Kareem INC v. Property Seized by Minnesota Department of Revenue in Goodhue County, ...

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A25-0399

Kareem INC,
Appellant,

vs.

Property Seized by Minnesota Department of Revenue
in Goodhue County et al,
Respondent.

Filed December 1, 2025
Affirmed
Smith, Tracy M., Judge

Goodhue County District Court
File No. 25-CV-24-1551

Craig J. Beuning, Wayne B. Holstad, St. Paul, Minnesota (for appellant)

Keith Ellison, Attorney General, Morgan Alexander, Assistant Attorney General, St. Paul,
Minnesota (for respondent)

Considered and decided by Ede, Presiding Judge; Smith, Tracy M., Judge; and

Cochran, Judge.

NONPRECEDENTIAL OPINION

SMITH, TRACY M., Judge

Appellant Kareem INC challenges a judgment of forfeiture of tobacco products

seized by respondent Minnesota Department of Revenue (DOR) from a retail store

managed by Kareem. Kareem argues, first, that the district court erred by determining that
the tobacco products were contraband and thus subject to forfeiture. Kareem argues,

second, that the forfeiture of the tobacco products was an unconstitutionally excessive fine

and that the seizure and forfeiture of the products violated Kareen’s procedural-due-process

rights. We affirm.

FACTS

The following facts are derived from the district court’s factual findings, which are

not challenged on appeal, and other parts of the undisputed record. Kareem is a Minnesota

corporation that manages an I-Mart convenience store located in Red Wing (Red Wing I-

Mart) and another convenience store at an Amoco gas station in Plymouth (Plymouth

Amoco). Red Wing I-Mart is directly operated by 727 INC—a Minnesota corporation that

is managed by Kareem. Plymouth Amoco is managed indirectly by Kareem. The tobacco

products 1 at issue in this appeal were seized from Red Wing I-Mart. The seized items

consisted of two distinct sets of tobacco products: (1) a variety of products that were

purchased from licensed distributor Granite City Jobbing Inc. (the Granite City products)

and (2) Loon Maxx vape pens that were purchased from licensed distributor Twin Cities

Distribution (the Twin Cities products).

As background, in June 2024, two compliance officers from DOR entered Red Wing

I-Mart for inspection. The officers requested documentation for the tobacco products in

inventory and were given invoices from Granite City Jobbing and Twin Cities Distribution.

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“Tobacco products” are generally tobacco-based products, other than cigarettes, that are
intended for human consumption. Minn. Stat. § 297F.01, subd. 19 (2024).

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 As for the Granite City Jobbing invoices, the officers noted that those invoices had

a “Deliver to” address of Plymouth Amoco, not Red Wing I-Mart. When asked about it by

the officers, an employee at Red Wing I-Mart explained that Granite City Jobbing does not

deliver to Red Wing, so Red Wing I-Mart has product shipped to Plymouth Amoco and

then, once a week, an employee from Plymouth Amoco brings the product to Red Wing I-

Mart. The officers explained that these transfers between stores require a distributor or

subjobber license and that, without it, the products are contraband. As for the Twin Cities

Distribution invoices, the officers noted that the Twin Cities products in inventory had a

manufacturing date of 2024 but the supplied invoices from Twin Cities Distribution were

dated July and August 2023.

The officers seized both sets of products. Two days later, they followed up by

sending a notice of seized contraband to Red Wing I-Mart. The notice explained that the

seized products were contraband under Minnesota law because, relevant here, the products

(1) were obtained from an unlicensed seller, in violation of Minnesota Statutes

section 297F.21, subdivision 1(g) (2024) or (2) were offered for sale or held as inventory

without an invoice, in violation of Minnesota Statutes section 297F.21, subdivision 1(j)

(2024).

In accordance with the procedures provided by statute to challenge a seizure or

forfeiture, see Minn. Stat. § 297E.16 (2024), Kareem filed a demand for a judicial forfeiture

determination in district court. The district court held a hearing, and the parties filed

supplemental briefs. Thereafter, the district court filed an order determining that the

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tobacco products were contraband and directing entry of a judgment of forfeiture of the

products.

This appeal follows.

DECISION

Kareem raises statutory and constitutional arguments. As a matter of statute,

Kareem argues that the district court erred by determining that the tobacco products seized

by DOR were contraband and thus subject to forfeiture. Kareem’s makes constitutional

claims under the Eighth and Fourteenth Amendments, asserting that the forfeiture of the

products was an excessive fine and that the seizure and forfeiture violated Kareem’s

procedural-due-process rights. We address the arguments in turn.

I. The district court did not err by determining that the tobacco products were
contraband.

Kareem challenges the district court’s determination that the seized tobacco

products were contraband. We are not persuaded.

In evaluating Kareem’s challenge, we review questions of statutory interpretation

de novo. Cocchiarella v. Driggs, 884 N.W.2d 621, 624 (Minn. 2016). We also review de

novo the district court’s application of law. Harlow v. State, Dep’t of Human Servs., 883

N.W.2d 561, 568 (Minn. 2016).

Minnesota law regulates the taxation and distribution of cigarettes and tobacco

products. Minn. Stat. §§ 297F.01-.25 (2024). The law imposes certain license requirements

to participate in the distribution of cigarettes and tobacco products. Minn. Stat. § 297F.03.

The law also establishes when cigarettes and tobacco products are considered contraband,

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Minn. Stat. § 297F.21, subd 1, and provides that cigarettes and tobacco products that are

contraband may be seized and forfeited, id., subds. 2, 3.

Here, two sets of tobacco products were declared contraband and were forfeited.

We consider the arguments related to each in turn.

A. The district court did not err by declaring the Granite City products
contraband because Red Wing I-Mart obtained them from an
unlicensed seller.

The district court, agreeing with DOR, concluded that the Granite City products at

Red Wing I-Mart were contraband under paragraph (g) of section 297F.21, subdivision 1.

Paragraph (g) declares as contraband “[c]igarette packages or tobacco products obtained

from an unlicensed seller.” Kareem argues that Red Wing I-Mart did not obtain the

products from an unlicensed seller when an employee transferred the Granite City products

from one retail store managed by Kareem to another.

To understand Kareem’s argument, we first outline the relevant regulatory

framework. There are three types of actors involved in the distribution of tobacco products:

retailers, distributors, and subjobbers. “Retailers” are persons “in the business of selling,

or offering to sell, cigarettes or tobacco products to consumers.” Minn. Stat. § 297F.01,

subd. 14. Retailers are licensed to sell tobacco products by municipal authorities under

Minnesota Statutes chapter 461 (2024). Red Wing I-Mart and Plymouth Amoco are

retailers. Their municipal licenses to sell to consumers are not at issue in this case.

A “tobacco product distributor” includes persons who manufacture tobacco

products for sale in this state, who import tobacco products from outside the state for sale

in the state, or who are engaged in the business of selling tobacco products outside the state

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and who ship or transport tobacco products to retailers in the state. Minn. Stat. § 297F.01,

subd. 20. A person engaged in the business of a distributor must be licensed by the

commissioner of revenue. Minn. Stat. § 297F.03, subd. 1. And a licensed distributor who

plans to distribute tobacco products to more than one location must separately apply for a

distributor’s license for each location. Id., subd. 3.

A “tobacco products subjobber” includes a person other than a distributor who buys

products from a distributor and sells them to retailers and includes a “licensed distributor

who delivers, sells, or distributes tobacco products upon which the tax imposed by this

chapter has been paid from a place other than that licensed in the distributor’s license.”

Minn. Stat. § 297F.01, subd. 21. A person engaged in the business of a subjobber must be

licensed by the commissioner of revenue. Minn. Stat. § 297F.03, subd. 1.

The district court concluded that “[t]he distribution of the at-issue tobacco products

from the identified Plymouth location to the Red Wing location was not performed by a

licensed distributor or licensed subjobber and was therefore performed by an unlicensed

seller.” Kareem argues that the district court erred by concluding that the transfer of

tobacco products between the retail stores required a distributor or subjobber license. It

contends that tobacco products could be transferred between commonly managed retail

stores with only a retailer license.

Kareem’s argument requires us to interpret the statute. The purpose of statutory

interpretation is to “effectuate the intent of the legislature.” State v. Pakhnyuk, 926 N.W.2d

914, 920 (Minn. 2019). The first step in interpreting a statute “is to determine whether the

statute’s language, on its face, is ambiguous.” State v. Thonesavanh, 904 N.W.2d 432, 435

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(Minn. 2017). “A statute is ambiguous only if it is subject to more than one reasonable

interpretation.” Id. at 435 (quoting 500, LLC v. City of Minneapolis, 837 N.W.2d 287, 290

(Minn. 2013)). In interpreting a statute, a reviewing court applies the statutory definitions

provided by the legislature. State v. Khalil, 956 N.W.2d 627, 632 (Minn. 2021). Where

terms are not statutorily defined, the reviewing court looks to “the common and ordinary

meanings” of the words used and may consult dictionary definitions to determine those

meanings. Thonesavanh, 904 N.W.2d at 436. If the court concludes that a statute is

unambiguous, it “must apply the statute’s plain meaning.” State v. Nelson, 842 N.W.2d

433, 436 (Minn. 2014) (quotation omitted). Forfeiture statutes are construed strictly in

favor of the challenging party. Riley v. 2987 Station Wagon, 650 N.W.2d 441, 443 (Minn.

2002) (citing United States v. One 1936 Model Ford, 307 U.S. 219, 226 (1939)).

As noted above, tobacco products “obtained from an unlicensed seller” are

contraband. Minn. Stat. § 297F.21, subd. 1(g). An “unlicensed seller” is statutorily defined

as “anyone who is not licensed [as a distributor or subjobber] to sell the particular product

to the purchaser or possessor of the product.” Minn. Stat. § 297F.01, subd. 21a. Kareem

argues that neither it nor Plymouth Amoco is a “distributor” or “subjobber.” But that

argument misreads the statute. What matters is whether the tobacco products in inventory

at Red Wing I-Mart were obtained from “anyone who is not licensed as a [distributor or

subjobber] to sell the product” to the possessor of the product. Id. (emphasis added). It is

undisputed that neither Kareem nor Plymouth Amoco holds a distributor or subjobber

license.

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 The only question that remains is whether the tobacco products at Red Wing I-Mart

were “obtained” from Kareem or Plymouth Amoco. “Obtain” is not defined in chapter

297F, and no caselaw has interpreted it in this context. One dictionary defines “obtain” as

“to bring into one’s own possession; to procure, especially through effort.” Black’s Law

Dictionary (12th ed. 2024). Under this definition, Red Wing I-Mart “procured” or

“brought” the products into its possession when it received them from Plymouth Amoco—

even under the strict construction we must give forfeiture statutes. Jacobson, 728 N.W.2d

at 521.

Kareem contends that the delivery from Plymouth Amoco to Red Wing I-Mart was

merely an internal transfer within a single entity. According to Kareem, because it manages

both stores, Red Wing I-Mart did not obtain the product from either Kareem or Plymouth

Amoco. But this distinction is not supported by a plain meaning of the word “obtain.”

Products received from a commonly managed entity are still “brought” or “procured” from

that entity.

Kareem argues that this interpretation is absurd because it would require any

business that has multiple retail stores and a centralized warehouse or redistribution point

to obtain duplicative licenses. See Minn. Stat. § 645.17(1) (2024) (stating presumption that

the legislature does not intend absurd results). But, as DOR noted in oral arguments, such

distribution is contemplated within the statutory scheme as the work of licensed subjobbers.

See Minn. Stat. § 297F.01, subd. 21 (defining subjobber). We also note that this

interpretation comports with DOR guidance for actors involved in the distribution of

tobacco products, which was introduced into the record in this case:

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 Once you receive an invoiced product at a distributor’s address
or retail location, you must not . . . move, transfer, or swap
cigarettes or tobacco products to a different location even if the
business is owned by the same entity[.]

We disagree that DOR’s reading of the statutory scheme is absurd.

Because the Granite City products at Red Wing I-Mart were obtained from an

unlicensed seller, the district court did not err in concluding that the products were

contraband.

B. The district court did not err by declaring the Twin Cities products
contraband.

We turn to the second set of seized and forfeited tobacco products—the Twin Cities

products. DOR’s notice of seized contraband cited paragraph (j) of section 297F.21,

subdivision 1, which declares as contraband “tobacco products offered for sale or held as

inventory for which there is not an invoice from a licensed seller as required under section

297.F.13, subdivision 4.” Section 297F.13, subdivision 4, requires retailers to maintain

itemized invoices for all tobacco products purchased and to make them available to

authorized agents within one hour of request.

In its principal brief to this court, Kareem makes no mention of the Twin Cities

products. In its response brief, DOR urges us to affirm the judgment of forfeiture for these

products. Kareem then addresses these products for the first time in its reply brief, arguing

that the judgment of forfeiture for the products must be reversed because the district court

failed to make findings of fact or conclusions of law related to the products.

Issues that were not addressed in an appellant’s principal brief generally cannot be

raised in a reply brief. Moorhead Econ. Dev. Auth. v. Anda, 789 N.W.2d 860, 887 (Minn.

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2010). Here, Kareem does not mention the Twin Cities products in its principal brief.

Kareem therefore has forfeited any argument that the Twin Cities products were not

properly declared contraband.

But even if Kareem’s challenge regarding these products were not forfeited, it would

fail on the merits. In its findings of fact, the district court referenced section 297F.21,

subdivision 1(j), regarding the requirement of invoices and found that DOR officers

reviewed invoices and noted that invoices from Twin Cities Distribution were dated a year

before the manufacture date of the products in inventory. Although the district court made

no specific conclusions of law on these products, it did list the statutory basis for the

seizure, determining that products meeting this definition may be seized, and issued a

judgment of forfeiture for all seized items—which included the Twin Cities products. And

because the district court’s other conclusions of law did not apply to these products, the

only possible ground for forfeiture of these products was the lack of invoices. See Minn.

Stat. § 297F.21, subd. 1(j). Kareem’s challenge therefore fails.

II. Kareem’s excessive-fine and procedural-due-process arguments fail.

Kareem also argues that forfeiture of the tobacco products from Red Wing I-Mart

constituted an excessive fine under the Eighth Amendment and that the seizure and

forfeiture violated Kareem’s procedural-due-process rights under the Fourteenth

Amendment. Again, Kareem’s arguments are unavailing.

A. Kareem’s constitutional claims are not properly before us.

As an initial matter, Kareem’s constitutional arguments are not properly before us.

An appellate court generally may consider only those issues that were presented to and

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considered by the district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

Kareem asserts that its Eighth Amendment excessive-fine argument was raised in the

district court in “Plaintiff’s Complaint, at the district court hearing and in post-hearing

submissions.” But the complaint makes no mention of an excessive-fine issue. There is

only one potentially relevant statement from the district court hearing, where Kareem’s

counsel asserted, “[T]he forfeiture of that amount of product where taxes have been paid

on it would be very excessive punishment.” (Emphasis added.) And only one sentence in

Kareem’s supplemental submission to the district court arguably applies: “Moreover, the

forfeiture of the tobacco products would impose an unjust and disproportionate penalty

considering that there was full compliance with Minnesota tax laws.” (Emphasis added.)

But neither of these statements explicitly mentions or analyzes the Eighth Amendment or

its excessive-fine language. Moreover, the district court made no reference to the issue in

its order.

As for the procedural-due-process issue, Kareem asserts that it raised this issue in

its reply submission to the district court. That brief contains only one reference to due

process:

[Kareem] also contends that once it provided the Granite City
Jobbing invoices showing that all taxes had been paid, any
purported basis for forfeiture is no longer applicable and
forfeiture infringes on principles of due process.

(Emphasis added.) Merely invoking the words “due process” is insufficient to warrant

review of a procedural-due-process claim in this court. Moreover, the district court did not

address the issue in its order. Kareem contends, though, that issues arising from undisputed

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facts and involving fundamental constitutional protections may be considered for the first

time on appeal. But Kareem cites no authority to support this rule, and Minnesota caselaw

holds that even constitutional issues cannot be raised for the first time on appeal. See In re

Welfare of C.L.L., 310 N.W.2d 555, 557 (Minn. 1981).

B. Kareem’s constitutional challenges fail on the merits.

Even if Kareem’s constitutional arguments were properly before us, however, they

would not succeed. Constitutional issues are questions of law, reviewed de novo. Schroeder

v. Simon, 985 N.W.2d 529, 536 (Minn. 2023).

1. Excessive Fine Under the Eighth Amendment

Kareem argues that the forfeiture of the tobacco products from Red Wing I-Mart

violated the Eighth Amendment’s prohibition against excessive fines. See U.S. Const.

amend. VIII (“Excessive bail shall not be required, nor excessive fines imposed, nor cruel

and unusual punishments inflicted.”). Whether a forfeiture is subject to the Excessive Fines

Clause depends on whether the forfeiture is at all punitive. Austin v. United States, 509

U.S. 602, 610 (1993). Minnesota courts have not addressed whether forfeiture of

contraband under chapter 297F is punitive. As DOR notes, the U.S. Supreme Court has

held the forfeiture of other contraband to be remedial, rather than punitive, for double-

jeopardy purposes. United States v. One Assortment of 89 Firearms, 465 U.S. 354, 364

(1984) (concluding that forfeiture of firearms did not constitute punishment in violation of

double-jeopardy following acquittal of dealing firearms without license). DOR contends

that the forfeiture here was purely remedial because the forfeited items were contraband

under chapter 297F and the forfeiture simply “served to separate [Red Wing I-Mart] from

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items it was not authorized to possess.” Thus, DOR argues, the forfeiture is not governed

by the Excessive Fines Clause.

But we need not decide whether forfeiture of contraband under chapter 297F is at

all punitive if Kareem’s Eighth Amendment challenge fails in any event. If a forfeiture is

punitive, we then must determine whether it was “excessive.” Wilson v. Comm’r of

Revenue, 656 N.W.2d 547, 554 (Minn. 2003). For this inquiry, Minnesota courts use the

“gross disproportionality test.” Id. at 555 (applying standard from United States v.

Bajakajian, 524 U.S. 321, 334 (1998)). That test considers three factors:

(1) comparison of the gravity of the offense with the harshness
of the penalty; (2) comparison of the contested fine with fines
imposed for the commission of other offenses in the same
jurisdiction; and (3) comparison of the contested fine with
fines imposed for the commission of the same offense in other
jurisdictions.

Id. (applying three-part test articulated in Solem v. Helm, 463 U.S. 277, 290-92 (1983)).

Evaluating these factors, we conclude that the forfeiture was not grossly disproportionate

here.

First, the seizure here was commensurate with the offense—only illegally possessed

products were seized. Second, the value of the product seized—which Kareem claims was

approximately $14,000 and which DOR claims had a wholesale value of $3,915—is not

large compared to other fines or seizures imposed in Minnesota. See, e.g., Wendell v.

Comm’r of Revenue, 7 N.W.3d 405, 410 (Minn. 2024) (concluding fine of $13,223 for

filing frivolous tax return not grossly disproportionate to other fines); Jensen v. 1985

Ferrari, 949 N.W.2d 729, 741 (Minn. App. 2020) (concluding forfeiture of $75,000 Ferrari

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following appellant’s third driving-while-impaired offense in ten years not grossly

disproportionate). Third, other states use similar tobacco-forfeiture schemes. See, e.g., Wis.

Stat. § 134.66 (2025); Iowa Code § 453A.32 (2025); S.D. Codified Laws § 10-50-66

(2025). Considering all these factors, even if forfeiture here was punitive, it was not grossly

disproportionate and thus did not constitute an excessive fine.

2. Procedural Due Process

Kareem argues that the seizure and forfeiture violated procedural due process

because Kareem lacked notice of the statute’s applicability and did not receive a

meaningful opportunity to be heard. Whether procedural due process rights have been

violated is a question of law reviewed de novo. Sawh v. City of Lino Lakes, 823 N.W.2d

627, 632 (Minn. 2012). In evaluating a procedural-due-process claim, courts first “identify

whether the government has deprived the individual of a protected life, liberty, or property

interest” and, if so, determine next whether the procedures used were constitutionally

adequate. Id. “The procedures afforded by the government must provide an individual with

notice and an opportunity to be heard at a meaningful time and in a meaningful manner.”

Id. (quotation omitted).

Assuming without deciding that Kareem had a property interest in the seized

property pending the forfeiture proceedings and in the ultimately forfeited property, we see

no violation of procedural due process here. Kareem argues that it did not “receive[] fair

warning that the internal inventory transfers between commonly managed, licensed retail

locations would trigger contraband classification or forfeiture.” But parties are presumed

to “know the law or, at least, to have acquainted themselves with those laws that are likely

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to affect their usual activities.” Underwood v. State, 25 N.W.3d 26, 34 (Minn. 2025)

(quotation omitted). And, as we held above, under the plain meaning of the relevant

statutes, even commonly managed retail stores cannot transfer product between them

without a distributor or subjobber license.

Moreover, Kareem received notice and opportunity to be heard regarding the DOR’s

determination that the tobacco products were contraband. When the DOR officers seized

the products, they explained the law, reviewed the seizure process, asked if the employee

had any questions, and left contact information. A notice of seized contraband was sent to

the store two days later, cataloguing the items seized and explaining the judicial-review

process. See Minn. Stat. § 297F.21, subd. 3. The district court held a forfeiture-

determination hearing and received supplemental briefing from the parties. Thus, even if

Kareem had a protected property interest in the seized contraband, the procedure it received

was sufficient to satisfy due process.

Affirmed.

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