By Epiphany Communications and Coaching*
When the Cleveland City Council introduced an ordinance to restrict the sale of flavored tobacco products including menthol cigarettes, flavored cigars and flavored vapes, MIRA jumped into action.
“We immediately called a meeting with members in Cleveland to discuss the negative effects this ordinance will have on our members,” said Paul Elhindi, Retail Vice Chair of the MIRA board and owner of Corner Market in Ohio. “That meeting led to a second meeting MIRA hosted with MIRA member Seaway Cash-N-Carry in Cleveland.”
Cleveland’s current smoking rate is around 35%, compared to the national average of 12%, according to public health experts. The Centers for Disease Control and Prevention labels tobacco as the leading cause of preventable death in the United States.
“We understand that tobacco and vaping come with health risks, but this ordinance doesn’t solve that issue,” said Elhindi.
The ban includes menthol cigarettes, flavored vapes, flavored cigars and others which will certainly negatively affect MIRA members. Flavored tobacco products are common staple items at convenience stores and gas stations, which contribute to increased sales.
“The ordinance is currently sitting in the finance committee,” said Elhindi. “Our position is that this ordinance should be introduced at the state level and not city-by-city pitting businesses in Ohio against each other. All customers will do is to drive to a neighboring city to buy the product.”
Back on March 2nd, MIRA collaborated with RJ Reynolds, Altria, and Ohio wholesalers to host a panel event in Cleveland for retailers to learn about an action plan to preserve their business. MIRA President, Bill Wild, moderated the event and Elhindi sat on the panel.
“We had more than 250 retailers present,” said Elhindi. “Not only did we voice our concerns publicly, but many MIRA members called City Council members to protest the ordinance that would ban these products.”
Also, in conjunction with a supporting coalition led by MIRA, a letter was issued to the City Council, signed by a multitude of Cleveland retailers, that stated the concerns the coalition has regarding Emergency Ordinance No. 184-2023 “in its current form would have a devasting economic impact on both the local small business ecosystem and the city of Cleveland’s Economy,” as stated in the letter.
The letter also listed out the impacts the ordinance would have on overall tobacco sales, incidental sales, job losses, customer loyalty, business valuation, real estate, outside investors, community reinvestment, tax revenue, the creation of a black market, age verification and control of it, public safety and tobacco getting into the hands of youth.
Many retailers made major investments in the city of Cleveland by purchasing closed businesses and re-opening them, improving the city aesthetics, and adding to the tax revenue. “Also, it is not fair to have people apply for licenses to sell a product and make these major investments and then propose banning the very product that accounts for a significant part of their revenue,” said Elhindi.
The Ban would also contribute to other lost revenue. “Customers are not going to make different stops for different products,” said Elhindi. “If they drive outside of Cleveland to buy flavored tobacco, they will purchase whatever else they want to buy from that store, ultimately hurting stores in Cleveland.”
In January, Columbus passed a similar ban against flavored tobacco products. Recently, Governor DeWine vetoed legislation passed by state lawmakers that would have prevented cities like Cleveland and Columbus from pursuing such bans. Lawmakers who supported the measure say they worry that such bans would open the door and allow for bans on other items.
And local retail businesses are not the only ones who will lose revenue. Any single organization that benefits from the Cuyahoga County’s Sin Tax will be negatively affected by a tobacco ban. The county’s sin tax is assessed at $3.50 a carton and more than 3¢ per pack of cigarettes, 1.5¢ per 12-ounce bottle of beer, 6¢ per 750-milliliter bottle of wine, 32¢ per gallon of mixed beverages, 24¢ per gallon of cider and $3 per gallon of hard liquor.
Consumers of these products have been paying a sin tax in Cuyahoga County since 1990 and will be paying it for several more years with the expected $260 million proposed to be split evenly among the Cleveland Browns, Cavaliers, and Indians.
Voters first approved a 15-year tax in May 1990 to build a baseball stadium and basketball arena in Cleveland. In November 1995 voters extended the tax for 10 years, from 2005 to 2015, to construct a new football stadium or renovate the current stadium. That vote occurred shortly after the Cleveland Browns announced they were moving to Baltimore.
That extension allowed Cleveland to issue bonds backed by the sin tax to build FirstEnergy Stadium, which opened in 1999. In May 2014 voters extended the sin tax for another 20 years.
In 2015, the tax generated about $13.6 million and the tax revenue must be spent on professional sports facilities.
If the ordinance is passed, MIRA has estimated that each store would lose about $27,000 in gross lost profits in cigarette sales, almost $22,000 in lost Other Tobacco Products (OTP) sales nearly $60,000 in lost gross profit per year sales in other category purchases equaling more than $131,000 in total lost sales per year.
*Writers with Epiphany Communications and Coaching are content creators for Bottom Line.