Despite the enactment of federal regulation of tobacco products, the category continues to attract the attention of federal, state and local legislators and regulators.
This activity, in some cases spawned by financial grants from the federal government, has affected manufacturers, distributors and retailers.
Considering that cigarettes and other tobacco products represent nearly 40% of in-store convenience store sales, adverse legislation could cripple a retailer's sales, foot traffic and profitability -- and have resounding effects on employment and overall business growth.[image-nocss]
Tobacco manufacturers, wholesalers and retailers all have a role to play in understanding tobacco-related legislative and regulatory issues and doing what we can to shape a desirable outcome. Some issues of particular importance:
Tax increases on cigarettes and other tobacco products. States are still facing record-high budget deficits. In first-quarter 2011, more than 30 tobacco excise-tax increases were proposed across the country, with more on the way.
The good news is that we have already seen some successes, as limited-government legislative majorities and governors have rejected higher taxes as an answer to budget woes.
More battles lie ahead, though. We know that excessive excise taxes on tobacco products harm legitimate retailers when adult tobacco consumers shift their purchases across state lines or to illegitimate sources to avoid the higher tax, depriving retailers of sales and revenue. This purchasing-shift effect becomes even more pronounced when reduced foot traffic results in lower sales of other products such as gasoline and groceries.
Retail sales bans, restrictions and other local activity. An increasing number of proposals calling for further tobacco restrictions are appearing at the state and local level, in both large and small jurisdictions.
These regulations could affect retailer licensing fees, in-store point of sale, restrictions on retail displays and more. For instance, San Francisco and Boston have enacted bans on tobacco sales in certain retail outlets. New York City passed a law, subject to a lawsuit, that would ban flavored tobacco products in the citywith an exception made for mint and wintergreen smokeless tobacco products. Similar measures are under consideration in Utah, Washington and Santa Clara, Calif. The city of Buffalo, N.Y., is considering a range of restrictions including arbitrarily limiting the number of retailers who can sell tobacco products. The proposal would potentially prohibit manufacturers and retailers from promoting their products to adult tobacco consumers through coupons, multipack offers or other retail pricing promotions. In an effort spawned by a federal grant, Linn County, Iowa (Cedar Rapids), is proposing to ban dissolvable smokeless tobacco products. This proliferation of state and local regulatory activity further threatens the viability of local retailers in communities where these types of bans and restrictions appear.
As the saying goes, "All politics are local." While legislators receive a great deal of information from their staff, professional lobbyists and many others, the views of their constituents in many cases are what actually influences them.
Editor's Note: Due to its popularity, this article was excerpted from an article, appearing in the June issue of CSP magazine. To learn more about what you, as a constituent, can do, please read our follow-up column in next week's issue of Tobacco E-News.
About the Authors
Kelly Cushman is director, government affairs outreach program for Altria Client Services. Dave Riser is vice president of external relationstrade marketing for R.J. Reynolds.
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