Tobacco.org

• Court rules against tobacco shop 

Customers are still rolling their own smokes at Tobacco Haven, despite a superior court ruling Monday that says the Brookline shop is a cigarette manufacturer that hasn’t been paying either the mandatory Tobacco Settlement tax, or making escrow payments.

Merrimack County Superior Court Judge Larry Smukler issued a temporary injunction against Tobacco Haven on Monday, ordering the shop on Route 13 to either ensure that its supplier has paid the required tax or escrow payment, pay itself, or stop operating its two high-speed cigarette-rolling machines.

The machines take loose tobacco and roll 200 cigarettes in a matter of minutes. A carton costs $25.99, while cartons of many name brand cigarettes can cost twice as much. Customers have flocked to the store, often lining up to use the machines.

What’s at stake here is a lot more than where people can buy cheap smokes. The state filed suit against the company in August because New Hampshire stood to lose about $50 million in tobacco settlement money.

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• AP IMPACT: Tobacco execs quickly find tax loophole 

With a simple marketing twist, tobacco companies are avoiding hundreds of millions of dollars a year in taxes by exploiting a loophole in President Barack Obama's child health law.

Obama and Congress increased taxes on tobacco products earlier this year to pay for expanded children's health insurance, but tobacco for roll-your-own cigarettes saw a disproportionate leap, from $1.10 to $24.78 per pound. Some predicted the tax would kill the roll-your-own industry, which had offered a cheaper alternative to packaged cigarettes.

But tobacco companies quickly adapted. The Associated Press found that as soon as the tax was on the books, companies all but shut down their roll-your-own brands and reinvented them under a less-restricted, less-taxed category: pipe tobacco. It's still destined to be rolled and smoked, but it's taxed at barely a tenth the rate, $2.83 per pound.

Normally, pipe tobacco is coarser and moister than cigarette tobacco. But nothing says it has to be. In fact, the federal government says the only distinction between the two is how it's labeled. That effectively gives tobacco marketing executives an opportunity to shape the company's tax rate. . . .

Anti-tobacco groups say it's deception, and not just because of the taxes. While flavored cigarettes are now banned in an effort to reduce the appeal of smoking to children, no such ban applies to pipe tobacco, allowing companies to sell black cherry, vanilla and other varieties. "This is a direct challenge to the federal government," said Matthew Myers, president of the Campaign for Tobacco Free Kids.

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• Roll your own smokes popular but no safer, research finds  

The number of tobacco smokers currently in Thailand has reached 14.3 million, the latest Global Adult Tobacco Survey revealed yesterday.

Meanwhile, the Public Health Ministry is considering a proposal to the Finance Ministry to increase the tax level on hand-rolled cigarette products after finding over 7.4 million people smoke this style of cigarette. The remainder smoke manufactured cigarettes.

The Global Adult Tobacco Survey is a national household survey launched in February 2007.

Sixteen countries, home to more than half the world's smokers and bearing the highest tobacco use, were involved in the study: Bangladesh, Brazil, China, Egypt, India, Indonesia, Mexico, Pakistan, Philippines, Poland, Russian Federation, Thailand, Turkey, Ukraine, Uruguay and Vietnam.

Thailand was the first country to complete and release its survey . . .

He said most cigarette manufacturers are now producing more smokeless cigarettes after noting an increasing trend in smokeless tobacco use among teenagers worldwide.

To reduce the number of hand-rolled cigarette smokers, Prakit has asked the government to increase the tax level on hand-rolled cigarette products and collect tax excise to 70 per cent of product price from the current rate.

Deputy Minister of Public Health Manit Nopamornbodee said he will consult with the Finance Ministry about increasing the tax level on hand-rolled cigarette products and ya nat - traditional medicine that contains hand-rolled cigarette products. . . .

Meanwhile, Thai Network Against Tabinfo Asia 2009, led by Dr Hatai Chitanont, has submitted an open letter to Deputy Finance Minister,Prasit Pattaraprasit asking him to withdraw from the tobacco industry event he is due to open on Wednesday at Impact Arena Moung Thontani Exhibition Centre.

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• Roll-ups burn a hole in cigarette sales  

Roll-ups are making a comeback, as recession-hit smokers switch from expensive cigarettes to cheaper hand-rolled tobacco.

Customs officials cleared 159,605kg of rolling tobacco for distribution in the first nine months of this year, a 38% increase on 2008. They attributed the surge to a rise in the use of roll-your-own tobacco by smokers striving to cut costs.

A survey published last week found that Irish people are smoking more than ever, with one third of the population still lighting up, the highest rate in 11 years.

Despite hikes in tobacco tax, the ban on smoking in the workplace and a law against shops displaying cigarettes for sale, the number of smokers has risen since 2007, when 29% of the population smoked, the EU’s Help campaign found.

A 25g pack of rolling tobacco costs €8.74 but, according to Vincent Jennings, chief executive of the Convenience Stores and Newsagents Association, a thrifty smoker could roll as many as 150 cigarettes from it. Twenty cigarettes cost €8.45, though a preliminary ruling from the European Court of Justice last week found that Ireland’s policy of setting a minimum price for tobacco products distorts competition.

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• Lawyer denies shop makes cigarettes 

The state says a Brookline business that sells loose tobacco to customers who roll their own cigarettes on machines inside the shop is a cigarette manufacturer and is obligated to pay into a tobacco settlement fund.

But an attorney for North of the Border Tobacco, which operates under the name Tobacco Haven, told a Merrimack County Superior Court judge Tuesday that his client isn't manufacturing cigarettes and should not be obligated to pay.

Judge Larry Smukler heard arguments in the case and will issue a ruling in the next 30 to 60 days. In August, the New Hampshire attorney general's office cited the small business for possible violation of state laws, saying a violation might put the state at risk of losing millions of dollars in tobacco settlement funds.

Assistant Attorney General David Rienzo, who works for the consumer protection and antitrust bureau, said the case was the first in the state and possibly the country.

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• Roll-up cigarettes’ popularity on the rise with women, report reveals 

More than one in four adult smokers now use pouch tobacco and roll-up cigarettes, with a particularly sharp rise in the proportion of women users, research shows.

Analysis of smoking habits in England suggests a cultural shift in the use of tobacco, with one in five white-collar professionals who smoke now using roll-ups rather than conventional cigarettes.

While roll-ups may once have been the habit of the working man and the spit and sawdust pub, their use among women has risen sharply in recent years.

In 1990 just one in 50 female smokers used hand-rolled tobacco, compared with one in five in 2007.

The trend, revealed in Statistics on Smoking in England 2009, was described as partly a cultural shift -- with roll-up smoking less stigmatised and more "hip" among the middle-classes -- and partly economic, with rolling tobacco significantly cheaper as it has not been subject to severe tax rises placed on other forms of smoking.

Some famous smokers of roll-ups include the actresses Kate Winslet, Emma Thompson and Helena Bonham-Carter.

The report, compiled by the NHS Information Centre and published yesterday, also shows that the number of people aged 35 and over admitted to hospital for smoking-related diseases has risen by a fifth since 1997, from 1.2 million to 1.4 million.

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• Much at stake in roll-your-own suit 

Customers from near and far line up daily at the Route 13 smoke shop with the roll-your-own cigarette machines that can spit out 200 cigarettes in 10 minutes. They buy by the carton, for less than half the price of many name brands.

But state officials say the machines are making an end run around the landmark 1998 settlement with major tobacco companies, which were required to pay yearly contributions to the states. In a lawsuit filed last week, New Hampshire's attorney general contends Tobacco Haven's cigarette machines violate terms of the agreement and could jeopardize the $50 million in settlement money New Hampshire receives each year.

"At $50 million a year, we have a rather inescapable incentive here,'' said David Rienzo, an assistant attorney general.

Rienzo, along with smoking industry specialists and antismoking groups, say that higher cigarette taxes have spurred a burgeoning roll-your-own market. But until now, it has been largely confined to individuals who buy small, hand-operated rolling machines for personal use. The machines at Tobacco Haven, by contrast, are more akin to high-powered vending machines that spit out cartons of cigarettes in a matter of minutes. Such machines have cropped up across the country, and in New Hampshire prosecutors worried that they could emerge as powerful competitors to commercial cigarettes.

New Hampshire's suit, believed to be the first of its kind, argues that Tobacco Haven is essentially manufacturing cigarettes and therefore should be making contributions to the state. Tobacco Haven counters that they are strictly a retail outfit and that customers are paying to use the machines for personal use.

State officials say that by allowing a shop to make cigarettes without contributing some proceeds, they risk lawsuits from competing manufacturers angry over unequal treatment.

"At face value, this tobacco shop is in the business of making cigarettes,'' Rienzo said. "It's roughly a pack a minute, so it's not an insignificant number of cigarettes, and it really could cause us some heartburn.''

Under state law, Tobacco Haven would have to contribute about 2 cents for each cigarette sold to a set-aside fund, he said.

This week, the state ordered the shop to shut down the machines, but the two machines rolled on as usual on a recent morning, with a lengthy line of smokers from New Hampshire, and Massachusetts. . . .

Sweda had never heard of a similar lawsuit, but Burd said there are plenty of other shops that have machines like Tobacco Haven's.

Doug Kennedy, editor of Roll Your Own Magazine, which caters to custom-made cigarette smokers, said the publication has "aggressively recommended shops to walk away from making cigarettes for their customers.''

"You make a cigarette for someone, then sell it to them, you are a tobacco manufacturer,'' he said.

Kevin O'Flaherty, director of advocacy in the Northeast for the Campaign for Tobacco-Free Kids, said many states are fueling the growth of roll-your-own cigarettes by taxing loose tobacco at a lower rate than store-bought cigarettes.

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• DIY cigarettes? Some smokers start growing tobacco  

In urban lots and on rural acres, smokers and smokeless tobacco users are planting Virginia Gold, Goose Creek Red, Yellow Twist Bud and dozens of other tobacco varieties.

Although most people still buy from big tobacco, the movement took off in April when the tax on cigarettes went up 62 cents to $1.01 a pack. Large tax increases were also imposed on other tobacco products, and tobacco companies upped prices even more to compensate for lost sales.

Some seed suppliers have reported a tenfold increase in sales as some of the country's 43.3 million smokers look for a cheaper way to get their nicotine fix in a down economy. Cigarettes cost an average of $4.35 a pack, home growers can make that amount for about 30 cents.

It's the latest do-it-yourself movement as others repair their own cars, swap used clothes and cancel yard work services to save money.

"Cigarette smokers say, 'Yeah, we're going to die of cancer, but do we have to die of poverty as well?'" said Jack Basharan, who operates The Tobacco Seed Co. Ltd. in Essex, England. Virtually all of his increased tobacco seed sales have been in the U.S., he said.

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• Tobacco sales fall by -19.3% 

In the first quarter of 2009, global duty free and travel retail tobacco sales slumped by -19.3% compared with the same quarter in 2008 - according to the TREND Tobacco Index which is based on actual audits of retail sales among a panel of locations worldwide.

"This is probably the worst quarter ever recorded for the tobacco business which has been battered in travel retail and elsewhere", says Yngve Bia, President Generation Research. "Sales were especially poor onboard airlines with a sales decline of -26.5%. Also airport sales were down steeply by -24.0%".

Sales in Asia Pacific and the Middle East held up relatively well in 1Q 2009 whilst significant drops were recorded in Europe (-21.2%) and the Americas (-12.3%). In Europe it is especially intra-EU duty-paid sales that have suffered, down by -21.6% in Euros and equal to a drop of -31.5% in US dollars. . . .

Amidst concerns of dramatically falling sales numbers, the tobacco industry is also faced with the challenging fact that many governments around the world - and particularly some in Asia - are considering supporting a ban on duty free cigarettes as part of the Framework Convention on Tobacco Control (FCTC).

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• Blazing a New Tobacco Road 

In this special report featuring exclusive interviews with retailers and executives from Altria Group -- the industry's largest tobacco supplier -- Convenience Store News analyzes how recent tobacco supplier consolidation will affect retailers' sets; the current challenges facing the tobacco category in convenience stores; what these hurdles mean to the future of the tobacco category; and whether or not the demise of tobacco has been pronounced prematurely.

Putting aside the issues of onerous taxation and FDA regulation for the moment (see CSNews' Tobacco Roundtable coverage for more on those topics, page 31), consolidation of suppliers could be one of the biggest retailer concerns. . . .

Moving forward, the main goal for Altria Sales & Distribution is to roll out the new trade program and freshness system. "The retailers benefit when we implement such programs," Paoli said. "I'm providing direction to the sales force that selling the program should be among their top priorities for August. With that will come improved business performance for the retailer."

Retailers can also expect more new products from the three Altria tobacco companies. PM USA is testing L&M roll-your-own tobacco in Michigan and Maine, while it also unveiled Marlboro No. 54 -- a menthol cigarette line extension in King and 100s sizes. John Middleton will also release line extensions for its Black & Mild brand of machine-made large cigars. In addition, USTTC's Red Seal, a value-positioned moist snuff, will see its distribution expanded to new markets.

Future new products will address "pure consumer expectations and needs," which is a benefit to retailers, since they won't carry an item that won't sell. Meanwhile, Altria can put more effort into its new products, knowing they will sell, according to Paoli.

And Altria's research and technology facility, which opened in 2007 and operates under Altria Client Services, will facilitate research for all three tobacco companies.

The multitude of changes to Altria's businesses as a result of these acquisitions will have an impact on the tobacco category in convenience stores. Paoli said it will improve attention paid to the category, especially to cigars and moist snuff, which will ultimately drive additional sales and profits as the space at retail becomes more organized.

Convenience store retailers, however, don't all agree.

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• Rolled cigarettes could be worse: study 

A New Zealand study has shown that factory-rolled cigarettes may be the lesser of two evils.

The Christchurch-based study compared people smoking factory-rolled cigarettes to those smoking roll-your-owns and found that smokers tended to suck rollies more intensively, more often and more efficiently, making them at least as deadly as factory-rolled cigarettes.

The study, led by public health specialist Dr Murray Laugesen, is the first to use people rather than smoking machines to compare the two types of cigarettes.

It compared 26 men who smoked rollies with 22 who smoked factory-rolled. Each smoked a filtered cigarette every half hour over two hours, according to usual habit.

Cravings and exhaled carbon monoxide were measured before and after each cigarette smoked.

It found that participants smoking rollies took 25 per cent more puffs per cigarette and generally puffed for six seconds longer per cigarette.

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• Roll-your-own cigarettes dangerous money-savers: research 

Roll-your-own smokes could be even more harmful than factory-made cigarettes because people suck them harder and more efficiently, Christchurch research indicates.

The researchers are calling for the Government to act on their findings by applying a higher tax and specific warnings on roll-your-own tobacco.

In the first comparison between the two types of smoking using people rather than smoking machines, the study suggests rollies are "apparently no less and possibly more dangerous" than factory-made cigarettes.

Public health specialist Dr Murray Laugesen and his co-researchers found roll-your-own smokers inhaled 28 per cent more smoke per filtered cigarette, even though the rollies contained less tobacco than the factory-mades.

And both types boosted the level of carbon monoxide, measured in exhaled breath, by the same amount.

"Whereas a smoker of factory-mades lets a lot of the smoke go up in the air, these roll-your-own smokers suck like crazy and don't let so much be wasted," Dr Laugesen said yesterday. "They're getting more value out of the tobacco - and more harm."

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• Too skint to light up — roll ups make a comeback  

Once the domain of older men, younger women are becoming increasingly partial to roll-ups as smokers of all ages flinch at paying full cost for cigarettes

Even before the credit crisis took hold, smokers flinched at paying £5.22 for a packet of 20 Lambert & Butler.

Now that recession is gripping the country, they are increasingly turning to cheaper hand-rolling tobacco to get their nicotine fix. According to Imperial Tobacco, Britain’s biggest cigarette company and the owner of Golden Virginia and Drum, the volume of hand-rolling tobacco sold by the group in the UK rose by 7 per cent to 3,750 tonnes last year and the company believes it is on course for another significant increase in 2009.

Imperial, which also owns Rizla cigarette papers, has attributed the continued surge in roll-your-own cigarettes to both the economic down-turn and the fact that more women and younger smokers are turning to the likes of Golden Virginia. Once the territory of Andy Capp-types, younger women are increasingly becoming partial to roll-ups. . . .

While Imperial says that the surge in sales of rolling tobacco has extended over the past four years, the increase in demand has been so strong that it has recently introduced discount roll-your-own brands. In November 2007, it launched Gold Leaf – a value brand – and Golden Virginia Yellow in March this year.

Imperial added that an increased number of smokers are “dualling” – smoking both roll-ups and regular cigarette brands.

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• Tax increase to boost tobacco black market?  

The rising price of tobacco is rippling across Arizona, forcing smokers to dig deeper for cash, sparking a potential black market boost and prompting an increase in calls to a state cessation help line.

The federal tax on a pack of cigarettes April 1 went from 39 cents to $1.01, which raises the price by about 10 percent. Cigar taxes went up 40 cents per stick, about a 10 percent increase for most smokers.

The tax on bulk tobacco - the roll-your-own type many smokers have turned to lately to save money - went from $1.09 per pound to $24. That's a 2,102 percent increase.

"They're creating a whole new black market, is what they're doing," said Dan Johnson, 54, a 30-year smoker who rolls his own. "There's going to be a lot more smuggling, that's for sure."

A couple of weeks ago, the price of a packet of "rollies" was about $1.25; now it's approaching $4, said Johnson, a day laborer who can ill afford the added cost.

The state Department of Revenue confirms that rising costs spur the black market.

Revenue Agent Jack Doyle told a state Bureau of Tobacco Education and Prevention Program committee in January that black market products from Mexico, Indian reservations and states with lower or no taxes take money from the state coffers. . . .

"If you can buy a carton of cigarettes in Mexico for $7 and sell it here for more, why not?"

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• Boston's ban on blunt wraps stands  

A Suffolk Superior Court judge ruled today that Boston has the legal authority to ban blunt wraps, tobacco-based rolling papers, from all store shelves across the city. Blunt wrap makers had sued to overturn the prohibition, arguing that city regulators were unconstitutionally picking on them.

The February ban on blunts was part of a broader regulation strengthening Boston's tobacco control ordinances, giving the city some of the nation's toughest antismoking regulations. A key rule eliminates cigarette sales in pharmacies and in stores on college campuses, but allows other retailers to continue selling tobacco products -- except for blunt wraps.

Three major blunt wrap manufacturers -- as well as their trade organization, the RYO (as in, roll your own) Cigar Association -- sued the city, complaining that their products had been unfairly singled out for a comprehensive ban.

But city health leaders contended that blunt wraps presented a particular threat to the well-being of the young because they are sold in tempting fruity flavors and used almost exclusively for smoking marijuana.

After a two-day trial, Suffolk Superior Court Judge Raymond Brassard ruled that blunts can remain forbidden in Boston stores.

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