2011 in Review: Local Tobacco Issues
NATO executive director looks at issues that have affected retailers at the local level this year
In 2011, there has been an increase in local governments considering ordinances to further regulate tobacco products, restrict tobacco advertising and impose new local excise taxes on tobacco products. Aside from budget deficits prompting proposals to raise excise taxes, there are two main reasons why local governments have been pursuing more restrictive laws and higher taxes on tobacco products.
First, Section 916 of the Family Smoking Prevention and Tobacco Control Act (the law enacted in 2009 that authorized the FDA to regulate cigarettes, roll-your-own and smokeless tobacco products) specifically states that local governments may "enact, adopt, promulgate, and enforce any law, rule, regulation, or other measure…prohibiting the sale, distribution, possession, exposure to, access to, advertising and promotion of, or use of tobacco products by individuals of any age…." While local governments have always had this implied authority to enact such restrictions, including outright prohibition, the FDA law essentially sanctioned the ability of cities and counties to consider and adopt such regulations and restrictions.
Second, the federal stimulus program passed by Congress and signed into law by President in 2009 included hundreds of millions of dollars in grant funds, being disbursed by such agencies as the Centers for Disease Control. The purpose of these federal grants to local governments is to support adoption of tobacco control measures, obesity awareness programs and other wellness efforts. That is, federal taxpayer dollars are being used by local governments to fund passage of ordinances to regulate and restrict legal tobacco products.
A summary of the major local issues that NATO has been involved in during 2011 are as follows:
Linn County, Iowa sought to adopt an ordinance to ban the sale of dissolvable products and prohibit "buy-one, get-one-free" promotions. The ordinance did not pass.
Worcester, Mass., became the first city to pass an ordinance banning all outdoor and in-store tobacco advertising. NATO, R.J. Reynolds Tobacco Company, Philip Morris USA and Lorillard Tobacco Company filed a lawsuit against the city, seeking to overturn the ordinance on First Amendment free speech grounds. A summary judgment motion hearing was held in federal district court on September 8th and a ruling from the judge should be issued soon.
The Philadelphia Board of Health is considering an ordinance to require that graphic image warning signs be placed at each register in retail stores that sell tobacco products. NATO has submitted legal comments to the Philadelphia Board of Health regarding how such a mandate violates constitutional First Amendment free speech protections. And NATO President Andy Kerstein, along with another retailer, testified against the ordinance. Just after a federal district court judge issued a temporary restraining order on November 7th against the FDA's graphic image cigarette warnings, a copy of the judge's ruling was sent to the Philadelphia Board of Health since the board is considering essentially the same kind of graphic image requirement. As this point, the Philadelphia Board of Health has not taken any action on the proposed sign ordinance.
The Danville, Va., city council considered adopting a local cigarette tax and tobacco product tax. NATO Board of Director Frank Armstrong and one of his store staff members testified against the proposed taxes. The cigarette and other tobacco product (OTP) taxes were not adopted.
The Boston Public Health Commission passed an ordinance on December 1st that bans single cigar sales, and also requires that cigars be sold in a manufacturer's package of at least four cigars. The ordinance does allow a retailer to sell a single cigar that has a wholesale price of more than $2 or a retail price of more than $2.50. Also, the ordinance doubled the fines on retailers that violate the ordinance. NATO sent legal comments to Public Health Commission members, opposing the cigar sales restriction and objecting to the doubling of retail violation fines.
The Cook County Board of Commissioners in Illinois passed a budget on November 18th that included new taxes on cigarettes produced by retailers using roll-your-own (RYO) machines and on RYO tobacco, smokeless tobacco and cigars. The new taxes are as follows:
- A tax of $.10 per cigarette on cigarettes produced by retailers operating roll-your-own machines.
- Through December 31, 2012, the following taxes apply:
RYO and smokeless tobacco: $.30 per ounce of fraction thereof.
Little cigars: $.05 per unit or cigar.
Large cigars: $.25 per unit or cigar.
- Effective January 1, 2013, the following taxes apply:
RYO and smokeless tobacco: $.60 per ounce of fraction thereof.
Little cigars: $.05 per unit or cigar.
Large cigars: $.30 per unit or cigar.
NATO opposed these new taxes with legal comments sent to the board of commissioners, activating not only NATO members, but also urging non-member retailers to contact their elected board members to oppose these new taxes.