San Francisco Voters Uphold Menthol Ban

Analyst raises concerns over border sales, federal action

SAN FRANCISCO -- In the wake of voters deciding to uphold San Francisco’s ban on all flavored-tobacco products—including menthol cigarettes—at least one industry analyst believes the implications may rise to the level of federal action, as disparate measures at the city and state level may prove to be unduly burdensome to retailers overall.

On June 5, a majority of voters in San Francisco approved Proposition E, the measure questioning the board of supervisors’ decision last year to ban flavored tobacco products, including menthol cigarettes, candy-flavored tobacco products and flavored vaping liquids. Sixty-eight percent of voters were in favor of the measure and 31% opposed it, reported CNN.

In her assessment of the results, Bonnie Herzog, managing director of consumer equity research for Wells Fargo Securities LLC, New York, said city retailers will take a hit considering the size of the menthol category but that demand will most likely stay the same. She said menthol represents 35% of total industry cigarette volume, although at least one San Francisco retailer told CSP Daily News that half of his category sales will be affected. Citing a Wells Fargo survey of tobacco retailers, Herzog said smokers will more than likely shop outside city limits or online.

She said the bigger risk was that of a federal ban on menthol-flavored tobacco products, which could become more likely as more and more jurisdictions begin enacting such measures. However, Herzog said such a move was “extremely unlikely” given that the U.S. Food and Drug Administration (FDA) must make such determinations based on science and must also consider unintended consequences.

Dubbing the topic a “thing to watch” in a recent newsletter, Herzog said the FDA’s current public-comment period, known as the advance notice of proposed rulemaking (ANPRM), on tobacco flavors will draw more attention in the wake of the San Francisco vote. The deadline to submit comments is June 19.

Ultimately, the industry would fight such a ban if it ever made it to the federal level, Herzog said. “If it ever occurred, we strongly believe the industry would pursue legal options,” she said.

San Francisco supervisors voted to ban flavored tobacco products last year, but a coalition of businesses and community leaders gathered enough signatures to place it on the June 5 ballot. In recent weeks, parties on both sides of the issue have been using multiple media channels to persuade voters. 

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