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August
2003

TOBACCO INDUSTRY NEWS

New York's Cigarette Safety Law Delayed

Albany - A state law requiring that all cigarettes sold in New York extinguish themselves when left unattended did not go into effect in July as planned, despite years of preparation. Designed to reduce the incidence of accidental fires, the 2000 law required Gov. George Pataki's administration to draft regulations spelling out the standards that cigarette manufacturers would have to meet by Dec. 31, 2002.

The law required that those rules would go into effect six months after the regulations were finalized. But the Pataki administration only issued a draft of the regulations by the December deadline and, at press time, had yet to approve the final version.

Pataki officials say the complexity and novelty of the "fire-safe" cigarette law - the first such requirement in the nation - have demanded more time. Peter Constantakes, a spokesman for the New York Department of State, said it has not been easy to develop a standard that will make cigarettes extinguish themselves. He also said the state wants to ensure the concerns raised in the public comment period are addressed to avoid potential lawsuits.

Brendan McCormick, a spokesman for Philip Morris USA, said cigarettes that met draft standards would extinguish themselves too quickly. He said that if the cigarette technology is not refined, people may go out of state to purchase unregulated cigarettes.

Whether cigarette manufacturers will be able to meet the standards remains to be seen. The industry maintains the standards must allow companies to make cigarettes that customers will still buy, or New York consumers will get them from other markets.

"In order for that standard to be achieved," said McCormick, "it has to be met with cigarettes that are acceptable to customers."

At press time in early July, it appeared the state would release new, stricter guidelines within a few weeks. A 30-day comment period will follow. Once the standards are printed, cigarette companies have six months to comply, but are expected to sue the state over the new requirements.


Republic Tobacco Awarded $10.6 Million in Defamation Suit Against NATC

Chicago - Glenview, Ill. based Republic Tobacco was awarded $18.6 million in damages from New York based North Atlantic Trading Company (NATC) by a jury in federal district court in June.

"This verdict sends a powerful message that false, defamatory statements about a competitor's programs are not acceptable business conduct," said Republic Tobacco chairman Don Levin.

Thomas F. Helms, Jr., chairman & c.e.o. of NATC, stated, "We were surprised and disappointed by the jury's award. In our opinion, the verdict is not supported by the facts in this case." At press time, NATC said it may appeal any judgment pending the outcome of post-trial motions.

In 1998, Republic Tobacco, which manufactures and sells Top, Drum, and Job rolling tobaccos, offered incentive and trade programs to its wholesale and retail customers. Republic argued that NATC, the which distributes ZigZag brand tobacco and cigarette papers, made false and disparaging remarks about Republic's programs and other practice, damaging Republic's reputation in the industry. A jury in Chicago awarded Republic $8.4 million in compensatory damages and $10.2 million in punitive damages. The case is pending before the Hon. John F. Grady of the United States District Court for the Northern District of Illinois.


Cheyenne Starts Own Cigarette Production

Grover, NC - Cheyenne International, in partnership with a group of North Carolina investors, has leased a 46,000-square-foot manufacturing site in Cleveland County and begun producing its own cigarettes. The facility is located near Grover, North Carolina.

The limited-liability company, which markets the Cheyenne Premium brands of cigarettes, started bringing the operation online in July, with plans for up to 30 employees.

Cheyenne and Cheyenne Light discount-priced cigarettes have previously been manufactured by another small tobacco company and distributed under Cheyenne's name.

Bill Greiwe, Cheyenne president and chief executive, hopes to eventually buy the building and employ up to 100 workers at the site. The company already has 11 cigarette products on the shelves of tobacco and convenience stores, primarily in the Southeast region of the country.

Cheyenne products are sold in varieties ranging from full-flavor lights to nonfilter kings.


Oklahoma Poised to Seize Non-Compliant Cigarette Brands

The Oklahoma Tax Commission has posted the names of more than 120 cigarette brands produced by 27 cigarette companies that could be considered contraband and seized, alleging that they have not complied with the rules of the Master Settlement Agreement.

Companies that have not joined the MSA can set aside money in an escrow account, based on volume of sales within the state. Under newly-enacted model legislation, Oklahoma's attorney general is required to provide the state's tax commission with the names of companies and brands that are violating the rules. The commission then has 20 business days to post the information on its website. The items are then considered contraband 20 days after the published notice. Enforcement is the responsibility of the tax commission and any other law enforcement agent in the State.

Manufacturers or brands that come into belated compliance with the law, will be posted by the Oklahoma Tax Commission on its website and will no longer be contraband and subject to forfeiture.


The Ultimate Cigar Book Celebrates 10th Year

This year, The Ultimate Cigar Book by Richard Carleton Hacker celebrates its first decade of continuous publication.

"When I first wrote the book," says Hacker, "I had no idea of how well it would be received, not only in America, but throughout Europe."

The Ultimate Cigar Book helped launch the cigar boom, making its appearance in October 1993. It was the first cigar book to expose the existence of counterfeit Cuban cigars (and to break the code) as well as the first cigar book to recognize women smokers, cigar clothes, cigar clubs, to pair cigars with whiskies, and to categorize virtually every cigar in the world, complete with tasting notes and history. In fact, Habanos, the Cuban marketing arm of Cubatabaco, used The Ultimate Cigar Book to recreate much of the history of their own brands.

Hacker is the only cigar book author to have visited every major cigar making country in the world and his unique "Highly Prejudiced HackerScale" (HPH) system of classifying cigars by strength, rather than taste, has been widely quoted.

A special Tenth Anniversary printing of The Ultimate Cigar Book will be available at the RTDA. Richard Carleton Hacker, P.O. Box 634, Beverly Hills, CA 90213, Tel; (818) 783-2477, Fax: (818) 995-0463.



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