As customers prepared to welcome 2020, c-store retailers were watching legislation drop on tobacco products.
The day before President Donald Trump signed the omnibus spending bill on Dec. 20 that raised the national tobacco minimum purchase age from 18 to 21, Sen. Ted Cruz (R-Texas) expressed dismay with the lack of a military exemption by lighting up a stogie in a Twitter video. Despite his objection, the bill became law.
The Food and Drug Administration (FDA) issued a directive on its website on Dec. 28, stating, “It is now illegal for a retailer to sell any tobacco product — including cigarettes, cigars and e-cigarettes — to anyone under 21.” The FDA noted it would provide additional details as they became available.
Although there’s been concern about the immediate impact on convenience stores — such as updating signage, reprogramming point-of-sale (POS) systems and training staff — the National Association of Convenience Stores (NACS) urged compliance.
“While there are unanswered questions about when FDA plans to enforce this requirement and whether the agency can legally enforce it before updating its regulations, retailers should be aware that FDA views any sale to a person younger than 21 as a violation of the new law,” the industry group said in a statement.
The National Association of Tobacco Outlets (NATO) concurred that to comply, “retailers in every state need to immediately cease selling any kind of tobacco product (i.e., cigarettes, cigars, smokeless tobacco, pipe tobacco, electronic cigarettes, nicotine vapor products, hookah tobacco, etc.) to anyone that is under the age of 21.”
NATO has contacted the FDA to ask if it planned to temporarily delay retail compliance checks to allow retailers the time needed to adequately train employees, educate customers and reprogram POS systems. While NATO awaited word from the FDA, it pointed out that complying with the new law and enforcing the new law are two different things.“Retailers are advised to comply with the new law now while the FDA determines how and when the agency will begin retail compliance inspections,” NATO advised.
However, the cigarette category did receive positive news, too. The day after President Trump signed the spending bill, the FDA announced approval of two new cigarettes — Moonlight and Moonlight Menthol, manufactured by 22nd Century Group. It specifically cited the fact that these cigarettes contain between 0.2 and 7.4 milligrams of nicotine per cigarette, significantly lower levels than typically found in legacy brands.
“(This authorization) represents the first product to successfully demonstrate the potential for these types of tobacco products to help reduce nicotine dependence among addicted smokers,” said Mitch Zeller, director of the FDA Center for Tobacco Products.
That’s just a snapshot of activity at the federal level last month.
Menthol Woes in Massachusetts
Most of 2019 was a regulatory roller coaster, with cities and states proposing and enacting restrictions. A recent example is Massachusetts’ statewide sales ban of flavored tobacco products, including menthol.The only exception is licensed smoking bars and hookah lounges, where the products must be consumed on site. The legislation immediately prohibited the sale of flavored vaping nicotine products; however, the menthol ban will begin June 1.
“Keep in mind, it’s a ban on sales and not a ban on using tobacco products. We’ve already seen the impact in cities and towns that banned flavors. It has exported sales to neighboring states and the black market,” said Jonathan Shaer, executive director for the New England Convenience Store & Energy Marketers Association.
“I’ve seen significant growth for our New Hampshire sites,” said Anna Bettencourt, senior category manager for Verc Enterprises, which owns and operates 27 convenience stores in Massachusetts and three in New Hampshire.
“As we hit June 1, menthol customers will go to New Hampshire. If they don’t want to make the trip, smokers might switch to non-menthol cigarettes,” she added. “Cigar smokers might try cigarettes. It’s a very tough market to predict where it exactly will go.”
Meanwhile in Tennessee
While 2019 ended on a down note for Bettencourt, it turned out well for Rick Staley, merchandising manager for Tri Star Energy, headquartered in Nashville, Tenn.
“It was a very good year for us in both (cigarettes and cigars) — much better than anticipated and better than the market,” he said. “Fourth tier (brands) have performed very well for us the past two years and have not hurt our premium brands.”
Of course, the fact that the company’s 89 Twice Daily stores are located in states that haven’t been inundated with additional oversight aided sales. That said, Staley realizes the environment would change if lawmakers or FDA administrators succeed in implementing a national menthol ban.
“It would kill the category,” he said.