Tobacco
Sales of cigarettes and other tobacco products comprised 36.6 percent of the in-store sales at convenience stores in 2008. While controversial, tobacco is a legal product and one that is important to the economic viability of the convenience store industry. The anti-tobacco industry is well organized and well funded. Additionally, avenues for evasion of state and local excise taxes have arisen through mail orders. NACS is focused on protecting this important industry category.
In an effort to reduce the incidence of smoking, particularly among minors, and to improve the safety of tobacco products, Congress has passed a law giving the Food and Drug Administration (FDA) regulatory authority over the manufacture and retailing of tobacco.
Congress enacted legislation to fund an expansion of the State Children's Health Insurance Program (SCHIP) by increasing the federal excise tax on tobacco, led by a 62 cents per pack increase on cigarettes, effective April 1, 2009.
Mail and Internet orders of tobacco products allow a minor to avoid a face-to-face transaction and therefore evade the requirement placed on traditional tobacco retailers to demand and check the identification of its customers. NACS is pursuing legislation to level the playing field.
If TTB is unable to enforce Ruling 2010-4, a growing number of tobacco consumers and retailers will exploit it. Over time, this lack of tax parity will dramatically alter the retail tobacco space, permitting consumers to purchase large quantities of RYO cigarettes using pipe tobacco for a substantially lower price than traditional packaged cigarettes.