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    Northeast Regional Report

    New York retailers face record tobacco license fee, while Maine may require ethanol-free premium gas. New Hampshire food stores lobby to sell liquor, and Vermont mulls tax on flavored malt beverages.

    By Hank Behar

    NEW YORK -- New York State is on track toward setting an all-time record in fee-busting. Governor David Patterson is preparing to recommend an increase in the retail tobacco dealers’ fee from $100 annually to as much as $5,000, depending on sales volume.

    Calling the 50-fold hike "punitive," James Calvin, president of the New York State Association of Convenience Stores (NYACS) claimed the measure is "part of a wider crusade by the public health community to badger retail stores to stop selling legal tobacco products altogether. Out-year revenue projections in the budget reveal that this proposal is designed to drive 40 percent or more of retailers out of the tobacco business entirely, by making the registration fee cost-prohibitive," he said.

    Calvin also declared, "it’s disgraceful for the state to sock licensed retailers with exorbitant fees while allowing certain competitors -- particularly Native American stores, many of which sell 50 times the volume of cigarettes we do -- to sell tobacco to New Yorkers without even obtaining a license, let alone pay any fee at all." Regrettably, rather than reducing tobacco consumption, fewer licensed tobacco retail outlets would merely drive more smokers to buy from these unlicensed sources of tobacco.

    "Given the reality that tobacco is a legal product that will continue to be consumed," Calvin observed, "the state has a choice: to have it sold in stores like ours, where it can be taxed and regulated, or sold exclusively on the unlicensed, untaxed, unregulated side of the street, which already supplies at least half the cigarettes consumed by New Yorkers. These Machiavellian fee increases would make the latter scenario inevitable."

    Fees should reflect the state’s administrative costs, not business volume, according to Calvin, rather than be designed to punish the licensee for selling a legal product in accordance with regulations governing such commerce.

    A bill may be proposed in the Maine legislature this session that requires premium gasoline to be ethanol-free.

    "That does not make sense because only 4 percent of the gasoline sold in Maine is premium, and of that 4 percent, less than 1 percent goes into the market that requires ethanol-free gasoline, primarily airplanes," said Jamie Py, president of the Maine Oil Dealers Association (MODA).

    "So where is the logic to mandate that ethanol-free premium gasoline be available wherever gasoline is sold when so few users require it?" he asked. "Experience has shown that whenever a boutique gasoline is mandated, its cost goes up and its supply becomes unreliable, which is why the Maine Department of Environmental Protection (MDEP) consistently opposed mandating boutique fuels." He added: "Besides that, there are no facilities in the state to comply with an ethanol-free mandate."

    That’s because Maine’s suppliers converted gasoline operations to produce ethanol blends after the governor’s office and MDEP urged wholesalers to do so, and after the federal government launched its Federal Renewable Fuel Standard (RFS) program on Sept. 1, 2007.

    As a result, all of Maine’s terminals have been converted to blend ethanol, and all Maine retailers have undergone expensive E-10 upgrades. The state’s infrastructure, therefore, isn’t prepared to offer ethanol-free premium gas.

    The fact remains that a moisture problem does exist when ethanol blends are used in snowmobiles, boats and small engines, but this is easily handled with an off-the-shelf additive, said Py. It’s what they’ve been doing for decades in Midwestern states, notes Py, which also have snowmobiles, boats and small engines.

    If the bill calling for ethanol-free gasoline does make its way to the Maine legislature, Py and the Main Oil Dealers Association will strongly oppose it.

    New Hampshire
    It’s a long time until Christmas, but New Hampshire’s grocers have a $16 million gift for the state treasury. All the legislature has to do to get the money is permit the state’s 1,400 food stores to sell liquor.

    "Right now the 77 state-run package stores are closed nights, holidays and some on Sundays, which makes them available to the public an average of 4,600 hours a week," John Dumais, president and CEO of the New Hampshire Grocers Association (NHGA) noted. "The state’s 1,400 food stores, on the other hand, are open an average of 115,000 hours a week, 11 hours a day, seven days a week, which we estimate would generate an extra $87 million a year in new liquor sales if groceries were allowed to sell spirits. That translates into $16 million in taxes for the state -- taxes that would be paid mostly by out-of-staters, since New Hampshire sells 60 percent of its products to out-of-state customers."

    The problem, said Dumais, is food stores in New Hampshire are not permitted to sell liquor. "They’re allowed to sell beer, wine and fortified wines, so we feel it’s a natural extension to carry liquor also. We don’t want to privatize the state’s stores. We only want to complement them for the convenience it would bring to the public, the additional business it would bring to food stores and the tax revenues it would bring to the state. It’s a win-win-win situation all around."

    A plan to overhaul the functions of the Liquor Commission was incorporated into Senate bill 181, but it was found unacceptable to the NHGA at its initial hearing during the week of Feb. 9. The next public hearing will be held early in March during which a substantial amendment more acceptable to the NHGA will be introduced.

    Flavored malt beverages may become expensive in Vermont if bill H. 197 is passed by the state legislature, which calls for a tax of $1.54 per gallon to be levied on flavored malt beverages, which is between three and six times greater than the amount levied on non-flavored malt beverages.

    This does not sit well with Jim Harrison, president of the Vermont Grocers Association (VGA).

    "Flavored malt beverages are already among the most expensive malt drinks there are," Harrison said. "Weighing them down with a heavy tax would only throw the dollar burden on consumers, and they’re having enough difficulty making ends meet these days."

    But taxes aren’t the only objectives of the bill’s sponsors. The bill also calls for re-classifying flavored malt beverages and adding additional restrictions on their sale. The proponents of the legislation want them defined as spirits, which would automatically remove them from grocers’ shelves and move them into the state’s 75 liquor stores. (Liquor stores in Vermont are state-run. Only beer and wine are available in all 1,000 grocery and convenience stores).

    The bill’s supporters argue having "alcopops" such as Mike’s Hard Lemonade, Bacardi Silver and Smirnoff Ice easily available in grocery and convenience stores encourages their consumption by young people. They will not only buy these drinks looking for thrills, say the bill’s advocates, but will sometimes purchase them without even knowing they contain alcohol.

    However, there’s no evidence that stores are selling these products to minors, counters Harrison. "All retail stores in Vermont that sell alcohol and tobacco products are required to train their employees and are subject to periodic compliance testing by the Vermont Department of Liquor Control," he said. "No store owner would risk a fine and the possible loss or suspension of license by selling to a minor, so we find the proposed law is completely unnecessary."

    At a press conference Feb. 4, members of the Senate Judiciary Committee were asked to determine which of the bottles on display contained alcohol and which didn’t. After reading the labels, most of them were able to do so.

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