FDA Issues Draft Guidance Report on Sell Through Question

On Saturday, June 5th, the FDA’s Center for Tobacco Products issued a document titled “Draft
Guidance for Industry: Use of “Light,” “Mild,” “Low,” or Similar Descriptors in the Label,
Labeling, or Advertising of Tobacco Products”. This Draft Guidance states that wholesalers and
retailers may distribute or sell tobacco products in their possession for which the label, labeling, or
advertising contains the descriptors “light,” “low,” or “mild,” or any similar descriptor after July 22,
2010. There is no time limit or time period for wholesalers and retailers to sell out their inventory
of these tobacco products with descriptors. This regulation on descriptor terms does not affect
cigars or pipe tobacco. A copy of this Draft Guidance accompanies this NATO E-News Bulletin
(see the last page for the confirmation of the ability to sell through product).

Postal Service Issues Final Rule to Implement PACT Act

On Friday, June 4th, the U.S. Postal Service issued the Final Rule to implement the provisions of the
PACT Act prohibiting the mailing of cigarettes, roll-your-own tobacco and smokeless tobacco. A copy
of the Final Rule accompanies this NATO E-News Bulletin. The Final Rule takes effect on June 29,
2010 and will prohibit the mailing of cigarettes, roll-your-own tobacco and smokeless tobacco in the
continental United States. Any of these tobacco products deposited into the mail are subject to seizure
and forfeiture and the sender of the tobacco products is subject to criminal fines, imprisonment and civil
penalties. There are limited exceptions to allow packages of these tobacco products to be mailed within
the States of Alaska and Hawaii and for mailing of these products between tobacco industry businesses.
Pipe tobacco and cigars are not regulated by the PACT Act and can continue to be mailed.

New York City Warning Signs Challenged

Altria Group, Lorillard, Inc., Reynolds American, Inc., two retailers and two retail trade
associations have filed a lawsuit in U.S. Federal District Court challenging the New York City
Board of Health’s ordinance requiring graphic anti-tobacco health warning signs be posted in retail
stores that sell tobacco products. The lawsuit includes claims that the federal government warning
label regulations pre-empt this action by New York City’s Board of Health and that the ordinance
infringes on the right to communicate with consumers about lawful tobacco products. This
litigation will be monitored and NATO members will be updated regarding further developments in
this case.

State Legislative Updates

Connecticut: A proposal that would increase taxes on other tobacco products from 48.59% to
65.03% passed the Connecticut Senate, but the Connecticut House did not concur. The proposal is
in conference committee. An earlier version of this bill included a proposal to raise cigarette taxes
by 20 cents per pack was defeated.
Illinois: The Illinois legislature concluded its session last week without raising the state excise tax
on cigarettes. A bill would have raised the cigarette tax rate by $.50 per pack for each of the next
two years.

As many of you know we have our own organization here in New York to help protect the rights of us tobacconists as well as protect the freedom of our customers.   Led by good friend and colleague, Ron Melendi (De La Concha), the NYTA has spent time both in downtown Manhattan and Albany recently in the name of smokers’ rights. Various members will once again be descending upon Albany tomorrow, 2 June, for a full day of lobbying.

Are you curious what you can do to help us?  Even if you are an occasional lover of cigars or pipe your basic rights as an adult are hanging in the hands of politicians as we speak. These officials not only want to take away your right to enjoy something as an adult, but they are potentially setting up New York State to economically collapse if they get their way with tobacco: every B&M will be forced to close their doors if this tax increase goes from our current 46% to the desired 90%.

You may not think you can do anything, but you can by calling/faxing/e-mailing/sending signed letters to specific elected officials.  These people in the government need to see that there is a vested opposition to their plan and if enough of you decide to exercise your rights, your voice will be heard — California is proof of that.  I am including a link below for a form letter that all you need to do is sign and send over to those listed in any manner you choose.  If you currently work in or own a tobacco shop and you have not already, print these letters out and have your customers and employees sign them.  Remember: there is strength in numbers, but there must be a united front to achieve a goal of this magnitude.

Ltr to Gov & Members of NYS Leg from Customers – tax inc

Please stay tuned because from time-to-time as information becomes available, I will post it here along with any other information or ideas on how you can help us help you.

I think the title speaks for itself.  If you’re an adult you know this to be true and life today is certainly not as black and white as in the days of “Ozzie and Harriet.” With that being said, I’d like to take this space and discuss something that has been occupying a lot of my time: fighting for fairness in the tobacco industry.

If you are not a resident of New York State or obsessed with tobacco legislation like myself and my colleagues, you may not know that here in the Empire State we have a problem.  (Well it’s more like we have a problem that is creating more problems by the name of David Paterson and his so-called ideas to close the budget gap.) According to the most recent figures we have a $9.2 billion deficit for FY2010 and our “governor” — I use that title in quotation because not only does he refuse to lead, but when he attempts to try he fails MISERABLY — thinks that there are certain items that should be taxed in order to make up the missing money the state needs to operate.

First and foremost, I am all for taxing sugary drinks, soda, fatty foods, etc. : I know the argument is that lower income neighbourhoods will suffer, but not if this is done correctly.  I live in Central Harlem and while my area is beautiful and I love my neighbours, we obviously don’t have the same cash-flow as someone living on 72nd and Fifth.  I can vouch that places like Harlem and Washington Heights are riddled with greasy Chinese take out spots, pizza places, and thirty thousand types of fried chicken restaurants, but we do lack access to proper produce in our grocery stores and bodegas.  It’s not that we always don’t know what to eat but it’s the ability to procure fresh fruit and vegetables that is the problem, and so with this fat & sugar tax there needs to be a concerted effort to give of the markets above 96th St the ability to sell produce that is edible.  There are way too many obese and morbidly obese people in this country (and this state) and the battle starts at home.

Now onto the heart of my argument: the proposed tobacco tax. Here in New York we have the highest taxes on tobacco products in the Union along with California.  At 46% when you purchase a cigar or pack of cigarettes literally half of what you pay goes to the government.  Gov. Paterson thinks that raising the tax to 90% is going to solve New York’s problems because the guy who weighs 500lbs is worried about paying more than $2.00 for a 20 oz Pepsi and over $3.99 for a jumbo bag of Doritos.  I hate to say it, but if smokers and tobacconists alike do not unite and remain strong and badger elected officials with phone calls/faxes/e-mails/letters providing lucid arguments then all of your favourite B&Ms will be forced to close their doors.  Aside from losing the ability as an adult to freely walk into an establishment and enjoy a fine cigar, think about the hundreds of years and tradition — often family owned and operated –that will be lost along with jobs of hardworking tobacconists who not only love their craft, but have become a part of your life as your friend.

The silliest part of this whole situation is that these elected officials are not businessmen.  They have no concept of the economic ramifications that exist if their tax increase makes us close our doors. Tobacco is historically a cash crop and will always be that in one form or another, and it creates revenue for the government today as it did for the monarchies of Old Europe centuries ago.  If New York is running around and complaining about budget deficits could you imagine what would happen if the State received NOTHING from the sale of tobacco?  We already went the prohibition route with alcohol and that backfired in a plethora of ways, but government officials don’t seem to realize that making the same mistake twice is ludicrous. This is not algebra class, folks: a negative multiplied by a negative does NOT equal a positive.

All anger and frustration aside, there are things that should be done to create more revenue and have the government leave tobacco alone.  In a discussion with a friend this morning who was complaining about our new licenses plates (which are mandatory), he not only mentioned he didn’t like the colours/design, but how each car must have these plates within two years.  News flash: $25 multiplied by the millions of cars registered here in New York will create billions of dollars in state revenue.   In addition to the license plates and the so-called “fat tax,” is there really any harm being done to tax those who earn a substantial income at a higher rate?  Taxing the rich would create a lot of windfall dollars that are ultimately necessary would by no means put that big of a dent in the life of the opulent.

The government is too big. Too many cooks in the kitchen and that costs money, so why not reduce the size of the government to reduce spending?  To be perfectly honest only three real politicians here have the power, so why not weed out what is unnecessary, such as agencies funded by the government that could be consolidated with their counterparts? On an even more practical level let’s reform the budgetary process in general because all of the nonsense that goes into creating and attempting to ratify a budget often costs millions of dollars, and much of that time is spent with officials twiddling their fat thumbs.

I’m sure you all have the same feelings I do: no more taxes, no more fees, and leave tobacco alone.  In the past two years between City and State we’ve had four new taxes levied on us here for tobacco and that’s just ridiculous. Whether you are a tobacco enthusiast, tobacconist, shop owner, or occasional lover of cigars you need to exercise your rights and make your voice be heard.  I have seen instances before where collective efforts, calculated arguments, and large numbers are not ignored and proposed tobacco legislation is defeated.   If you are unsure of where to go, please talk to your local tobacconist who can provide you with form letters where all you have to do is sign your name in support of this cause.  If any of you want to contact me I have letters, names, and addresses of those you can write to, e-mail, call, or fax and I would be happy to send you what you need to stand up and let your voice be heard

“I think myself that we have more machinery of government than is necessary, too many parasites living on the labor of the industrious.” — Thomas Jefferson

NATO Continues with Tax Windfall Strategy

NATO is continuing with an effort to educate lawmakers about the potential tax windfall that states will likely receive as a result of the federal Prevent All Cigarette Trafficking Act (PACT Act).  To date, NATO has sent letters regarding the likelihood of the tax windfall to lawmakers in Connecticut, Illinois, Kansas, Minnesota, New Hampshire, New York and the governor of South Carolina.  A reply letter from New York State Assemblyman Brian Kolb acknowledging the tax windfall is reproduced with the Assemblyman’s permission in the cover e-mail message that accompanies this E-News bulletin.

This week, NATO also sent a letter to New Jersey Assemblyman Louis Greenwald who just last month introduced Assembly Bill Number A.2590 to reduce the New Jersey cigarette tax rate by $.30 per pack from the current $2.70 per pack rate to $2.40 per pack.  The NATO letter indicated that the likely tax windfall may be an argument in favor of reducing the state’s cigarette tax rate.

Postal Service Issues Proposed Rule to Implement PACT Act

Today, the U.S. Postal Service published a Notice of Proposed Rule in the Federal Register to implement the provisions of the PACT Act prohibiting the mailing of cigarettes, roll-your-own tobacco and smokeless tobacco (see accompanying Federal Register notice).  According to the notice, the Postal Service will attempt to publish a final rule effective June 29, 2010 to cover the general non-mailability provisions of the PACT Act.  Public comments to the proposed rule must be submitted by May 17, 2010.  NATO plans to submit comments supporting the proposed rule.

Specifically, the proposed rule states that cigarettes, roll-your-own tobacco and smokeless tobacco cannot be mailed in the continental United States.  Any of these tobacco products deposited into the mail are subject to seizure and forfeiture and the sender of the tobacco products is subject to criminal fines, imprisonment and civil penalties.  There is a limited exception to allow packages of these tobacco products to be mailed within the States of Alaska and Hawaii.  Cigars can continue to be mailed.

Moreover, the Proposed Rule states that due to the complex verification process to ensure that these tobacco products are not mailed and the severe penalties for violating the law, the Postal Service has also concluded that cigarettes, roll-your-own tobacco and smokeless tobacco cannot be handled through the U.S. Mail either outbound to international destinations or inbound from international locations.  As stated in the notice, “the Postal Service does not believe that any alternative exists at this time to allow U.S. mailers to tender cigarettes and smokeless tobacco as outbound international mail or to receive them as inbound international mail under the PACT Act’s exceptions.”  This position should further reduce the sale of these tobacco products from Internet sellers located outside the U.S.

FDA: Court Decision Striking Down Color Ad Ban Applies to All

The FDA is required under the recently enacted tobacco regulations to reissue its 1996 rule banning color advertisements of tobacco products.  However, given the Kentucky Federal District Court decision issued in January of this year which struck down the color advertising ban, the FDA just issued a “Guidance” document which states the agency will not take any enforcement action regarding color tobacco advertisements against any retailer, wholesaler or manufacturer while the FDA’s appeal of the Kentucky court decision is pending.  A copy of the FDA Guidance notice accompanies this bulletin.

Check out this post from the website Americans for Tax Reform about the very sad, hidden agenda behind Gov. Patterson’s desire to raise the tobacco tax here in New York State from 46% to 90%.

Many thanks to Israel Markevitz of Uptown Cigar Company for bringing this article to my attention!

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From Joshua Culling on Tuesday, May 4, 2010 5:56 PM

David Paterson’s New York is in a whole heap of trouble. The state is barely keeping its head above water with a series of stop-gap spending bills to keep the lights on until the legislature and Gov. Paterson take serious action to bring the budget into balance. This is almost certain to be achieved via what is becoming an annual tradition in Albany – crippling tax hikes coupled with spineless defferal of responsibility to next year’s crop of politicians.

Looking at the governor’s latest “gap-closing plan” – I prefer to call it a status quo maintenance plan – a couple things jump out. Among roughly $1 billion in “revenue actions,” he includes yet another tax increase on tobacco products. In addition to his previous call for a $1 per pack cigarette tax increase, Paterson now insists on a 95 percent tax increase on chewing tobacco, cigars, pipe tobacco, and rolling tobacco, along with a whopping 122 percent tax increase on snuff.

Reading further, though, we get to the interesting part:

Reduce DOH Tobacco Prevention Program (2010-11 Savings: $5 million; 2011-12 Savings: $5 million): This proposal would reduce funding for the Tobacco Prevention Program from $57 million to $52 million. The program supports a variety of tobacco use prevention/cessation initiatives. When coupled with the proposal in this package to increase the tax on certain tobacco products (see section on Revenue Actions below) the overall effectiveness of the State’s efforts to reduce the tobacco use by adults and adolescents will not be impaired.

Now, we can quibble about whether government-funded smoking cessation programs work. Dr. Michael Marlow argues that any link between such cessation programs and lower incidences of smoking is a tenuous one. The National Cancer Policy Board argues they do. I certainly won’t use this space to rail against cuts in government spending on any type of program.

But the Paterson plan proves a point we’ve been making for years: Tobacco tax increases have the express purpose of growing the size of government. Politicians do not care about the supposed health benefits; if they did, they wouldn’t be cutting smoking cessation programs. They care about the revenue. And what better way to ensure government growth continues unchecked than by taxing 20 percent of the population? What incentive is there for a non-smoker to oppose high levels of spending if they are not footing the bill?

This is why smokers and non-smokers alike should oppose tobacco tax increases. It’s nothing more than frivolous politicians gaming the system to raise more money for their politically connected friends and porky special interest spending priorities. The next time a politician says “I hope we raise zero revenue from this bill because it causes everyone to quit smoking,” think back to the situation in New York. Or the other 15 jurisdictions that raised cigarette tax rates in 2009 and didn’t spend a dime of it on smoking prevention.