logo
















logo

logo

logo

logo

logo

logo

logo

logo

logo

logo
June,
2008

Big Threats Require Bigger Responses

It’s taken the premium cigar industry an inordinately long time to fully recognize the exploding legislative threats against its livelihood. But it’s not too late to effectively fight back.

By J. Glynne Loope


The most overused adage in politics is “People who love the law or good sausage should never watch either being made.” When former German Chancellor Otto von Bismark uttered those words, one can see that he was actually foretelling the future of law-making as it applies to the tobacco industry, and specifically those that affect the premium hand-made cigar sector of the tobacco economy. The onslaught of legislation impacting the livelihood of America’s professional tobacconists, as well as the international manufacturers of cigars, is beginning to steamroll across the country at a pace that proves one thing: despite the mad rush of counterattacks, the industry is late in organizing itself to combat this plethora of legislation.

Fighting Back: Never Too Late
The cigar industry can be thankful that modern politics is based upon what works today and what sounds good today. Sadly for democracy, it brings to life the notion that “politicians think about the next election; statesmen think of the next generation,” which in this case works to the advantage of the cigar industry - for both the producers and consumers of fine cigars. It’s time to mobilize.

During the course of a 2006 RTDA seminar, I volunteered the strategy from the floor that for the premium hand made cigar industry to fight off threatening legislation, it had to marry itself to organizations and causes “bigger than yourself.” I believe that statement is still true today, and our work with the Cigar Association of Virginia is testament to this strategy - a model for such activities at the local, state, and national level.

In Virginia, the effort to fight off smoking ban legislation started as an effort by the Virginia Hospitality and Travel Association and “Big Tobacco” in 2006, and blossomed by the additional efforts of four family-owned Virginia tobacco shops into a business-led coalition that includes over a dozen trade associations. They said this issue is not about smoking, it’s about business. It’s about personal property rights. It’s about unwarranted intrusion into the livelihood of small entrepreneurial businesses. And, it’s about the hype the health-care community has generated using questionable data, and scare tactics targeted at the legislators themselves.

Nationally, the story is the same. In a day when the halls of government should be obsessed with addressing crumbling infrastructure, failing schools, homeland security, and energy for the future, instead there are hours of political debate on whether a patron should be able to enjoy a cigar in the shop in which it was purchased, or at the local bar with friends after a long day in the office. And hours more on whether the level of taxation on that one cigar should be so great that it forces an economic decision that is totally unnecessary. It’s all because tobacco products are just too easy a target.

The recent SCHIP tobacco tax debate is a case in point. The legislation to expand the State Children’s Health Insurance Program using new levels of tobacco taxation has been turned into a political football that has little to do with serving at-risk children and more to do with the next cycle of elections. Instead of a program slated to serve our nation’s most needy, it would have allowed families with incomes up to $83,000 to benefit. It was estimated by the Congressional Budget Office that the country would actually need 22.4 million “new” smokers to fund the program at the proposed levels.

That’s government math for you: use a declining revenue source to expand a program for those that don’t need it.

As governments also continue to feed their appetite for new sources of revenue, the OTP tax that tobacco retailers have become all too familiar with is also a common legislative debate. Maine, Kentucky, Massachusetts, Maryland, and Kansas are among those that keep trying to push this level of taxation higher. Tobacco retailers, manufacturers, and consumers need to get this OTP tax debate integrated into the issues monitored by groups such as Americans for Tax Reform, FreedomWorks, and Americans for Prosperity. We have friends we didn’t even know on such issues.

Smoking bans are another commentary on misplaced priorities. Few states have not been engaged in a debate on some form of smoking ban, or broadened their reach to ridiculous limits. New York, in just one example, wanted to extend its smoking ban to beaches and (gasp!) golf courses. In Virginia, the legislature went from one tobacco-related bill filed in 2006 to 12 filed in 2008.

Proponents of smoking bans are quite fond of stating that there are no adverse economic consequences to the passage of such legislation. Now, there is evidence to the contrary. A recent report from the Federal Reserve Bank of Kansas City cites federal Bureau of Labor Statistics analysis that notes in areas that have passed smoking bans, there is a “statistically significant” employment decline in bars/restaurants ranging from 4-16 percent. Over a 25 year period, California experienced a four percent decline in revenues as a result of smoking ban action. The study further notes that when a “higher jurisdiction,” i.e., state governments, impose smoking bans, that they can have a “detrimental economic impact.” The analysis was by Michael Pakko, a career Federal Reserve Bank economist.

When the Cigar Association of Virginia cited this study in legislative testimony, the healthcare and non-profit groups (heart, lung, and cancer) tried to depict Pakko as a pawn of the tobacco industry. Tobacco retailers had to actually get a written statement from Pakko that he had no contact with the tobacco industry, and that it would have been against their code of professional conduct to have any influence from the industry. Amazing.

Since the beginning of 2008, Alabama, Mississippi, Oklahoma, Pennsylvania, Rhode Island, Washington, and Iowa - among others - have debated varying versions of smoking ban legislation. It’s time to mobilize. It’s time to win some elections for “our side.” It can be done.

When Florida and Ohio can sway the outcome of an entire national election; 9,329 votes can decide a Virginia race for the United States Senate; and 75 votes can toss out of office Virginia’s chief proponent of a smoking ban, it all means one thing: the industry can round up enough people who enjoy a fine cigar to make our voices heard and play a tangible role in the political process.

A Gameplan For Survival
To leverage its influence to affect the outcome of local, state, and national legislative threats, the industry must:

  1. Make the issues closest to the premium hand-made cigar industry, the issues of large national trade associations such as the National Association of Manufacturers, National Federation of Independent Businesses, U.S. Chamber of Commerce, and related groups that carry a great deal of weight in our nation’s capital. These groups are our philosophical cousins, and we need to get the family on the same hymn sheet;

  2. Organize state cigar associations that mobilize retailers, and their patrons. Form a political action committee within each association that “gives to your friends” in your state and federal legislative delegation, as well as, candidates for local office;

  3. Make “tobacco issues” into “business issues.” No politician likes to be labeled anti-business, and many business groups rank the level of “business friendly” for a given elected official. Get tobacco issues into these calculations.
We need to make our fight into the ultimate grassroots movement. There needs to be a ground swell of political activism that takes to heart the Machiavellian notion, it is better to be feared, than to be loved. Those that enjoy cigars can sway elections, defeat legislation, influence decision makers, and protect their right to enjoy a fine cigar. The time, is now.

J. Glynn Loope is founder and president of Commonwealth Advance, LLC, a government relations and business development consulting firm in Virginia. He is also the lobbyist for the Cigar Association of Virginia..


SMOKESHOP - June, 2008