Nathan Bush Vice President of Government Relations

1. Taxing New Tobacco Products: Strategies and Challenges in the States Nathan Bush Vice President of Government Relations

2. Taxing Smokeless Tobacco: Offensive and Defensive Campaigns • Some campaigns will allow you to play offense and control the policy • Others will force you to scramble to slow up or kill a bad bill • A simple weight-based taxation bill (or existing statute) is your enemy • If you are forced to assume a defensive posture and educate lawmakers for the first time on this issue mid-session, the cards will be severely stacked against you

3. Taxing Smokeless Tobacco: The Public Health Campaign Approach • Manage your effort like the public health campaign it is • Recruit local and national partners • Don’t reinvent the wheel • Always use combination of facts and personal stories to make your points • Quality anecdotes can be game-changers for lawmakers • Don’t assume decision-makers know anything about smokeless tobacco or how to properly tax it – educate them!

4. Taxing Smokeless Tobacco:Getting Organized • Research local and national data • Know your policy talking points • Focus on health • Determine coalition resources and member roles (stick together on this!) • Show decision-makers examples of these new, flavored products (they will be shocked!) • Know your opposition’s (e.g., UST’s) policy talking points

5. Taxing Smokeless Tobacco: The Public Health Campaign Approach Problem Statement: Taxing all forms of smokeless tobacco (and/or moist snuff) by a simple weight- based tax lowers the comparative price of the brands most popular with youth.

6. Smokeless Tobacco and Cancer The American Cancer Society notes that all forms of oral tobacco contain chemicals known to cause cancer (carcinogens). These products can cause cancer of the mouth, pancreas, and esophagus.

7. Prepare Yourself:Research Good vs. Bad Policy • Simple weight-based taxes are bad for health and bad for state revenue, especially over the long-term • New generations of smokeless products tend to weight a LOT less, therefore subject to lesser tax in a weight-based scheme • UST will try to couch a switch to weight-based taxes as a good way to raise taxes & a public health win • UST will try to use traditional public health arguments against you (e.g. “kids are victims of other brands’ low-priced tobacco”) • You must be prepared to demonstrate the truth: kids prefer UST products

8. Brand Preferences: Percentage of Youth Users

9. Weight-Based Taxation is a Bad Strategy Because It Promotes Harmful and Very Popular Products • The smokeless tobacco industry likes to promote the use of smokeless tobacco as an alternative to smoking cigarettes. • The smokeless tobacco industry suggests that the use of smokeless tobacco will help smokers quit. • WARNING: THERE ARE HUGE PROBLEMS WITH THIS TYPE OF MARKETING BY THE INDUSTRY

10. Weight-Based Taxation is a Bad Strategy Because It Promotes Harmful and Very Popular Products • Smokeless tobacco is not a safe alternative to smoking cigarettes. • Increased marketing by the industry leads to an increase in the number of new users, including youth users • FDA-approved smoking cessation aids are safe and increasingly available.

11. Smokeless Tobacco PromotionVia Weight-Based Taxation is Not a Public Health Strategy • http://www.npnweb.com/uploads/featurearticles/2007/npnMarketPulse/011707_mp1.asp (Web page information excerpted and printed 1-28-07) Study: Moist tobacco does better where tax is weight-based Moist smokeless tobacco volume is increasing faster in states employing a weight-based excise tax versus states that use an Ad Valorem tax, according to an analysis by Willard Bishop, a consulting firm in Barrington, Ill. Only nine states use a weight-based tax, Willard Bishop said Jan. 16 in releasing results of its analysis. Those nine reported volume can growth of 10.7 percent for a 13-week period in 2006 compared to the same period in 2005 (see table). In the states with Ad Valorem tax, volume can growth was 7.5 percent, according to the firm’s analysis. Ad Valorem tax is typically expressed as a percentage of the wholesale price.

12. Smokeless Tobacco PromotionVia Weight-Based Taxation is Not a Public Health Strategy • Long-term ACS “Switchers Study” (Henley et al. 2007) determined that premature death was more likely for men who switched from cigarettes to smokeless compared to those who quit smoking with no other tobacco use • 2009 report from HHS/SAMSHA confirmed that smokeless use is increasing among adolescent males • “Dual Use” can interfere with tobacco cessation, especially when the industry promotes switching

13. Planning Your Strategy:Know Who The Players Are • Big Tobacco companies dominate this market but they cannot rightfully make legitimate health claims • UST / Altria • Conwood / Reynolds American • Other players, other products entering the market at various price points and stoking competitive (and legislative) flames between tobacco companies

14. Preparing Your Strategy:Know Your Opposition • UST is an aggressive company with ambitious legislative goals • UST is now owned by Altria (parent company of Philip Morris) • UST continues to dominate the market alongside other high-end Altria brands like Marlboro snus • UST has a checkered past

15. Preparing Your Strategy:Know Your Opposition

16. Preparing Your Strategy:Know Your Opposition’s Opposition • Market share domination is the #1 objective of competing tobacco companies • Conwood & RJR are strategic enemies of UST & Altria on this issue • Only UST will benefit from simple weight-based taxes (now with the backing of Altria) • No need to collaborate with the industry – just make the health arguments, and leave the rest to tobacco industry infighting • Do not appear to be aligned with any one tobacco company’s interests: you must be the voice of reason and the voice of health

17. Do Your Homework:Inform Your Lawmakers • Beware of UST’s bad habit of recruiting otherwise quality tobacco control legislative champions for their weight-based scheme • Your job is to preemptively educate lawmakers and relevant tax/revenue policy analysts (display actual products – and applicable weights – if possible) • Do not be swayed by offers of revenue enhancements for public health programs courtesy of UST and their weight-based scheme • If your state has a price-based moist snuff tax, it is only a matter of time before UST shows up at your capitol

18. For campaign assistance, please contact: Kelley Daniel Senior Representative – State and Local Campaigns American Cancer Society Cancer Action Network kelley.daniel@cancer.org