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Big Tobacco Pours Millions Into California Cigarette Tax Fight

Reynolds American Inc., Altria Group Inc. and other tobacco companies are steering millions of dollars to defeating a $2 cigarette-tax increase in California, a high-stakes effort and the third such fight in a decade in the most populous U.S. state.

The tobacco industry’s outlay of $55.9 million so far means that it has outspent supporters 3-to-1 in donations to defeat the measure, which starting in April would boost the levy to $2.87 a pack. The initiative would generate from $1 billion to $1.4 billion in revenue in fiscal 2018 for cancer treatment and smoking prevention.

“When one side is spending much more than the other, it’s hard for voters to get a clear picture,” said Daniel G. Newman, president of MapLight, a Berkeley, California-based nonpartisan research organization that tracks money in politics. “Imagine two messages side by side — one blaring from a gigantic movie screen and on the other side from a small cellphone. For voters, that amplification is going to make a difference.”

California, the first U.S. state to eliminate smoking in bars and restaurants and legalize medical marijuana, is an important battleground for the tobacco industry because policies approved there tend to be adopted by other municipalities. Blocking the tax in the state of 39 million people could deter anti-tobacco advocates in more conservative states from pursuing similar changes. That’s led cigarette markers including Richmond, Virginia-based Altria and Winston-Salem, North Carolina-based Reynolds to steer more cash toward fighting tax proposals in California than in any other state.

As the harmful health effects of smoking have come to light, the industry has for years employed an army of lobbyists and spent hundreds of millions of dollars on its battle with state and federal regulators and public-health advocates over curbing the practice and marketing the product, especially to kids. The firms reached a $200 billion settlement with 46 states in 1998 over the costs to treat ailing cigarette smokers.

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