Among the bills that slipped through the legislative session with little fanfare was Tennessee’s plan to reduce smoking by making it more profitable to sell cigarettes.
Read that sentence again, if you need to. The logic is tough to follow.
Lawmakers could have raised taxes on cigarettes from 62 cents a pack — 12th lowest in the nation. That, however, would have involved a — shudder — tax increase. Instead, the freedom-loving supermajority voted to force stores to raise prices.
It’s a win-windfall solution. Tobacco dealers will earn an extra $129 million a year when the price control is fully implemented.
This was achieved by manipulating the 1950s-era Unfair Cigarette Sales Law. The law was passed when cigarettes were advertised everywhere and a pack cost two bits. To protect small merchants from big stores using cigarettes as loss-leaders, states established minimum markups. In Tennessee, that markup was 8 percent over the retailer’s invoice cost.
There aren’t many small dealers left now. Cigarettes are sold by giant chains. Still, in recent years that 8 percent minimum markup hasn’t seemed like enough, and the retailers began lobbying for more.
…Sadly, minimum markups alone don’t do much to slow tobacco addition. A report by the Tobacco Control Legal Consortium points out that cigarette manufacturers — desperate to keep their hooks in the market — spend lavishly to counteract such price increases with promotional discounts. In 2006, for instance, the industry spent more than $9 billion on discounts.
A few states have addressed that by mandating that discounts can’t be used to offset their “unfair cigarette sales laws.”
Tennessee isn’t one.