NATO Urges NYC Council to Oppose Tobacco Regulations

Outlines "severe economic impact" regulations would have on retailers

Thomas A. Briant, NATO Executive Director

A coalition of retailers and trade groups was formed earlier this year to oppose a series of tobacco regulations being considered by the New York City Council. The New York City Save Our Stores Coalition (SOS), of which NATO is a sponsoring member, now has 4,151 member businesses including retailers, local chambers of commerce, and trade associations. 

The proposed retail tobacco restrictions include a ban on both redeeming tobacco product coupons and on promotional product pricing such as buy-one, get-one free, a prohibition on displaying tobacco products in the public’s view, a requirement that cigars be sold in packages of four or more, and an increase in the legal age to purchase tobacco to 21.

This week, NATO sent a follow up letter to all 51 New York City council members urging them once again to not support these additional tobacco regulations and restrictions. The NATO letter outlined the severe economic impact that the proposed regulations would have on NYC’s tobacco retailers. To quantify the financial effects, the SOS Coalition conducted a study that concludes the regulations would result in thousands of jobs lost throughout New York City and several thousand store closures. 

According to the study, these consequences would materialize because tax-paid cigarette sales would decline by almost 2.5 million packs of cigarettes. This decrease in cigarette sales will translate into a 21% drop in licensed tobacco retailers, from 9,805 current stores to an estimated 7,766 stores. The job losses would be spread across all segments of the tobacco retail industry in New York City. Specifically, the study estimates that grocery stores and supermarkets would lose 4,456 jobs, bodegas would be forced to terminate 3,615 employees, and drug stores would also cut staff by 1,259 jobs.

Another unintended consequence of these proposed retail regulations would be the expansion of an already well-established black market. The high cigarette tax environment in New York City has led to a rampant black market in illicit cigarettes, with low taxed cigarettes brought in from other states by black market profiteers and then being sold illegally within the city limits. This black market in cigarettes has doubled in scope from 2006 to 2011 and adopting more regulations will only make the illicit marketplace for cigarettes worse.

However, with black market cigarette sellers indifferent about checking identification and willing to sell cigarettes to anyone of any age who has cash, the gains that law-abiding retailers have made in reducing youth access to tobacco are being undermined. Adopting more regulatory burdens on law-abiding retailers will not solve the problem with the black market. NATO urged the city council members to focus on more law enforcement to stem the size of the black market or the illicit trade will continue to flourish to the detriment of New York City tobacco retailers.

Finally, NATO reiterated to the New York City council that the proposal to ban the display of tobacco products from the public view is unconstitutional on its face. Specifically, this ordinance violates the First Amendment of the U.S. Constitution, which protects the right to advertise legal products.  Product packaging is a form of advertising, and the proposed local law would prevent any tobacco product from being displayed by a retailer.

Future hearings may be scheduled by the New York City Council to consider taking action of these proposed tobacco restrictions. The SOS Coalition will continue to oppose these infringements and restrictions on the right to sell legal tobacco products.