Below is a summary of issues we are currently monitoring, and where called for, taking action. Bills may be viewed on IPCPR's legislation database at www.ipcpr.org/legislation.html.

Though the majority of legislatures have adjourned for the year, several heated fights continue and several more legislatures have tobacco-related bills in "legislative limbo." Among the states we continue monitoring are California, Massachusetts, North Carolina, Michigan, Illinois, Ohio, and Pennsylvania.
 
State-level IPCPR retail groups have been successful in Texas, Wisconsin, Louisiana, and Minnesota, and Michigan's and California's groups remain engaged on their state-specific issues.
 
IPCPR's lobbyists in Michigan, Ohio, New York, and California continue actively working to ensure our members and the industry remain protected from additional taxation. We also continue working closely with the Cigar Association of America, as well as other tobacco interests.

California

 
The Assembly remains deadlocked on proposed cigarette tax increases. It is crucial to understand that the state's cigarette and other tobacco products (OTP) excise tax (including cigars and other premium tobacco products) is coupled-when the cigarette excise tax increases, so does the OTP excise tax rate. Presently, we see no resolution in the matter. The governor continues his vow to veto ANY tax increase measure approved by the Assembly. All tax increase proposals require a two-thirds majority vote of both chambers for passage.  

Illinois

 
Presently, no tobacco excise tax increase bills are actively under consideration. HB1196, one bill we are monitoring, proposes an increase in the OTP excise tax rate from the current rate of 18% to 40%.

Louisiana

 
Both tobacco excise tax increase and smoking ban expansion bills failed to pass the legislature this session. The good news is that tax proposals may only be considered in odd-numbered years, so the next attempt at a tobacco excise tax increase may come in 2011. The bad news is the legislature may again attempt to expand the state's public smoking prohibition in 2010. Currently, bars, taverns, casinos, and other like-businesses are exempt from the current statute.

If the tax bills has been approved, cigars would have been taxed as high as 30% (from the current 20% rate), smoking tobacco, from 33% to 49.5%, and smokeless tobacco from 20% to 30%.

Maine

 
The state's legislature failed to pass HB637, legislation to increase the OTP excise tax to $1.00 per ounce. Currently smokeless tobacco is taxed at the rate
of 78% of the wholesale sales, while all other tobacco products (excluding cigarettes) are currently taxed at 20% of the wholesale sales price).

Massachusetts

 
Following a joint committee on revenue hearing two months ago, no new news has surfaced related to the state's proposed tobacco tax increases. We are closely watching this issue and regularly communicate with that committee's staff, key retailers, and other allies, including the CAA. HB2773 proposes the following: cigars from 30% to 80% of the wholesale price; smoking Tobacco, from 30% to 90%; smokeless tobacco from 90% to 110%.

Michigan

 
Several bills proposing a statewide smoking ban, while exempting retail tobacco shops, cigar bars, and casinos, have passed from their respective committees and await action in the legislature. At this time, we may expect these bills to begin moving in the next several weeks. However, as Michigan is currently working through their state deficit and proposed budget, the smoking ban issue may be forced to the backseat for some time.
 
Considering Michigan's budget issues, similar to most states in the Union, we currently have little details or information on what, if any, tobacco tax increase may look like. The governor is currently pledging no new taxes. We continue watching these two issues closely.

Minnesota

 
The legislature adjourned without approval of another OTP excise tax increase. Of the bills closely monitored, HB2194 proposed an increase from 70% to 140% of the OTP excise tax rate.

New Hampshire

 
Legislation was signed by the governor increasing the OTP excise tax from the present rate of 19% rate to 48.5%. The bill also brings large cigars (as defined by the federal government) into the OTP excise tax category for the first time, while exempting cigars wholesaling for $2 or more in addition to requiring humidifying.

New Jersey

 
Several bills await action in the state assembly propose increasing the OTP excise tax on little cigars as high as 150% (from the current rate of 30%). Currently nothing to report on these specific bills.

North Carolina

 
As the state approved a statewide smoking ban, attention now moves to another tobacco tax increase. Presently, it looks like the legislature's budget will not include any new tobacco taxes, contradicting the governor's desire for more tobacco taxes. We continue to closely watch this issue as the session progresses.

Ohio

 As with other states, Ohio too faces a sizeable budget deficit. Currently, the legislature has little stomach for additional tobacco taxes. We continue to closely monitor the session.

Oregon

 
The state's biannual legislature adjourned without approving several proposed tobacco excise tax increases. These bills proposed an increase in all tobacco excise taxes while maintaining the 50-cent tax cap.

Pennsylvania

 
Again, the legislature and governor look for additional revenue streams and are considering initiating taxes on other tobacco products, including cigars. Several proposals have again been introduced, with no clear front-runner. One possible bill calls for cigars to be taxed at a rate of about 36 cents for every 10 cigars.

Vermont

 
Mixed news from here as the state expanded its statewide smoking prohibition to cover all work places (including retail tobacco shops) but failed to approve an OTP excise tax increase from the current rate of 41% to 61%. 

Wisconsin

 
The legislature approved a statewide smoking ban that exempts retail tobacco shops and an increase in the OTP excise tax rate from 50% to 71%. However, the legislature rejected the governor's demand for an increase in the cigar tax cap-that remains at a maximum tax of 50 cents per cigar. Additionally, the excise tax on moist snuff, previously at $1.31 per ounce, reverts back to an ad valorem tax base with a new rate of 100% of the wholesale price.

Federal Legislation

 
There are been a handful of press releases and subsequent editorials and letters to the editor touting possible attempts at another federal tobacco excise tax increase. According to IPCPR's federal lobbyists, the CAA, and other sources, such a scenario coming to fruition is highly improbable.
 
President Obama did sign into law legislation granting the Food and Drug Administration (FDA) authority over tobacco products. With the daunting task before that bureaucracy, the deadline for mandated guidelines and requirements has been extended from 180 days to 270 days. Additionally, news and Capitol Hill sources cite potential legal issues already developing since the bill's approval by the president, most notably, First Amendment violations pertaining to certain advertisement restrictions called for within the FDA bill. As news develops on FDA, we will update you. It is important to know that while the FDA law calls for the regulation of all tobacco products, only cigarettes, roll-your-own tobacco, and moist (smokeless) tobacco are defined and outlined for regulation.

In This Issue

California

Illinois

Louisiana

Maine

Massachusetts

Michigan

Minnesota

New Hampshire

New Jersey

North Carolina

Ohio

Oregon

Pennsylvania

Vermont

Wisconsin

Federal Legislation