NYC Tobacco Discount Ban Goes Into Effect

WINSTON-SALEM, N.C. – A New York City ban on tobacco product discounts went into effect Friday after manufacturers opted not to appeal a U.S. District Court judge's ruling, reported the Winston-Salem Journal.

Altria Group Inc., Lorillard Inc. and Reynolds American Inc. previously argued that disallowing discounts violated their free-speech rights, and that state and federal laws supersede limits at the city level. However, in June, Judge Thomas Griesa ruled that "the ordinance only regulates an economic transaction — the sale of tobacco products below the listed price. It does not restrict the dissemination of pricing information and thus, it does not violate the First Amendment."

Tobacco discounts, which include sales, coupons, discounts on bulk purchases and providing free lighters or non-tobacco products with a purchase, allow retailers to sell tobacco products below list prices. Opponents of tobacco products say one reason for the discounts is to keep prices low enough to attract more and younger smokers.

In New York City, a pack of cigarettes carries a city tax of $1.50, a country-high state tax of $4.35 and the federal tax of $1.01 for $6.86 in total tax.

Officials from the tobacco companies opposing the ban declined to comment directly on the ruling or their litigation strategy, but the law may be counterproductive to "efforts to keep tobacco out of the hands of children," according to Reynolds spokesman Bryan Hatchell. "By further driving up the price of tobacco at legitimate retail outlets, black-market sellers who do not verify age and routinely sell products to children will profit even more."

Regarding the possibility of a legal precedent being set on discounting, Robert Bannon, director of investor relations for Lorillard, said a precedent "can always be a concern, but in this case, we decided not to pursue the appeal process."

The Campaign for Tobacco-Free Kids applauded the ban. "These rulings show that tobacco discount bans stand on firm legal ground," stated Executive Director Susan Liss. "They supply strong legal support for an important new tool that state and local governments should use to increase the price of cigarettes and other tobacco products and reduce tobacco use, especially among kids."