Georgia Supreme Court rules tax levied on adult entertainment establishments is constitutional

The Supreme Court of Georgia has ruled that a state tax levied on adult entertainment establishments to help child victims of sexual exploitation is constitutional.

The state’s highest court affirmed a Fulton County trial court’s denial of summary judgment to the Georgia Association of Club Executives in its lawsuits against the State and Georgia Revenue Commissioner Frank O’Connell. It also affirmed the trial court’s grant of summary judgment for O’Connell and the state.

State lawmakers passed the tax assessment in question in 2015; it went into effect in 2017.

The money collected through the tax are deposited into the Safe Harbor for Sexually Exploited Children Fund. They may be used to provide care and rehabilitative services to sexually exploited children and to raise awareness and prevention.

The Georgia Association of Club Executives, representing more than a dozen adult entertainment establishments, filed its lawsuit against the revenue commissioner in 2017, challenging the constitutionality of the assessment. The group argued the assessment was a “content-based tax” that violated the First Amendment of the U.S. Constitution’s protection of free speech.

The trial court declared that part of the state law defining adult entertainment establishments was void because it was vague, but all other portions of the assessment were constitutional and enforceable.

In the first appeal, the Supreme Court vacated the trial court’s orders and sent the case back to the trial court. GACE later amended its complaint to include a claim that state law’s definition of an adult entertainment establishment was unconstitutionally overbroad.

GACE also filed a separate lawsuit against the state in 2022.

All parties filed motions for summary judgment. In 2023, the trial court decided both cases, denying GACE’s motions and granting O’Connell’s and the state’s motions for summary judgment.