Attorneys general from 39 states and Guam are lobbying to change federal regulations that allow tobacco manufacturers to classify cigarettes as "little cigars," which they say allows these companies to skirt health restrictions and taxes.
In two petitions sent to federal regulators in April and May, the attorneys general called on the Alcohol and Tobacco Tax and Trade Bureau (TTB) to modify its rules to prevent tobacco companies from labeling cigarettes as little cigars.
Little cigars avoid advertising and health restrictions imposed by a 1998 deal between tobacco companies and 46 state attorneys general. Called the Master Settlement Agreement, this deal prohibits techniques such as using cartoon characters in tobacco advertising.
Taxes on cigars are significantly lower, which allows tobacco companies to sell little cigars at about half the price of cigarettes, according to the attorneys' general petition. Little cigar manufacturers also don't have to report their ingredients to the Centers for Disease Control and they can avoid putting health-warning labels on cigar packages.
"The incorrect and inaccurate classification of Little Cigars raises numerous public health and other public policy concerns for States … The States therefore petition the TTB to adopt new rules to stop unscrupulous manufactures from continuing their end run around all the federal and state laws and regulations designed to tax and regulate cigarettes," reads the petition, which is being pushed by Iowa Attorney General Tom Miller.
Consumption of little cigars have more than doubled in the last decade, from about 1.4 billion in 1995 to more than 3.7 billion in 2005, according to Department of Agriculture statistics cited by the attorneys general. At the same time, sales of cigarettes reached a 55-year low in 2005 with sales of about 378 billion, according to the National Association of Attorneys General.
The crackdown on the "little cigar" loophole has at least one detractor. Norman E. Kjono, who serves on the board of directors of the consumer advocacy group Forces Inc., said states are pushing to reclassify little cigars primarily as a means to generate tax revenue.
"It's a revenue play, that's what it is," Kjono said.
But a representative from the R.J. Reynolds Tobacco Company said the company would cooperate with the attorneys general. "We look forward to being involved in the process of ensuring that all tobacco products are properly classified — be it cigarettes, cigars or little cigars," according to a company statement.
The push against little cigars adds to a string of recent state efforts to pressure the tobacco industry. In January, 37 attorneys general reached an agreement with tobacco manufacturer Philip Morris to curb online cigarette sales. And in March, Eliot Spitzer, New York's Attorney General, pushed to stop the shipment of cigarettes through the mail.
More states also requiring tobacco companies to manufacture "fire-safe" cigarettes designed to burn out quickly and prevent house fires. In 2004, New York became the first state to require fire-safe cigarettes and four states since have followed suit — including Illinois on May 19 and New Hampshire on May 31.
Bill Roach, a spokesman for attorney general Miller, said the numerous state cigarette battles are not a coordinated effort. Rather, it's the result of the industry's effect on the country. "The tobacco industry sells a product that is responsible for the deaths of 1,200 people every day in America. On many levels, government has the responsibility to deal with the enormous loss of life. And that does mean multiple fronts," he said.
Roach said he expects TTB to take several months to review the attorneys' general petition.
The 39 states that backed the little cigar petition include: Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming.