40 States Seek to Limit 'Little Cigar' Marketing
Friday, May 19, 2006
Forty states have asked the U.S. Treasury Department to bar tobacco companies from marketing products they say are identical to cigarettes as "little cigars," a designation the states say lets the firms evade taxes and target younger consumers.
Attorneys general from the 40 states, including Maryland, want the department's Alcohol and Tobacco Tax and Trade Bureau to reverse decades-old rules that permit products the size, shape and weight of cigarettes, but have brown rather than white wrappers, to be labeled as little cigars.
"If it looks like a cigarette, smokes like a cigarette and is being marketed like a cigarette, then the federal government should classify it as a cigarette," said Bill Roach, spokesman for Iowa Attorney General Tom Miller, co-chairman of the National Association of Attorneys General tobacco committee. The attorneys general also said the "little cigars" appeal to young smokers because they cost less than cigarettes and come with flavorings such as chocolate and raspberry.
The "little cigar" label allows the companies to pay lower federal and state taxes, and to avoid payments and advertising restrictions required for cigarettes under the 1998 master agreement between tobacco companies and all 50 states, according to the petition for rule changes.
The request was filed last month with the backing of 23 states, but the National Association of Attorneys General didn't announce it until yesterday, by which 17 more states had signed on.
Since 1998, the number of little cigars sold in the United States has doubled, to about 4 billion a year, according to the Cigar Association of America, the industry trade and lobby group.
"We think that is no accident," Roach said. "We think these are being marketed in a way to get around the tax and marketing restrictions on cigarettes."
A spokesman for the Tax and Trade Bureau said the agency can write rules so there is a "bright line" drawn between cigarettes and little cigars but that the release of the rules is months away at best. Several tobacco companies and the cigar trade association also have asked the bureau to clarify the definition of the two products, industry and government officials said yesterday. Makers of "little cigars" want to make sure they are not subject to legal attacks that they are really marketing cigarettes.
Both sides agree that there is a legitimate category of cigars known as little cigars and that a clearer line has to be made between those products and cigarettes. They differ, however, on how to do that.
Norman F. Sharp, president of the Cigar Association of America, said the attorneys general are confused on many facts. "Little cigars are not cigarettes and, over the long term, they have never been substitutable for cigarettes," he told New Jersey legislators at a hearing this month. "They represent the cigar industry's attempt to give satisfaction to cigar smokers, not an attempt to attract cigarette smokers."
Representatives of four nonprofit groups -- the American Heart Association, Americans for Nonsmokers Rights, the American Lung Association and the Campaign for Tobacco-Free Kids -- disagreed. "Many of these 'little cigars' are blatantly aimed at our children," they said in a joint statement in support of the 40 states' filing. "They are cheaper and more affordable to kids than regular cigarettes because they have lower excise tax rates, and they are often sold individually rather than in packs because their classification exempts them from state laws setting minimum pack sizes for cigarettes."
Cigars are harmful, said Matthew Myers of the Campaign for Tobacco-Free Kids, but they generally are smoked less frequently than cigarettes and their smoke often is not inhaled. The products being marketed as "little cigars" are often smoked frequently and the smoke is inhaled like that from cigarettes, he said.
The little-cigar industry's retail value is about $360 million a year, Sharp said. In contrast, 380 billion cigarettes are sold each year, with retail value of more than $80 billion.
Miller, the Iowa attorney general, said that while the sales of little cigars are low compared with those of cigarettes, their growth rate in recent years, if it continues, could undo the reduction in overall smoking that the 1998 agreement achieved.