colorado cigarette prices The Impact of Increased Cigarette Taxes on Big Tobacco

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## Introduction

In recent years, the cigarette industry has faced numerous challenges, including increased regulations and the rise of alternative nicotine products. One significant blow to Big Tobacco came in the form of ballot measures in Colorado and Oregon, where voters approved substantial tobacco tax hikes. Surprisingly, the industry did not mount its usual aggressive opposition campaign. This article will explore the implications of these tax increases and the role played by major tobacco companies like Altria Group. colorado cigarette prices

The Unusual Support from Big Tobacco

Big Tobacco’s decision not to vigorously oppose the tax hikes in Colorado and Oregon raised eyebrows. In the past, companies like Altria Group, the parent company of Marlboro, have spent millions of dollars to defeat similar tax initiatives in other states. However, in the case of Colorado, Altria Group did not spend a single dollar in opposition, while Colorado voters overwhelmingly approved the tax with two-thirds support. This surprising change in strategy can be attributed to various factors, including the potential for market gains and the desire to transition smokers to non-combustible products. colorado cigarette prices

The Colorado Tobacco Tax Hike

The Colorado tax hike, known as Proposition EE, marked the state’s first tobacco tax increase in 16 years. The measure included multiple provisions aimed at reducing smoking rates and generating revenue for public health initiatives. The total state-levied tax on cigarettes will increase from 84 cents to $2.64 per pack by 2027. Additionally, vaping products, which were not previously taxed, will face a tax rate of 30% of the manufacturer’s list price in 2021, gradually increasing to 62% by 2027. One controversial aspect of the tax hike is the inclusion of a minimum price per pack of cigarettes, starting at $7 and rising to $7.50 in 2024.

Altria’s Influence in Colorado

While Altria Group did not publicly oppose Proposition EE, it did exert its influence behind the scenes. Emails between political consultants and Colorado Governor Jared Polis’ office revealed that Altria insisted on including a minimum price provision in the proposal. This provision could potentially benefit premium tobacco companies by allowing them to corner the market, as discount cigarette prices rise to meet the minimum price requirement. The requirement to include a minimum price was seen by Altria as an opportunity to gain market share while still supporting tobacco harm reduction initiatives.

The Opposition’s Lawsuit and Federal Judge’s Ruling

Not everyone was pleased with the minimum price provision of Proposition EE. Discount cigarette companies, including Liggett Group, Vector Tobacco, and Xcaliber International, filed a lawsuit against the state, claiming that the provision would give Philip Morris (a subsidiary of Altria Group) an unfair advantage. They argued that the provision would destroy their ability to compete in Colorado. However, in December, a federal judge rejected their request for a preliminary injunction, allowing the tax measure to proceed as planned. Liggett Group has stated its intention to appeal the ruling.

Oregon’s Tobacco Tax Increase

Oregon also saw a significant tobacco tax increase with Measure 108. This measure garnered two-thirds support from voters and increased the state’s tobacco taxes by $2 per pack, from $1.33 to $3.33. The tax increase also extended to e-cigarettes, creating a new tax for these products. The estimated revenue generated by Measure 108, approximately $300 million, will be allocated to funding the state’s health plan, the Oregon Health Plan.

Altria’s Response to Oregon’s Measure 108

While Altria Group opposed Oregon’s Measure 108, it did not actively campaign against it. The measure passed despite the absence of major industry opposition. The success of the campaign can be attributed to various factors, including early resource allocation, targeted funding for healthcare, and a diverse coalition of supporters from both the left and the right. The absence of opposition from major tobacco companies suggests that public support for tobacco tax increases is strong.

Implications for Future Tobacco Tax Initiatives

The approval of tobacco tax increases in Colorado and Oregon could serve as a blueprint for other states considering similar measures. The fact that major tobacco companies did not launch aggressive opposition campaigns indicates a potential shift in their strategy. This change may be driven by various factors, including the desire to promote tobacco harm reduction and the recognition that increasing the price of tobacco products is an effective way to reduce consumption, particularly among young people.

The Role of Tobacco Taxes in Public Health

Tobacco taxes have long been recognized as an effective tool in reducing tobacco use. Studies have shown that for every 10% increase in cigarette prices, consumption decreases by approximately 4% among adults and 7% among teenagers. The revenue generated from tobacco taxes can be used to fund various public health initiatives, including tobacco use prevention programs and healthcare services. The approval of the tax hikes in Colorado and Oregon reflects the public’s support for using tobacco taxes to promote public health.

Conclusion

The approval of significant tobacco tax increases in Colorado and Oregon without notable opposition from major tobacco companies marks a turning point in the tobacco industry’s relationship with public health initiatives. While the motivations behind Big Tobacco’s change in strategy may be complex, the fact that these tax measures passed with overwhelming support indicates a shift in public opinion. As other states consider similar measures, the experiences of Colorado and Oregon can serve as valuable lessons in shaping effective tobacco tax policies that prioritize public health and reduce tobacco consumption.