Tobacco Legislative Roundup

Regulatory threats "slowly moving toward prohibition": NATO

Samantha Oller, Senior Editor/Fuels, CSP

MINNEAPOLIS -- In the first of a series of webcasts, the National Association of Tobacco Outlets Inc. (NATO) provided members with an update this past week on tobacco legislation and litigation, led by executive director Thomas Briant. With the Food & Drug Administration's (FDA) Center for Tobacco Products finalizing its approach to tobacco oversight, regulatory matters dominated the event.

They included:

Self-service displays. While "adult-only" retail stores are currently exempt from an FDA rule that prohibits the use of self-service cigarette, roll-your-own [image-nocss] and smokeless tobacco displays, FDA may be revising that law to revoke the exemption. (The law does not apply to pipe tobacco or cigars.)

A NATO webinar participant asked whether a c-store could be retrofitted to meet the current "adults-only" exemption. As written, the regulation defines "adults only" as a retail establishment that only those 18 years of age and older can enter, and for which more than 50% of sales come from tobacco. With this in mind, Briant suggested that a retailer could possibly build an adults-only "store within a store" with a restricted entry to meet the exemption.

Retailer training. FDA is mulling the final details for a tobacco retailer training program, and a comments period ended this past January. NATO lobbied for adoption of the industry-accepted We Card program. Retailers who follow an "approved training program" would face lighter penalties for any violation of tobacco promotional, advertising or sale restrictions, according to The Family Smoking Prevention & Tobacco Control Act.

Pipe tobacco tax. A bill introduced to the U.S. House of Representatives, H.R. 4439, proposes raising the federal tax on pipe tobacco from $2.83 to $24.78 per pound, bringing it in line with RYO tobacco, which saw its tax rate rise from $1.10 to $24.78 per pound with the expansion of the State Children's Health Insurance Program (SCHIP). Briant noted that since SCHIP, more tobacco labeled as for pipes has sold than RYO, thanks to the large price disparity.

PACT Act. Poised to be picked up by the Senate, the Prevent All Cigarette Trafficking Act (PACT Act) would practically eliminate any price advantage enjoyed by Internet retailers, who currently are not required to enforce federal or state taxes on tobacco sales. NATO urged members to lobby their Senate representatives to call the bill up for consideration.

State tax increases. As of Jan. 1, 2010, nine states were proposing increases to cigarette excise taxes, while others have introduced bills to bump up the OTP tax rate, according to Briant. One state, Kentucky, is actually considering a 2.9% decrease in its OTP tax.

Flavored tobacco bans. While a district court is considering U.S. Smokeless Tobacco Manufacturing Co. LLC and U.S. Smokeless Tobacco Brands Inc.'s lawsuit against New York City's flavored tobacco ban, the state of New York is also considering a ban of its own on the sale of all flavored tobacco products except for tobacco, menthol, mint or wintergreen varieties. NATO is pressing New York State legislators to await the ruling on the USST lawsuit before proceeding further.

Meanwhile, Maine is weighing a ban on little and large machine-made flavored cigars, and cigar wrappers. And Utah's House of Representatives is considering a ban on all flavored tobacco except for those approved by FDA for general consumer use. Briant said that the new focus of anti-tobacco forces is to prohibit the sale of flavored tobacco, forcing courts to decide its legality.
While most of these regulatory threats have not yet wended their way through completion, they suggest that federal and state governments, and anti-smoking advocates are "slowly moving toward prohibition, one step at a time," in effect making it so difficult to sell tobacco that that retailers will decide it is not worth the trouble," argued Briant. "It's time to be vigilant and respond."

The NATO legislative update comes as the group and tobacco retailers convened in Las Vegas this week for the Tobacco Plus Expo. Watch for details in CSP Daily News.