August 20, 2020

Stanton A. Glantz, PhD

Big tobacco mounts ad blitz against Calif flavor ban (SB 793) making its usual failing arguments

Big tobacco mounts ad blitz against Calif flavor ban (SB 793) making its usual failing arguments

The big tobacco companies have launched a multi-million dollar ad campaign in a last ditch effort to stop SB 793.  My favorite ad so far is one urging Assembly members to vote against the bill because it will reduce anti-tobacco education (copy below).  Their unstated argument is that without flavors kids would buy fewer tobacco products, which would reduce tobacco taxes, some of which goes to education to reduce tobacco use.

This is the same argument that they made in their unsuccessful campaign to defeat Proposition 56, a big tobacco tax on the ballot in 2016. 

The public wasn’t tricked by this argument then.  Hopefully the Assembly won’t be tricked now.

A related argument that the tobacco interests are making is that SB 793 would reduce tax income to the state at a time of growing demands because of COVID-19 and, now, wildfires. 

While it is true that SB 793 would reduce tobacco tax income, it is likely that there would be a net increase in California economic activity, including associated tax income.

This is because when someone buys a tobacco product almost all the money leaves the state, so has a very low “economic multiplier.”  If a kid (or adult) doesn’t by tobacco, they don’t throw the money away; they buy something else.  And that something else is much more likely to be made in California and so have a higher economic multiplier.

While I have not had time to do a specific estimate for SB 793, here are the results for the impact of the $2 tobacco tax increase voters passed in 2016 despite a massive campaign against it:

  • There will be an increase in jobs and economic activity as funds are shifted from purchasing cigarettes into medical services, tobacco control, research and related activities specified by the initiative.
  • The effect of the price increase associated the $2 tax alone will reduce tobacco consumption by 69 million packs, resulting in $244 million lost sales to the tobacco industry in the first year after the tax passes.
  • Of this total reduction in pre-tax tobacco sales, $48 million will represent retail activity in California that is shifted to the general California economy and $195 million will represent money remains in the state economy rather than being exported to out-of-state tobacco manufacturers, notably Philip Morris and RJ Reynolds, as well as their suppliers, including tobacco farmers.
  • Combining these two effects of the $2 tax yields an estimate that there will be a net increase of about 8,645 jobs and about $664 million in total economic activity.

While economic multipliers are kind of an arcane idea for most people, the Assembly Appropriations Committee – which is considering SB 793 – understands economics.

Hopefully they will also see through this hackneyed argument and move SB 793 to the full Assembly.

Meanwhile, the CDC just reported that tobacco use among young people continues to balloon thanks to all these new products.

In response to these new findings, CDC concluded:

"Multiple factors continue to promote and influence tobacco product use among youths, including exposure to tobacco product advertising and imagery through media, as well as the availability of flavored tobacco products. The sustained and comprehensive implementation of population-based strategies, in coordination with the regulation of tobacco products by the U.S. Food and Drug Administration (FDA), can reduce all forms of tobacco product use and initiation among U.S. youths. Such strategies include increasing the price of tobacco products, implementing comprehensive smoke-free policies, implementing advertising and promotion restrictions and national antitobacco public education media campaigns, restricting youth access to flavored tobacco products, and implementing policies that increase the minimum age of purchase for tobacco products to 21 years (1,2,4,10). [emphasis added]"