID: 4328239
Source: CourtListenerOpinion
Date Created: 2018-11-06 16:07:39.040765+00
Date Added: 2024-06-11T14:20:23.759641
License: Public Domain

FIRST DISTRICT COURT OF APPEAL
                STATE OF FLORIDA
                 _____________________________

                         No. 1D16-4273
                 _____________________________

GRABBA-LEAF, LLC,

    Appellant,

    v.

DEPARTMENT OF BUSINESS AND
PROFESSIONAL REGULATION,
DIVISION OF ALCOHOLIC
BEVERAGES AND TOBACCO,

    Appellee.
                  ___________________________

On appeal from the Division of Administrative Hearings.
J. Lawrence Johnston, Administrative Law Judge.

                        November 6, 2018

OSTERHAUS, J.

     Grabba-Leaf, LLC, filed an unadopted rule challenge in 2016,
just after the Florida Department of Business and Professional
Regulation issued a memorandum to distributors of tobacco
products changing its practice of taxing tobacco wraps. The memo
stated that the Department would no longer tax “homogenized
tobacco wraps” because of a court decision, but would continue
taxing “whole leaf” tobacco wraps as “tobacco products.” The
Department interpreted whole leaf wraps to qualify as “loose
tobacco suitable for smoking” under the definition of “tobacco
products.” § 210.25(12), Fla. Stat. But Grabba-Leaf argues that the
Department’s policy and interpretation of the statute required
formal agency rulemaking, not simply just a memo to tobacco
distributors. We agree. Because the policy and practice set forth in
the memo alters the Department’s tax policy, makes new
distinctions between taxable and non-taxable tobacco wraps, and
includes taxing whole leaf tobacco products that aren’t clearly
covered by the applicable statutory definition, we conclude that the
Department’s statement constitutes an unadopted rule.

                                  I.

     The appellant, Grabba-Leaf, is a licensed distributor of
tobacco wrap products (known colloquially as “blunt wraps”). After
the federal government began taxing blunt wraps in 2009, the
State of Florida followed suit by applying its “other tobacco
products” tax to tobacco wraps. Florida’s blunt wrap distributors
were not pleased. Distributor Brandy’s Products, Inc., challenged
the State’s tax on the basis that its wraps were not taxable “tobacco
products” as defined by § 210.25, Florida Statutes. And its
argument ultimately prevailed before this court. See Brandy’s
Prods., Inc. v. Dep’t of Bus. & Prof’l Regulation, 188 So. 3d 130, 133
(Fla. 1st DCA 2016) (reversing the agency’s determination that
Brandy’s blunt wraps “are taxable ‘tobacco products’”).

     Following the Brandy’s decision, the Department amended its
tax policy to carve out Brandy’s Products-like tobacco wraps, but
continue taxing other wraps. The Department sent a
memorandum to licensed distributors of tobacco products taking
the position that “homogenized tobacco wrap products,” like those
sold by Brandy’s Products, would not be taxed. But that it would
continue taxing whole leaf blunt wraps as “tobacco products.” See
§§ 210.276 & 210.30, Fla. Stat.

     In response to the memo, Grabba-Leaf challenged the new tax
policy as an unadopted rule. See § 120.56(4), Fla. Stat. The
challenge culminated below in an administrative hearing, where
Grabba-Leaf argued that the Department was unlawfully
enforcing interpretations of the statute and of the opinion in
Brandy’s without having satisfied its rulemaking obligations.

    An administrative law judge, however, concluded that
rulemaking wasn’t required. In his view, the Department’s memo
applied the plain meaning of a clear and unambiguous statute to
Grabba-Leaf’s wraps: “[I]t is readily apparent that whole leaf, non-
                                  2
homogenized cigar wraps meet [§ 210.25(12)’s] statutory definition
of loose tobacco suitable for smoking.” Grabba-Leaf timely
appealed this final order.

                                II.

     We review the ALJ’s conclusions of law in this unadopted rule
challenge de novo. See Volusia Cty. Sch. Bd. v. Volusia Home
Builders Ass’n, Inc., 946 So. 2d 1084, 1089 (Fla. 5th DCA 2006).
Grabba-Leaf’s argument on appeal strikes at the heart of the
Department’s authority, in the absence of rulemaking, to assess
taxes against products that only arguably fall within the
parameters of a tax statute. Grabba-Leaf doesn’t argue that its
wraps cannot be taxed as “tobacco products” under the statute (not
yet at least). Rather, it argues that the Department must initiate
rulemaking before applying that tax to its whole leaf tobacco
wraps, because it isn’t clear that they are “loose tobacco suitable
for smoking.” § 210.25(12), Fla. Stat.

                                A.

     Florida’s Constitution divides the power of the state
government between three branches: the legislative, executive,
and judicial branches. Art. II, § 3, Fla. Const. Each branch
possesses “its own powers and responsibilities.” Bush v. Schiavo,
885 So. 2d 321, 329 (Fla. 2004). Generally speaking, the Florida
Constitution grants the power to make the laws to the legislative
branch and the power to execute the laws to the executive branch.
Various agencies within the executive branch perform the role of
interpreting and enforcing Florida’s laws in everyday areas of life,
including taxation. But their authority is constrained. Executive
agencies can neither assume the power to enact law nor exercise
unrestricted discretion in carrying out the laws. See Sims v. State,
754 So. 2d 657, 668 (Fla. 2000) (recognizing that “the Legislature
may not delegate the power to enact a law or the right to exercise
unrestricted discretion in applying the law”). Agency
interpretations and applications must comport with the laws they
are carrying out. And if they cannot be squared with the laws, their
interpretations and applications must give way. See, e.g., Verizon
Bus. Purchasing, LLC v. Dep’t of Revenue, 164 So. 3d 806, 812 (Fla.
1st DCA 2015) (“Judicial deference does not require that courts
adopt an agency’s interpretation of a statute when the agency’s
                                 3
interpretation cannot be reconciled with the plain language of the
statute.”).

    An agency statement that “implements, interprets, or
prescribes law or policy or describes the procedure or practice
requirements of an agency” is considered a “rule.” §§ 120.52(16),
120.56(4)(a), Fla. Stat. Statements that are rules cannot be
enforced unless they are formally adopted in accordance with
requirements set forth in chapter 120. See § 120.54, Fla. Stat. If an
agency statement meets the definition of a rule, but hasn’t been
adopted as a rule under chapter 120, then it is considered an
“unadopted rule.” § 120.52(20), Fla. Stat. Agencies may not enforce
an unadopted rule against a party’s substantial interests.
§ 120.57(e)1., Fla. Stat.; Coventry First, LLC v. State, Office of Ins.
Regulation, 38 So. 3d 200, 203 (Fla. 1st DCA 2010) (quoting Dep’t
of Revenue v. Vanjaria Enters., Inc., 675 So. 2d 252, 255 (Fla. 5th
DCA 1996)).

     If an agency statement merely reiterates a law, or declares
what is “readily apparent” from the text of a law, however, the
statement is not considered a rule. See, e.g., Amerisure Mut. Ins.
Co. v. Dep’t of Fin. Servs., 156 So. 3d 520, 532 (Fla. 1st DCA 2015);
St. Francis Hosp., Inc. v. Dep’t of Health and Rehab. Servs., 553
So. 2d 1351, 1354 (Fla. 1st DCA 1989). The parties’ arguments in
this case focus on this rulemaking exception. We must decide
whether the Department’s 2016 memorandum, setting forth its
post-Brandy’s intention to tax only whole leaf blunt wraps,
amounts to a simple reiteration of what is “readily apparent” from
the text of § 210.25(12).

                                  B.

     After this court’s decision in Brandy’s, the Department issued
a memorandum interpreting our opinion to prohibit the taxation
of blunt wraps made partly of tobacco, but not of whole leaf wraps
consisting completely of tobacco. In accordance with its
interpretation, the Department altered its practice of taxing all
wraps and announced going forward that it would only be taxing
“whole leaf, non-homogenized” wraps. In changing its policy, the
Department did not initiate rulemaking. 1 Rather, it viewed its

    1   The Division of Alcoholic Beverages and Tobacco possesses
                                  4
policy as reiterating the court’s decision and as carrying out its
obligation to tax “loose tobacco suitable for smoking.” § 210.25(12),
Fla. Stat. 2 The Department considers itself free to forgo
rulemaking because its policy is “readily apparent from its literal
reading” of the statute.

     We aren’t convinced, however, that its authority to tax whole
leaf blunt wraps is readily apparent from the statute. Whether and
how § 210.25(12)’s “tobacco products” definition applies to blunt
wraps is not an easy question. Prior to 2009, the statute wasn’t
applied to blunt wraps. 3 After that, the Department began
interpreting the statute to apply to all blunt wrap products. When
Brandy’s Products challenged the tax, this court determined that
the “loose tobacco” part of the statute didn’t apply to its blunt
wraps. A debate exists about the breadth of our Brandy’s opinion.
Some language in the Brandy’s opinion suggests that it forbade the
taxation of blunt wraps across the board:

authority to adopt rules to enforce chapter 210, part II’s provisions
for taxing loose tobacco products. See § 210.75, Fla. Stat.
    2  On July 1, 2016, the definition of “tobacco products” was
moved, without being amended, from subsection 210.25(11) to
subsection 210.25(12). Although this dispute pre-dated the change,
this opinion will use and refer to the current subsection, which lists
the following “tobacco products” as taxable:

    [L]oose tobacco suitable for smoking; snuff; snuff flour;
    cavendish; plug and twist tobacco; fine cuts and other
    chewing tobaccos; shorts; refuse scraps; clippings,
    cuttings, and sweepings of tobacco, and other kinds and
    forms of tobacco prepared in such manner as to be
    suitable for chewing; but “tobacco products” does not
    include cigarettes . . . or cigars.

§ 210.25(12), Fla. Stat. (emphasis added).
    3 Blunt wraps weren’t taxed as “loose tobacco suitable for
smoking” until 2009, some 24 years after § 210.25(12) was first
enacted. See Ch. 85-141, §§ 1, 5, at 1023-29, Laws of Fla. (1985).

                                  5
    [W]e agree with the ALJ that ‘giving the words used in
    section 210.25(11) their plain and ordinary signification,
    the definition . . . does not include blunt wraps within its
    reach.

    [W]e agree with the ALJ that the agency’s purported
    failure of proof on [whether blunt wraps are “suitable for
    smoking”] is so completely overshadowed by the
    conclusion that blunt wraps are not loose tobacco as to be
    superfluous to the outcome of this case.

Brandy’s, 188 So. 3d at 132 & n.2 (quotation omitted). At least one
court has interpreted Brandy’s to extend, for instance, to Grabba-
Leaf’s whole leaf wraps. 4

      But the dissent correctly points out that Brandy’s limited its
relief to Brandy’s Products’ own wraps: “we reverse the agency’s
determination that the blunt wraps distributed by Appellant are
taxable ‘tobacco products.’” And the make-up of Brandy’s Products’
wraps and Grabba-Leaf’s wraps are different. It is into this
interpretive vacuum that the Department’s 2016 memorandum
introduced a composition-based distinction between blunt wrap
products. It took the position in its memorandum that Brandy’s
only applied to “homogenized” blunt wraps, and not to “whole leaf”
blunt wraps. This differentiation between blunt wraps was novel
for purposes of interpreting § 210.25(12) and Brandy’s, because
neither draws a composition-based distinction between blunt wrap
products. And so, while the Department was right that Brandy’s
Products’ wraps were only partly made of tobacco, and Grabba-
Leaf’s wraps are 100%, whole tobacco leaves, it isn’t clear that this
is a distinction with a difference for tax purposes. Nonetheless, the
Department’s memo to tobacco distributors established this new

    4  In a tax refund case brought by Grabba-Leaf in South
Florida, a trial court citing Brandy’s refunded more than $828,000
in overpaid taxes to Grabba-Leaf associated with its whole leaf
blunt wraps. See Grabba-Leaf, LLC v. Dep’t of Bus. & Prof’l
Regulation, No. 2015-CA-12414-25 (Fla. 17th Cir. Ct. Oct. 25,
2016), aff’d sub nom. Dep’t of Bus. & Prof’l Regulation v. Grabba-
Leaf, LLC, No. 4D16-4166, 2017 WL 5195127 (Table) (Fla. 4th
DCA, Nov. 9, 2017).

                                 6
composition-based taxing regime for blunt wraps. Under its terms,
the Department would no longer be taxing the Brandy’s-like
wraps, but would continue taxing whole leaf wraps. According to
the memo, distributors would now have to “consider the
composition of the product” to determine their tax liability and
“seek clarification from the product manufacturer if necessary.”

     We think this new approach required agency rulemaking. Not
only did it represent a tax policy change for the Department, but
the Department’s interpretation isn’t clearly correct under
§ 210.25(12), as might excuse it from having to satisfy rulemaking
requirements. As we noted in Brandy’s, the statute itself doesn’t
define “loose tobacco.” So we must construe these terms “in their
plain and ordinary sense.” State v. Brake, 796 So. 2d 522, 528 (Fla.
2001) (citing State v. Mitro, 700 So. 2d 643, 645 (Fla. 1997)). In
Brandy’s, we relied on the dictionary definition of “loose,” which is
“not rigidly fastened or securely attached,” “not brought together
in a bundle, container, or binding,” “not dense, close, or compact in
structure or arrangement,” and “not solid.” Brandy’s, 188 So. 3d at
132 (citing Loose, Merriam–Webster Online Dictionary,
www.merriam-webster.com/dictionary/loose). The definition of
“tobacco” is also important here, which is: “the leaves of cultivated
tobacco prepared for use in smoking or chewing or as snuff, [or] the
manufactured products of tobacco.” Tobacco, Merriam–Webster
Online Dictionary, www.merriam-webster.com/dictionary/tobacco.
Because cultivated and prepared leaves are themselves “tobacco,”
it isn’t clear that use of the modifier “loose” in the tax statute
applies to whole leaf wraps. Rather, “loose” would appear to be
surplusage as applied to these wraps.

     In addition to straight textual problems with “loose,” the rest
of the “tobacco products” definition identifies products that are
further manufactured from tobacco leaves. “[S]nuff; snuff flour;
cavendish; plug and twist tobacco; fine cuts and other chewing
tobaccos; shorts; refuse scraps; clippings, cuttings, sweepings” do
not consist of whole leaves, but of cultivated tobacco fragments.
§ 210.25(12), Fla. Stat. Similarly, the prototypical “loose tobacco”
product, on which the ALJ and parties alike agree is “loose
tobacco,” is filler tobacco. Like the other stuff in § 210.25(12), filler
tobacco is shredded and chopped from cultivated tobacco leaves for
smoking in a pipe, blunt wrap, or other suitable vessel. Filler

                                   7
tobacco, too, is structurally distinct from a whole leaf tobacco wrap,
which is comparatively compact, unbroken, and solid, such that it
can bundle, contain, and secure loose filler tobacco. This also leads
to the conclusion that blunt wraps are different than the “tobacco
products” included in the statute because they aren’t similarly
“loose.” 5

     Along this line, it is noteworthy that other state and federal
definitional statutes specifically identify tobacco leaves and wraps
when they are meant to be included. Section 569.002(6), Florida
Statutes, for instance, defines “tobacco products” to include both
“loose tobacco leaves” and “products made from tobacco leaves, in
whole or in part, . . . which can be used for smoking.” 26 U.S.C.
§ 5702(o) similarly identifies filler tobacco separately from
wraps—“tobacco which . . . is suitable for use . . . for making
cigarettes and cigars [and] wrappers thereof”—in defining what
are federally taxable tobacco products. In contrast, the definition
in § 210.25 doesn’t mention tobacco leaves or wraps, but only “loose
tobacco.”

     That countervailing arguments exist that whole-leaf blunt
wraps are “loose” tobacco suitable for smoking is not the test for an
exemption from rulemaking. Rather, the test is whether an agency
statement reiterates a law, or declares what is “readily apparent”
from the text of a law. Amerisure Mut. Ins. Co., 156 So. 3d at 532.
Because § 210.25(12) does not clearly include whole leaf tobacco
wraps, we conclude that the Department cannot by memorandum
extend the statutory definition to cover them and disregard its
rulemaking obligations.

    Finally, we recognize the limits of our holding and of the issue
presented here. We haven’t been called upon to finally resolve the
question of whether whole leaf blunt wraps are “loose tobacco

    5  We recognized in Brandy’s that “tax statutes [must] be
construed narrowly, not broadly.” 188 So. 3d at 132. “[T]axes may
be collected only within the clear definite boundaries recited by the
statute.” Id. (quoting Maas Bros., Inc. v. Dickinson, 195 So. 2d 193,
198 (Fla. 1967)). And “any ambiguity in the provision of a tax
statute must be resolved in the taxpayer’s favor.” Verizon, 164 So.
3d at 809.

                                  8
suitable for smoking.” 6 And we needn’t do that in order to resolve
Grabba Leaf’s unadopted rule challenge. Rather, we more
modestly conclude that the Department’s memo—which
recognizes two different classes of blunt wraps, one taxable and
one not—does not simply reiterate § 210.25(12)’s text. See St.
Francis Hosp. Inc., 553 So. 2d at 1354. The Department’s memo
constitutes a “rule” because it is a statement of general
applicability that implements and interprets the law. § 120.52(16),
Fla. Stat. And it constitutes an “unadopted rule” because
rulemaking procedures weren’t followed, and it is not “readily
apparent” from the statute itself that non-homogenized, whole leaf
blunt wraps can be taxed as “loose tobacco suitable for smoking.”
Cf. Dep’t of Revenue v. U.S. Sugar Corp., 388 So. 2d 596, 598 (Fla.
1st DCA 1980) (concluding that an agency-adopted policy
distinction was not “readily apparent” in the statute and
constituted an unadopted rule).

                               III.

   For these reasons, we conclude that the Department’s
memorandum setting forth a policy to tax whole leaf non-
homogenized     blunt    wraps     constitutes an unadopted
administrative rule that cannot be enforced.

    REVERSED.

WOLF, J., concurs; KELSEY, J., dissents with opinion.

                 _____________________________

    Not final until disposition of any timely and
    authorized motion under Fla. R. App. P. 9.330 or
    9.331.

    6 We don’t finally resolve the “loose” issue here as relates to
whole-leaf wraps, or whether whole-leaf blunt wraps can be
considered “suitable for smoking” under § 210.25(12). See also
Brandy’s, 188 So. 3d at 132 n.2 (also not resolving whether blunt
wraps are “suitable for smoking”).

                                9
                  _____________________________

KELSEY, J., dissenting.

     I respectfully dissent because I conclude that the
Administrative Law Judge did not err in holding that the agency’s
memorandum was not an unadopted rule, but rather merely
announced this Court’s ruling in Brandy’s Products, Inc. v.
Department of Business & Professional Regulation, 188 So. 3d 130
(Fla. 1st DCA 2016), and adhered to the plain meaning of the
taxing statute. Under Florida’s Administrative Procedure Act,
neither act requires rulemaking. That resolves this case entirely
in favor of the agency. The ALJ correctly dismissed Appellant’s
Petition to Determine Invalidity of Agency Statement filed under
section 120.56(4) of the Florida Statutes, and we should affirm.

     A rule is an “agency statement of general applicability that
implements, interprets, or prescribes law or policy or describes the
procedure or practice requirements of an agency and includes any
form which imposes any requirement or solicits any information
not specifically required by statute or by an existing rule.”
§ 120.52(16), Fla. Stat. (2018). The agency’s “statement” here—its
memorandum noting that the Brandy’s decision was released, that
this Court held that the specific products there at issue were not
taxable, that the decision did not address whole-leaf tobacco
wraps, and thus that such whole-leaf wraps would continue to be
taxed (as they had been since 2009 under the plain language of the
taxing statute)—did not implement the statute, did not interpret
the statute, and did not prescribe law or policy. The agency’s
statement merely reiterated the holding of the then-new Brandy’s
decision, and state that the pre-existing taxation of non-Brandy’s
products (under the plain meaning of the statute) would continue.
Under the APA, this was not an unadopted agency rule.

    1. The Plain Meaning of the Statute.

     Even though this is an APA issue, and not a taxation issue as
in Brandy’s, the analysis properly begins with the plain language
of the taxing statute. The “other tobacco products” or OTP tax (i.e.,
not cigarettes, taxed in a separate part of the statute; or cigars, not
taxed), is imposed in what is now section 210.25(12), Florida

                                  10
Statutes (2018) (formerly subsection (11)), using language
unchanged since its enactment in 1985 (emphasis added):

         (12) “Tobacco products” means loose tobacco
    suitable for smoking; snuff; snuff flour; cavendish; plug
    and twist tobacco; fine cuts and other chewing tobaccos;
    shorts; refuse scraps; clippings, cuttings, and sweepings
    of tobacco, and other kinds and forms of tobacco prepared
    in such manner as to be suitable for chewing; but “tobacco
    products” does not include cigarettes, as defined by s.
    210.01(1), or cigars.

     As we correctly noted in Brandy’s, when construing a statute
we must first determine whether statutory language is clear and
unambiguous, and if it is, then we must look first to the plain
meaning of the statute. 188 So. 3d at 132. This Court in Brandy’s
expressly held that the specific statutory language at issue here–
“loose tobacco suitable for smoking”–“is clear and unambiguous.”
Id. To be taxable under the plain meaning of this statutory phrase,
tobacco must be both (a) “loose” and (b) “suitable for smoking.”
Brandy’s correctly employed a plain-meaning approach to defining
“loose tobacco,” but because we concluded that the product at issue
was not “loose tobacco,” we did not analyze whether the product
was “suitable for smoking.” Id. at 132 & n.2. We need to analyze
both phrases here.

    (a) “‘Loose’ Tobacco.”

     Our analysis in Brandy’s was specific to, and limited to, the
particular product at issue there. The parties, and apparently the
industry as a whole, refer to the Brandy’s-type products as
“homogenized” wraps. The dictionary definition of “homogenized”
is “to blend (diverse elements) into a mixture that is the same
throughout; to make uniform in structure or composition
throughout.”     See   Homogenize,     Merriam-Webster     Online
Dictionary,      www.merriam-webster.com/dictionary/homogenize
(last visited August 30, 2018). Appellant’s representative in this
litigation freely admitted that the Brandy’s manufactured wrap
product “is made out of a few different things, not just tobacco,”
and thus is “homogenized” (his description). The wraps at issue in
Brandy’s were not 100% tobacco. They were not even

                                11
predominantly tobacco. Instead, they were predominantly wood
pulp and gums used as adhesives, combined with tobacco pulp in
a manufacturing process to produce a cut-out tobacco-infused
paper rectangle that witnesses in that case as well as in this case
described as looking and feeling very much like a brown paper bag
or a thin piece of cardboard. See Brandy’s, 188 So. 3d at 131.
Evidence in this case established that the Brandy’s-type
manufactured products are patented.

     Only that specific product with those specific characteristics
was at issue in Brandy’s, and this Court made that very clear as
the factual basis for its ruling. Id. at 131 (“[T]he narrow issue on
appeal is whether, as a matter of law, the product described by the
ALJ falls within the statutory definition of ‘tobacco products.’”)
(emphasis added); see also id. at 132 (“Accordingly, tobacco that is
densely bound together to make a solid, uniform, cohesive product
like the blunt wraps at issue in this case is not ‘loose tobacco’ for
purposes of section 210.25(11).”) (emphasis added). The function of
the product was not the basis for this Court’s decision. This Court
in Brandy’s, after finding the statutory term “loose tobacco” to be
“clear and unambiguous,” resorted only to the dictionary definition
of “loose,” that being “‘not rigidly fastened or securely attached,’
‘not brought together in a bundle, container, or binding,’ ‘not dense,
close or compact in structure or arrangement,’ and ‘not solid.’”
Brandy’s, 188 So. 3d at 132. The ALJ who rendered the
recommended order in Brandy’s had observed that “a blunt wrap
is no more loose tobacco than a piece of writing paper is loose
wood,” and that “[n]o tobacco, as such, is visible when examining a
blunt wrap, much less ‘loose’ tobacco or any other ‘loose’
ingredients for that matter.” Id. at 131. We agreed with that
analysis in Brandy’s. Id. Our holding in Brandy’s was that,
because the tobacco content of those wraps was by no means “loose”
from the other components of the wrap, that product was not
within the plain meaning of the taxing statute.

    In contrast, Appellant’s wraps are natural, cured tobacco
leaves, not combined with any other ingredients. They are leaves
and only leaves, not tobacco-infused paper, not bound to or
combined with anything else. The undisputed evidence below with
respect to Appellant’s leaves was that “There’s nothing more,
nothing less, to it.” They look like leaves and feel like leaves—

                                 12
because they are leaves and only leaves. They are brown because
they have been air-cured. They come in a pouch, and their
packaging describes them as “natural tobacco wraps that are
inspected and selected from the finest tobacco leaves available,
ensuring a smooth smoke from beginning to end. Slow, smooth
burning.” The package includes a Surgeon General’s warning
about the danger of tobacco use. The packaging contains no patent
marking. The evidence showed that users might cut or tear the
leaves as needed; and Appellant’s counsel admitted at oral
argument that users could grind or chop the leaves for use as filler
tobacco, although he opined that they probably would not do so
because the leaves are selected for qualities that make them better
suited to use as an outside wrapper. It was also admitted at oral
argument that packages of whole tobacco leaves are available for
purchase, and that those are taxed under the OTP statute.

     Given the undisputed facts about the physical characteristics
of Appellant’s whole-leaf wraps, they fall within the dictionary
definition of “loose” tobacco, as we applied it in Brandy’s. Our
holding in Brandy’s means that tobacco is not “loose” when it is
mixed with wood pulp and gum to form a manufactured product in
which the different ingredients are bound uniformly and
inextricably to one another. The function of the product as a wrap
was not part of the analysis. In direct contrast to the Brandy’s
product, Appellant’s leaves are not mixed with anything. They are
not fastened or attached to anything or bound to anything. They
are not dense, close, compact, or solid in structure. They are
tobacco leaves, nothing else. They are loose tobacco within the
plain meaning of the statute. Appellant’s argument that only filler
tobacco is “loose” tobacco within the meaning of the statute,
improperly restricts the statute in a way that the Legislature did
not. St. Joe Paper Co. v. Dep’t of Rev., 460 So. 2d 399, 401-02 (Fla.
1st DCA 1984) (“The Department’s interpretation would require
the court to add the word “amended” to Section 214.14, and it is
axiomatic that the court is not free to add words to steer a statute
to a meaning which its plain wording does not supply.”). As the
ALJ observed, chopped or ground filler tobacco is loose tobacco, but
the Legislature did not limit loose tobacco to filler tobacco—and
neither can we. Appellant’s attempt to claim that its leaves are “a
solid, uniform, cohesive product” because they are leaves all the
way through themselves and the cells of the leaves are closely

                                 13
bound to one another within the leaves, is a wholesale
misapplication of Brandy’s and its specific holding, which was
limited to the product at issue there and the fact that its minor
component ingredient of tobacco was bound inextricably to other
non-tobacco ingredients. Appellant’s leaves are loose tobacco. This
brings us to whether they are “suitable for smoking.”

    (b) “Suitable for Smoking.”

    The Brandy’s Court did not analyze this statutory phrase
because it became irrelevant in light of the clear finding that the
product at issue was not “loose” tobacco in the first place. 188 So.
3d at 132 & n.2. But because Appellant’s leaves are loose tobacco
within the meaning of the statute, it becomes necessary to move to
the second part of the test of OTP taxability and determine
whether tobacco leaves are “suitable for smoking” within the plain
meaning of the taxing statute.

     The ALJ invoked the plain meaning of “suitable”—having the
qualities that are right, needed or appropriate for something. This
was consistent with the dictionary definition of the word. See
Suitable, Merriam-Webster Online Dictionary, www.merriam-
webster.com/dictionary/suitable (defining suitable as “adapted to a
use or purpose”) (last visited August 30, 2018). Appellant does not
challenge this interpretation of “suitable” standing alone, but
argues that the statute should be limited to tobacco suitable for
smoking “on its own.” The ALJ properly rejected this argument. In
construing a clear and unambiguous statute, we are not at liberty
to add words to it. St. Joe Paper, 460 So. 2d at 401-02. Our task is
to apply the plain meaning of “smoking.”

     The dictionary defines “smoking” as the verb form of “smoke,”
meaning “to inhale and exhale the fumes of burning plant material
and especially tobacco.” See Smoke, Merriam-Webster Online
Dictionary, www.merriam-webster.com/dictionary/smoke (last
visited August 30, 2018). Florida law defines “smoking” in several
statutes. The Clean Indoor Air Act defines it as “inhaling,
exhaling, burning, carrying, or possessing any lighted tobacco
product, including cigarettes, cigars, pipe tobacco, and any other
lighted tobacco product.” § 386.203(10), Fla. Stat. (2018). The
medical marijuana statute defines it as “burning or igniting a

                                14
substance and inhaling the smoke.” § 381.986(1)(n), Fla. Stat.
(2018). The public nuisance statute defines it as “possess[ing] any
ignited tobacco product or other ignited substance . . . .” § 823.12,
Fla. Stat. (2018). “Smoking,” used alone, is not limited to a product
being smoked with something else. Smoking is smoking. If the
Legislature had intended to limit “suitable for smoking” in the way
Appellants suggest, it could have done so, but has consistently
done the opposite and invoked a broad and plain-meaning
definition of “smoking.” It did so in the OTP statute. Thus, the ALJ
correctly construed “suitable for smoking” as extending to
Appellant’s tobacco leaves heated and consumed during the act of
smoking.

     To support its restricted definition of “smoking” as limited to
“smoking on its own,” Appellant relied below on a Colorado
decision that was not yet final. The case became final well over a
year ago, and ended up being contrary to Appellant’s position,
although Appellant failed to notify us of that development. In
Colorado Department of Revenue v. Creager Mercantile Co., 395 P.
3d 741 (2017) (En Banc), the majority of the en banc Colorado
Supreme Court held that the Colorado statute imposing a tax on
other tobacco products (which differed from the Florida statute by
not being limited to “loose” tobacco), encompassed even
homogenized blunt wraps because they are “consumed by the act
of smoking” and are therefore “suitable for smoking.” 395 P. 3d at
745. While Creager interprets Colorado law and is not binding in
Florida, it is directly contrary to Appellant’s argument.

     Appellants get the opposite of the Brandy’s answer on the tax
question—not because of any difference in the law, but because of
the material factual differences between the nature of the
manufactured products at issue in Brandy’s and the natural whole
tobacco leaves at issue here. Brandy’s Products succeeded in
establishing that its product was not taxable under section
210.25(11) (now (12)), by carefully distinguishing its product based
on its physical characteristics as a manufactured blend of
inseparable wood pulp, tobacco pulp, and gums. While Appellant
attempts to tag along on that result based on the function of its
product, function of the product is not a factor under the taxing
statute and was not a factor in Brandy’s. Appellant’s product is

                                 15
taxable. But as already noted, this is an APA rulemaking case, not
a tax case.

    2. The Memorandum is not an Unadopted Rule.

     The tax question informs the APA question. The question
before the Court is whether the agency’s post-Brandy’s
memorandum included an unadopted rule. The agency announced
this Court’s holding in Brandy’s, and stated that the status quo
pre-Brandy’s continued to apply to the whole leaf products not
addressed in Brandy’s. If Appellant’s product falls within the plain
meaning of the statutory language that we expressly held in
Brandy’s was “clear and unambiguous,” then it was taxable by
direct operation of the taxing statute. Thus, two propositions
become clear: no rulemaking was required to apply a clear and
unambiguous statute; and rulemaking is not required when an
agency reiterates a court holding. Neither agency statement is an
unadopted rule.

    As the agency’s representative testified, the post-Brandy’s
agency memo did nothing other than “stop[] the taxation of the
homogenized product based on [Brandy’s],” leaving all other blunt
wrap products taxed as they had been since the State started
imposing the tax. The reasoning and result in Brandy’s serve to
highlight the factual distinctions between taxable and non-taxable
wrap products, leaving intact the State’s long-standing policy and
practice of taxing other tobacco products not like those in Brandy’s,
which was based on the plain language of the taxing statute itself.
No rulemaking was required.

    (a) Unambiguous Statute Requires No Rule.

     The parties here, as in Brandy’s, agreed that since 2009,
under statutory language in place since 1985, and without
adopting any rules to do so, the agency had been taxing both the
tobacco-infused paper product at issue in Brandy’s and the whole
leaves of tobacco at issue here. We noted in Brandy’s that “[t]he
agency’s decision to start taxing blunt wraps was not based on a
change in Florida law as the definition of ‘tobacco products’ in
section 210.25(11) has remained unchanged since its original
enactment in 1985.” 188 So. 3d at 131 n.1. The agency’s position

                                 16
all along has been that the statute imposed the tax by its plain
meaning, and therefore rulemaking was not required.

    Florida law is clear that agencies are not required to
promulgate rules when those agencies merely apply the plain
language of a statute:

         An agency interpretation of a statute which simply
    reiterates the legislature’s statutory mandate and does
    not place upon the statute an interpretation that is not
    readily apparent from its literal reading, nor in and of
    itself purport to create certain rights, or require
    compliance, or to otherwise have the direct and consistent
    effect of the law is not an unpromulgated rule, and action
    based upon such an interpretation are permissible
    without requiring an agency to go through rulemaking.

Amerisure Mutual Ins. Co. v. Dep’t of Fin. Svcs., 156 So. 3d 520,
532 (Fla. 1st DCA 2015) (quoting St. Francis Hosp, Inc. v. Dep’t of
Health & Rehab. Svcs., 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989)).

    This fundamental premise of administrative procedure
harkens back to the early days of the Administrative Procedure
Act, when former Judge Robert P. Smith, Jr. of this Court
explained that rulemaking is required only for agency statements
intended “by their own effect” to make law:

    [T]he Section 120.54 rulemaking procedures are imposed
    only on policy statements of general applicability, i.e.,
    those statements which are intended by their own effect
    to create rights, or to require compliance, or otherwise to
    have the direct and consistent effect of law.

McDonald v. Dep't of Banking & Fin., 346 So. 2d 569, 581 (Fla. 1st
DCA 1977) (emphasis added) (superseded by statute on other
grounds). This principle gives effect to the fundamental
proposition that the Florida Legislature alone makes statutory
law, and confers on state agencies only limited authority to make
rules that “implement or interpret the specific powers and duties
granted by the enabling statute.” § 120.536(1), Fla. Stat. (2018).
No agency has “the authority to implement statutory provisions

                                17
setting forth general legislative intent or policy.” Id. Rulemaking
requirements were never intended to “encompass virtually any
utterance by an agency.” McDonald, 346 So. 2d at 581. Where a
statute is clear and unambiguous and can be interpreted according
to its plain meaning, there is neither authority nor need for agency
rulemaking. Id.

     We have continued to rely on the language of McDonald’s
explanation that agencies must make rules only for statements
that “by their own effect” have the effect of law. We expressly
applied exactly that principle in Coventry First, LLC v. Office of
Insurance Regulation, 38 So. 3d 200 (Fla. 1st DCA 2010). In
pertinent part, we held that the agency’s letters to licensees
requesting information about out-of-state settlements, and its
procedures for obtaining such records, were not unadopted rules.
Id. at 204-05. Rather, the agency’s communications and
statements were authorized by statute, and did not themselves
have the effect of law, and therefore were not improper unadopted
rules. Id. at 205. In Agency for Health Care Administration v.
Custom Mobility, Inc., 995 So. 2d 984 (Fla. 1st DCA 2008), we
applied the McDonald’s language to hold that a formula for
calculating overpayments in audits was not an unadopted rule.
995 So. 2d at 986. It did not of itself have the effect of law and it
did not implement, interpret, or prescribe law or policy. Id. at 986-
87.

     In St. Francis Hospital, Inc. v. Department of Health &
Rehabilitative Services, 553 So. 2d 1351, 1354 (Fla. 1st DCA 1989),
we held that an agency’s statement reiterating the literal meaning
of a statute without creating new rights, burdens, or law, is not an
unpromulgated rule:

    [A]n agency interpretation of a statute which simply
    reiterates the legislature's statutory mandate and does
    not place upon the statute an interpretation that is not
    readily apparent from its literal reading, nor in and of
    itself purport to create certain rights, or require
    compliance, or to otherwise have the direct and consistent
    effect of the law, is not an unpromulgated rule, and
    actions based upon such an interpretation are

                                 18
     permissible without requiring an agency to go through
     rulemaking.

     We applied this rule in State Board of Administration v.
Huberty, 46 So. 3d 1144 (Fla. 1st DCA 2010). The statute at issue
allowed state employees to elect to participate in the state
Investment Plan “in writing or by electronic means.” 46 So. 3d at
1146 (quoting § 121.4501(4)(a)1.a.). The agency prepared and
distributed a booklet advising state employees that the election
could be made online or by telephone. A state employee had given
the state clear instructions by recorded phone call to switch her
retirement account to the Investment Plan, but then became
disappointed in the Investment Plan’s performance. She claimed
that her telephonic instructions to switch her to the Investment
Plan should be rescinded because the agency did not adopt a rule
providing that telephonic communications were encompassed
within the statutory phrase “electronic means.” We rejected the
employee’s argument, and held that the agency’s plain-meaning
interpretation of the statute as including telephone
communications within “electronic means” did not require
rulemaking. The agency’s statement itself did not adversely affect
substantive rights, deny or withdraw a pre-existing right, impose
any new or additional requirements, or have “the direct and
consistent effect of law.” 46 So. 3d at 1147 (quoting Dep’t of Rev. v.
Vanjaria Enter., Inc., 675 So. 2d 252, 255 (Fla. 5th DCA 1996)). See
also, e.g., Envtl. Trust v. State, Dep’t of Envtl. Prot., 714 So. 2d 493,
498-99 (Fla. 1st DCA 1998) (holding that an agency statement
explaining “how an existing rule of general applicability will be
applied in a particular set of facts” is not itself an unadopted rule
and does not require agency rulemaking).

     By the same token here, the agency’s memorandum did not
constitute an unadopted rule, because it merely presented exactly
what this Court had held in Brandy’s, followed by the statement
that nothing else had changed and products other than those
addressed in Brandy’s would continue to be treated the same way
they had been since 2009, under the plain meaning of the taxing
statute. Such other products had been taxed as Other Tobacco
Products (OTPs) since 2009 based on a plain meaning of the
statutory phrase “loose tobacco suitable for smoking” – the very
phrase that we expressly held in Brandy’s was “clear and

                                   19
unambiguous.” The agency’s memorandum did not change any
substantive rights, impose any new legal burden, or have the direct
effect of law.

     Appellant argues that the agency’s memorandum was an
unadopted rule because it used the phrases “whole-leaf” and
“homogenized,” which are terms the statute does not use. This
argument is unavailing, because these phrases are merely
descriptors for the holding in Brandy’s and for Appellant’s product.
The parties in Brandy’s as well as here used these terms to
distinguish the two products based on their physical
characteristics, and testified that these are the industry terms for
the products. The agency’s use of undisputed shorthand synonyms
for the longer descriptive phrases used in Brandy’s did not
constitute improper rulemaking.

     The agency changed nothing. We alone did, and only by
applying the plain language of the statute to the specific product
at issue in Brandy’s. Nothing changed for other products, including
the whole tobacco leaves at issue in this case. They were taxable
under the plain language of the statute from the inception of the
State’s taxation of them, and they remain so. The agency is not
required to promulgate rules upon issuance of this kind of an
appellate court decision, and is not required to promulgate rules
when it acts within the plain meaning of the taxing statute. To
hold otherwise would impose on all agencies a tremendous burden
to make rules for virtually every statute and court decision. That
is not the law of Florida. Therefore, the agency’s post-Brandy’s
memo is not an invalid un-adopted rule. The ALJ properly
dismissed Appellant’s Petition, and we should affirm.
                 _____________________________

Gerald J. Donnini II, Joseph C. Moffa, James McAuley, and
Jonathan W. Taylor of Moffa, Sutton, & Donnini, P.A., Fort
Lauderdale, for Appellant.

Pamela Jo Bondi, Attorney General, and Elizabeth Teegen,
Tallahassee, Assistant Attorney General, for Appellee.

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