Of all the different tobacco legislative bills introduced this year, two themes have emerged: increased tobacco taxation and greater scrutiny of electronic cigarettes. Both issues will shape the tobacco offering at convenience stores for years to come.
Tom Briant, executive director of the National Association of Tobacco Outlets (NATO) sat down with Convenience Store Decisions to discuss these issues and what tobacco retailers can expect over the next year.
CSD: Can you describe the legislative landscape over the past year.
TB: While 26 state legislatures are looking at bills to raise the cigarette or tobacco product tax rate, so far, bills have either died or failed in 10 states including Georgia, Kentucky, Maryland, Mississippi, New Hampshire, North Dakota, Utah, Virginia, West Virginia and Wyoming.
Tax bills in 16 other states are still pending and include Alabama, California, Hawaii, Kansas, Louisiana, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
CSD: What about states attempting to tax electronic cigarettes?
TB: So far, Minnesota and North Carolina are the only two states that tax e-cigarettes with Minnesota at a 95% other tobacco product (OTP) tax rate and North Carolina’s tax of five cents per milliliter of nicotine solution goes into effect on July 1, 2015. However, there is a bill pending in the Minnesota legislature that would reduce the tax on e-cigarettes to 30 cents per milliliter.
In other states, 22 legislatures introduced bills this year to tax e-cigarettes. While no bills have passed, eight bills have either been defeated or died due to the adjournment of the legislature and include bills in Arizona, Arkansas, Indiana, Kentucky, Montana, Nevada, New Mexico and Virginia.
This leaves bills to tax e-cigarettes pending in Alabama, Hawaii, Maine, Massachusetts, Minnesota, New Jersey, New Hampshire, New York, North Carolina, Ohio, Oregon, Rhode Island, Vermont and Washington.
There are three different tax methods for e-cigarettes that were proposed in these 22 bills. Nine of these states proposed taxing e-cigarettes per milligram of nicotine or per milliliter of nicotine solution, 12 states proposed an OTP tax rate, and two states have proposed applying the cigarette tax rate.
CSD: Are some states pursuing a change in the minimum legal age to purchase tobacco products?
TB: For a number of years, four states have had 19 as the legal age to purchase tobacco products and include Alabama, Alaska, New Jersey and Utah. This year, bills in Iowa and Texas would increase the legal age to 19, but have not been passed yet. Bills that raise the legal age to 21 are pending in California, Hawaii, Massachusetts, New Jersey, New York, Oregon, Vermont and Washington. At the same time, bills to raise the legal age have died or failed in Rhode Island and Utah.
CSD: What is the current status of the FDA’s deeming regulations?
TB: At the recent NATO Show, U.S. Food and Drug Administration (FDA) director Mitch Zeller stated that the agency has a goal to finalize the proposed deeming regulations by June 30, 2015.
The deeming regulations would extend the FDA’s authority to cigars, pipe tobacco, electronic cigarettes, nicotine gels, hookah tobacco and dissolvables.
CSD: What kinds of regulations are being proposed that would impact retailers?
TB: As proposed, the deeming regulations would prohibit free samples of the deemed tobacco products, the minimum age to purchase these tobacco products would be 18 years old, retailers will be required to verify through photographic identification the legal minimum age of a customer who is younger than 27 years old, manufacturers would be required to submit an ingredient list for all of deemed products, and the FDA would require a new health warning on all deemed tobacco products, all cigarette tobacco and roll-your-own tobacco packaging, and all advertisements for these tobacco products.
CSD: Will there be additional tobacco regulations proposed by the FDA after the deeming regulations are finalized?
TB: Yes, in fact, Zeller stated during his presentation that the deeming regulations are just the first set of regulations for the deemed products and that research studies that the FDA is conducting now will form the basis for future sets of regulations. He also stated that the FDA plans to develop product standards based on these research studies.