TOB Magazine

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[ 12 ] TOBACCO BUSINESS [ MARCH / APRIL | 17 ]
The year 2009, as an example, was when the SCHIP
taxes were instituted, and that was tough. The good news
for those years is just getting through them with your
head above water—and 2016 was one of those years.”
THE FAMILIAR BAD NEWS
From the underside, there is plenty that concerns our in-
dustry’s top players—primarily, as Gallagher notes: “the
government at every level.”
He adds, “we continue to work with manufacturers,
trade organizations, and our two in-house people work-
ing on government issues and government relation-
ships, at all levels, every day. We are getting the whole
organization behind whatever initiative is looming and
most dangerous.”
Looking at what’s in front of the company at the mo-
ment, Gallagher notes that a minimum wage increase at
the state level passed in Colorado—“and that will certain-
ly cost us a great amount of money annually,” he says.
For Klafters in Pennsylvania, a big challenge now
looms overhead—the state implemented OTP taxes
on all forms of tobacco (55 cents per ounce) and vapor
(40 percent of the wholesale billing price), reports Sil-
verman. “In addition, there was a $10-per-carton state
cigarette excise tax, making Pennsylvania’s cigarette tax
$26 per carton,” he says. “Aside from the uncertainty of
whether consumers will still purchase these products,
due to this being a completely new tax, the state has been
challenged on how to administer the tax, making it very
difficult for wholesalers and retailers to implement.”
Mahoney agrees. “They’re trying to choke us out,”
he says.
In Indiana, “the strict vape law reduced the number
of state-certified vape manufacturers to six,” says Col-
lett. “This created a situation that drove prices up by 50
percent.” Also weighing heavily on his mind are “health
insurance increases of nearly 20 percent due to the ACA
[Affordable Care Act]."
And, of course, beyond individual state concerns, the
uncertainty pertaining to the issuance of the FDA deem-
ing regulations looms large for Top 50 players. The fact
that the regulations are being challenged in the courts
brings some hope to retailers like Roberts, as does a new
administration that could potentially cancel previous
executive orders. But he and others are very cautiously
awaiting their fate.
The way Armstrong sees it, the deeming regulations are
already drastically stifling creativity, as far as new prod-
ucts and new ways to promote products are concerned.
“When you do that to an industry, you will start to see an
overall decline,” he says. “It’s critical we figure out how to
still have new innovations in the tobacco category.”
FOCUSING ON GROWTH VIEWS
Many resilient tobacco outlets are all too familiar with
these big challenges and what can go wrong, so they opt,
instead, to keep their eye on the good growth ahead.
Smoker Friendly remains on the lookout for new
growth through acquisitions, and at press time it had
just purchased a cigar store in Denver. In early February,
the company completed the acquisition of Cigars on 6th,
a premium tobacconist and cigar store. The company
will continue to operate the store under its Cigars on 6th
banner, but will introduce the Smoker Friendly brand of
cigars into the store as well.
“The acquisition of this store is a great opportunity
to continue to expand our footprint in the Denver mar-
ket, and, more specifically, continue to grow our market
24 | aDELTA
DISTRIBUTORS,
DISCOUNT TOBACCO
OUTLET, Andalusia,
Alabama; 20 stores
25 | aCIGARET
SHOPPER, Brewer, Maine;
20 stores
26 | aSMOKIN’ JOE’S
TOBACCO & LIQUOR,
Davenport, Iowa; 19 stores
27 | PUFF DISCOUNT
CIGARETTES, Mill Hall,
Pennsylvania; 18 stores
28 | FAST LANE
DISCOUNT TOBACCO,
Lovely, Kentucky; 18 stores B
29 | COX’S SMOKERS
OUTLET & SPIRIT
SHOPPES, Louisville,
Kentucky; 18 stores
30 | WILLIAM & TAYLOR
TOBACCO, Mullins, South
Carolina; 17 stores
31 | LOUISIANA
DISCOUNT TOBACCO
(DISCOUNT TOBACCO
OUTLET), Shreveport,
Louisiana; 17 stores
32 | PUFF SUPER VALUE,
Mill Hall, Pennsylvania;
17 stores
33 | TOBACCO ROAD,
Jermyn, Pennsylvania;
16 stores
34 | TOBACCO SHOPPE/
SAVE-A-LOT, Bowling
Green, Kentucky; 16 storesB
35 | aKLAFTERS, D.B.A.
SMOKER FRIENDLY/
CIGAR EXPRESS,
New Castle, Pennsylvania;
16 stores
36 | ROSS-LAB
MARKETING (NOTHIN’
BUTT SMOKES), Lubbock,
Texas; 15 stores
37 | aKOCOLENE MKTG.
(SMOKERS HOST),
Seymour, Indiana; 14 stores
Collett Enterprises' Darren Collett runs 29 stores.