Last year the California legislature passed SB793, which ended the sale of almost all flavored tobacco products. Led by RJ Reynolds and Philip Morris, the multinational tobacco companies spent over $20 million collecting signatures to force a referendum on the law. Forcing a referendum is an established tobacco industry strategy to shift the field of play to the ballot box where they can spend millions on an ad campaign against the law. (RJR forced a referendum on the comprehensive San Francisco flavored tobacco products ban and Juul used the initiative process to try and overturn San Francisco e-cigarette rules. Both attempts failed thanks to well-organized adequately funded campaigns by health groups.) At the very least, forcing a referendum has delayed implementation of the law until it is placed before the voters.
The question is currently scheduled to appear on the November 2022 ballot, although it may be presented to the voters sooner because Republicans succeeded in forcing a recall election of Governor Gavin Newsom, which will likely occur before then.
An important issue in the campaign will no doubt be the economic effects of the law. If history holds, the tobacco companies will claim that ending the sale of flavored tobacco products — including menthol — will cost the state tax revenues and destroy jobs.
Fortunately, there is now substantial evidence about the actual effects of ending the sale of menthol cigarettes, particularly from Canada, as well as good estimates of the short-term effects of changes in smoking on health costs.
Frank Chaloupka and I used this information to prepare an analysis of the health and economic effects of the state ban on sales of flavored tobacco products, “Potential Effects of a Ban on the Sale of Flavored Tobacco Products in California,” which was just published on the University of Illinois Chicago’s Tobacconomics web site. It shows that not only will the law save a lot of lives because many menthol smokers quit when menthol cigarettes are not available, but will also save the state money and create jobs.
Specifically, while there will be a drop in tobacco excise tax revenues this drop will be more than offset by reductions in health costs (including state MediCal expenditures). In addition, the fact that many menthol smokers will quit or reduce consumption will mean that they are spending less money on cigarettes and other tobacco products, most of which leaves California to the cigarette companies (and, to a mush lesser extent, farmers) outside California. Instead, this money will be spent on things inside California, which will increase economic activity in California, including creating jobs and increasing tax revenues.
The key conclusions in the report are:
“Ending the sale of flavored tobacco products will reduce tobacco use initiation, lead current tobacco users to quit, improve health, and save lives. The policy will result in modest reductions in California’s tobacco tax revenues while at the same lead to significant reductions in health care spending, including MediCal spending, in the state. The public health and economic benefits of this policy are substantial, as detailed below.
Public Health Impact:
- 46,000 smokers (5.6% of menthol smokers) would quit as a result of the policy
- 10,700 premature smoking-caused deaths avoided
- Fewer youth initiating smoking with menthol cigarettes
Fiscal Impact:
- Increase in state revenues because reductions in tobacco excise tax income would be more than offset by MediCal savings and increased economic activity
- $113.7 million decline in cigarette excise tax revenue (7.8% decline)
- $25.9 million decline in other tobacco products excise tax revenue (11.4% decline)
- More than $819 million in annual health care cost savings, including $283.6 million in MediCal savings
- Net increase of 3,322 jobs and $580.8 in California economic activity and associated state and local tax revenues.
The projected health care savings and public health benefits are conservative because they do not include the impact on youth who will not start to smoke as a result of this policy. Preventing California kids from becoming addicted smokers would secure additional millions of dollars in future health care cost savings.
The full citation for the report is: Chaloupka, FJ, Glantz SA. Potential Effects of a Ban on the Sale of Flavored Tobacco Products in California, University of Illinois at Chicago, 2021. Available open access here.
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