Jason "Hutch" Hutchison fears Jake’s Cigars and Spirits' bottom line will suffer a serious blow after a Nebraska Supreme Court ruling Friday essentially banning smoking in cigar bars.
The 39-year-old bar owner said the state’s cigar bar exemption allowed him to expand his business in Lincoln and Omaha, hire more staff, start new ventures and give back to the community.
Now, he expects he may lose up to 10 percent of his revenue in light of the Supreme Court decision, which also struck down exemptions to the state's indoor smoking ban for tobacco shops.
The court upheld the overall smoking ban.
“It’s disappointing that one business threw a temper tantrum, and now they’ve basically ruined it for cigar smokers all across the state,” Hutchison said.
Big John’s Billiards, an Omaha pool hall, has fought the state’s ban since its inception.
Instead of scrapping the ban, the Supreme Court struck down exemptions in the law which it considered special legislation and contrary to lawmakers' initial intent.
The lawyer for Big John's said he now hopes state lawmakers will level the playing field in regard to the smoking ban.
But cigar bars and tobacco shops fear their revenue will suffer, and with no immediate guidance on enforcement from the state, some owners may voluntarily end cigar smoking before their permits are up to stay out of trouble.
“It is concerning to me, because I don’t want to get a ticket for something that I have a license for,” said Lawrence Chatters, who owns Rich Bar and Lounge, a Lincoln cigar bar.
Chatters said he has considered ending hookah smoking altogether.
“How do we govern ourselves accordingly?” he asked.
In Friday’s ruling, Judge Kenneth Stephan, writing for the majority, said there is no substantial difference in circumstances between cigar bars and other public places or workplaces that justifies treating them differently.
In 2008, the Legislature amended the Nebraska Clean Indoor Air Act to make it “unlawful for any person to smoke in a place of employment or a public place.”
But they provided exemptions for hotel guestrooms, indoor areas used for research on the health effects of smoking, and tobacco retail outlets defined as businesses that only sell tobacco or related products.
The next year, they added an exemption specifically for cigar bars, which they defined as any business receiving at least 10 percent of its annual revenue from cigar sales, with a walk-in humidor on site.
Friday's decision followed a 2011 ruling by a Lancaster County judge that all three smoking exemptions involving businesses were unconstitutional.
The case ultimately reached the state's highest court, with the exempted businesses continued to allow smoking during the appeals process.
Now it appears cigar smoking days at Nebraska’s 11 cigar bars are numbered.
Those bars won’t be allowed to renew their specialized liquor licenses, which expire in October, Nebraska Liquor Control Commission Executive Director Hobert Rupe said. The commission won’t issue any new licenses either, he said.
The Attorney General's Office said Friday it was reviewing the lawsuit and deferred comment on enforcement to the Nebraska Department of Health and Human Services.
Bill Wiley, a Nebraska Department of Health and Human Services spokesman, said department officials had just received the decision and will develop a plan next week.
“We’ll be assessing it for its impact on Nebraska businesses where exceptions were previously granted,” Wiley said.
The Supreme Court ruled that only the exemption for hotel guestrooms is constitutional, because the evidence against it doesn't overcome its presumption of constitutionality, Stephan wrote.
That's not the case for tobacco retail outlets and cigar bars, he said.
"Allowing patrons of such shops to smoke simply because it is convenient does not comport with the purpose of the Act, which is to protect the public and employees from the dangers of second-hand smoke," Stephan wrote.
The justices noted that senators in discussion of the 2009 cigar bar exception said those joints existed to allow smoking.
Stephan called that reasoning "directly contrary" to the Act's purpose.
In a 2011 ruling, Lancaster County Judge Jodi Nelson said the smoking ban exceptions for businesses were unconstitutional and that they could be severed from the ban.
Friday's decision affirmed Nelson's decision in part.
The Supreme Court judges heard oral arguments in May from Big John's Billiards Attorney Ted Boecker and Assistant Nebraska Attorney General Dale Comer.
Boecker said the exemptions were "unfair."
Now that the court has ruled, lawmakers have the opportunity to "create a more even playing field so that some businesses aren’t afforded special exemptions and special privileges," Boecker said.
In its appeal to the Supreme Court in the case, Big John’s took on the entire Nebraska Clean Indoor Air Act.
A former Big John's owner even openly invited his patrons to light up inside the billiards hall in 2012 to protest the ban.
In the past, Big John's also sued the state and the Douglas County Health Department after legislators decided pool halls would not be among the businesses exempted from the smoking ban.
Aside from being special legislation, Big John’s said the smoking ban hurt its right to contract because the bar’s lease factored in revenue expected from attracting smoking customers, and said it amounted to regulatory overreach.
But the judges disagreed with Big John’s on both arguments.
Judge William Cassel dissented in part, differing only on the constitutionality of the exemption for tobacco shops.
People who go into those businesses do so to buy tobacco and tobacco products and use it despite its related risks, Cassel wrote.
"There is no rationale for a patron to enter a tobacco retail outlet other than to facilitate his or her access to firsthand smoke."
Following Friday's ruling, Rich owner Chatters said he feels most for cigar bars like Jake's which stand to lose out on a large chunk of revenue.
Chatters' bar won't take as big a hit because its hookah sales didn't comprise too large a portion of its total revenue — just more than 10 percent as required, he said.
But he said he is concerned about the hookah patrons, especially his Muslim clients.
They came to his bar as a way to go out at night and keep to their religious faith of not consuming alcohol.
Rich received its cigar bar license in April.