Nathan Bush

1
Taxing New Tobacco Products Strategies and
Challenges in the States

• Nathan Bush
• Vice President of Government Relations

2
Taxing Smokeless Tobacco Offensive and
Defensive Campaigns

• Some campaigns will allow you to play offense and
  control the policy
• Others will force you to scramble to slow up or
  kill a bad bill
• A simple weight-based taxation bill (or existing
  statute) is your enemy
• If you are forced to assume a defensive posture
  and educate lawmakers for the first time on this
  issue mid-session, the cards will be severely
  stacked against you

3
Taxing Smokeless Tobacco The Public Health
Campaign Approach

• Manage your effort like the public health
  campaign it is
• Recruit local and national partners
• Dont reinvent the wheel
• Always use combination of facts and personal
  stories to make your points
• Quality anecdotes can be game-changers for
  lawmakers
• Dont assume decision-makers know anything about
  smokeless tobacco or how to properly tax it
  educate them!

4
Taxing Smokeless Tobacco Getting Organized

• Research local and national data
• Know your policy talking points
• Focus on health
• Determine coalition resources and member roles
  (stick together on this!)
• Show decision-makers examples of these new,
  flavored products (they will be shocked!)
• Know your oppositions (e.g., USTs) policy
  talking points

5
Taxing Smokeless Tobacco The Public Health
Campaign Approach

• Problem Statement
• Taxing all forms of smokeless tobacco
• (and/or moist snuff) by a simple weight-
• based tax lowers the comparative price
• of the brands most popular with youth.

6
Smokeless Tobacco and Cancer

• The American Cancer Society notes that all forms
  of oral tobacco contain chemicals known to cause
  cancer (carcinogens). These products can cause
  cancer of the mouth, pancreas, and esophagus.

7
Prepare Yourself Research Good vs. Bad Policy

• Simple weight-based taxes are bad for health and
  bad for state revenue, especially over the
  long-term
• New generations of smokeless products tend to
  weight a LOT less, therefore subject to lesser
  tax in a weight-based scheme
• UST will try to couch a switch to weight-based
  taxes as a good way to raise taxes a public
  health win
• UST will try to use traditional public health
  arguments against you (e.g. kids are victims of
  other brands low-priced tobacco)
• You must be prepared to demonstrate the truth
  kids prefer UST products

8
Brand Preferences Percentage of Youth Users
9
Weight-Based Taxation is a Bad Strategy Because
It Promotes Harmful and Very Popular Products

• The smokeless tobacco industry likes to promote
  the use of smokeless tobacco as an alternative to
  smoking cigarettes.
• The smokeless tobacco industry suggests that the
  use of smokeless tobacco will help smokers quit.
• WARNING THERE ARE HUGE PROBLEMS WITH THIS TYPE
  OF MARKETING BY THE INDUSTRY

10
Weight-Based Taxation is a Bad Strategy Because
It Promotes Harmful and Very Popular Products

• Smokeless tobacco is not a safe alternative to
  smoking cigarettes.
• Increased marketing by the industry leads to an
  increase in the number of new users, including
  youth users
• FDA-approved smoking cessation aids are safe and
  increasingly available.

11
Smokeless Tobacco PromotionVia Weight-Based
Taxation is Not a Public Health Strategy

• http//www.npnweb.com/uploads/featurearticles/2007
  /npnMarketPulse/011707_mp1.asp
• (Web page information excerpted and printed
  1-28-07)
• Study Moist tobacco does better where tax is
  weight-based
• Moist smokeless tobacco volume is increasing
  faster in states employing a weight-based excise
  tax versus states that use an Ad Valorem tax,
  according to an analysis by Willard Bishop, a
  consulting firm in Barrington, Ill.
• Only nine states use a weight-based tax, Willard
  Bishop said Jan. 16 in releasing results of its
  analysis. Those nine reported volume can growth
  of 10.7 percent for a 13-week period in 2006
  compared to the same period in 2005 (see table).
• In the states with Ad Valorem tax, volume can
  growth was 7.5 percent, according to the firms
  analysis. Ad Valorem tax is typically expressed
  as a percentage of the wholesale price.

12
Smokeless Tobacco PromotionVia Weight-Based
Taxation is Not a Public Health Strategy

• Long-term ACS Switchers Study (Henley et al.
  2007) determined that premature death was more
  likely for men who switched from cigarettes to
  smokeless compared to those who quit smoking with
  no other tobacco use
• 2009 report from HHS/SAMSHA confirmed that
  smokeless use is increasing among adolescent
  males
• Dual Use can interfere with tobacco cessation,
  especially when the industry promotes switching

13
Planning Your Strategy Know Who The Players Are

• Big Tobacco companies dominate this market but
  they cannot rightfully make legitimate health
  claims
• UST / Altria
• Conwood / Reynolds American
• Other players, other products entering the market
  at various price points and stoking competitive
  (and legislative) flames between tobacco companies

14
Preparing Your Strategy Know Your Opposition

• UST is an aggressive company with ambitious
  legislative goals
• UST is now owned by Altria (parent company of
  Philip Morris)
• UST continues to dominate the market alongside
  other high-end Altria brands like Marlboro snus
• UST has a checkered past

15
Preparing Your Strategy Know Your Opposition
16
Preparing Your Strategy Know Your Oppositions
Opposition

• Market share domination is the 1 objective of
  competing tobacco companies
• Conwood RJR are strategic enemies of UST
  Altria on this issue
• Only UST will benefit from simple weight-based
  taxes (now with the backing of Altria)
• No need to collaborate with the industry just
  make the health arguments, and leave the rest to
  tobacco industry infighting
• Do not appear to be aligned with any one tobacco
  companys interests you must be the voice of
  reason and the voice of health

17
Do Your Homework Inform Your Lawmakers

• Beware of USTs bad habit of recruiting otherwise
  quality tobacco control legislative champions for
  their weight-based scheme
• Your job is to preemptively educate lawmakers and
  relevant tax/revenue policy analysts (display
  actual products and applicable weights if
  possible)
• Do not be swayed by offers of revenue
  enhancements for public health programs courtesy
  of UST and their weight-based scheme
• If your state has a price-based moist snuff tax,
  it is only a matter of time before UST shows up
  at your capitol

18
For campaign assistance, please contact Kelley
Daniel Senior Representative State and Local
Campaigns American Cancer Society Cancer Action
Network kelley.daniel_at_cancer.org