On the evening of April 25, NATO retailers, wholesalers, and manufacturers gathered for the 2007 NATO Annual Awards Dinner at the Las Vegas Hilton Hotel to celebrate the association’s sixth anniversary. As an encore to the black tie fifth anniversary dinner held last March, the theme for the 2007 NATO Annual Awards Dinner was “The Freedom Barbecue,” featuring a Western barbecue menu.
Sponsors
The event was made possible by numerous NATO manufacturer members, including R.J. Reynolds Tobacco Company (Platinum Sponsor), Philip Morris, U.S.A. (Gold Sponsor), Conwood Sales Co., LLC (Gold Sponsor), Altadis, U.S.A. (Silver Sponsor), Swedish Match North America (Silver Sponsor), John Middleton, Inc. (Bronze Sponsor), Republic Tobacco Company (Bronze Sponsor), Swisher International (Bronze Sponsor), U.S. Smokeless Tobacco Company (Bronze Sponsor), Cusano Cigars (Patron Sponsor), Robert Burton Associates, Ltd. (Patron Sponsor), and Santa Fe Natural Tobacco Company (Patron Sponsor).
Heartland Partnership
Joe Bast, president of the Heartland Institute, spoke to the annual dinner guests about the need to support the freedom to buy and enjoy tobacco products. From smoking bans to unfair excise taxes, Joe Bast explained how hospitality establishment owners are being unjustly denied their freedom to accommodate all of their customers and consumers who buy tobacco products are being unfairly taxed.
This year, NATO is partnering with the Heartland Institute to change the public’s opinion about tobacco. The partnership effort will include (1) distributing 50,000 copies of Please Don’t Poop In My Salad, a collection of essays opposing smoking bans and higher taxes on tobacco products; (2) contacting hundreds of elected officials each month offering research papers and experts to testify at legislative
hearings on tobacco issues; (3) submitting commentary letters-to-the-editor on tobacco issues; and (4) creating a web site combining Heartland’s and NATO’s research and data on tobacco issues and promoting the web site as the best place to find professional and persuasive pro-tobacco information.
Legislative Report
During the NATO Annual Dinner, newly appointed NATO President Andy Kerstein spoke to the guests about NATO’s legislative efforts this year. In his remarks, Andy Kerstein indicated that this is a “watershed year” in terms of tobacco legislation because there are more bills to raise tobacco taxes and ban smoking than in any previous year. So far this year, cigarette and tobacco tax increases have been defeated in Kentucky, Mississippi, Nebraska, New Mexico, New York, and West Virginia and passed in Indiana and Iowa. Also, state smoking restrictions have been defeated in Kentucky, Mississippi, North Carolina, South Dakota, Virginia, and Wyoming.
New NATO Officers
The NATO board paid tribute to Velma Hartley, who served as the association’s president for the past three and one-half years. Velma did a remarkable job guiding NATO to numerous legislative victories during her term as president and the board presented her with a five point diamond star set inside a circle diamond pendant in appreciation for all of her hard work. In her remarks to the audience, Velma introduced the new NATO officers including President Andy Kerstein, Vice President Mary Szarmach, and Treasurer Dave Kepler.
Pinnacle Award Winners
The annual NATO Pinnacle Awards were presented to two very deserving recipients as a part of the dinner program. The Pinnacle Awards are given to a retailer and manufacturer member who demonstrate extraordinary support of NATO and who have shown the highest degree of commitment and dedication to assisting NATO on tobacco legislative issues.
The retail Pinnacle Award was presented to Jon Rand of Discount Smoke Shops in Missouri for his tireless efforts on planning and coordinating the effort to defeat a ballot question last November that would have raised the cigarette tax by $.80/pack and increased the OTP tax by another 20 percent. R.J. Reynolds Tobacco Company was honored with the manufacturer Pinnacle Award for the company’s support of NATO’s grassroots legislative advocacy, including extensive efforts to fight tax increases in Indiana, Iowa, and other states.
FDA Bill Impact
In the prior issue of TOB, I provided a summary of the legislation recently introduced in Congress that seeks to grant the Food and Drug Administration authority to regulate cigarettes and smokeless tobacco. In this column, I provide a more focused look at how the FDA legislation would impact retailers.
In an interview with the Associated Press on March 6, 2007, Dr. Andrew von Eschenbach, the Secretary of the U.S. Food and Drug Administration, acknowledged serious reservations about the agency regulating tobacco products when he stated:
“We could find ourselves in the conundrum of having made a decision about nicotine only to have made the public health radically worse. And that is not the position FDA is in; we approve products that enhance health, not destroy it.”
Dr. Eschenbach is not alone in expressing reservations about the legislation recently introduced in Congress as S. 625 and H.R. 1108 to grant the FDA regulatory authority over tobacco products. In fact, many of the proposed FDA regulations are duplicitous because other government agencies including the Federal Trade Commission, the Bureau of Alcohol, Tobacco and Firearms, the Bureau of Alcohol, Tobacco Tax and Trade among others currently administer many tobacco industry regulations that are contained in this legislation.
Besides being duplicitous and adding unnecessary regulations, four of the provisions in the FDA legislation warrant special attention by retailers that sell tobacco products.
Future Sales Prohibition: Section 917 of the bill specifically allows Congress, federal agencies, states, and cities to adopt even more severe restrictions, including a complete ban on the sale of tobacco products. No other business is confronted with such an uncertain fate regarding the sale of a legal product. By including this provision, the authors of the bill are attempting to specifically codify into federal law the ability of many levels of the federal and state governments to outright prohibit cigarettes and smokeless tobacco products. Prohibition of alcohol in the 1920s and early 1930s offers a textbook lesson why this kind of regulation will be an utter failure and circumvented through illegal means.
Nicotine Elimination: The legislation permits the FDA to reduce nicotine found in tobacco products to a miniscule amount and reserves the power to Congress to completely eliminate nicotine from cigarettes and smokeless tobacco products. While nicotine is habit forming, it is not harmful in and of itself and health advocates agree on this point. If nicotine is essentially eliminated from tobacco products, consumers will be unable to purchase their favorite brands of tobacco products as they now know them and such “nicotine free” products would be unacceptable to all or nearly all adult consumers resulting in severe sales declines for retailers. Moreover, the elimination of nicotine will force consumers to smoke more or turn to black market sources to purchase tobacco products containing nicotine.
Advertising Ban: All color tobacco advertising would be prohibited inside any retail store and retailers would be reduced to advertising legal products by using black letters on a white background. This in-store color advertising ban violates the protection of “commercial speech” under the First Amendment of the U.S. Constitution by limiting how tobacco product characteristics are communicated to adult consumers. Without in-store advertising, sales of less well known tobacco products will decline precipitously, reducing retailer profits and margins. For convenience stores and gas stations, which rely on in-store tobacco sales for as much as one-third of their revenue, such a serious decline in tobacco sales could have severe negative consequences for stores.
Tobacco Flavoring Prohibition: S. 625 and H.R. 1108 would also ban all cigarette flavorings except menthol, an herb or spice. This flavoring prohibition would eliminate an entire category of cigarette products, including clove cigarettes. Moreover, if the FDA uses its broad powers to expand this flavoring prohibition to other tobacco products, many kinds of cigars, little cigars, smokeless tobacco and pipe tobacco could no longer be offered for sale to adults. In the end, limitations on flavorings will make the taste attributes of tobacco products unacceptable to adult consumers and will increase the incentives for black market activity at the expense of law abiding retailers.
All of these legislative provisions should raise serious and valid concerns among every class of retailer that sells tobacco products. In fact, it was the mandate to reduce nicotine levels in tobacco products that prompted Dr. Andrew von Eschenbach to publicly question the efficacy of Congress granting the FDA such wide-ranging regulatory powers.
The future of retail stores that sell tobacco products will be placed in jeopardy by this legislation. Moreover, the uncertainty created by a grant of such sweeping authority to the FDA will cause retailers not to invest in expanding their businesses or opening new stores. Since the vast majority of new jobs that fuel our nation’s economy come from small businesses such as retailers, this legislation will have a negative impact on job growth in the retail sector.
Retailers need to understand the impact of the FDA legislation on their business and take action to protect the investment in their stores and their livelihood. At NATO, we are opposing the retail provisions of the FDA legislation, and we ask all retailers to join this fight.
Join NATO
If you want help to protect your business, you need to belong to NATO. To join, visit the NATO web site at www.natocentral.org and complete and send in the membership application form that you will find under the “Join NATO” button or fill out and fax back the form on the next page. Membership is open to tobacco outlets, convenience stores, gasoline service stations, liquor stores, grocery stores, wholesale distributors and manufacturers. To learn more about NATO, contact us at our toll-free number which is 1-866-869-8888 and visit the association’s web site at www.natocentral.org. •