Reynolds American Inc (RAI) and Loews Corp's (LTR) Lorillard unit Tuesday lost a bid to the Supreme Court to stop a California tobacco tax that is used to fund anti-smoking advertising campaigns by the state government.

The tobacco companies had challenged the California programme, known as Proposition 99, which requires tobacco companies to pay 25 cents per pack of cigarettes to help fund an antismoking media campaign. The companies challenged the law on First Amendment grounds, arguing it was a "tax-and-smear" campaign that violated the free speech rights of the companies.
California spends about US$ 25 million a year on the anti-smoking advertising campaign. The lawsuit was initially thrown out by a US District Court judge. Later, the 9th US Circuit Court of Appeals in San Francisco ruled the programme amounted to government speech that does not trigger First Amendment restrictions on the programme. (pi)