MINNEAPOLIS -- Twenty years ago, when Charlie Rose (pictured above) opened Charlie’s Chocolate & Cravings in a downtown St. Paul, Minn., office tower, he sold high-end chocolates, thinking his professional clientele had a sweet tooth for upscale confections.
He was wrong. Voting with their wallets, they bought 50-cent “nutty bars” and 25-cent bags of chips. Customers want what they want, and he would have been foolish not to respond. Since then, Rose has made a pretty good living: He evolved Charlie’s Chocolate & Cravings into a traditional c-store, serving the area’s 9-to-5 crowd.
Yet despite 20 years of nimbleness, Rose may soon have to close up shop. Local lawmakers have rewritten the rules, taking away a key lifeline: menthol-flavored tobacco.
Rose is one of dozens of Minneapolis and St. Paul retailers who—with the exception of age-restricted outlets such as liquor stores and tobacco shops—now face sweeping bans on the sale of menthol, mint and wintergreen-flavored tobacco products. Their cities have joined San Francisco and other Bay Area communities, which passed menthol bans starting more than a year ago.
Lawmakers made their decisions in spite of potentially enormous economic losses. In San Francisco, the state controller’s office said the city would lose $50.5 million in annual sales; in Minneapolis, numbers from Pittsburgh-based Management Science Associates (MSA) said c-stores would lose as much as $39.9 million annually.
Barring any unexpected reversal or court action, Minneapolis-St. Paul retailers will have to remove product by this fall. That day will be particularly devastating for Rose. Cigarette sales are a big dollar-profit generator for his two stores, with menthol accounting for a third of the category. For other tobacco products (OTP), menthol is an even greater sales contributor.
“When you get down to Grizzly, menthol is about 75% of chew sales,” Rose says.
Mia and Clay Lambert, co-owners of the Metro Petro c-store in Minneapolis, feel Rose’s pain on threatened OTP sales, because the nearby University of Minneapolis is a smoke-free campus.
The Lamberts are at wit’s end, having met with local council members, attended hearings and explained the damage that such restrictions would do to their business [CSP—Sept. ’17].
They also felt blindsided. The few weeks that elapsed from the proposal emerging until the final city council vote seemed extremely short. “It came so fast there’s no way [for lawmakers] to understand the impact it will have,” Mia Lambert says. “I feel victimized.”
In an interview with CSP prior to the August vote in Minneapolis, Councilman Cam Gordon, Green Party-Ward 2, said the law’s ultimate goal was a “healthy city,” admitting that some of the council’s recent legislative eff orts—ranging from plastic-bag rules to minimum-wage mandates—amount to “overregulating.” Still, Gordon, who voted for the menthol restrictions, said, “It’s all about finding balance.”
St. Paul lawmakers moved in lockstep with Minneapolis. One or two council members suggested they might vote against the menthol restrictions, but Rose of Charlie’s Chocolate & Cravings believes they had no real intentions to do so.
Rose also believes that allowing over-18 establishments—but not c-stores—to sell menthol products is contradictory. If public health is the main concern, he says, “Why let anyone sell it at all?”
Rose admits that he and other St. Paul retailers could have done more preemptory work in educating lawmakers, but he says the concerns they expressed at public hearings fell on deaf ears: “They didn’t have any interest in what we had to say.”
In Minneapolis this past fall, Mia Lambert and her fellow retailers held a press conference at her store, sharing the results of an economic impact study conducted by MSA. They talked about sales and job losses and the overall financial effects of the Minneapolis ordinance. She also has calculated how lower tobacco sales could affect other categories in her store, with potential market-basket losses in cups of coffee, chewing gum, sunflower seeds and related items that tobacco customers would now buy elsewhere.
Despite these efforts, on Nov. 1, St. Paul’s City Council passed the menthol ban 6-1.
Metro Petro’s options are narrowing. “We’re scrambling now to see what else can work inside our business,” Mia Lambert says.
They could offer more foodservice, but it’s very labor-intensive and it comes with quality and food-safety issues. Also, last July, the city voted to gradually raise its minimum wage from $10 per hour today to $15 by 2024.
“Nothing’s standing out as the next best thing,” she says. “For us, this convenience store has been the place to stop for [tobacco] for 50 years, and now the government has turned that on its head.”
The Lamberts own the property and could sell it for redevelopment as an office building or residential space. But as a c-store, “no stone goes unturned,” she says, hoping to exhaust every possibility before considering shutting down. Metro Petro now faces an Aug. 1, 2018, date when the Minneapolis restrictions will take effect. “We’ll be nimble and creative, but there’s not a lot of time and we’ll have to assume the worst,” she says.
As for Rose, his options are also fading. The effective date of St. Paul’s new rule is Nov. 1, 2018, and the lease on his 1,300-square-foot location is up soon. He’ll have to decide whether to downsize with another location or to simply close. With the menthol ban, minimum-wage requirements and nearby construction, he feels a continuous “drain on my revenue stream, until finally it’ll stop.”
Retailers Advised of ‘Other Strategies’
Amid rising opposition to menthol-flavored tobacco products, retailers should not give up hope, says Tom Briant, executive director of NATO, Minneapolis. “There are other alternative strategies,” he says. This is especially true when a retailer is complying with state and federal regulations in the sale of legal product.
In San Francisco, for instance, retailers and other interested parties ran a successful petition to get that city’s menthol ban onto the ballot. Now residents can vote on the measure in June, with retailers hoping voters will overturn it.
It’s important to remain engaged, Briant says, pointing out that c-stores are a crucial link in the responsible sale of tobacco products.
Such building of relationships with lawmakers takes time and persistence, says Paige Anderson, director of government relations for NACS, Alexandria, Va. “Yes, there will be times when you get the nod that says, ‘Sure, sure, I’m with you,’ and then they vote another way,” she says. “But it’s a long game.”