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A Successful Month in the Midwest

It's been a good month for convenience stores in the Midwest, as Indiana passed a breakthrough law removing some restrictions on pseudoephedrine sales, and Kansas granted c-stores the same rights as package stores to sell alcoholic beverages on Sunday. Iowa, however, is sweating out a possible doubling of cigarette taxes.

In the sensitive matter of pseudoephedrine, the Indiana state legislature came up with a new law that exempts convenience stores from certain restrictions, pointing the way, we can hope, for other states to follow.

Recognizing that c-stores occupy a unique position in the retailing landscape, the new statute exempts retailers that carry only convenience packaging from logging buyers of pseudoephedrine products or requiring them to furnish government identification. Nor do these retailers have to store their products behind a counter or locked in a display case. Instead, they have a choice of three less restrictive methods of securing them.

“With this bill,” said Scot Imus, executive director of the Indiana Petroleum Marketers Association, “Indiana has successfully avoided the national trend of classifying cold relief products as Schedule V drugs, since it's obvious that these medicines sold in single- and double-dose packages are not the kind used by criminals to make methamphetamine. Convenience packages only hold two or four pills, but it takes a thousand to make a batch of meth. We're very grateful that logic has ruled in this matter.”

Chalk up a big victory for the convenience stores of Kansas, too. Tom Palace, executive director of the Petroleum Marketers and C-Store Association of Kansas, reports that the state legislature has approved the Sunday sale of alcoholic beverages and cereal malt beverages (i.e., beer) in convenience stores.

"Up to now, " noted Palace, "only package stores were allowed to sell alcoholic beverages on Sunday; c-stores were shut out of the marketplace. It was truly an unfair situation and the overwhelming vote in the House, 87 to 34, to change the law in our favor is an indication of how much the legislature agreed with us. We're grateful to them for taking this action."

The vote in the Senate was closer, 21 to 17, but that did not lower the satisfaction quotient among c-store operators in the Sunflower State.

The new rule goes into effect July 1 of this year.

And, as a little icing on the legislative cake, the threatened 50-cent increase on cigarette packs never made it to a vote, so the tax rate remains the same in Kansas.

Iowa is hoping for the same.

"We have no less than six states bordering us," noted Jerry Fleagle, president of the Iowa Grocery Industry Association, "and right now only one of them, Missouri, has lower taxes on cigarettes than we do. Theirs is 17 cents a pack, and ours is 36 cents. That's important to us because tobacco is the No. 1 product sold in c-stores and Iowa's low cigarette tax helps keep our sales figures stable.

"But now the whole situation is shaky," Fleagle reported, "because the Iowa state legislature is threatening to double our tax to 72 cents. That will make us higher than four of the states around us: Nebraska at 64 cents, South Dakota at 53 cents, Minnesota at 48 cents and good old Missouri at 17 cents, which will send a lot of people out of Iowa for their cigarettes. Only Illinois at 98 cents and Wisconsin at 77 cents will have higher cigarette taxes than us if the increase goes through.”

The Senate, evenly split between Democrats and Republicans, 25 to 25, has already passed the tax increase, but as we go to press the House has not yet voted on it. Its lineup is 51-49 in favor of Republicans, but the Governor is a Democrat, so no one is making any predictions at this time.

Finally, Midwesterners gathered together at the Midwest Petroleum and Convenience Tradeshow (M-PACT), a four-state exposition that brings together petroleum marketers, suppliers, convenience store operators and others from Indiana, Ohio, Kentucky and Illinois. More than 2,000 attendees paid their way in this year, joining more than 1,500 exhibitors manning 422 booths.

William Fleischli, executive vice president of the Illinois Petroleum Marketers Association, observed, "You can always tell if a tradeshow has been a success by how many exhibitors sign up for next year when the show ends. Over 10 percent did just that when our M-PACT show ended on April 28th this year, which is the most we've had since we started M-PACT four years ago.”

Among the guest speakers was John Melo, president, U.S. Fuels Operations for BP, who shared his insights on the future of the fuel industry.

"I think the absolute price we're seeing today is the price we'll be seeing in the future, with a 35 to 40 cent window," said Melo, as reported in Convenience Store News. That positions him several dollars below Goldman Sachs, one of Wall Street's top energy derivative traders, which predicts a spike in oil prices that could take it to a scary $105 a barrel

But no need to panic: Long term, Goldman Sachs and Melo are in agreement, since Goldman Sachs emphasized in its report that high prices will reduce energy consumption, after which lower prices will return.

Midwest operators seeking more predictions and other trenchant observations should head for Indianapolis next year when M-PACT convenes again from April 18 to 20.
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