Can Utah municipalities prohibit retail tobacco specialty businesses? M. Squared Enters. v. St. George Explained

The Utah Court of Appeals recently clarified municipal authority over retail tobacco specialty businesses in M. Squared Enters. v. St. George, affirming that cities can effectively prohibit these businesses through their licensing authority.

Background and Facts

In 2012, St. George City adopted an ordinance expressly prohibiting the operation of retail tobacco specialty businesses (RTSBs) within city limits. Nearly a decade later, M. Squared Enterprises applied for an RTSB license to operate “a high class tobacco retail business, offering high quality cigars, pipe tobacco, vapor products, cbd, kratom, etc.” The city denied the application based solely on its prohibition ordinance. M. Squared appealed through the administrative process and then to district court, both of which upheld the city’s decision.

Key Legal Issues

The central issue was whether Utah Code section 10-8-41.6 permits municipalities to prohibit RTSBs entirely or only to regulate them. M. Squared argued that the statute’s use of “regulate” and “requirement” could not be interpreted to mean “prohibit,” contending that the legislature would have used explicit prohibition language if intended, as it did in other statutes like section 10-8-42 regarding intoxicating liquors.

Court’s Analysis and Holding

The court applied principles of statutory interpretation, seeking to “produce a harmonious whole” by reading all provisions together. The court found three key statutory provisions determinative: (1) subsection (3) states a person “may not” operate an RTSB without a municipal license, (2) Utah Code section 68-3-12 defines “may not” as “not authorized and is prohibited,” and (3) subsection (6)(a)(i) expressly states that “nothing in this section requires a municipality to issue a retail tobacco specialty business license.” Reading these provisions together, the court concluded municipalities can effectively prohibit RTSBs by refusing to issue the required licenses.

Practice Implications

This decision demonstrates the importance of examining the entire statutory scheme when challenging municipal licensing authority. The court’s interpretation shows that licensing statutes can grant broad prohibition power even without explicit “prohibit” language, particularly when they contain express provisions stating municipalities are not required to issue licenses. Practitioners should carefully analyze whether enabling statutes contain similar non-requirement provisions that might support municipal prohibition authority.