2017 Tobacco Legislative Roundup

Among various regulatory activity thus far in 2017, 41 local cities have enacted above 18 legal minimum age requirement-to-purchase ordinances.

By CSD Staff

Stricter tobacco regulations are becoming more prevalent. As convenience store chains become familiar with a new local policy, another seems to pop up immediately after, in another community.

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Now that almost all of the state legislatures have concluded their 2017 legislative sessions, Thomas Briant, executive director of the National Association of Tobacco Outlets, or NATO, recently sat down with Convenience Store Decisions (CSD) to recap the outcome of state tobacco legislation across the country as well as local jurisdiction activity as many sessions start coming to an end for the year.

Convenience Store Decisions (CSD): In the past couple of years, bills were introduced in approximately one-half of the state legislatures seeking to increase either cigarette or tobacco product excise taxes, but only one or two states actually enacted higher tax rates. Did that trend hold true for 2017?

Thomas Briant (TB): 2017 produced an increase in state legislatures considering new taxes on cigarettes and tobacco products. This year, 28 states have considered bills to raise cigarette and/or tobacco product tax rates in some form. These states include Delaware, Florida, Hawaii, Indiana, Kansas, Louisiana, Maine, Massachusetts, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, West Virginia and Wyoming.

However, only three of these states passed and enacted tax changes including Delaware (50-cent-per-pack cigarette tax increase, 15% increase on other tobacco products or OTP, and a 38-cent tax increase on moist snuff), New York (modified the tax on large cigars from 75% of wholesale to 45 cents per cigar), and Rhode Island, (increased tax rate on cigarettes by 50 cents).

We also saw one state legislature pass a measure and sign into law a decrease on uncompetitive taxes levied on retailers and consumers of tobacco products. Minnesota removed the automatic inflator on the excise tax per pack of cigarettes and froze the rate per pack at $3.04. Additionally, Minnesota reduced the tax cap on premium cigars from $3.50 to 50 cents per cigar.

Finally, California voters approved a ballot question last November that raised the state’s cigarette tax by $2 per pack and also increased the OTP tax to 65.08%. These tax increases went into effect on July 1, 2017.

CSD: We have also seen an increasing number of states introduce legislation to assess a new tax on e-cigarettes and vapor products. Did that trend hold true again this year?
TB: This year, 15 states considered bills to enact a new tax: Arizona, Delaware, Hawaii, Indiana, Kansas, Massachusetts, Michigan, Montana, New Mexico, New York, North Carolina, Ohio, Oregon, Washington and West Virginia.
Of the bills introduced in these states, only two were enacted into law. Delaware passed a new tax on vapor products at five cents per fluid milliliter on nicotine solution and New York passed a tax modification on vapor products to 40 cents per fluid milliliter.

Further, the Kansas legislature decreased the excise tax on vapor products from 20 cents per milliliter of e-liquid to five cents.

CSD: Have state legislatures continued to consider bills to raise the legal age to purchase tobacco products?

TB: Yes, at the time this article was completed, 28 state legislatures had bills introduced to raise the legal age to purchase tobacco products to either age 19 or age 21. So far, the states of Oregon, New Jersey and Maine have enacted a statewide law to increase the legal minimum age to purchase to 21 years old.

These states join California and Hawaii from last year to increase the total count across the country to five states that now set the minimum legal age to purchase at 21.

Bills introduced to raise the legal age to 21 that didn’t pass were considered by lawmakers in Arizona, Arkansas, Connecticut, Florida, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Texas, Utah, Vermont and Washington. Also, a bill in North Dakota that would have raised the legal age to 19 years old failed.

CSD: We have heard that local tobacco ordinances continue to be the most important threat for tobacco retailers. Can you elaborate on this?
TB: For the past few years, NATO has been tracking and opposing a growing number of local tobacco ordinances in cities across the country. The proliferation of local ordinances is the real battleground on tobacco restrictions for retailers with 480 local ordinances proposed in 2015, 675 in 2016, and over 700 so far in 2017. The three primary types of regulations at the local level are flavor bans of tobacco products, increases to the minimum age to purchase and minimum cigar package/pricing requirements.

One of the most prevalent local regulatory trends is a ban on the sale of flavored tobacco products. In 2016, approximately 80 cities adopted flavor bans across the country. In 2017, 28 cities—most located in the four states of Rhode Island, Minnesota, California and Massachusetts—have adopted similar bans.

Additionally, 2017 has ushered in the first ordinances that regulate or ban the sale of menthol cigarettes, and mint and wintergreen flavored tobacco products in local jurisdictions. This year the following cities have adopted either a limited or complete ban on the sale of menthol, mint and wintergreen tobacco products: San Francisco, Berkley, Contra Costa County, Los Gatos, Santa Clara and Yolo County (all in California), Minneapolis and Chicago. The ban of menthol, mint and wintergreen flavored tobacco products, coming on the heels of previously passed flavor bans, represents a real threat to the viability of many tobacco related retailers.

On the minimum legal age issue, 128 cities in 2016 passed new regulations to increase the legal age to buy tobacco products. While we saw continued growth of this regulation in 2017, the rate of that growth has slowed. Thus far in 2017, 41 local cities have enacted above 18 legal minimum age requirement-to-purchase ordinances.

Cigar minimum pricing and packaging mandates continue to be a common form of local regulation as well. In 2017, some 16 cities across Minnesota, Massachusetts and California that have passed or enacted a cigar minimum price or packaging regulation.