New Law Putting Licensing Fees on Tobacco Sellers By JEFF WEISS Contributing Reporter Phillip Morris USA, the Coalition of Responsible Retailers, Wholesalers, & Distributors, and The California Board of Equalization held meetings recently at the Sheraton Universal in Universal City to inform businesses about California Assembly Bill 71 set to be enacted into law June 30. It will require cigarette manufacturers to pay a one-cent tax on each pack of cigarettes sold. Additionally, it will require retailers to pay a $100 one-time fee to obtain a California state license to sell cigarettes, while wholesalers will be obligated to fork over $1,000 plus in yearly renewal fees. Phillip Morris came out strongly behind the bill and urged retailers and wholesalers to comply, claiming that only by stringent regulation can the industry combat the flourishing contraband cigarette trade. “Phillip Morris believes that we need to control this illegal trade. We lose billions of dollars in sales, the state loses billions in tax revenues, and it adversely impacts legitimate retailers who are seeing their businesses undercut by these counterfeiters,” Jamie Drogin, Phillip Morris’ manager of media affairs, said. “We feel that it will provide protection for legitimate businesses and give lawmakers the power they need to fight the people breaking the law. There is a problem and we need to address it.” The California Board of Equalization believes that the new law will be effective in fighting illegal sales as well as helping fill the states coffers. “We do feel that Assembly Bill 71 will reduce evasion of counterfeiting in California. We are projecting that the state will gain between $58 million and $87 million a year in additional revenues,” said Gil Haas, chief of the Board of Equalization’s investigations division. “The board is going to be conducting 10,000 inspections of retailers checking for counterfeit stamps on the sides of cigarette packages.” While the major corporations and bureaucrats involved claim that this was a major dilemma that needed to be addressed, certain individual retailers are chafing under the burden of having to pay licensing fees. “I am not in favor of Assembly Bill 71. For us, it’s an extra burden because they want us to pay money for the license. I understand that they don’t want people to sell to minors but it hurts small business owners,” Wesley Strekowski, owner of a Shell gas station in Canoga Park said. “It had been working quite fine until now. More licensing is just an extra tax to collect. Nothing has ever changed in terms of my sales. It’s extra taxation.”
