February 28, 2017 / 6:09 AM / 7 months ago

Business groups, once tobacco-friendly, switch sides in fight

A woman lights a cigarette in this illustration picture taken in Paris, October 8, 2014. REUTERS/Christian Hartmann

NEW YORK (Reuters) - The local chamber of commerce is usually a reliable ally in battles against regulation. But when it comes to smoking rules, many business groups have decided they would rather switch than fight.

Even in states where tobacco has played an important role in the economy - including North Carolina, Kentucky and Missouri -chambers have endorsed cigarette tax hikes, raising the smoking age and other efforts to curb tobacco habits.

The shift has accelerated since 2016, driven by a growing awareness that smoking drives up healthcare costs for employers, business groups said.

Smoking restrictions often are part of broader wellness initiatives, such as promoting exercise and nutrition, aimed at improving health - and business.

“Smoking isn’t just killing us, it’s bankrupting us,” said Ashli Watts, a spokeswoman with the Chamber of Commerce for Kentucky, where one in four adults uses tobacco, the lung cancer rate is the nation’s highest and related healthcare and lost productivity costs nearly $5 billion a year.

“Companies do look at the health of a workforce,” Watts said. An unhealthy workforce “is a deterrent.”

In Kansas City, Missouri, the chamber joined the local Blue Cross and Blue Shield insurer in 2015 in launching a smoking cessation effort.

They hoped to persuade five communities to raise the legal tobacco age to 21 by 2018. Within a month, two of the largest cities in the area had signed on, and now more than 20 communities with 1.4 million people have raised the age.

Pam Whiting, a spokeswoman for the Greater Kansas City Chamber of Commerce with members in Kansas and Missouri, said the group was “happily stunned” by the results.

“It is a real concern for our business members, for their employees and their bottom line,” she said.

In Indiana, where smoking costs an estimated $7 billion in healthcare and lost productivity, the state chamber is pushing for a $1-a-pack increase in the state cigarette tax, to raise the smoking age to 21 and for more spending on cessation.

“It’s not typical for a chamber to advocate for a tax increase,” said Kevin Brinegar, president and chief executive of the Indiana chamber. But, he added, the cost of smoking “gives us a black eye.”

TOBACCO FIGHTS BACK

Cigarette makers are spending tens of millions to fight the efforts, according to a Reuters review of campaign spending data and interviews, healthcare groups and the companies.

Brittany Adams, a spokeswoman for Camel cigarette maker Reynolds American Inc RAI.N, said the local chambers’ efforts go against their core mission and could hurt businesses outside the tobacco industry.

“Chambers of commerce are supposed to protect the interests of businesses in their communities, and supporting these kinds of bills may negatively impact local wholesalers and retailers,” Adams said.

Last fall, the industry spent almost $100 million to fight cigarette tax ballot measures in several states. More than $70 million of that was spent in California, where voters approved Proposition 56, raising state taxes by $2 to $2.87 per pack.

Business groups in San Francisco and Los Angeles supported the measure. Tax increases failed in Colorado and North Dakota.

Although adult smoking rates in California are the second lowest in the country, its large population makes it the single biggest U.S. market with 8.5 percent of cigarette sales.

Marlboro cigarette maker Altria (MO.N) estimated tax hikes enacted in Pennsylvania and California would hurt industry sales volumes by about 1 percent this year.

Wall Street analysts say the bigger risk is that more states follow suit.

At least 215 states and municipalities - including Hawaii and California, as well as New York City, Chicago and Boston – have raised the age to 21, according to the Campaign for Tobacco-Free Kids.

A spokesman said Altria wants to see the battle return to Congress, where it believes it has gotten a better hearing. With the Tobacco Control Act of 2009, Congress set a national minimum smoking age of 18.

In 2015, an Institute of Medicine study concluded that raising the national minimum to 21 would prevent about 223,000 premature deaths among people born between 2000 and 2019.

A group of Democratic senators introduced a bill to raise the age nationally to 21, but it never got a vote.

“This is a complex issue, and Congress has established a thoughtful process to better understand it,” Altria spokesman David Sutton said.

Tobacco products already “are very heavily taxed,” Sutton said. He also said sales taxes were a particular burden on the poor and created incentives “for criminals to engage in contrabrand.”

The U.S. Chamber of Commerce has not taken a position on the bill in Congress to raise the smoking age, and, as a rule, it leaves local issues to local chambers, said chamber representative Blair Latoff Holmes.

In Kentucky, a recent survey found more than 90 percent of the state’s chamber members support bans on smoking in the workplace. But the chamber decided against pushing for a statewide ban because it believes the politics are stacked against it.

The industry has spent more than $3.7 million the last five years lobbying Kentucky state legislators, records show. And, in November, Republicans won control of the legislature with the support of many constituents who consider smoking a personal prerogative.

For now, the Kentucky chamber is putting its clout behind a doctor-sponsered bill that would ban tobacco products from schools. Currently, less than 40 percent of Kentucky school districts ban tobacco.

“Generation after generation of people in Kentucky have smoked,” said Watts, the chamber spokeswoman. “There are people who don’t know anyone who has ever quit.”

For graphic on rising taxes on tobacco products, click: bit.ly/2m0MMpr

Reporting By Jilian Mincer; Editing by Michele Gershberg and Lisa Girion

Our Standards:The Thomson Reuters Trust Principles.
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