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December
2003

COULD YOUTH ACCESS DEBATE
RESHAPE DIRECT-ORDER TOBACCO SALES?

When Maine legislators implemented a new law in September aimed at preventing children from gaining access to tobacco products through direct-mail and Internet retailers, it managed to rile up cigar enthusiasts, cigar catalogs, delivery services, and raise questions of constitutionality.

Some local cigar shops are thrilled.

The premise was, in theory, simple: Hold all retailers, including out-of-state direct mail and Internet businesses, to the same strict, youth access standards (and tax burden) of the corner smoke shop. But because online and catalog purchases are not made face-to-face, the logistics of such compliance are problematic. The new law quickly began to discourage out-of-state tobacco sales, including cigars. That's just fine, say state officials, who'd just assume ban it completely, if they could.

The reason is clear. Online tobacco sales continue to grow. They're a glaring loophole in youth access efforts as well as tax revenue collections. Massachusetts-based Forrester Research Inc. estimates that 14 percent of tobacco sales in 2005 will occur online and states will lose an estimated $1.4 billion in tax revenue.

Maine's new law holds tobacco buyers, retailers, and delivery services, including the U.S. Postal Service, responsible for compliance. Sellers of tobacco products must be licensed in Maine. Buyers are required to send the retailer a letter with their birth date, legitimate mailing address, a paragraph that they have made a choice to personally receive the deliveries, and a statement that they are aware that providing false information is unlawful. Tobacco sellers must verify the buyer's age through a commercially available database that collects information from government records. Retailers must clearly label packages as containing tobacco products and mark them with their Maine tobacco license number, and ensure the company making the delivery also verifies the age of the addressee, even checking the buyer's Maine-issued photo identification card.

Once each month, out-of-state tobacco retailers must notify the state about all the tobacco it shipped to Maine, either by memo or submitting copies of each invoice to Maine Revenue Services. The name, address of purchaser, and the brand and quantity of the tobacco products that were sold must be included.

It's a lot of work that isn't currently being done... unless you're a brick and mortar tobacco shop, that is. Given the new requirements, United Parcel Service quickly decided to discontinue deliveries of tobacco products to individual consumers in Maine. A civil lawsuit filed in October by three New England motor transport associations challenges the constitutionality of the law because it imposes restrictions on free trade. Delivery services have to separate all packages to weed out ones identified as containing tobacco, check if the shipper is licensed in Maine, and possibly return to an address numerous times to hand the package to the addressee if it can't be delivered the first time, according to the lawsuit.

About three years ago, New York attempted to impose similar rules, which were eventually struck down. Efforts are also under way in the U.S. Senate to impose similar requirements on delivery services at the national level. The "Prevent All Cigarette Trafficking Act" currently awaits a full Senate vote.

Tobacco retailers in Maine say they will benefit from the new law because they'll pick up new tobacco sales. Which all begs the question, if powerful retail lobbies have prevented online liquor sales in some states, should brick and mortar tobacco shops be fighting harder to restrict direct-order tobacco sales?

E. Edward "Ted" Hoyt III
Editor