Felixstowe: Four arrested in alleged tobacco-smuggling plot

Four suspected smugglers are on bail today after large quantities of hand-rolling tobacco were seized at Felixstowe and Southampton ports.
They include a 40-year-old woman who was arrested earlier this month on suspicion of evading more than £1million in excise duty, following the discovery of hauls totalling 6.5 tonnes.

UK Border Agency officers uncovered the three separate cargo loads of tobacco, which were recorded on import documents as ‘Chinese Herbs’, last April.

Three tonnes were
seized at Felixstowe, while around three-and-a-half tonnes were found at Southampton.

Each illegal consignment was referred to criminal investigators of HM Revenue and Customs for investigation.

It is estimated the total haul could have made over 12 million cigarettes.

The woman was arrested in Croydon, Greater London.

Meanwhile three men, aged 25, 29, and 36, were also detained in North Kensington, London, in relation to 1.65 tonnes of tobacco seized at Southampton Container Port in December 2011.

All the suspects are Chinese nationals. At least one of the men is believed to be in the county illegally.

A home in Croydon, three in London, and a commercial address in North Kensington, London, have been searched by customs officers, as the investigation continues.

The inquiry has already spanned a nine-month period as the Felixstowe seizure was made in April last year.

The female suspect has been released on bail until April 24, while the men are on bail until April 19.

All four were arrested for being knowingly concerned in the fraudulent evasion of excise duty chargeable on tobacco.

HM Revenue & Customs spokesman Bob Gaiger said: “Smuggling cigarettes and tobacco into the UK can have a devastating impact on legitimate traders and deprives the nation of around £2billion a year in lost revenue which is needed for vital public services.

Tobacco monopoly looks to raise market share

The state-owned Thailand Tobacco Monopoly (TTM) remains the single largest buyer of tobacco produced locally.

The agency bought 21,970 tonnes of leaf in 2010, 36% of an estimated 60,500 tonnes of leaf grown that year.

TTM also imported 3,470 tonnes of leaf to make 28.9 billion cigarettes for domestic sale and export.

Domestic brands control a 75% share of the market, with the balance imported brands.

But sales in recent years have been decreasing due to an amendment to the excise tariff in 2009 that raised cigarette prices.

In addition, some consumers have switched to low-priced imports or roll-your-own tobacco.

Anti-smoking campaigns launched by government agencies and the private sector have also affected sales volume.

These developments have prompted the state enterprise to outline its strategic plans to improve performance and stay competitive.

Based on TTM's five-year plan, it vows to increase its market share by 0.25 percentage points each year to 77.5% by 2015, with sales revenue of 60 billion baht for a net profit of 5 billion over the period.

A total of 63 projects have been planned to improve operational efficiency and marketing, allow research and development to produce better-quality products, and support more tobacco farmers qualifying for Good Agricultural Practice (GAP) criteria.

TTM received cabinet approval in 2007 to build a second tobacco production plant for 16.2 billion baht.

To be located in an industrial estate for more effective control of its environment, TTM decided on Rojana Industrial Park in Ayutthaya.

However, last year's massive flooding made the government nervous, and Chiang Mai has emerged as a new choice.

Besides TTM, there are several other suppliers that purchase tobacco for export. Many of them supply tobacco to Philip Morris International Co (PMI), which purchased one billion baht worth of tobacco from Thailand in 2010 or 30% of total Thai tobacco exports.

Like other makers, PMI buys all types of locally grown tobacco _ Virginia, Oriental and Burley are mixed for its American blend, the most popular of blended cigarettes.

Philip Morris (Thailand) works closely with growers to promote GAP standards.

The Thai subsidiary commands a 20% share of the domestic market.

British American Tobacco extends fleet contract

British American Tobacco (BAT) has extended its 350-car fleet contract for a further three years.

Following a review process, the tobacco group decided to extend its contract with Leasedrive Group. The contract has been in place since 2004.

Viv Windrum, fleet manager at BAT in the UK, said: “Following an extensive review process, we were happy to renew. Leasedrive continually improves the products and services it offers to us to make the employee driver experience the best possible.”

Roddy Graham, commercial director at Leasedrive Group, added: “Of the BAT fleet, 48% of cars are under contract hire and 52% are owned by BAT but managed by us.

“BAT operates a user-chooser fleet policy to maximise the attractiveness of the employee benefit and, in support, we also provide online driver licence checking, accident management and car rental services.”

Tobacco Taxes: A Smuggler’s Boon?

By the end of 2011, taxes on cigarettes reached 71% of their retail price following the latest tax increase in July of last year. The figure surpassed the guidelines that were outlined in the March 2011 World Health Organization’s (WHO) report.

The report, titled “The Economics of Tobacco and Tobacco Taxation in Egypt,” had estimated raising the average tax on cigarettes to 70% of the retail price would prevent over 600,000 premature deaths in current and future smokers. While this may be a welcome development for the state budget and WHO’s outlook, it has also resulted in a flourishing illicit trade market.

Taxes are a basic and commonly used economic tool for the government to raise funds. In the recent past, the Egyptian government has raised taxes on cigarettes twice. First in July 2010, when there was an 84% tax increase that led to a 48% increase in prices. In July 2011, taxes were raised by another 37%, pushing prices up 21%. Overall, the price of cigarettes has gone up nearly 80% in less than a year.

The budget for the 2011/12 fiscal year shows that tax from tobacco and cigarettes will amount to LE 18 billion, which is the second-highest source of tax revenue. Instead of blocking a new tax under the premise that it would be an additional financial burden on the lower-income consumer, Parliament insisted that the tax be applied across the board, not only on imported brands. Fatimah El-Awa, regional advisor on WHO’s Tobacco Free Initiative, points out that this latest round of taxes is different than any other. “When taxes were raised on tobacco before, it was simply a fundraising tool for the government,” she says. “This time, the tax increase has a health benefit behind it, which is why it was approved by the last Parliament.”

Increase in black-market trading
Common sense dictates that with price increases, smokers would be deterred from smoking. Instead, the increase in prices has been a boost for illicit tobacco trading. “What happened was that the market size did not shrink, but instead there was a heavy increase in the illicit trade of tobacco because there weren’t enough measures in place to safeguard the market from infiltration by illicit traders,” says Karim Refaat, head of Corporate Affairs for North Africa at British American Tobacco (BAT).

According to Refaat, the illicit tobacco trade accounted for a mere 0.01% of Egypt’s 81 billion stick market (the common measurement in the industry) in the first quarter of 2010 and now jumped to 7%, with the possibility of moving toward the 10% mark. Refaat blames pricing dynamics for allowing illegal brands to gain a wider market share.

“The cheapest pack prior to the [2010 and 2011] excise taxes was Cleopatra […], which was being sold for LE 2.75,” he says. “So for an illicit trader to manufacture a pack outside Egypt, ship it, clear it, pay retailers an incentive to sell something that is illegal and to cover all costs and still be able to sell under LE 2.75 is extremely difficult — almost impossible.”

With the Cleopatra pack now at LE 5, illicit traders can make a bigger buck and still sell below that price.

Research by the Tobacco Free Center shows that illicit cigarettes are sold up to 90% cheaper than legal ones in Canada, 50% less in the UK and 25% cheaper in China. The center’s research also shows that in 2007, China had the highest number of illicit cigarettes at about 214 billion sticks, Brazil 38 billion and Turkey 12 billion.

It’s true that tobacco companies have not seen their market share grow, but what bothers the cigarette makers is that they didn’t lose market share to another competitor; they lost to 62 brands of illegal cigarettes, some of which are made and shipped over from the UAE’s Jebel Ali industrial zone.

According to research, the size of the illicit cigarette market in the Middle East and North Africa is 10–15%, whereas it has reached 27% in Brazil and the UK and more than 30% in Hungary.

According to these numbers, the government is losing LE 1.7 billion per year of the targeted tax revenue. Over five years, with the illicit trade market at 10% at the end of 2011, the government would lose LE 8.5 billion — 50% of the health insurance bill.

Raising taxes might seem like a bad idea, but El-Awa says trial and error in other countries has proven that growth of illicit trade has little to do with pricing and more to do with border control. She recounts that Spain saw illicit trade increase when tobacco prices were decreased whereas tobacco smuggling activities increased when the price was brought down.

“This means that the price is not the only factor affecting illicit trade — there are other security measures that need to be taken to reduce illicit trade,” she says.

Tobacco export volumes down by 7.8% in Apr-Nov

Tobacco shipments from India, the third-largest exporter in the world, fell by 7.8% to 1,54,171 tonnes during the April-November period of the current fiscal on account of surplus global stock and less competitive prices, the Tobacco Board said.

The country shipped 167,319 tonnes of tobacco overseas in the year-ago period, it said.
"Tobacco exports fell as the contracted price was lower in the wake of surplus availability in the global market," a senior Tobacco Board official told PTI.
Tobacco shipments, comprising raw tobacco and its products, fell by 7.27% in value terms to Rs 2,523.14 crore during the April-November period of the 2011-12 fiscal from Rs 2,721.04 crore in the year-ago period, he said.

While tobacco product exports surged in terms of both value and volume terms, raw tobacco shipments declined.

The country shipped 26,429 tonnes of tobacco products like cigarettes worth Rs 659.59 crore abroad during the review period, as against 24,746 tonnes worth Rs 605.01 crore in the corresponding year-ago period.

In contrast, raw tobacco shipments declined marginally in volume terms to 1,27,742 tonnes from 1,42,573 tonnes, while in value terms, exports of raw tobacco fell to Rs 1,863.55 crore from Rs 2,116.03 crore in the period under review.

India, with annual production of about 700 million kilograms of tobacco, exports raw tobacco and products to major markets such as Belgium, Russia, Philippines and Germany.

Cultivation of tobacco is controlled by the government. Andhra Pradesh and Karnataka are the two major growing states. At present, tobacco prices in Karnataka are ruling at Rs 97.69 per kg in Karnataka on average.

D.C. Getting Its First Marijuana Store

The “Walmart of Weed” is coming to Washington. WeGrow, a national franchise, is set to open its first store in the D.C. area this March, according to its local franchisee, Alex Wong. Wong said he has leased space at 1522 Rhode Island Ave., NW, and will offer a full array of products to medical marijuana cultivators and indoor gardeners.

But isn’t it illegal to sell and grow marijuana? Yes, according to the Controlled Substances Act, it is. But a new D.C. law allows doctors to write medical marijuana prescriptions for patients who suffer from conditions such as multiple sclerosis, HIV/AIDS, cancer, glaucoma and other serious conditions.

The law provides that up to 10 sites will be authorized to grow the plant and allows five distribution centers where people can obtain medical marijuana with a D.C. doctor’s prescription. The lists for cultivation centers and dispensaries are due to be released in March with the full program under way by late spring.

WeGrow stores call themselves hydroponics superstores. They sell all of the products needed to grow marijuana and other indoor plants but they don’t sell the weed itself.

In a news release, WeGrow said Wong is “an entrepreneurial financial professional with an MBA and 13 years in the banking/corporate arenas and 9 years of business ownership [who] … wants to bring a new social perspective to the area by having honest hydro stores in the Mid Atlantic region.”

Prison study finds link between violence, tobacco

Ohio’s top prison official has asked his department to investigate whether an increase in violence is linked to a tobacco ban and the subsequent use of contraband tobacco as a commodity among inmates.

“Tobacco has become a currency that’s used in our prisons,” with a hand-rolled cigarette valued at up to $5, Ohio Department of Rehabilitation and Correction Director Gary Mohr told the Dayton Daily News.

The department’s chief security-threat investigator, Vinko Kucinic, said gangs can gain power in prison by controlling the trade of contraband goods that can be sold or used to barter, such as the tobacco, illegal drugs and weapons. Officials are concerned that the fight to control the flow of such goods has stirred more violence.

Mohr is looking into whether disturbances involving at least four inmates were connected to illicit tobacco. Those incidents happened on average once every 28 days in 2008 and once every two weeks by 2010, the year after the ban took effect, Mohr said.
“I could not fathom what was going on in our system,” said Mohr, a former prison official who worked in private-sector prisons before he became director a year ago.

The tobacco ban had been instituted in 2009 in an effort to help reduce inmate health-care costs. Mohr said he would have to weigh the severity of the violence against the benefits of the tobacco ban before deciding whether to lift it.

The chief investigator at the Warren Correctional Institution near Lebanon said tobacco has become the preferred contraband item, and inmates aren’t the only ones who see that.

“It’s very, very profitable,” investigator Mark Stegemoller said. “We just removed a staff member a couple of months ago who was making a lot of money bringing in tobacco.”

The contraband problem isn’t new to the prisons system, which contains more than 50,000 inmates at a cost to taxpayers of more than $1.5 billion, the newspaper said. But there are indications that the tobacco ban and other changes have contributed to the violence.

Tobacco Farmers Facing Uncertain Future

"At one point it got kind of hostile. The local farmers, family farmers, we feel like they don't care about us." Tim Harrell is a Tobacco farmer in Tennessee.
He was inside a closed door meeting Friday in Greenville where Phillip Morris U.S.A. announced they were closing down their tobacco buying operation in east Tennessee.
According to farmer John Cavin, this will affect the local economy in several ways. "This station serviced 138 farm families that produced 6 million pounds of tobacco, that generated 10 point 5 million dollars in sales."
Cavin estimates that the area economy will lose up to 25 million dollars a year.
Phillip Morris U.S.A. spokesman Ken Garcia told me this was simply a business decision they had to make. "To better align our operations that we have to but both burley and flu cured tobacco. We have stations in Yanceyville, North Carolina and Danville, Kentucky."
Yanceyville is 5 hours from Greenville while Danville is nearly 4 hours away.
Farmers we talked to said they're going to have to now go home and make some hard decisions with their families, because once February comes this location will no longer be in operation.
John Litz is considered a big grower. Guys like him will be able to stay in business, but he believes that this move will put the smaller farmers, those with 10 acers or less, out of business. "What Phillip Morris has done is they have signed the foreclosure papers on a lot of farmers."
Litz feels like the multi-billion dollar company is cutting costs at the expense of the very ones it depends on for their product.

'Addiction Incorporated' looks at Big Tobacco's efforts to suppress info on cigarettes

Despite omnipresent health warnings, an estimated 46 million Americans continue to smoke, with many claiming that they just can’t quit. So why it is so hard to kick the deadly habit?
“Addiction Incorporated,” the new documentary by Charles Evans Jr., attempts to answer that question, showing how the tobacco industry sought to deceive the American public for so many years. The film tells the story of scientist Victor DeNoble’s unexpected discovery of an addictive ingredient in tobacco which led to the first ever federal regulation of the tobacco industry in the 1990s.
“Scientists do research with the hope that we will have a positive impact on people’s lives. I thought I would never have that opportunity when I went to work at the Philip Morris Research Center. I never dreamed that our research would be suppressed for over ten years and that it would take a major federal investigation, congressional hearings, and acts of Congress before my hope would be fulfilled,” DeNoble, who started work for Philip Morris in the 1970s and is regarded as one of the first “whistleblowers” on the tobacco industry, told FOX411’s Pop Tarts column. “The average American knows that cigarette smoking is dangerous and can cause heart disease and other things, but what people don’t know is the length the industry went in order to cloud the issue.”
Through secret testing in a hidden laboratory, DeNoble used rats to prove just how powerfully addictive nicotine was long before the public had any idea. He claims that his shocking findings were squashed by the powers-that-be. Not long after his remarkable discoveries he also learned he was out of the job.
“My purpose in making the film was to break out the issue of tobacco dependence in an industry that produces the most lethal product on earth,” said filmmaker Evans Jr. “There is also a need to educate young people in a way that inspires them to make good decisions and provide information.”
In response to the film, a rep for Philip Morris USA said that the company agrees with the overwhelming medical and scientific consensus that cigarette smoking is addictive and causes serious diseases in smokers.
“Philip Morris stood alone among the major cigarette manufacturers in support of FDA regulation over cigarettes and believes that this regulation can provide significant benefits to tobacco manufacturers and adult tobacco consumers,” a company rep said.
Yet according to DeNoble, the battle has only really just begun, and he is pushing for further regulation.
“Someday they could produce a cigarette that only produces a little nicotine. That would mean that if young people experimented, it wouldn’t necessarily lead to a lifelong addition. But the tobacco isn’t going to lie down to this. They will clearly fight every step of the way,” he said. “I want people not to be complacent. Half a million people die annually from smoking, that’s just in the United States. Six million people die in the world every single year from tobacco products. I want people to realize we need to take action.”
“Addiction Incorporated” premieres in Los Angeles on Friday, January 13.

Group wants to survey Pittsylvania County's old tobacco barns

The field representative for Preservation Virginia and the National Trust for Historic Preservation aims to undertake a survey of old tobacco barns in Pittsylvania County.

The organization will hold the first of several meetings late next month to gather volunteers to conduct a full, countywide count of the historic structures, said Sonja Ingram.

“We do hope to get a good grasp of how many barns we do have and what is the general condition of the barns,” said Ingram, field representative for Preservation Virginia/the National Trust for Historic Preservation.

Volunteers will find out who owns each building, how it was constructed, its estimated age and what it’s made of, Ingram said. It will be the first such project in the state and will take at least a year to complete, Ingram said.

“We hope the program can be a model for other counties in the state,” she said.

The purpose of the program is to raise awareness of the importance of rural historic resources including tobacco barns, Ingram said. Virginia’s economy is based on agriculture — the state’s largest industry generating $55 billion a year for the commonwealth’s economy.

The tobacco barns are part of what makes Virginia and the Dan River Region unique, Ingram said.

“Those barns are so symbolic of our agricultural heritage,” Ingram said. “Losing that would be like losing part of our identity.”

Glenn Giles, a member of the Pittsylvania Historical Society’s board of directors, called the program “an excellent idea.”

“The big catch is getting volunteers and getting people pro-active enough to do something about it (preserving the barns),” Giles said.

Pittsylvania County, established in 1767, is approaching its 250th anniversary and there should be a series of projects aimed at the county’s heritage, Giles said. Tobacco barns are probably the “most prominent symbol” of the process of growing, curing and harvesting tobacco, he said.

Information on the barns will be compiled and used to eventually seek their inclusion in the National Register of Historic Places and the Virginia Landmarks Register, Ingram said.

City Colleges Smoking Ban: Chicago Campuses Go Tobacco-Free

Chicago's City Colleges voted Thursday to ban tobacco use on school property at their seven colleges, seven satellite locations and district office.

The policy goes into effect March 1 and will include a smoking cessation program called "Courage to Quit," according to a press release from the city. More than 120,000 students and 5,800 faculty and staff will be affected by the ban, which includes smokeless tobacco products in the list of substances prohibited on school property.

Before voting on the measure, the school system surveyed students, faculty and staff, and found 85 percent supported a tobacco-free campus, according to the release. College students typically smoke at a higher rate than average adults, according to Dr. Bechara Choucair, Commissioner of the Chicago Department of Public Health, who praised the move.

"From a student's perspective, a tobacco-free campus helps both smokers and non-smokers, as it helps to create a comfortable environment for the non-smoker who should not have to endure the harmful effects of second-hand smoke," Olurotimi Akindele, president of the Harold Washington College Student Government Association, said in the release. "I am happy that City Colleges of Chicago is focused on ensuring our students are supported in their academic pursuits as well as the other non-academic aspects of their lives that are often critical to their success in college and beyond."

The ban is part of a larger initiative, led by the public health department, to provide city residents with resources and support to make healthier choices.

Boring Cigarette Packaging: Enough to Stop Teens From Smoking?

Make quitting smoking your New Year’s resolution for 2012, trumpets the homepage for the Center for Disease Control and Prevention. In the US, a quarter of teenagers smoke and almost 21 percent of adults do. Cigarette smoking accounts for 1 out of 5 deaths in the US every year and is the leading cause of preventable death in the US. More than 80 percent of adult smokers began smoking before 18 years of age.

Health advocates have long directed criticism at tobacco companies and their splashy advertising campaigns — remember Joe Camel? — attracting the attention of teenagers and children. The Atlantic reports that health advocates are urging the British government to ban all “eye-catching designs and branding” from cigarette cartons, in an effort to prevent young people from smoking. The calls for the campaign follow the release of a survey on December 29 by the British Heart Foundation according to which more than a quarter of young people rely solely on the packaging for their health information about cigarettes and smoking.

The survey, which collated responses from more than 2,700 16 to 25 year-old smokers and non-smokers, found that three quarters of those who responded thought selling cigarettes in packs with no colorful brands or logos, and larger health warnings, would make it easier for people to smoke less or quit. One in six, or 16 percent, said they would consider the pack design when deciding which cigarettes to buy, and 12 percent said they would choose a brand because it was considered ‘cool.’

The results suggest that some percentage of young people start smoking because of perceptions, or rather misperceptions, about smoking.

By the end of this year, Australia is set to introduce legislation banning such appealing advertising from cigarette packaging; Europe, Canada and New Zealand are watching the proposed law closely while (not surprisingly) cigarette companies are none too happy. Three of the world’s largest tobacco makers including Philip Morris are fighting the proposed legislation in Australia’s High Court.

Will such “boring” ads work in the US? Will cigarette packaging make smoking seem less appealing?

I’m hopeful but also somewhat dubious; it seems likely that teens will simply shrug off packaging. In the effort to get people (though not necessarily teens) to stop smoking, some other studies cited by The Atlantic is of interest.

According to the study under Dr. Jonathan Winickoff, a professor at Massachusetts General Hospital and Harvard Medical School, about one out of four parents with small children are more likely to respond to interventions to stop smoking. This figure is only a bit better than the one in five parents who quit smoking “without any special help.” But as parents are more likely to take young children to pediatricians’ visit (for vaccinations and check-ups), pediatricians “can make use of the teachable moment of a child’s vulnerability to tobacco smoke… [and] may provide added benefit to helping this group of smokers quit,” notes Dr. Winickoff. Pediatricians can screen parents for smoking and point out how stopping has numerous health benefits for children, smoking being associated with a large range of health issues in children including pneumonia, asthma, developmental delay, school absenteeism, dental decay, sudden infant death and hearing loss.

Raise Alabama's cigarette tax

Nothing good can be said about cigarettes, except perhaps that smokers pay a little more than the rest of us toward the cost of state and local government in Alabama. Now a couple of lawmakers would like them to pay more.
That's an excellent idea, especially since the state General Fund is expected to come up short by at least $400 million when fiscal 2013 begins next Oct. 1. The General Fund is the budget that provides the money for state troopers, Medicaid, mental health, prisons, the courts and a number of other agencies like state parks. (Cities and counties add their own taxes; Huntsville adds 10 cents a pack, and Madison Count, 3 cents.)
Rep. Patricia Todd, D-Birmingham, has filed a bill that would raise the state cigarette tax by 32.5 cents to 75 cents a pack, The Birmingham News' David White reported. That would raise an estimated $75 million a year for the General Fund.
Rep. Joe Hubbard, D-Montgomery, has filed a bill to raise the tax by $1 a pack, which would be earmarked for the state's Medicaid program for poor and disabled Alabamians. According to the Legislative Fiscal Office, the $1 increase would bring in about $230 million a year.
Chances for either to win approval appear slim. Todd has pushed cigarette tax increases for several years without success. But she told White she thinks the odds are better this year because the General Fund is in such poor shape. This year's $1.77 billion budget faces the loss of one dollar out of every five next year.
Todd was unable to persuade the Legislature to pass the tax for several years when Democrats were in control. Republicans took over in the November 2010 general election, and their leaders doubt the Legislature would increase in the tax.
And Gov. Robert Bentley has said he will not seek any tax increases. He has been thinking about cutting earmarked money for classroom teachers out of the state school budget to help the General Fund, even though the school budget is already under serious siege.
Marshaling his arguments, Hubbard told White that increasing cigarette taxes would be fair because some of Medicaid's money is used to treat the self-inflicted illnesses caused by smoking. "This is not an unfair tax," he said. "It is a tax on the people who engage in activity that costs every taxpayer."
A counter-argument is made by David Sutton, a spokesman for cigarette maker Philip Morris USA. "You're talking about a tax increase on one segment of the population to provide funding to the General Fund, which benefits the entire population of the state," he told White. "That's an issue of taxing equity."
But it isn't fair for all Alabamians to pay increased health insurance premiums to cover the cost of smokers' doctor and hospital bills. The American Lung Association estimates that more than one in five Alabamians smokes.
Think about the extra cost of caring for Medicaid babies in neonatal intensive care units who were born prematurely and underweight because their mothers smoked cigarettes. Out of more than 6,900 births to all mothers in Alabama in 2009, 11 out of 100 were smokers, according to the state Department of Public Health.
Some people argue against such an increase, saying it would expand cigarette bootlegging from border states where the taxes are lower. But people wouldn't have to pay a tax increase or any tax at all if they quit smoking. Of course, many of them would have a terrifically hard time doing that because they are physiologically addicted smokers, another endearing quality of cigarettes.
To be sure, cigarette smoking in the state is on the decline. For fiscal 2010, the state tax brought in $131.4 million from tobacco sales, a drop of about $17 million over four years, according to the state Department of Revenue. So a tax increase would not provide a stable source of money, but it would bring in dollars the state would not get otherwise for essential public services.
And a significantly higher tax can be expected to discourage a few people from taking up smoking or encourage them to cut back or quit before it kills them.
That's where a tax increase would really begin to pay off.

Boulder dispensaries react to ban on new businesses

From glee at the prospect of no new competition to dismay at the city's handling of the matter, Boulder's medical marijuana industry had a mix of reactions Wednesday to the city's unexpected ban on new businesses.

The City Council approved the temporary ban on new dispensaries and growing operations at about 11 p.m. Tuesday at the request of City Attorney Tom Carr.

The ban took effect immediately and will last at least until 8 a.m. Feb. 8. But the council is scheduled to hold a public hearing Feb. 7 to decide whether to impose a longer-term moratorium.

On Wednesday, Carr said he plans to call for at least a six-month moratorium at that meeting.

"The fact is that we wanted to get to a level where we could get through the first 120 applications that we've gotten and make sure the community was adequately served," Carr said.

Now, with 37 cultivation facilities, 32 dispensaries and six marijuana-infused product manufacturing sites in the city, Carr said, "We have more than enough businesses in town."

He said there are also concerns that growing operations are simply shipping their product to Denver dispensaries -- cutting Boulder out of the tax collections -- and that dispensaries in Fort Collins will try to relocate to Boulder after that city ordered all medical marijuana businesses to close by Feb. 14.

Carr said the temporary ban on new license applications would give the council time to review the laws governing the industry and whether changes should be made.

"We think we've been very fair to this industry," Carr said, noting that most other Front Range cities have banned dispensaries entirely. "We've tried to help this industry and support it."

The city would likely draft changes to regulations, or write new ones, if the council approves a longer-term moratorium. It's possible that the moratorium could be extended again after six months, however.

Carr said it was important not to give prior notice about the emergency moratorium so that would-be dispensary owners didn't have time to submit last-minute applications.

Some dispensary owners said Wednesday that they suspected the city would eventually close the floodgates.

"While I think it's unfortunate for people looking to expand or perhaps relocate from other areas, it doesn't surprise me," said Frank Horwich, owner of the Boulder MMC dispensary, 2206 Pearl St.

City officials said Boulder now has 12 pending applications for medical marijuana shops -- which will still be allowed through the process.

Horwich said he thinks the relatively large number of dispensaries in Boulder is driving the moratorium.

"It has felt to me that the city of Boulder has realized they have probably more than enough shops," he said. "All of the conversations that I've had in the past with officials from the city of Boulder didn't lead me to believe they were interested in having any additional (medical marijuana) businesses."

Carr, the city attorney, said the moratorium also gives his office time to see how a court case involving a Boulder dispensary owner plays out.

Last month, Boulder County District Court Judge Andrew Macdonald granted a preliminary injunction against the city that allows Jack Pease, owner of Buffalo Enterprises, to continue operating his medical marijuana dispensary, The Station, and the accompanying grow operation, Bushes.

The city had ordered the company to close its doors over compliance issues and for denying city inspectors access to his business. Pease appealed that order, saying the city didn't treat him fairly.

On Wednesday, Pease said he thinks the moratorium is an unfair overreaction to his case.

"No, I don't think it's fair to the other people -- not at all," he said. "It seems like, to me, that instead of putting it on hold and stopping the world, you deal with the situation at hand and move on."

But some businesses that already have a license see the moratorium as an opportunity.

"It's a good thing for us," said Dan Boden, general manager at Boulder Kind Care, 2031 16th St. "We're actually pretty happy about it."

He said the dispensaries that got on top of the city's stringent requirements early are the ones that deserve to stay in business.

"The people who actively put effort into complying ... are being rewarded," he said.

And the rewards can be great. According to city officials, the sale of medical marijuana in the city topped $18 million in the first 10 months of 2011. That has translated to about $654,000 in sales tax for the city.

Laura Kriho, director of the Boulder-based Cannabis Therapy Institute, said the financial incentives of keeping competition out of the market have made it more difficult to rally local businesses against things like additional regulations and moratoriums.

"The dispensaries, they want these regulations," she said. "They want their competition put out of business."

But from the standpoint of medical marijuana patients, she said, a moratorium doesn't help anyone.

"Any more prohibitions are going to go against patients," she said. "This is supposed to be liberal Boulder, so what is the problem here?"

Two potential ballot measures this fall may change the playing field for medical marijuana businesses regardless of what Boulder does.

Kriho is working on the "Legalize 2012" campaign, which seeks to legalize the drug in Colorado.

A competing measure, meanwhile, seeks to regulate marijuana like alcohol and legalize possession of up to 1 ounce of the drug for anyone over 21.

Mason Tvert, a proponent of the initiative, turned in nearly 160,000 signatures to the Colorado Secretary of State on Wednesday in an effort to get that measure on the fall ballot. The initiative needs only about 86,000 valid signatures to make the ballot.

He said the initiative would not affect Boulder's rules for dispensaries.

"The initiative explicitly allows localities to establish their own policies and to ban those types of facilities if they want," he said. "This initiative will not affect current medical marijuana rules and regulations in any way."

Terry eyes legal action over cigarette image

Lawyers for England captain John Terry could take legal action after an apparent image of the footballer was used in a tobacco warning on cigarette packets in India, his spokesman said Tuesday.
The blurry photograph featuring the head and shoulders of a man resembling Terry appears on packets of Gold Flake cigarettes and other brands with a superimposed set of blackened lungs and the warning that “Smoking Kills”.
“It would seem that the picture is of him and he has not posed for anything like this,” Keith Cousins, of the British-based Elite Management agency, which represents Terry, told AFP by telephone.
“We don’t know where the image is taken from, but he has not given his consent for this,” he said. “We have consulted solicitors in London and India to investigate the matter and take appropriate action.”
Cousins added that Terry, who has hit the headlines in the past over drinking binges, was a non-smoker.
The Indian Express newspaper reported that the government’s Directorate of Visual Publicity had created the health warning, which appears on packets of 20 cigarettes which cost as little as 96 rupees ( 1.80).
Terry, 31, who is facing criminal charges in Britain over allegations of racially abusing QPR’s Anton Ferdinand, has made 72 appearances for England and is also captain of leading English Premier League side Chelsea.
K.S. Dhatwalia, additional secretary of the Directorate of Visual Publicity, told the Express he was uncertain about the image’s origin.
“We sent the creative to the health ministry and they then cleared it and circulated it,” he said. “But how Terry’s picture got to be used is not clear.”
Government advertising departments have landed in trouble in the past for using “cut-and-paste” images taken from elsewhere.