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June,
2005

TRENDS AND TRENDSETTERS IN SPECIALTY TOBACCO RETAILING
Cigar Bar Owner Ends Eminent Domain Fight
San Diego, CA - Opponents of the government's power to take private property bid farewell to one of their most celebrated San Diego fighters. Ahmad Mesdaq, owner of the Gran Havana Cigar and Coffee Lounge in San Diego's historic Gaslamp district, waged a spirited and costly legal battle to stop the city from taking his business to make way for a proposed Marriott Renaissance Hotel.

"I'm really exhausted, and I'm really depressed," he said. "I cannot fight this anymore. I'm burned out." In 2000, Mesdaq spent $2.5 million to buy and renovate the former warehouse he'd been leasing since 1994.

To take the property, the Centre City Development Corp., San Diego's downtown redevelopment agency, declared the site "blighted," a first step in eminent domain, a process enabling the government to condemn private property for a public benefit. In Mesdaq's case, the land surrounding his building - some old buildings and parking lots - were declared blighted. Mesdaq refused offers to sell to the hotel developer and CCDC. San Diego still must pay Mesdaq what a court decides is a fair market price; any cleanup costs could be deducted from that money.

With legal bills exceeding $500,000 and seeing few prospects for success in the courts, Mesdaq said he could no longer fight. He has been ordered to vacate the property by June 15 for demolition.

The case, which drew national attention, had support from property rights groups and was the subject of a documentary film - Grand Theft Building. The dispute has left Mesdaq financially and emotionally broken, he said. "I feel it's just wrong," he said.


Ontario Will Be Smoke-Free By 2006
Complete Retail Tobacco Display Ban in Place by 2008

Ontario became the seventh Canadian province to go smoke-free when its government passed the Smoke-Free Ontario Act on June 9. The government says it is the strictest anti-tobacco legislation in North America.

The new regulations ban smoking in all enclosed public places and workplaces as of May 31, 2006; toughen laws on tobacco sales to minors; and restrict the display of tobacco products in retail outlets. By May 31, 2008, there will be a complete ban on the display of tobacco products - particularly "power wall" display cases, which hold dozens of cigarette packages at a time.

Provincial Health Minister George Smitherman took a tough line and said affected establishments will have about a year to close their smoking areas, no exceptions. Veterans associations had asked for an exception to the ban but legion halls will also be covered by the legislation. Even so, minor exceptions were made for nursing homes, veterans hospitals and psychiatric centres as long as separate ventilation is provided.

The legislation was called a "crippling blow" to many small businesses across the province by Canadian Restaurant and Foodservices Association (CRFA) president Douglas Needham. "Business owners asked for a reasonable transition period to a full ban, but their concerns have been ignored," says Needham, adding that the regulations render hundreds of costly designated smoking rooms (DSRs) worthless.

"Hundreds of small business owners invested in DSRs in good faith to comply with municipal bylaws and now the provincial government is effectively expropriating them without compensation. Their investment has gone up in smoke," says Needham.

More than 700 businesses in Ontario have already built DSRs to comply with municipal smoking bylaws, at costs ranging from $15,000 to $300,000.


Bits & Pieces
  • The majority of D.C. Council members have said they are open to exempting cigar bars from legislation that would ban smoking in all public places, including restaurants and bars. At least nine of the council's 13 members have expressed openness to a cigar-bar exemption after a public hearing on three anti-smoking bills this week. There are several competing bills being considered, however: one would exempt bars that earn at least 10 percent of their revenue from tobacco sales, while another has no exemption for cigar bars. but would exempt retail establishments that earn 75 percent of their revenue from tobacco and related products.

  • Synergy Brands, Inc., plans to open the company's first major retail outlet and cigar club in Miami Lakes, Florida, in July with a grand opening celebration planned for fall of 2005. The Cigars Around the World retail store is expected to feature over 1,000 unique cigars, including both brand name, hand-made premium cigars as well as proprietary brands of Gran Reserve Corp., a unit of Synergy Brands.

  • Louisiana governor Kathleen Blanco has given up on a heavily promoted campaign for a $1-a-pack increase in cigarette taxes to give teachers a significant pay raise.

SMOKESHOP - June, 2005