MINNEAPOLIS -- On Aug. 4, 2017, the Minneapolis City Council voted 10-2 to adopt an ordinance banning the sale of menthol cigarettes and mint and wintergreen smokeless tobacco products at all retail stores except tobacco shops and licensed liquor stores. The ban will affect more than 200 retail stores beginning Aug. 1, 2018.
Prior to the adoption of the ordinance, a study was conducted by Management Science Associates on the potential economic impact of the menthol, mint and wintergreen sales restrictions. The study reached the following conclusions:
- Menthol cigarettes currently account for 43% of total cigarette volume and 88% of total menthol tobacco volume in Minneapolis.
- The convenience-store channel represents 73% of menthol-cigarette volume in Minneapolis. Together, tobacco outlets and liquor stores comprise only 9% of menthol-cigarette volume.
- In the United States, 35% of convenience stores’ in-store revenue comes from tobacco. Tobacco is a convenience stores’ second-largest source of in-store gross-margin dollars.
- It is estimated that Minneapolis convenience stores would lose $36.7 million to $39.9 million annually in menthol, mint and wintergreen tobacco sales and ancillary in-store purchases.
- The average convenience store would lose between $238,000 and $259,000 in annual sales and incur a gross margin loss of $38,000 to $44,000 per store.
- The average U.S. convenience store provides 15 jobs, split about equally between full- and part-time workers.
- There are approximately 30 stores (excluding tobacco outlets) in Minneapolis that would close, and the other remaining stores in Minneapolis would cut employee hours in line with their lost menthol tobacco profits.
- This loss of sales and store closures is estimated to negatively affect about 940 employees (a mix of full- and part-time jobs), or the equivalent of 630 full-time jobs.
This likely potential economic impact demonstrates why retailers that sell tobacco products need to engage in local advocacy to oppose such a sales restriction. A broad menthol, mint and wintergreen ban is not survivable by many small, family-owned convenience stores, and the result will be the closing of stores, the loss of investment in retail businesses and almost 1,000 employees terminated.
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