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19TOBACCOOUTLETBUSINESSMAYJUNE2009NEWSTRENDSMAYJUNE2009SantaFeNaturalTobaccoCo.oundedinNewMexicox19scapitalcityin1982namedNicholasA.Bumbaccopresidentandchieexecutiveox1cerinMarch.Bumbacco44comestoSantaFex14whichmanuacturesandmarketsNaturalAmericanSpirittobaccoproductsandmarketsDunhillcigarettesx14withmorethan20yearsoexperienceintheglobaltobaccoindustry.CanadianbybirthhehasheldmanagerialpositionswithImperialTobaccoinCanadaBritishAmericanTobaccoandReynoldsAmericanInc.BeorejoiningthetobaccoindustryhewasinvolvedinthebarandrestaurantbusinessinCanadahelpinggrowachaintoninerestaurants.BumbaccoreplacesRichardM.Sanders56whowillremaininanadvisorypositionwiththecompanyocusingonSFNTCx19sinternationalbusinessinterestsbeoreretiringJuly1.Sandershasbeenpresidentandchieexecutiveox1ceroSFNTCsince2002andledthecompanythroughsteadygrowth.Underhistenurethecompanyx19sshareotheU.S.marketgrew170percent.Manuacturingcapacityexpanded300percentandthesalesorceincreased14-old.Sandersoversawtheconstructionandmovetothecompanyx19snewadobe-styleenergy-ex1cientbuildingin2004.In2007SFNTCwasnamedoneothebestplacestoworkinNewMexico.SFNTCcurrentlyhasmorethan400employeeswith135basedatitshomeox1cesinSantaFe.In2008thecompanywasrecognizedasax1cGreenPartnerx1dbytheU.S.EnvironmentalProtectionAgencyorx1lling100percentoitselectricpowerneedsviapurchasingwindmill-generatedenergyoritsSantaFeheadquartersmanuacturingoperationsinNorthCarolinaanddistributioncenterinNevada.Thecompanyx19spioneeringeortstopromotesustainabletobaccoarmingweredetailedinabookpublishedinearly2009OrganicTobaccoGrowinginAmericaandOtherEarth-FriendlyFarmingSunstonePressSantaFeN.M..RecentlegislationandcostpressuresarepromptingSmokerFriendlyInternationaltoscalebackitsretailoperationsbyclosingorrelocating15oitsstoresbyApril1.MarySzarmachvicepresidentotrademarketingorSmokerFriendlycitedthepassageoSCHIPlegislationandthecorrespondinghikeintheederalexcisetaxandimpositionoafoorstockstaxascontributingmightilytothedecision.Thefoorstockstaxcallsoralltobaccoretailerswholesalersanddistributorstousecurrentinventorylevelstocalculateapaymenttotheederalgovernmentequaltothedierencebetweentheoldandnewederalexcisetaxrateonalltobaccoproductsexcludinglargecigarsandminusa500creditpercompany.ThatmeasurealonewillcostSmokerFriendlymorethan1millionaccordingtothecompany.LikemostoutletsSmokerFriendlydecidedtoselldowninventoryasmuchaspossiblebeorethefoorstockstaxhitsonApril1.Buttheplanwassomethingoaguessinggameasconsumerswereexpectedtostockuponcigarettesinadvanceoataxhike.Retailerswhounderestimatedthatsurgeindemandlostoutonpotentialprox1twhilethosewhooverestimateditgothitwithahugeinventorytaxx14ollowedbyapurchaselullinthewakeothetaxhike.SmokerFriendlyistakingaproactivestanceonpreparingoramarketthatmaywellberedex1nedbythenewlegislation.NewCEOforSantaFeBumbaccotakesthereinsatSantaFeNaturalTobaccoCo.SmokerFriendlyRetrenchesThechainwillshutterunderperformingstores.IpassedabillbeoreaMarylandHouseoDelegatescommitteewouldchangethewaythestatetaxesmoistsnu.Marylandcurrentlyhasa15percenttaxonthepurchasepriceomoistsnu.Thenewproposalwouldshitthattoaweight-basedtaxo75centsperounce.Thetaxwouldreportedlyincreasethestatex19stotaltaxrevenueonmoistsnu.Butopponentsotheideapointoutthatthenewsystemwouldgiveanadvantagetomoreexpensivemoistsnubrandsbecauseitwouldhelpnarrowthetotalcostgapbetweenpremiumandcheaperbrands.AsimilarbillpassedintheMarylandSenatelastyearbutwasdeeatedintheHouse.MarylandMullsSnuffTaxAweight-basedtaxisunderconsideration.