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October,
2006

Prop 86 Strategy, Hard Work, Money Paid Off in California

This past election day, six states had tobacco-related ballot initiatives on the ballots, letting voters decide the outcome of proposed smoking bans and excise tax hikes.

California’s Tobacco Tax Act of 2006, a.k.a. Prop 86, garnered a tremendous amount of industry attention and funding. If passed, it would have increased cigarette taxes by $2.60/pack and the tax on other tobacco products would have been raised to approximately 135% of the wholesale price. Voters defeated this unfair and unreasonable tax increase.

While there was debate among opposition group as to selecting the proper strategy to ensure defeat, in the end the considerable shift in public opinion among California voters was testament that the arguments presented against Prop 86 were exceedingly effective: Voters defeated the initiative with 52.1% voting no and 47.9% voting yes. Consider that as of last August, public opinion was stacked handily in favor of the ballot initiative and against the industry, with 63% saying they’d vote for Prop 86, and only 32% saying they’d vote against it among polled voters.

A diverse industry opposition formed, including grassroots efforts of over 200 California retail tobacconists; 13 cigar manufacturers and distributors who came together to form California Association of Liberty and Choice, No on Prop 86 (CalLC) with contributions from the Retail Tobacco Dealers of American (RTDA). In addition, the National Association of Tobacco Outlets (NATO) worked with numerous industry partners to oppose the ballot question, as did the California Association of Retail Tobacconists (CART).

“Whenever I spoke to California retail tobacconists,” said CalLC’s Keith Park, “I was just so amazed by how hard they campaigned since August. Many of them went around the golf courses near their shops to pass out the campaign brochures and held special cigar events to educate their customers on why Proposition 86 was an ill-conceived, poor tax measure. I even know a retailer who stood on the street corner to pass out the campaign matches. Our triumphant victory belongs to California retail tobacconists, who gave their blood, sweat, and tears.”

Then of course there were the big guns. “Californians Against Unaccountable Taxes, Sponsored by R.J. Reynolds Tobacco Company,” raised and spent $23 million; “No On 86 - Stop The $2 Billion Tax Hike, A Coalition of Business, Law Enforcement and Taxpayer Groups and Philip Morris USA,” raised and spent $36 million. It was these funds that drove major television campaigns.

CalLC already announced plans to re-group and begin its fight on its next battle, including segregating the tax on cigars and pipe tobacco from the tax on cigarettes, and limit the maximum tax rate of cigars to $0.50 per cigar. Unlike Prop 86, the cigar industry can expect to fly solo on these efforts, but if the success in Washington, Oregon, and Rhode Island are any indication, success may not be as elusive as it once appeared.

E. Edward Hoyt III