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August,
2006

Industry Rolls Out Massive Campaigns to Fight Prop 86

The importance of implementing an effective challenge to California's Tobacco Tax Act of 2006, known commonly as "Proposition 86," has been made clear throughout the industry for months now. Authorization for the tax hikes will appear as a ballot initiative to be decided by state voters on election day in November. As California's narrow 1998 passage of Prop 10 proved, a victory on election day is the only way to defeat the tax.

Agreeing on the best approach in winning public sentiment, however, has generated some passionate differences of opinion within the industry.

In August, RTDA legislative director Chris McCalla reiterated the association's position in challenging Prop 86.

Phillip Morris USA, R.J. Reynolds, and the Cigar Association of America (CAA) have committed a total of $50 million to challenge the tax hike. "Without the financial resources of these groups, there would be no effective challenge in the State of California to this tax initiative," says McCalla.

"Your Association stands with [them] in this fight to ensure one consistent, clear message [is] conveyed to all registered voters -that Proposition 86 is the wrong solution. Prop 86 is an unfair tax increase supported by special interests who are amending the state Constitution and statutes to benefit themselves. It's a money grab by huge hospital corporations who will reap hundreds of millions of taxpayer dollars each year."

"In order to prevent confusion among the electorate, sending out a separate message unrelated to the central theme could undermine and prove detrimental to the tobacco industry's efforts in the state. We cannot afford to send conflicting messages to the voters. This fight can only be won if we collectively stand together on one platform with one voice."

As explained at the RTDA trade show by a representative of the public opinion firm hired by the tobacco coalition to sway California voters, only voters with no strong opinion either way on the issue are targets of the campaign, as their opinions can still be swayed by arguing facts surrounding the proposition. Committed anti-smoking voters on the other hand, as well as tobacco consumers, retailers, and those allied to the industry, have already made up their minds and are committed to their position. To win the middle ground, the campaign doesn't argue about the unfair burden of high taxes on premium cigar smokers. In fact, you won't see the word "tobacco" anywhere.

The trouble, note some within the industry, and the issue at the heart of the lessons learned by the narrow passage of Proposition 10 in 1998, is that it's dangerous to assume anything. Smokers and the California industry itself should be fully aware of exactly what will happen - to them - if Prop 86 passes, some argue. That particular angle is not part of the major coalition's media campaign.

"A lot of California retailers do not completely understand the issue," noted Keith Park of California Association of Liberty and Choice (CalLC) in early July. "For instance, quite a few of them told me that we must write to the state legislature. The propositions are not determined by the elected officials, but by the voters." Park notes even some cigar smokers voted for Prop 10 back in 1998, thinking its taxes only applied to cigarettes.

As election day approaches, all parties continue to forge closer cooperation, however. In August, the RTDA committed additional funds to CalLC to cover the costs of "No on 86" matches for every tobacco retailer in California. And both CalLC and the RTDA coalition are providing plenty of POS materials for stores. By November 7, there should be little doubt in anyone's mind.

E. Edward Hoyt III