TBEC Review / flickr

Restrictive new anti-tobacco ordinances are spreading across the San Francisco Bay Area like a cigarette-sparked wildfire. Northern California cities already have some of the toughest anti-smoking laws in the nation, but a raft of new laws and proposals take aim at “flavored” tobacco products such as menthol cigarettes and fruity mini-cigars.

Health officials argue that these flavored products are particularly appealing to teens, and that their bans are designed to keep young people from picking up an unquestionably dangerous habit. They also argue that the purveyors of menthol cigarettes, for example, target minority communities, and lead to ongoing health problems there.

The ordinances, however, share one trait that has advocates for tobacco “harm reduction” concerned. They make no distinction between combustible tobacco products – i.e., cigarettes, cigarillos, pipe tobacco and cigars – and smokeless products such as e-cigarettes and snus (Swedish-style spit-less tobacco that one places on one’s upper lip).

Tobacco “harm reduction” is a public health strategy designed to reduce the harmful effects of cigarette smoking by encouraging smokers to switch to far-less dangerous – not safe, but less dangerous – types of tobacco-related products. For instance, Public Health England, the United Kingdom’s main public-health agency, argues that vaping is 95 percent safer than cigarette smoking and therefore is a potentially beneficial alternative to smoking.

“About 40 percent of former and current adult smokers predict that removing their ability to choose flavors would make them less likely to remain abstinent or attempt to quit,” wrote Carrie Wade, the R Street Institute’s director of harm-reduction policy, in a recent Washington Examiner column. “While the vast majority of quit attempts are of the ‘cold turkey’ variety, e-cigarettes beat out both nicotine replacement therapies like the patch or nicotine gum and prescribed drugs like Chantix and Zyban.”

Vape liquids are not actually tobacco but mostly contain nicotine. They almost always are flavored. Many adult e-cigarette users prefer vaping with flavored liquids than vaping with those that have a tobacco flavor. These local bans on flavors, by the way, follow a recent statewide law that taxes vaping liquids at the same rate as cigarettes. The California Board of Equalization is currently working out the details of that taxation edict.

Wade described the essence of tobacco harm-reduction policy: make it easier for smokers to switch to smoking alternatives that cause fewer health-related problems. It might be ideal, health-wise if every smoker simply went “cold turkey,” but that’s not likely to happen, so harm-reduction advocates see vaping as a reasonable alternative. They see efforts to limit access to liquids and to boost taxes on them as policies that work against this harm-reduction approach.

Even California’s official Tobacco Education and Research Oversight Committee explained, in a public meeting earlier this year, that insufficient numbers of smokers participate in medically approved nicotine-replacement therapies. The committee, however, made no effort to distinguish between degrees of harm, and one member depicted vaping as just another form of smoking. In Bay Area cities and elsewhere, public-health officials argue that vaping is still dangerous – and they argue (despite contrary evidence) that it serves as a gateway for teens to actual smoking.

As a result of the new rules, it will become increasingly difficult for nicotine-addicted northern Californians to purchase and use vaping products. That’s particularly true as neighboring counties and cities embrace similar bans. Supporters of these bans admit that it is one of their goals to have such ordinances spread from one community to another, thus making it more difficult for people to simply go to a neighboring city to grab some vape juice.

Some proposals have become law, such as one in the Marin County city of Novato. Others are under consideration. The Contra Costa County Board of Supervisors is now considering a ban after one of its committees recently approved a new proposal. Likewise, officials in San Francisco and Oakland have also introduced flavor bans.

San Francisco Supervisor Malia Cohen’s public statements focus on the sale of mentholated tobacco products. She explains that 80 percent of African-American smokers use menthol products. Nevertheless, her proposal includes all flavored tobacco, which includes vaping liquids. Oakland Councilmember Annie Campbell Washington, who led a 2016 campaign to increase soda taxes in the city, has introduced a similar measure that includes vapor products in the flavoring ban.

Novato’s ordinance, which goes into effect January 2018, requires that all residential leases in the city include a clause calling it a “material breach of the agreement for tenant or any other person subject to the control of the tenant … to violate any law regulating smoking while anywhere on the property.” In other words, tenants can be evicted from their apartments not only if caught smoking – but if they or their guests are caught vaping.

The Contra Costa County health department justifies its proposal by stating that e-cigarettes contain nicotine, which is addictive, and includes various chemicals known to cause cancer and lung problems. But harm-reduction advocates don’t claim that vaping is totally safe, only that it is far safer than cigarette smoking.

Given the political bent of Bay Area cities and counties, it seems likely that most if not all of these proposals will eventually become law. The question remains whether in their zeal to improve the public’s health, these officials are embracing policies that will make actual smoking-related health improvements that much harder to attain.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

Upsetting years of tradition and new trends alike, Gov. Jerry Brown signed into law sweeping new measures that put consumers and producers of nicotine-based products on the defensive.

One bill will “raise the legal age to buy products from 18 to 21,” while another “dramatically tightens restrictions on e-cigarettes,” NPR reported. “Anyone who gives tobacco or tobacco paraphernalia to someone under 21 could be found guilty of a misdemeanor crime,” the Associated Press cautioned. “Under the new law, 18 to 20-year-olds will no longer be allowed to buy tobacco in California starting on June 9.”

So-called vapes have been incorporated into a crackdown critics said would make it harder for traditional smokers to find less harmful alternatives to tobacco. Applicable legislation now “defines e-cigarettes as tobacco products, barring their use in workplaces, schools, hospitals and on public transit,” according to the Los Angeles Times. “The bill also requires vaping devices and liquids to be sold in child-resistant packaging. They also cannot be marketed to minors.”

Nevertheless, Gov. Brown did exercise some restraint around the issue of taxing smoking. He “vetoed a bill that would have permitted cities and counties to establish their own tobacco taxes,” NPR added, based on his discomfort level with the number of other tax hikes voters might usher in. “Although California has one of the lowest cigarette taxes in the nation, I am reluctant to approve this measure in view of all the taxes being proposed for the 2016 ballot,” said Brown in his veto message. 

Just the beginning

The new laws, Sacramento watchers noted, are themselves only the tip of the iceberg for public health-focused legislators. California State University and even community college students could soon be barred from smoking or vaping on campus. The legislation that would bar them, Assembly Bill 1594, “squeaked out of the 80-member Assembly on a 41-23 vote,” the Sacramento Bee reported, “with all but two of the votes against coming from Republicans and several Democrats not casting votes.”

Nationally, meanwhile, U.S. policymakers were poised to follow California’s lead, although the Golden State has become just the second state across the country, after Hawaii, to hike the smoking age to 21. (As the Associated Press noted, “more than 100 local jurisdictions around the country have made the change, including New York, Chicago and San Francisco.”) A new federal rule promulgated through the Food and Drug Administration will subject tobacco and classified-as-tobacco products to extraordinary new scrutiny. Going forward, “every e-cigarette on the market — and every different flavor and nicotine level — would require a separate application for federal approval,” according to USA Today. “Each application could cost $1 million or more, says Jeff Stier, an e-cigarette advocate with the National Center for Public Policy Research and industry officials.”

Conflicting conclusions

Scientific research on the relative benefits of vaping have been mixed. But new studies conducted in the United Kingdom have led researchers there to reach a conclusion completely at odds with the emerging expert consensus in the U.S. In a new report, the Royal College of Physicians has endorsed vaping “as part of a ‘harm reduction’ strategy that encourages smokers to move to less dangerous forms of taking nicotine, the addictive substance in tobacco,” U-T San Diego recently reported. “The advice contradicts conclusions from some researchers and American government agencies. These focus on getting smokers to quit entirely, or at least to use federally approved means of nicotine replacement therapy with the goal of totally quitting nicotine use. And results in other countries may not apply in the United States, they say.”

Tellingly, California’s anti-smoking legislators preserved one big carve-out for a certain class of smokers — military personnel age 18-20. “[B]efore you scream that you can fight for your country but you can’t light up,” the LA Weekly reported, as state Sen. Ed Hernandez, D-West Covina, admitted, “you can light up if you’re fighting for your country.”

Triggering the sort of speculation about nationwide change California’s new regulations often inspire, legislators approved bills raising the legal age for smoking and vaping to 21.

“The California state Senate voted Thursday to raise the legal age to buy and use cigarettes and other tobacco products from 18 to 21 years old,” Slate noted. “The anti-smoking legislation had already been passed by the state Assembly and is now just the governor’s signature away from making California only the second state (along with Hawaii) to raise the age individuals can consume tobacco products, including e-cigarettes and smokeless tobacco.”

Domino effect

Analysts swiftly turned attention to the likelihood of other states adopting similar rules. Already, the Associated Press reported, “dozens of cities, including New York and San Francisco, have passed similar laws of their own.” Thomas Carr, the American Lung Association’s director of national policy, told the Huffington Post he suspected “Massachusetts and New York are likely candidates” to follow suit, “since their biggest cities have raised the smoking age to 21 in recent years.” But some observers, according to the Huffington Post, have noted that cigarette use tends to plunge more as a result of higher taxes than age restrictions.

Only one loophole survived California’s new strictures. “American law and custom has long accepted that people can make adult decisions on their 18th birthday and live with the consequences,” opponents insisted, according to the AP, noting that the milestone permits Americans to “register to vote, join the military, sign legally binding contracts, consent to sex and do just about any legal activity besides buying alcohol. In response, Democrats changed the bill to allow members of the military to continue buying cigarettes at 18.”

That concession granted, the legislation advanced. “The higher age limit, part of a package of anti-tobacco bills, won approval despite intense lobbying from tobacco interests and fierce opposition from many Republicans, who said the state should butt out of people’s personal health decisions, even if they are harmful,” the AP noted.

A vape crackdown

TBEC Review / flickr

Perhaps the most significant change ushered in by the six interrelated laws making up the suite of anti-smoking legislation — assuming they receive Gov. Jerry Brown’s signature — affects electronic cigarettes, “classifying them as tobacco products. ‘Vaping’ devices are not regulated by the Food and Drug Administration, and critics have described them as a gateway to more harmful, combustible tobacco,” the Orange County Register noted.

“The bill passed by the Legislature classifying e-cigarettes as tobacco products would subject them to the same restrictions on who can purchase them and where they can be used, meaning they would be banned from bars, workplace break rooms and hotel lobbies.”

“Among Orange County teens, the 2014 California Healthy Kids Survey found that 9 percent of 11th-graders polled had smoked cigarettes, while 20 percent reported vaping e-cigarettes,” the paper added. Vapes have been big business in California, driven by shifting preferences among consumers largely convinced that e-cigarettes offer a less hazardous product with a comparably enjoyable experience to traditional tobacco smoking.

Foregone conclusion

Although the governor’s office declined to comment on the likelihood of the bills being signed into law, overwhelming support among Sacramento Democrats has cemented the view that Brown won’t stand in their way. “An expanded ban on smoking in workplaces and permission for counties to begin introducing local taxes on tobacco sales were among the other proposals passed Thursday, almost entirely with support from Democratic lawmakers,” the Sacramento Bee reported. “The only proposal to attract notable opposition from Democrats was the expanded ban on smoking in workplaces, which will remove exemptions for hotel lobbies, warehouse facilities, gaming clubs, bars and businesses with five or fewer employees.”

On Wednesday, legislation that would classify e-cigarettes as tobacco products was amended and held in the Assembly Governmental Organization Committee.

Senate Bill 140 author Sen. Mark Leno, D-San Francisco, dropped his support for the bill after committee amendments struck out portions of the legislation that would have redefined tobacco products and smoking to include electronic devices and vapors emitted from those devices.

Sen. Leno said during the hearing that, by federal definition, products that contain nicotine are technically derived from tobacco. Assemblyman Eduardo Garcia, D-Coachella, also mentioned during the hearing that the FDA “is moving in the direction of classifying” e-cigarettes and similar products as tobacco products.

‘Tobacco products’

Existing law, under the Stop Tobacco Access to Kids Enforcement Act, prohibits selling or furnishing tobacco products to minors, as well as selling without a state license. California’s Smoke Free Act also prohibits smoking in any “enclosed space at a place of employment” – which includes schools, offices, daycares, bars, restaurants and many other venues.

Since the definition of tobacco products and smoking, under SB140’s original text, would expand to include electronic devices and vapors emitted from those devices, the bill would subject e-cigarettes to the same regulations under California’s STAKE Act and Smoke Free Act.

“A growing number of Californians are becoming increasingly concerned about the public’s exposure to e-cigarettes, as is evidenced by the fact that nearly 180 cities and counties have already passed ordinances that restrict e-cigarette smoking,” Sen. Leno said in a prepared statement. “These tobacco products are addicting a new generation of smokers to toxic nicotine, which we already know is highly addictive and contains harmful chemicals. SB140 puts common sense regulations into place statewide in order to protect young people, non-smokers and smokers alike.”

“Recent studies show that e-cigarettes pose potentially serious health risks to users and those who inhale their secondhand emissions. In 2009, the Food and Drug Administration found cancer-causing chemicals, including an ingredient used in antifreeze, in two leading brands of e-cigarettes. The same study also discovered that e-cigarettes labeled as “nicotine-free” had traceable levels of nicotine. In addition, a 2015 study published in the New England Journal of Medicine found high levels of formaldehyde, a known carcinogen, in e-cigarette emissions.”

Opposition to the bill

But Gregory Conley, president of the American Vaping Association, says these measures are mere “hype and conjecture designed to scare” people away from “switching to a potentially lifesaving product.”

“Vapor products are not tobacco products and it makes no sense to regulate them as such. These products do not create harmful secondhand smoke and have been repeatedly shown to be effective in helping smokers kick the habit. California’s 3.6 million adult smokers deserve truthful information about the risks of these smoke-free products. …

 

“The vapor industry does not oppose sensible regulations designed to prevent youth access to these adult products, including beefing up California’s existing ban on sales to minors. However, SB140 goes far beyond what is necessary to achieve this goal. If this bill is passed, over 1,400 California businesses will be left to deal with the unintended consequences of this rushed regulatory plan.”

Los Angeles, Long Beach and San Francisco have already enacted bans on e-cigarette use in public places. “The e-cigarette industry is almost completely unregulated, and statewide laws are essential to providing uniform protections for the health and wellbeing of all California children and our communities,” said San Francisco Supervisor Eric Mar.

But proponents of the electronic smoking devices say that this kind of fear-mongering propaganda ultimately protects cigarettes and threatens the lives of vapers and smokers. Bill Goodshall, executive director of Smokefree Pennsylvania, said of a similar Pennsylvania bill to ban e-cigs, “Public health benefits every time a smoker vapes instead of smoking a cigarette. The proposed vaping ban … would deceive the public to inaccurately believe that vaping is just as hazardous as cigarette smoking.”

In the Senate, the legislation passed on a 25-12 vote. But once the Assembly Governance Committee approved amendments that would no longer classify e-cigarettes as tobacco products, Sen. Leno immediately dropped his support of the bill, stating it would be “dead on arrival in the Senate” and that he could no longer “associate [himself] with it.”

Assemblyman Ken Cooley, D-Rancho Cordova, also said he would “not support the bill in this form.” He addressed the “rising cost of health care” and how it was the task of policymakers to “cut down discrete sources of costs” — such as potential health problems acquired through vaping. “To deal with costs in the health-care system,” he said, “we have to look at where the cost drivers are and chase them down.”

After passage of the amendments, the bill was held in committee.

Photo credit: www.vaping360.com

By the numbers

According to the bill’s supporters, the ban would be instrumental in dramatically reducing not only teen smoking but smoking in general. “Sen. Ed Hernandez, D-West Covina, said he introduced the bill, SB151, out of concern that an estimated 90 percent of tobacco users start before age 21,” the Los Angeles Times reported.

That statistic emerged from a recent Institute of Medicine study making the rounds in policy circles. Researchers suggested that “teen smoking could be curbed by 12 percent if the age limit was raised to 21,” as LAist noted, “making it harder for minors to find somebody to buy cigarettes for them.” In real numbers, the study concluded, the age-21 limit would ensure “more than 200,000 fewer premature deaths nationally for those born between 2000 and 2019.”

Although critics have pointed out that people older than 18 are adults eligible to be drafted and bound to signed contracts, the Times observed, momentum has gathered to raise the legal smoking age for reasons unrelated to consistency in the treatment of individual rights and responsibilities.

Tobacco-related illness has long represented a significant chunk of aggregate health care costs. For policymakers, that problem grows more serious the more those costs are shifted onto government and taxpayers. “Tobacco-related disease killed 34,000 Californians in 2009 and cost the state $18.1 billion in medical expenses, according to studies by UC San Francisco,” according to the Times.

A developing trend

Some evidence of the policy’s likely impact has accumulated in states where the smoking age was previously hiked. “Although most states set the minimum age at 18, Alabama, Alaska, New Jersey and Utah set it at 19, and some localities have set it at 21,” according to The Washington Post. “Higher age limits seem to correspond with lower smoke rates in these states; Utah and New Jersey also have among the lowest smoking rates in the country, No. 1 and No. 5, per Gallup, while Alaska has the most improved, and Alabama is somewhat of an outlier in the South, as it’s not among the states with the highest smoking rates, like its neighbors Mississippi and Louisiana.”

California could be the first state to deny tobacco to under-21s. But other western states could swiftly follow suit. According to KPPC, “Legislatures in Oregon and Washington are considering similar bills and lawmakers in Hawaii have passed a bill and sent it to the governor.” Among the localities setting the legal age at 21, Hawaii County has been joined by New York City.

Next, vaping

Traditional tobacco products were not the only ones on the state Senate’s chopping block. SB140, introduced by state Sen. Mark Leno, D-San Francisco, also passed handily, on a 24-12 vote.

As the San Francisco Chronicle reported, that bill “would include e-cigarettes in the definition of tobacco products in order to prohibit the devices from being used at workplaces, schools and public places, just as tobacco products are under the state’s Smoke Free Act. SB140 would also make it a misdemeanor to provide e-cigarettes to minors.”

The tandem advance of the state Senate’s anti-smoking and anti-vaping bills raised the prospect that the two approaches would converge in the near future, raising the vaping age to 21. “California bans the sale of e-cigarettes to anyone under 18,” the Chronicle observed, “but Leno said young teens still have access to them and they are becoming increasingly popular among middle and high school students.” If Hernandez’s bill were to pass before Leno’s, vaping would automatically be restricted in the same manner as traditional cigarette smoking.

In a statement explaining the campaign, CDPH described two new TV ads emphasizing “the e-cigarette industry’s use of candy flavored ‘e-juice'” and “exposing the fact that big tobacco companies are in the e-cigarette business.”

The move bolstered momentum for broad crackdowns on vapes, which have been targeted by policymakers and activists who see them as just as bad as tobacco cigarettes — if not worse.

Playing politics

Political considerations have played into CDPH’s adverse judgment against vapes. New data recently showed that, last year, the use of e-cigs outpaced the use of tobacco cigarettes among teenagers and young adults.

Defenders of the freedom to vape argued this is good news. Vaping companies have claimed e-cigs help smokers abandon far more dangerous tobacco products, especially those, like traditional cigarettes, that emit high numbers of carcinogens.

But for prohibitionists, e-cigs presented a special hazard because of their accessibility and appeal to children. As the Los Angeles Daily News detailed, those drawbacks appeared to be the product of unregulated marketing, a more pleasurable use experience and apparent carelessness among adult consumers with children:

“Most startling to health officials was the spike in calls to California Poison Control centers related to exposures to accidental e-cigarette poisonings, including drinking the liquid inside. There were seven calls in 2012 to poison control. In 2014, those calls jumped to 243. More than 60 percent of all those e-cigarette related calls involved children 5 years and under.”

As NBC News reported, “bottles and cartridges that contain the liquid for e-cigs have been known to leak and tend not to be equipped with child-resistant caps, creating a potential source of poisoning through ingestion or just through skin contact.”

Although legislation and regulation could be tailored narrowly to focus on the threat of poisoning, public health officials issued a broad warning that comports with the prevailing view among prohibitionists.

Dr. Ron Chapman, State Health Officer and director of the California Department of Public Health, said that “many people do not know that they pose many of the same health risks as traditional cigarettes and other tobacco products.” In January, he called for a “bold public education campaign” to roll back e-cig gains in market share. Anti-smoking advocates working in the policy arena have been all but unanimous in treating e-cigs like an integral part of the same problem as tobacco products.

Safety over freedom

Despite the unfolding research concerning the differences between e-cig effects and those of tobacco cigarettes, prohibitionists in the political arena have used heightened rhetoric of their own to advance vape bans.

Earlier this year, state Sen. Mark Leno, D-San Francisco, underscored how far many officials have been willing to go in departing from the scientific record. In January, he introduced Senate Bill 140, a bill that would ban e-cigs at hospitals, restaurants, schools and workplaces.

“No tobacco product should be exempt from California’s smoke-free laws simply because it’s sold in a modern or trendy disguise,” he warned. Yet, as Reason’s Jacob Sullum observed, e-cigs neither emit smoke nor burn tobacco. Instead, they heat a device which allows the user to exhale a vapor.

SB140 will go into committee hearings this spring, behind a full-steam-ahead approach to cracking down on vapes. As CalWatchdog.com reported previously, the so-called “precautionary principle” — better safe than sorry — has inspired a spate of municipal regulations that treat e-cigs the same way as tobacco cigarettes, despite widespread ignorance and uncertainty as to how the products differ.

A new wave of anti-smoking legislation is wafting through the halls of the state Capitol. And it’s been more than four years since former Gov. Arnold Schwarzenegger folded his cigar “smoking tent” on the Capitol grounds.

First out of the pack is a bill that would boost the smoking age statewide to 21 years from the current 18. Tapping into longstanding fears concerning children and public health, legislators have teed up a stronger political conflict around health care costs and personal responsibility.

State Sen. Ed Hernandez, D-West Covina, is the author of Senate Bill 151, an expansion of the so-called Stop Tobacco Access to Kids Enforcement Act, or STAKE.

Existing law prohibits the furnishing of tobacco products to, and the purchase of tobacco products by, a person under 18 years of age. According to the new bill’s language:

“A person is prohibited from making various promotional or advertising offers of smokeless tobacco products without taking actions to ensure that the product is not available to persons under 18 years of age. Existing law also requires the State Department of Public Health to conduct random, onsite sting inspections of tobacco product retailers with the assistance of persons under 18 years of age.”

SB151 revises those provisions such that Californians under 21 years of age are covered. And it authorizes random compliance inspections of retailers by the State Department of Public Health.

In a statement, Hernandez cast his bill as essential to preventing children from becoming addicted to cigarettes. “We can no longer afford to sit on the sidelines while big tobacco markets to our kids and gets another generation of young people hooked on a product that will ultimately kill them,” he said.

Defining children upward

But the Sacramento Bee reported something about SB151 on Hernandez’ own website. The site quotes the California branch of the American Lung Association saying 90 percent of smokers begin before they turn 19.

Critics of raising the smoking age also point out that people age 18 can vote, join the military and get a driver’s license without parental permission. And although the drinking age in California is 21, that’s because drunkenness can cause immediate harm to others, especially through car accidents.

Although the numbers does not make a strong case for Hernandez’s level of concern, the numbers likely don’t matter to his legislation’s fortunes. According to the Los Angeles Times, SB151 already counts the support of the American Cancer Society, the California Medical Association and, importantly, the American Lung Association.

The Times reports, “Smoking contributes to the deaths of more than 40,000 Californians each year, according to Kimberly Amazeen, vice president for the American Lung Association in California. She said 21,300 California kids start smoking each year.”

Targeting e-cigarettes

As the Washington Times notes, legislation similar to SB151 has failed elsewhere across the country, including in Colorado, Maryland, New Jersey and Utah. California, however, boasts a stronger anti-smoking constituency and a more effective anti-smoking lobby than those states.

In yet another demonstration of many Californians’ preference for prohibition, state Sen. Mark Leno, D-San Francisco, has introduced an anti-smoking bill of his own. SB140 would restrict “vaping” e-cigarettes to the same extent that smoking traditional cigarettes is restricted.

As the Bee reports, Leno’s rhetoric focuses on the addictive qualities of smoking in the same manner as Hernandez’s. Leno said in a statement:

“No tobacco product should be exempt from California’s smoke-free laws simply because it’s sold in a modern or trendy disguise. Addiction is what’s really being sold. Like traditional cigarettes, e-cigarettes deliver nicotine in a cloud of other toxic chemicals, and their use should be restricted equally under state law in order to protect public health.”

Although e-cigarettes are demonstrably safer than traditional cigarettes to smokers and bystanders, the science is secondary to the cultural politics that surround vaping.

As the San Francisco Chronicle observes, “California bans the sale of e-cigarettes to minors, but other efforts to legislate them have failed. State Sen. Ellen Corbett, D-San Leandro, originally proposed stronger restrictions in 2013, but the language in her proposed bill was watered down to ban e-cigarette sales in vending machines and was defeated in an Assembly committee last year.”

E-cigarettes are widely seen as both a popular substitute for traditional cigarettes and as a more tempting option for people who would not consider taking up traditional smoking. That tension helps account for the push for increased regulation and for the failure of recent legislation to meet its mark.

Senate Bill 768 by Sen. Kevin de León, D-Los Angeles, proposes to triple California’s cigarette excise tax from $0.87 to $2.87. The tax would also extend to cigars.

De León was unable get SB768 passed during the 2012-2013 legislative session. While it sits on the shelf in the Senate Appropriations Committee, there is already talk of bringing it back to life, as well as initiating another statewide cigarette and tobacco tax ballot initiative.

The bill's language contends its passage would benefit Californians because, among other things, “Tobacco use costs Californians more than $9.1 billion in tobacco-related medical expenses every year. The cost of lost productivity due to tobacco use adds an additional estimated $8.5 billion to the annual economic consequences of smoking in California…. The treatment of cancer, heart disease and stroke, lung disease, diabetes, and other diseases related to tobacco use continues to impose a significant burden upon California’s overstressed health care system, including publicly funded health care programs.”

New study on tobacco tax increase

But would this huge tax increase actually raise the revenues intended, while curbing smoking?

The California Foundation for Commerce and Education report on The State and Local Impact of Tobacco Prices on Smuggling and Black Market Sales found that, by failing to account for smuggling, proponents overestimate tax revenue from tobacco products by $500 million 
annually due to smuggling caused by the tax increase. “In addition, lost legitimate retail sales will eliminate approximately 11,000 direct retail jobs,” it concluded.

“The literature suggests that the $2 excise tax increase may create the unintended consequence of increasing 
organized crime in California,” the study found.

The tax promotes smuggling

California consumers would pay a total tax rate of 137.4 percent per cigar, and a $2-per-pack additional tax on cigarettes, lighting up incentives for smuggling.

De León's bill aims to raise an estimated $1.4 billion, with the money slated to fund research into tobacco-related diseases and the stronger enforcement of tobacco laws.

The tax increase would make California’s cigarette tax rate the fifth highest in the nation, with New York state's the highest at $4.30 a pack. New York City tacks on an additional $1.50 a pack, making smokers inhale a price of up to $12 a pack.

In addition to the state and local taxes, another tax of $1.01 is imposed by the federal government.

If SB768 becomes law, in California a pack of cigarettes would cost more than $9 at grocery stores, including sales tax; a bit less at tobacco stores.

Smuggling tobacco products doesn't pay

The Tax Foundation published a study in January which found nearly 60 percent of the cigarettes sold in New York state are smuggled from other states, or come from Indian reservations with lower tobacco taxes. The Tax Foundation reported that tobacco smuggling and the tax rate have risen in tandem since 2006, a strong indication that tax increases and smuggling go hand-in-hand.

The New York State tax on cigarettes has risen 190 percent since 2006, while the rate of smuggling increased 170 percent.

The National Taxpayers Union Foundation released an excellent study in August detailing the recent history of tobacco taxes in the states. They found:

* States with low cigarette taxes have lower overall tax burdens;

* Tobacco tax hikes are rarely used to cut other taxes;

* Tobacco taxes don’t forestall other tax increases;

* Tobacco tax hikes may encourage other tax hikes down the road;

* Cigarette taxes don’t spur economic growth.

Proposition 29's failure

De León’s bill was introduced less than a year after the June 5, 2012 defeat of Proposition 29, the 2012 tobacco tax ballot measure. Prop. 29 would have boosted cigarette taxes $1 a pack to fund cancer research, anti-smoking activities and more law enforcement for an expected expansion of black markets. And despite voters’ defeat of Prop. 29, its $1 proposed tax would be doubled by SB768.

SB768  is backed by the same coalition which supported Prop. 29: the American Heart Association, the American Lung Association, the American Cancer Society, the Service Employees International Union and Health Access California.

These longtime proponents of cigarette tax increases said Prop. 29′s narrow defeat justified bringing it back through the Legislature. The groups also stand to benefit from the estimated $1.4 billion raised by the tax (assuming the black market does not increase so much it substantially cuts that amount).

Smokers are resilient

“No sooner does the new tax go into effect, my street contacts tell me, than Indian tribes will open tobacco shops at their casinos, where buyers can escape state taxes and buy cigarettes on the cheap,” said Willie Brown,
 former Mayor of San Francisco and California State Assembly Speaker, in a June 2012 “Willie’s World” column in the San Francisco Chronicle.

“Just as quickly, smugglers will start rolling in truckloads of smokes from Nevada, Arizona and Oregon, as street dealers realize there is more money to be made selling hot cigarettes than there is selling dope,” Brown said.

Even the California Department of Public Health found “following a tax increase, many smokers will find a way to buy cheaper cigarettes.”

“Some smokers will try to find cheaper cigarettes on the internet; others will buy their cigarettes on Indian reservations and in casinos, or even travel across state lines,” the California Department of Public Health said. “This type of individual ‘casual’ evasion does not have a significant fiscal impact on the illicit cigarette market whereas, large-scale bulk tobacco smuggling can be a problem.”

Tobacco taxes are relatively easy for lawmakers to pass because they are a tax on a hated and “sinful” habit — smoking. But the smoking tax proposed in SB 768 would extend to cigars, a  favorite vice of many lawmakers and Capitol elites.

There are several chichi cigar lounges within walking distance of the Capitol, where in many cases the real political business of the state takes place.

A sin tax is a state-mandated tax added to products or activities seen as vices, such as alcohol, tobacco and gambling. These taxes are levied by governments ostensibly to discourage use without making the products illegal, while raking off taxes to pay for government programs.

Smoke tax

SB 768 is by Sen. Kevin DeLeon, D-Los Angeles. It would boost cigarette taxes $2 per pack. As I wrote earlier, the bill likely would promote cigarette smuggling.

But this bill is more than just a $2 per pack tax on cigarettes. SB 768 also targets cigar and pipe tobacco by creating a disproportionate tax increase on these products. Because of how the state excise tax works, there is no cap on the amount of tax that can be charged on cigars or pipe tobacco. If SB 768 passes, the state excise tax applied to cigars would go from 31 percent per cigar, to 75 percent.

On top of that, the state and local sales tax — as high as 10 percent in some cities — would be charged. Plus the recently enacted federal excise tax of 52.4 percent on cigars.

Total: California consumers would pay a total tax rate of 137.4 percent per cigar. This translates into nearly $1.40 in taxes for every $1 of product.

This tax reminds me of a car I rented while on a visit to Seattle: The city taxes cost me more than the actual cost to rent the car.

Tobacco products

Tobacco products are an important source of revenue for the nearly 34,000 retailers in California. According to the National Association of Convenience Stores, tobacco sales account for 35 percent of all in-store sales.  Many of these retailers are small “mom and pop” stores that specifically cater to the cigar and pipe market.

SB 768 will irreparably harm these retailers and small businesses by forcing them to cut jobs or even close their business altogether.

We’ve already seen this happen. After Proposition 10 was passed in 1999 and the tobacco tax rose by 50 cents, there was a 26 percent decrease in the taxable sales of tobacco within two years, forcing many retailers out of business. Because of the federal excise tax, the maximum tax rate on large cigars has surged more than 700 percent and has already resulted in significant layoffs within the cigar industry, according to Stogie News.

States with high tobacco taxes open the door to smuggling and black market sales. This illegal activity puts a strain on law enforcement and results in a loss of revenue to businesses, as well as to the state.

According to a January study by the Tax Foundation, 60 percent of the cigarettes sold in New York state are smuggled from other states or Indian reservations with lower tobacco taxes.

According to a CNN summary of the study, “The report said that tobacco smuggling and the tax rate have risen practically in tandem since 2006. The New York State tax on cigarettes has risen 190% since that time, as the rate of smuggling increased 170%.”

Tax hit

The State Board of Equalization has found that California will actually lose hundreds of millions of dollars in revenue if SB 768 passes.  Even legislators have become weary of funding programs using tobacco tax revenue because of its instability.

Californians aren’t the biggest fans of tobacco taxes anyway. In 2006, voters rejected a $2 tax on tobacco and more recently, in 2012, a $1 tax on tobacco. What makes politicians think Californians will be supportive now?

Smokers have always been easy targets, but there’s a bigger picture here. SB 768 will negatively affect our economy, jobs and the livelihood of millions of Californians.

By Katy Grimes

By Katy Grimes

A new bill could drive cigarette prices even higher. It especially would hit working-class Californians because they’re more likely to smoke than professionals.

SB 768 is by state Sen. Kevin de León, D-Los Angeles. It would increase the state’s cigarette tax another $2 a pack from the current 87 cents. That would be a 230 percent hike, to $2.87. It would raise an estimated $1.4 billion, with the money funding research into tobacco-related diseases and the stronger enforcement of tobacco laws.

The tax increase would make California’s cigarette tax rate the fifth highest in the nation, with New York’s the highest at $4.30 a pack. New York City tacks on an additional $1.50 a pack, making smokers inhale a price of up to $12 a pack.

In addition to the state and local taxes, another tax of $1.01 is imposed by the federal government.

If SB 768 becomes law, in California a pack of cigarettes would cost more than $9 at grocery stores, including sales tax; a bit less at tobacco stores. That likely will spark more black-market activity.

According to a January study by the Tax Foundation, about 60 percent of the cigarettes sold in New York state are smuggled from other states or Indian reservations with lower tobacco taxes. According to a CNN summary, “The report said that tobacco smuggling and the tax rate have risen practically in tandem since 2006. The New York State tax on cigarettes has risen 190% since that time, as the rate of smuggling increased 170%.”

De León’s bill also is advancing less than a year after the June 5, 2012 defeat of Proposition 29, the 2012 tobacco tax ballot measure that would have boosted cigarette taxes $1 a pack to fund cancer research, anti-smoking activities and more law enforcement for an expected expansion of black markets. Despite voters’ defeat of Prop. 29, its $1 tax would be doubled by SB 768.

Unlikely to discourage consumption

“Sin taxes” are aimed at currently legal activities or products frowned on by some people, including taxes on alcohol, gambling or sugary drinks.

According to the Adam Smith Institute, “Sin taxes are more likely to deter moderate users than heavy users, whose demand for cigarettes and alcohol is relatively inelastic.” “Sin taxes” are the most regressive indirect taxes, as they tend to target products that are disproportionately consumed by the poor. The law even concedes this, explaining in its own words, “Tobacco use rates are much higher than the general population in African Americans, white men, Korean men, enlisted military personnel, lesbian, gay, bisexual and transgender, young adult, rural, and low-income populations.”

Proposition 29 redux

Prop. 29 was sold as the “Tobacco Tax for Cancer Research Act.” SB 768  is backed by the same coalition which supported Prop. 29: the American Heart Association, the American Lung Association, the American Cancer Society, the Service Employees International Union and Health Access California.

These longtime proponents of cigarette tax increases said Prop. 29’s narrow defeat justified bringing it back through the Legislature. The groups also stand to benefit from the estimated $1.4 billion raised by the tax (assuming the black market does not increase so much it substantially cuts that amount). That’s the way legislation is done in today’s political environment.

The current $1.01 federal tax and the .87 cent tax in California on a pack of cigarettes apparently are not enough to keep the anti-smoking and health programs alive.

Tobacco tax monies currently are divided among the general fund and three programs:

* 10 cents to the General Fund.

* 25 cents to the Cigarette and Tobacco Products Surtax Fund (created by Proposition 99 in 1988).

* 2 cents to the Breast Cancer Fund (created by AB 478, Chapter 660 of 1993).

* 50 cents to the California Children and Families Trust Fund (created by Proposition 10 in 1998).

Cigarette smuggling

Cigarette taxes have historically been an easy mark for politicians who keep raising them. The growing intolerance by non-smokers of the smoking population helps. But the social consequences are serious, along with a lucrative black market for smuggled cigarettes.

“But state and local levies have grown so onerous in some parts of the country that they almost could be called ‘prohibition by price,'” wrote Michael D. LaFaive and Todd Nesbit, Ph.D. of the Mackinac Center. Their study looked at cigarette smuggling into Michigan, where state taxes are $2 a pack — that is, less than the $2.87 under SB 768. They found shocking results:

“And like other forms of prohibition, this one has led to a spike in smuggling-related criminal activity as smokers turn to illicit distribution channels. We estimate that for 2011, 29.3 percent of all cigarettes consumed in the Great Lake State were smuggled in.”

For SB 768, the bill analysis said:

“California tax-paid cigarette distributions have decreased dramatically over the past 30 years, both before and after passage of Proposition 10. Consequently, revenues for all funds supported by cigarette taxes have declined as well.”

Unfortunately for government budgets, revenue expectations from tobacco taxes tend to be chronically wrong. “Since 2003 there have been 57 cigarette tax increases across the nation and 68% of them have failed to meet projected revenues,” The Minnesota State News reported in 2011, when faced with another tobacco tax increase. “In 2006, New Jersey raised cigarette taxes with the hope of pulling in $30 million in extra revenue each year.  Not only did the tax hike fail to bring in extra revenue, but the state actually collected $20 million less in cigarette sales.”

New Jersey’s cigarette tax currently is $2.70 a pack, also less than the $2.87 it would be in California if SB 768 becomes law.

Decline in cigarette sales means funding gap

According to the California Board of Equalization, programs funded by cigarette taxes have experienced a “funding gap” due to cigarette sale decreases.

Those most adversely impacted by an increase in the tobacco tax are working class and low-income Californians. Those with an annual income of $10,000 to $20,000 bear the burden of tobacco tax increases.

The Taxpayers Protection Alliance reports “these types of ‘targeted’ tax increases harm small businesses and could result in smuggling, which would not only defeat the purpose of tax increase but also take away money from both those businesses and the state that they otherwise would have received without the proposed legislation.”

Ironically, smokers and heavy drinkers do not cost the state more for health care, according to the Adam Smith Institute. “Though smokers may cost more during their working lives, non-smokers require greater expenditure in pensions, nursing care and welfare payments. Chronic diseases associated with old age are far more expensive than the lethal diseases associated with smoking and alcoholism.”