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TOBACCO OUTLET BUSINESS
JULY/AUGUST 2012
FDA Dashboard
State Flashes
Beyond FDA matters, individual state taxation and regulation
issues are still very much alive and blinking on tobacco company
dashboards. At press time, of the 23 states in which tobacco product
tax increases had been introduced in the 2012 legislative session, at
least three—Illinois, Maryland and Vermont—had passed them:
Illinois
passed a $1 per pack cigarette tax hike effective June 24, 2012 and an
OTP tax increase to 36 percent effective July 1, 2012. It also changed taxation on
moist smokeless tobacco to a weight-based rate of 30 cents per ounce effective
January 1, 2013, and included little cigars in the definition of cigarettes, making
them taxed at the rate of $1.98 per pack, effective July 1, 2012.
Maryland
passed a bill raising the tax on cigars, excluding premium cigars,
from 15 percent to 70 percent, and raising the tax on all other tobacco products,
including pipe tobacco, from 15 percent to 30 percent, all effective July 1, 2012.
Vermont
changed the definition of little cigars so that they now fall within the
category of cigarettes and will be taxed at $2.62 per pack.
California
reported some good news. Proposition 29, which attempted to raise
California’s excise tax on cigarettes by $1 to $1.87 per pack and on other tobacco
products by similar amounts, lost in a June vote, defeated 50.3 percent to 49.7
percent. While additional absentee and other ballots remain to be counted, the
proposition is expected to be defeated.Opponents, led by cigarette makers, raised
nearly $47 million to fight the bill, while supporters, including the American
Cancer Society and cycling champion/cancer survivor Lance Armstrong, raised
just over $12 million, according to nonpartisan research group MapLight.
In the matter of commercial RYO machines, 11 states so far have adopted
measures to regulate retail businesses that offer them, with laws ranging from
licensing RYO retailers, requiring them to pay an equivalent tax that is assessed
on traditionally manufactured cigarettes to outright banning the operation
of commercial RYO machines, according to Tom Briant of the National
Association for Tobacco Outlets (NATO). The 11 states with RYO legislation
so far in 2012 are Arkansas, Iowa, Idaho, Oklahoma, South Dakota, Tennessee,
Vermont, Virginia, Wyoming, Washington and Illinois.