Sonoma County may set price floor on cigarettes to deter underage smokers

Sonoma County supervisors on Tuesday are poised to take up sweeping new regulations aimed at making it more costly - and thus more difficult - for minors to purchase cigarettes and other tobacco products outside city limits.

An ambitious anti-smoking campaign, spearheaded by county health officials, seeks to impose new licensing fees on retailers who sell tobacco in the unincorporated area. The licensing regulation would require tobacco sellers to permanently raise the price they charge for a pack of cigarettes to a minimum of $7. Retailers would retain the additional income, while the county would use the money from licensing fees - an estimated $140,000 a year from a total of 140 stores outside city limits - to pay for sting operations targeting sale of tobacco to underage customers.

The premise behind the campaign is that the higher cost of tobacco products - including cigarettes, chewing tobacco and cigars - and the bolstered enforcement of laws prohibiting sale of tobacco products to people under 18 will cut down tobacco use by minors.

If approved, Sonoma County would become the first jurisdiction in California to set a price floor for cigarettes and other tobacco products, and the second in the nation to adopt minimum pricing laws designed to curb teen smoking, after New York City.

“No one has done this in California,” said Serena Chen, advocacy director for the American Lung Association in California. “Evidence has shown that tobacco retail licenses help prevent stores from selling to minors, and we’ve also seen that higher cigarette pricing can help prevent young kids from starting to experiment with tobacco in the first place.”

Imposing licensing fees on tobacco retailers, however, is an increasingly common practice that local governments across California and the country use to deter underage smoking and pay for enforcement of tobacco laws aimed at minors.

Sonoma County’s proposal would require tobacco retailers - liquor stores, gas stations and groceries - to purchase a seller’s license for around $1,000 a year. The proposed ordinance also would reclassify e-cigarettes as tobacco products, and impose the same regulatory requirements on businesses that sell them. County health officials said revenue the licenses would generate would be used to pay for two half-time employees to run the program in addition to coordinating sting operations with police departments.

“We’ve not done a good job of preventing kids from starting to smoke,” said Brian Vaughn, a county health policy director. “And right now, there isn’t proper enforcement of underage smoking laws - it’s more like irregular shoulder-tapping, so we’re trying take an evidence-based approach to reducing youth access and purchasing of tobacco products.”

The county - which cannot boost California’s cigarette tax of 87 cents per pack - is seeking to take advantage of one avenue local governments have to financially wade into the cigarette market. Its proposal is the latest in a series of local initiatives that seek to crack down on smoking.

The Santa Rosa City Council last week advanced rules that would ban smoking tobacco in attached homes, and Healdsburg last year became the first city in the state to bar retailers from selling tobacco products to people under 21, while also requiring retailers to purchase a tobacco license.

New county laws would increase local compliance checks, and in order for retailers to retain their annual license, business owners would have to agree to sell cigarettes for at least $7 a pack. Though many stores currently sell cigarettes for that price or more, tobacco companies offer widespread discounting specials to business owners for lowering their price per pack. In exchange for selling at lower prices, retailers get financial kickbacks to display advertising and tobacco companies can create more smokers at a young age, critics, health officials and local business owners said.

“This would prevent that discounting,” Vaughn said. “We’re just setting a minimum price and not allowing the tobacco industry to offer financial incentives to retailers for discounted tobacco products, thereby selling more.”

The county’s anti-smoking initiative, advanced by the Board of Supervisors last June, has been met with sharp criticism from local retailers who say requiring them to pay an annual licensing fee unfairly penalizes business owners who follow the rules and don’t sell to minors. New minimum pricing rules would also create an uneven marketplace, they said.

Take, for example, the case of two brothers who own businesses in Sonoma County. Pete Mogannam, owner of the 4th Street Market and Deli in downtown Santa Rosa, wouldn’t be subject to the new rules because he operates in the city. But his brother Ned Mogannam, who owns Larkfield Liquor and Deli north of Santa Rosa, would have to buy the annual license and agree not to offer deals on cigarettes.

“We have never knowingly sold cigarettes or alcohol to a minor, so why are they punishing us by making us pay this licensing fee?” said Ned Mogannam, who has been in operation on Old Redwood Highway for 31 years. “The other thing is, if you go one block away, that’s Santa Rosa, so what’s stopping my customers from just taking their business there?”

Mogannam is one of roughly 15 local business owners who have sent letters or emails to county supervisors urging them to vote against the proposal. Retail groups have also taken issue with the county’s approach, arguing that tobacco licenses and minimum pricing laws do not actually prevent youth from accessing cigarettes.

“This does nothing to solve the problem because it doesn’t get to the actual source of how kids are getting tobacco,” said Thomas Briant, executive director of the National Association of Tobacco Outlets. “Most underage kids obtain cigarettes through social sources - from an 18-year-old friend, or their sister, or by paying someone to buy them or even their parents.”

Data about how readily minors can access cigarettes on their own vary.

County health officials found during a February sting operation that 18 percent of tobacco outlets in Sonoma County sold cigarettes to minors, compared with the state’s rate of 9 percent. Under the county’s survey, underage teens visited 76 stores that sold tobacco and were able to buy cigarettes 14 times, an effective rate of 18 percent. Another sting in Petaluma during January had a 39 percent successful buy rate, officials said.

Health officials also pointed to data from San Luis Obispo County’s tobacco retail license ordinance to support their anti-smoking campaign. There, officials recorded a significant drop in the number of underage kids who were able to successfully buy cigarettes, from 33 percent prior to passage of the ordinance, to 5 percent after.

Critics contend, however, that retailers do a good job of avoiding selling tobacco to minors. Briant highlighted a U.S. Food and Drug Administration survey results that found out of 10,305 inspections in California between January of 2012 and January of 2015, retailers were in compliance with tobacco laws nearly 98 percent of the time.

Briant also criticized charging a minimum of $7 per pack, saying that if people want to smoke, they’ll find a way. County officials said they disagree.

“We believe $7 is high enough to prevent kids from buying cigarettes, but that price point will have a minimal effect on adults,” Vaughn said.

In New York City, home of arguably the nation’s toughest anti-smoking laws, a pack of cigarettes goes for at least $10.50. Public health and legal experts said Sonoma County’s proposed ordinance, if passed, would make the county’s anti-smoking rules as aggressive as New York’s.

In California, 140 other local governments have adopted ordinances that require retailers to pay licensing fees ranging from $250 to $1,500 per year and at least 25 other states have adopted minimum pricing laws, but they are structured to prevent retailers from undercutting their competition with very low prices instead of for public health reasons.

The county’s multi-pronged approach to reducing smoking rates among minors would also include provisions preventing stores from selling individually priced cigars and cigarillos, instead requiring them to be sold in packs of 20. In addition, it would bar new licenses for retailers that primarily sell tobacco products, and prohibit new retailers from selling tobacco products within 1,000 feet of schools. Minimum pricing laws would only affect cigarettes and cigarillos.

Anti-smoking groups across the state and throughout the country are paying attention to Sonoma County, saying its set of proposals to deter underage smoking could encourage other cities and counties in California to adopt similar laws.

“This approach is bold, and in many ways, groundbreaking,” said Vince Willmore, vice president of communications for the Washington, D.C.-based Campaign for Tobacco- Free Kids, a nonprofit advocacy group. “Making cigarettes cheaper is the tobacco industry’s favorite way of promoting their products, so getting rid of that discounting is an important step toward taking away that appeal to kids.”

Tobacco companies spend $9.6 billion each year to market tobacco products, with price discounting making up about 85 percent of that spending, according to a Federal Trade Commission report released last week.

In Sonoma County, the cost for cigarettes varies by location and customer base. People who purchase cigarettes in downtown Santa Rosa already pay about $7 per pack, but near Santa Rosa Junior College, where there is a high concentration of young people, liquor stores sell the same brand for around $4.

Pete Mogannam, from the 4th Street Market and Deli, opposes the county’s proposal, but said it’s no secret that tobacco companies persuade retailers to price their cigarettes lower.

“It’s just the way of doing business,” Mogannam said. “My customers work downtown and are generally more elderly, educated and well-to-do, so tobacco companies aren’t interested in advertising here, but go to a liquor store near a college campus or go to a disenfranchised neighborhood and you’ll see cigarettes for $2 or $3 cheaper, and windows covered in advertising.”

County health officials said if their proposal geared toward reducing smoking among teens is adopted, they’d work with cities, sharing best practices, to adopt similar ordinances.

Santa Rosa Mayor John Sawyer said he has floated the idea of a tobacco retail license.

“Anything we can do to target that group of youth smokers, we should do,” Sawyer said. “If we charge for a license, that could pay for sting operations or educating kids in schools about the dangers of smoking and how addicting nicotine can be.”

Some supervisors have expressed concern that the county’s proposal could put some stores that rely on cigarette sales out of business.

“One thing I’m concerned about is having a patchwork of local regulations that differ between cities and the county,” said Supervisor Efren Carrillo. “But studies and research show that regulating tobacco at the local level clearly works.”

You can reach Staff Writer Angela Hart at 526-8503 or angela.hart@pressdemocrat.com. On Twitter @ahartreports.