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Chicago Finance Committee Approves Amended Tobacco Ordinance

CHICAGO – On Feb. 10, the Chicago City Council’s Finance Committee voted 22-9 to approve an amended tobacco ordinance that increases the legal age to purchase tobacco to 21, sets minimum prices for certain tobacco products, mandates minimum package sizes for various tobacco products, prohibits the redemption of tobacco product coupons, outlaws multipack discount pricing, and assesses new taxes on other tobacco products.

In addition, the amended ordinance says if a lawsuit is brought against the city of Chicago that results in a court overturning the new tax on other tobacco products (OTPs), then the minimum price and minimum package size requirements would take effect. However, the substitute ordinance also says that if a lawsuit is not brought to overturn the new OTP tax, then the minimum price and minimum package size requirements would not take effect.

Mayor Rahm Emanuel, the original sponsor of the ordinance, also agreed in the amended ordinance to double the fine for the sale of loose cigarettes to $5,000 for the first violation and $10,000 for repeat offenses, while also using some of the revenue from the new tax on tobacco products to fund smoking cessation programs in addition to funding incoming high school orientation programs. The mayor also agreed to increase city and police enforcement against the sale of single cigarettes and report back to the city council annually on the progress of the stepped up enforcement.

The amended ordinance as approved by the Finance Committee will go before the full Chicago City Council for a vote, which may occur sometime Feb. 10.

On Feb. 8, the Finance Committee held a hearing on the proposed tobacco ordinance and a number of the Chicago Finance Committee members raised questions about the lack of legal authority for the city council to adopt a new OTP tax, the effect of such a tax on lower income residents, the expansion of the current black market in Chicago, the loss of retail jobs, the likelihood of retail store closings, and the fact that 18-, 19- and 20-year-olds are adults and should be allowed to decide whether to buy and use tobacco products.

Turnout by retailers at the hearing was very high, with about 50 7-Eleven franchisee owners attending and the president of the Illinois 7-Eleven franchisee association testifying against the ordinance. NATO Board Member Mike Gold, the owner of Arango Cigar Co., testified about the lack of regulation of premium cigar sales over the Internet, the fact that the proposed minimum prices on premium cigars will drive more consumers to buy cigars over the Internet—resulting in lost retail sales and lost excise tax and sales tax revenue for the city, and that four tobacco stores have already closed in the past several years.

I testified about the Illinois state law that prohibits Chicago from enacting an OTP tax while also responding to misinformation from ordinance advocates, opposing the age 21 provision, and explaining how the minimum pricing would expand the current black market in Chicago.

The amended ordinance as approved by the Finance Committee creates a dilemma for retailers who will be forced to decide whether to pursue their legal rights to overturn the new OTP tax and face minimum price and package size mandates, or give up their legal rights and involuntarily agree to an unlawful tax on tobacco products in order to avoid minimum price and package size regulations.

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