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Consequences from local tobacco regs and benefits of recreational marijuana

DALLAS -- Two retailers offered up their perspectives on tobacco regulations while also singing the praises of the recent legalization of marijuana sales in some states.

Mary Szarmach and Ruth Ann Lilly

The breakout session during CSP’s Convenience Retailing University conference in Dallas featured Ruth Ann Lilly, senior category manager for Sunoco Inc., Houston, and Mary Szarmach, vice president trade marketing and government relations at Smoker Friendly, Boulder, Colo.

Three Unintended Consequences from Local Tobacco Regs

  1. Compliance confusion: Retailers always seek to be 100% compliant on regulations, as evidenced by years of 90% compliance rates from FDA inspections. This becomes significantly more difficult as states, cities and other local municipalities enact completely different sets of regulations. Between the difficulty of training store staff (with a high turnover rate) and the need for wholesalers to also keep up on which products are and aren’t allowed in which stores, regulations don’t just affect a retailer’s bottom line, but with their ability to comply with the ever-changing laws.
  2. Black market headaches: High city and state excises aren’t just costing local retailers; they’re also potentially dangerous for operators in nearby areas with lower tax rates. Retailers in Virginia, for example, frequently suffer from a higher risk of cigarette theft due to their proximity to the high-tax New York market.
  3. Keeping up with the smoke shops: One of the most troubling new trends in local regulation are the channel-specific bans, where certain products are only allowed to be sold in stores that only allow adults inside. Minneapolis, St. Paul, Minn., and Boston have all passed such regulations for flavored tobacco, with convenience-store retailers pointing out it’s not just the flavored tobacco sales, but the gas and additional in-store purchases that go with it.

Three Ways Recreational Marijuana is Benefitting C-Stores

  1. Accessories boom: Though convenience stores are not currently allowed to sell marijuana in recreational states like Colorado and Washington, they are allowed to sell marijuana-related accessories—something Smoker Friendly has leveraged to great success with its Glass Werx line.
  2. Additional tax dollars: Marijuana has brought a windfall of additional tax dollars to states where it has been legalized, money that has primarily gone to education. Historically, legislatures have used tobacco taxes to fund state and city schools; with the money coming from marijuana, it seems less likely that Colorado, Washington, Oregon and Alaska will need to propose a tobacco tax increase any time soon.
  3. It hasn’t hurt sales: When recreational marijuana was legalized in Colorado, there were fears it might hurt alcohol or tobacco sales. It hasn’t. In fact, sales largely have increased.

Follow CRU 2016 at #ConvenienceRetailing.

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