By Steve Sandman
No matter how many articles we read about Foodservice, Technology, Beverages or Candy, the No. 1 profit-generating category in the c-store universe remains tobacco. Like it or not, it will remain so for many decades to come.
The category turns faster than any other category inside the c-store, generates the most profit dollars, and takes up the least amount of space resulting in the most efficient lineup of products a c-store retailer can sell.
The tobacco department has proven time and again to be the most resilient category as well, withstanding the “end of the world” threats we’ve perceived including TV advertising bans, The Master Settlement Agreement, SCHIP tax hikes, major manufacturer mergers, health warnings and the ominous U.S. Food and Drug Administration (FDA) regulations that have been enacted, along with the ones still looming around the corner. So why worry about tobacco?
We’ve recently seen a multitude of local taxes and regulations that are about as damaging to your business as one might imagine if you find yourself in an affected jurisdiction.
Minneapolis made big headlines for the banning of menthol products beginning this summer, but many don’t know flavored tobacco products have been banned in the city previously.
STATE OF REGULATION
New Jersey is considering a state-wide ban on menthol, but without a ban on automobiles, consumers will flock to Pennsylvania, Delaware and New York if those products are still sold there legally. New York is looking to tax e-liquid at 40 cents a milliliter, but the tax doesn’t affect the post office, so consumers will buy on line.
What about the proposed ban of vape juice, menthol cigarettes, flavored cigars and chewing tobacco in Oroville, Calif.? Retailers there will notice when consumers start heading to the nearest town that offers those legal products. If you’re the retailer on the wrong side of the street, how can you stop these business killers before they happen?
While awareness and donations are critical, being visible and establishing a relationship with the decision makers plays an important role, both with politicians and the tobacco community. It’s important to attend fundraisers and dinners, and to also learn who else in your community is a stakeholder in your tobacco business, such as your wholesale distributor, landlord or your vendor partners.
As soon as you become aware of a threatening issue such as raising the age to buy tobacco to 21, contact your vendor partners and let them know the concern. A variety of companies are willing to assist in helping you organize opposition to a proposed ordinance, and often will provide the resources and expertise to give you the best opportunity to succeed in beating back the detrimental proposal that can take a major toll on your business.
Many tobacco regulations are copycat laws, so if the city of Oakland, which has discussed banning menthol passes a law to the effect, how long do we think it will take until the same law occurs in San Francisco and San Jose? While some folks might think a rise in the minimum age to buy tobacco to 21 makes sense, consider the fact many of these young adults that are shut out of your stores will simply purchase their vaping products online generating zero sales for you and zero tax for the state or city that imposed the age increase.
Many entities offer free electronic communications from your city council, state government or other organization involved in taxes or regulations. Local news sources, anti-tax groups and industry organizations also often provide free notifications on the latest developments in your community. Before you can fight a big tax increase or business-killing regulation, you need to put yourself in a position where you know about it from its inception.
We’ve all heard the expression,“If you don’t vote, don’t complain.” Fighting taxation and regulation holds true to that old axiom. It’s better to spend a dime today than a dollar tomorrow. And if you happen to be in Minneapolis or Oroville, you might not have a dollar to spend if your convenience business gets killed off by something you never saw coming.