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By Mehgan Belanger
WASHINGTON -- When news broke that NACS dropped its opposition of House bill H.R. 1108, which would give the U.S. Food and Drug Administration (FDA) regulatory authority over tobacco products, Mary Szarmach, vice president of trade marketing for Smoker Friendly Intl., was surprised.
"I still am a little startled by the FDA announcement and obviously, NACS opinion on it," she told CSNews Online on Friday, noting that she does not disagree with the changes. "For our company, it has been a fight that we felt very steadfast in not changing our position. … No matter what wording was put in there to protect retailers, I think for the entire industry it's a big step backward."
NACS dropped its opposition to the bill on April 1, after meeting with committee chairman John D. Dingell (D-Mich.) and bill sponsor Henry Waxman (D-Calif.), to negotiate changes, including removing any language that would regulate the sale of tobacco products.
"We got concessions in everything we asked for, including Internet and Native American sales. Then we were confronted to accept the changes or not," Lyle Beckwith, senior vice president of government relations for NACS, told CSNews Online. "With the political reality that if we did not accept the deal, we'd get none of the concessions, then our option would be to offer an amendment to strip the retail provisions out."
However, even if an amendment was added, the chairman of the committee could go to the House floor and make changes. "I was fairly confident that based on past performance, Dingell would have stripped the amendment out of bill, and we'd have nothing," said Beckwith. "Even if he didn't and it passed in the House, there was no way we'd ever get the language through the Senate."
He continued: "This weekend was open, and this weekend only, to accept the deal. It would have passed without our acceptance, the chairman would have said that he tried to negotiate, but we were not reasonable. … That would remain until it's enacted, and we'd get nothing."
NACS was able to get protections for convenience retailers selling tobacco products, including:
-- Internet sellers would be required to verify purchaser's age, and the FDA could regulate Internet advertising;
-- Provisions would be enforced against Native American tribes selling tobacco;
-- Tobacco stores would be required to comply with the same advertising restrictions as other retailers;
-- There would be no restrictions on the type of location that can sell smoking cessation products, provided those locations verify age;
-- Retailers' concerns on alleged violations would be heard in person at a federal facility convenient to the retailer;
-- A notice of violation would be provided before follow-up compliance checks; and
-- Notices of violation would be delivered to a specified location, to ensure violations are received properly and there is a chance to take corrective action.
NACS also ensured that when punishments are assessed, certain considerations are made, such as whether the retailer has a compliance and training program in place before determining to impose or modify a "no tobacco sale" order; and imposing lower fines for the first three violations if the retailer has a compliance and training program in place, and requiring the FDA to consider any state fines imposed when deciding the amount of a federal fine for the same violation.
While NACS' efforts "as far as getting some retail protection in the bill as it sits, are certainly helpful," said Szarmach, there are some provisions in the bill that were not amended and concern her, including retail advertising regulations and section 917, a preemption exception section that gives agencies other than the FDA the ability to regulate tobacco.
"The two big ones that really concern me is the ban on color advertising in retail stores, which would only allow for brand names in black letters with a white background," she said. "If passed as it reads, then there will be another battle. For ourselves as retailers or for manufacturers, who see this as against freedom of commercial speech."
Secondly, Szarmach is opposed to section 917, which allows federal agencies other than the FDA -- including states, counties and cities -- to ban the sale, distribution, advertising, promotion or possession of tobacco products. "The FDA wouldn't be the end-all say-all," she said. "Not only will the FDA be breathing down your neck, but then it really doesn't preempt another agency from breathing down your neck also."
If that wasn't enough, the bill also would ban flavored cigarettes, including cloves and other super premium products, "which are great margin items and great sellers," Szarmach said. "We're not really excited over that either."
She wasn't alone. Another retailer, John Call, managing partner of CF Capital Assets, acknowledged NACS' efforts on behalf of retailers who sell tobacco, but was still concerned about the bill.
"I think NACS did what NACS had to do," he told CSNews Online, noting the makeup of Congress, and the fact that the bill was going to be passed regardless, "deciding not to die on the Hill was probably politically the smartest thing for NACS to do."
Call said he was "adamantly opposed" to any governmental regulation of tobacco, and believed that the industry should be allowed to police itself. He added: "as these things come, it just is another step, to another step, to another step. What's next? Where do we draw the line?"
He added: "But like anything else, you can't continually milk a cow and not feed it. Sooner or later, the cow will fall over."