Directive Directive 94-8: Cigarette Licenses not Transferred to Resulting Corporation by Merger or Consolidation

Date: 05/02/1994
Organization: Massachusetts Department of Revenue
Referenced Sources: Massachusetts General Laws


ISSUE: Does the merger or consolidation of corporations transfer cigarette licenses issued pursuant to General Laws Chapter 64C from a merged or constituent corporation to the resulting corporation?

DIRECTIVE: No, cigarette licenses are not transferred to the resulting corporation by consolidation or merger. The resulting corporation must apply for any new cigarette licenses which it will require.


General Laws Chapter 64C describes how the Commonwealth administers the cigarette excise tax to ensure accurate collection. The Commissioner of Revenue is charged with licensing vendors of certain tobacco products, appointing stampers and collecting tax through the use of adhesive stamps, and preventing unfair competition by enforcing the statutory minimum price standards for the sale of certain tobacco products. G.L. c. 62C, § 67, provides that registrations and licenses (including cigarette licenses) are not assignable.

Massachusetts business corporation law, G.L. c. 156B, permits the merger or consolidation of corporations. G.L. c. 156B, § 80, provides that upon the effective date of the merger or consolidation, all of the estate, property, rights, privileges, powers and franchises of the constituent corporation(s) and all of their property, real, personal and mixed shall be transferred to and vest in the resulting or surviving corporation.

The Supreme Judicial Court recently examined the nature of cigarette licenses. Cigarette vending machine operators challenged a local by-law prohibiting the siting of cigarette vending machines in a Massachusetts town. The plaintiffs asserted that the by-law deprived them of "licenses and property rights protected by state law without due process of law...." The court examined the nature of the interest and found that "the granting of a cigarette ... license by the Commissioner of Revenue, under G.L. c. 62C, § 67, does not create a property interest in that license." The SJC concluded that "G.L. c. 64C is exclusively a taxing statute. Furthermore, the companion statute, G.L. c. 62C, § 67...which describes the licensing process, gives further evidence that the licensing is only a method of taxation." See Take Five Vending, Ltd. v. Provincetown, 415 Mass. 741 (1993).

Since a cigarette license is neither a property interest nor a right within the meaning of G.L. c. 156B, § 80, and since it is not assignable under G.L. c. 62C, § 67, it does not pass from one corporation to a resulting corporation following consolidation or merger.

/s/Mitchell Adams
Mitchell Adams
Commissioner of Revenue


May 2, 1994

DOR-D 94-8

Table of Contents

Referenced Sources: