New York Tobacco Flavor Ban Would Hurt Small Businesses

NYACS estimates the state would lose $3.4 billion in tax revenue and eliminate 1,200 jobs.

January 11, 2021

ALBANY, N.Y.—Outlawing the sale of flavored tobacco products for adults—such as cherry pipe tobacco and menthol cigarettes—would deepen New York State’s budget hole, threaten the survival of thousands of mom-and-pop retailers, and place the jobs of frontline workers at these businesses at risk. That’s the conclusion of an economic study performed by Regional Economic Models Inc. (REMI) for the New York Association of Convenience Stores (NYACS).

REMI estimated the proposed action would cost the state $3.4 billion in tax revenue over the next decade, cost shop owners nearly $500 million annually in lost sales and eliminate 1,200 jobs in retail and related industries.

Legislation introduced in the state Senate and Assembly would bar New York’s 21,000 licensed tobacco outlets from selling flavored tobacco products to age-verified customers. A law that took effect July 1, 2020, already prohibits them from selling flavored vaping products. New York City additionally bans the sale of flavored non-cigarette tobacco products.

“As convenience stores struggle to keep the doors open to serve local communities, some elected officials want to further impair the economic viability of these essential small businesses,” said Jim Calvin, NYACS president. “Especially when such a ban would slash tax revenue by hundreds of millions of dollars a year, cause job losses and intensify an already- nation-leading illegal tobacco trade.”

Business and labor groups joining NYACS in opposing a statewide tobacco flavor ban are the Bodega and Small Business Association, the New York Association of Service Station and Repair Shops, International Brotherhood of Teamsters Local 810, the Long Island Gasoline Retailers Association, the New York City Newsstand Operators Association and the Asian American Retailers Association.

The REMI report notes that after Massachusetts enacted a tobacco flavor ban June 1, 2020, its tobacco tax revenues plummeted, while those of New Hampshire and Rhode Island skyrocketed as smokers simply crossed state borders to continue buying flavored product, thwarting the health policy objective.

The New England Convenience Store & Energy Marketers Association reported last week that Massachusetts lost nearly $62 million in menthol cigarette tax revenue during the first six months of the state’s ban on flavored tobacco. Neighboring Rhode Island and New Hampshire benefited, selling a combined 18.9 million more excise tax stamps than they did compared with the same period in 2019, while Massachusetts sold 17.7 million fewer.

“Here in New York, cigarette smoking is at a record low, the purchase age has been elevated to 21, and six new restrictions on tobacco retailing were enacted within the past seven months,” Calvin pointed out. “Given these trends, taking a more drastic action with harmful fiscal and economic consequences is unwarranted.”

Francisco Marte, secretary treasurer of the Bodega and Small Business Association, said: “Our stores have already lost more than half of our adult cigarette business to bootleggers who don't collect taxes or verify age. Banning menthol flavor would just drive more of our customers into their waiting arms, hurting small businesses, slashing tax revenue, and making cigarettes more accessible to kids.”

Wayne Bombardiere, executive director of the New York Association of Service Station and Repair Shops, said: “We represent a great number of independent convenience store operators from all areas of New York state. Our members have been inundated by abhorrent tobacco tax rates on all products—flavored or not—for years. To further restrict the ability to offer for sale a legal product to verified adults would be another nail in the proverbial coffin for these small businesses. We strongly oppose any additional debilitating legislation pertaining to tobacco retail sales.”

Max Bookman, counsel to the New York City Newsstand Operators Association said: “Sidewalk newsstand operators have a front row seat to the illicit market that has developed in the streets after years of restrictive tobacco and electronic cigarette regulation in New York City. These restrictions hurt already-struggling small businesses, while shifting sales to unregulated dealers who do not check IDs, collect sales tax, or care about selling counterfeit products. Whether it’s tobacco, alcohol, or food, adults have the right to make their own choices.”