The PACT Act was sponsored by Rep. Anthony Weiner [D-NY], the State with the HIGHEST tobacco taxes in the nation. He whined that New York was losing over a billion dollars a year in cigarette taxes alone: well of course they are! Smokers can't afford to BUY cigarettes in New York.
This Bill is designed to give" law enforcement new tools to crack down on smugglers of tobacco and curb illicit tobacco sales over the Internet". Rep Weiner, who sits on the House Judiciary Crime, Terrorism & Homeland Security Subcommittee, justified H.R. 4081 with statements such as:
“This new crackdown on the illegal sale of tobacco will close a major source of finances for global terrorists and criminals. Every day we delay is another day that New York loses significant amounts of tax revenue and kids have easy access to tobacco products sold over the Internet."
"By some estimates, New York state loses $1 billion from tobacco smuggling", said Weiner. "According to a recent Government Office of Accountability (GAO) report, Hezbollah profited $1.5 million from the sale of illegal tobacco."
Terrorists? Criminals? Hezbollah profiting? Oh, this isn't about lost tobacco tax revenue or getting around the ban on Internet taxation......no, this is about THE WAR ON TERROR! And of course, that old stand-by, "saving the children".
The bill makes it a FELONY to sell tobacco in violation of ANY State tax law. The legislation will also effectively end Internet tobacco "smuggling" by stopping shipments of cigarettes through the U.S. Postal Service. FedEx, UPS, and DHL have already agreed not to deliver tobacco.
Cigars, however, are exempt from PACT as you'll read in the actual bill. Of course they are! The rich and powerful....and some politicians, regularly receive generically packed Cuban Cigars from their offices, embassies, and over-seas "individuals" wishing to curry favor. Screw the average American: the rich and powerful....and some politicians: they're not going without their ILLEGAL Cuban Cigars. After all, laws are for the "little people".
So how does this affect Swedish Snus? In the short description of the Bill I quoted above, I bolded "and for other purposes". Those other purposes include making smokeless tobacco a regulated substance, imposing shipping and record-keeping requirements on delivery sellers of cigarettes and smokeless tobacco.
Snus is a form of smokeless tobacco. The majority of Swedish Snus is sold over the Internet. Now it’s going to be a "regulated substance" as will dip and chewing tobacco. Add up the hurdles overseas snus e-tailers are going to have to jump through combined with the small per-unit profit, and say goodbye to SnusCENTRAL.com, BuySnus.com, Northerner.com, and all the rest.....as it looks at first..... don't panic yet.
SO LET'S SEE WHO THE WINNERS AND THE LOSERS ARE IN ALL THIS:
H.R. 1108 sponsored by Rep Henry Waxman (D-CA) puts all tobacco products under FDA regulatory control. But unlike their Swedish counter-part which is quality-centric, the US FDA has one agenda: to ban cigarettes within the next 5 years. But not any form of Smokeless Tobacco and of course not cigars or pipe tobacco.
• WINNERS: FDA, Anti-Smoking activists, politicians pandering for the votes of the 3/4 of the US that doesn't smoke, and of course "the children" (who still seems to consume a lot of alcohol & illegal drugs, despite their being banned too....)
* LOSERS: Big Tobacco, State and Federal Cigarette Tax Collection, Convenience Store Owners, any business related to or that provides services to the tobacco industry (except cigars, of course) and 46 million + nicotine-addicted smokers who would have quit by now because of the virulent anti-cigarette climate, regulation, and social stigma in America but can't because they're nicotine-addicted. Nicotine is more addictive than heroin, by the way.
BUT WAIT!!!!!!! No one cares about the poor nicotine-addicted cigarette smoker. But Big Tobacco, State and Federal Cigarette Tax Collection, Convenience Store Owners, any business related to or that provides services to the tobacco industry (except cigars, of course)?????? They're not ALLOWED to be LOSERS and certainly wouldn't engineer that happening. Something else is afoot.
Three to five years ago, Big Tobacco, saw the handwriting on the wall: The anti-smoking zealots were gaining power and becoming a major lobby: backed, at least tacitly by the 3/4 of the American public that doesn't smoke (but vote). Big Tobacco also knew the US State and Federal budgets can't survive without the cigarette tax money, let alone the huge $250BB Settlement Agreement they entered into with the US and State Governments: a settlement that is paid out over 25 years...unless Big Tobacco has been forced out of business.
The Government can't let that happen! In fact, they keep raising the cigarette taxes because the US is in the worst financial state since the Great Depression. And in so doing, drive more smokers to the Internet and Indian Reservations where they don't have tax burdens like New York's $2.75 per PACK cigarette tax..........
Enter the Snus Solution............
• WINNERS: Cigarette Smokers who make the transition, Employers who don't lose enormous amounts of productive time to "smoke breaks" and in winter, sick-time is down because smokers aren't going from heated offices to freezing outside "smoking areas". The Anti-Smoking Zealots since the cigarette odor is gone (which is what they all really cared about from the beginning), and the new American Swedish Snus Users who, taxes aside, pay considerably less for Swedish Snus (and their nicotine) which can last hours as opposed to cigarettes which last minutes.
• LOSERS: Big Tobacco unless they get on the snus bandwagon and the State and Federal Governments, since Swedish snus primarily is purchased over the Internet with them never seeing a cent in taxes. The amount of money all are losing is minuscule...now. But what are 46 million plus American Smokers going to do when the FDA bans cigarettes? Nicotine is one of the most addictive substances known to man. The nicotine gum and nicotine patch manufacturers are getting excited, but for the vast majority of smokers, they are no solution.
So enter Swedish Snus. Reviled for reasons I still don't understandin the EU, a discreet tobacco source of nicotine. No "second-hand-snus". No spitting. Use a regular 1 gram portion or the loose equivalent, and no one would even know you were snusing.
And Swedish Snus is TRULY Reduced Harm (legal term) tobacco. Sweden regulates its Snus as a Food Product. Quality Control, a manufacturing guideline that requires steam pasteurization and quality, safe ingredients is mandated and monitored.
The results? Low to virtually no TSNA's (carcinogens).In documented long-term studies of Swedish males who are the largest group of snus users in Europe, Sweden has the LOWEST rates of mouth, throat, and lung cancer than the rest of the EU! Great taste and variety too.
Swedish Snus is the least harmful tobacco product in the world today. In fact, Swedish Snus manufacturers no longer have to use the word "cancer" in their health warning labels and advisories.
Most of the carcinogens in cigarettes area result of the tobacco being combusted. Tar and as many as 3000 dangerous substances are contained in a lit cigarette, inhaled directly and in a very concentrated dose into the lungs by the cigarette smoker.
Nicotine is not a carcinogen. It does have a negative effect on the cardiovascular system and was immediately linked to pancreatic cancer by the Anti-Tobacco Zealot "Researchers and Doctors". That's the same group who invented the danger of "second-hand-smoke" before a single long-term study had been completed...or even started. It was a marketing ploy and a very successful one by the anti-cigarette smoke smell lobby.
There finally was a 20 year study publicized by the World Health Organization of French males which concluded that there was no measurable cancer differences between those exposed to 2nd hand smoke on a regular basis and those who weren't. It was met with such an hysterical, outraged, how DARE you outcry, the study was yanked off WHO's website in less than 24 hours.
The Anti-Cigarette Zealots couldn't let that study stand: it would mean it's more the odor than the health risks that non-smokers were fighting against. Ever get into an elevator with a woman wearing too much perfume or a man wearing too much cologne? Pretty much everyone hates it, but except for a few, it's not a health issue. Congress would ignore any group advocating the baning of perfume and cologne. The States and Cities collect sales tax on it. It would never get anywhere.
And Swedish Snus, while not benign, is certainly safer than excess trans-fatty acids, American "junk food", high fat/high cholesterol foods, andit doesn't cause cirrhosis of the liver like alcohol....or mouth andthroat cancer like Cuban Cigars. No clogged arteries, no unhealthy weight gain, doesn't cause Type 2 Diabetes, no "smell" to offend non-users, and for all practical purposes, no cancer significance.
• WINNERS: Swedish Snus users in America; especially those that switched from cigarettes, the 3/4 of Americans who don't smoke, the nicotine-addicted, Swedish Snus manufacturers, distributors, retailers, e-retailers and the Swedish Government focusing on safety over curtailing personal freedoms and choices.
• LOSERS:Swedish Snus users since the Swedish Government appears to be tax hungry too causing the majority of the increases in price from last year at this time. And ultimately, Big Tobacco unless they actively compete.....or cheat. American snus manufacturers are not required to disclose TSNA levels, nicotine levels, or even the ingredients or process used to make their snus. If that changes, and it will if all smokeless tobacco becomes a regulated substance, they'll get caught if their cheating. But will it make a difference by then?
But the Swedish Snus industry, the inventors of snus over 200 years ago, is still small compared to Big Tobacco.
Swedish Match produces roughly 95% of all Swedish Snus and markets them through a number of the most popular brands (which they own as well). Snus accounts for a little less than half of Swedish Match's business.
They also have a huge presence in the Cigar, Chewing tobacco???, pipe tobacco, and the matches/lighters verticals. Unless my currency converter overloaded translating MSEK into Dollars, they grossed somewhere in the neighborhood of $17BB in 2007. And their largest market for Snus (growing) and Chewing Tobacco (declining) is in the American market! That's big money, but too big for Big Tobacco to buy? Or do they even have to?
Back to Big Tobacco seeing the handwriting on the wall.......
Both Reynolds Tobacco (Camel SNUS) and Philip Morris USA (Taboka & Marlboro snus) started test-marketing snus-like products just a couple of years ago.
I detail (it took 3 articles!) their marketing strategy and product comparison against Swedish Snus in my series Camel SNUS and Marlboro Snus: US Cigarette Smoker's lack of knowledge about REAL Snus being Exploited by Big Tobacco for BIG Profits. It’s fascinating, insulting, and now Scary. Here is the link to Part 1. It is truly frightening to read in light of recent legislative developments.
Then suddenly there arrive the new players and new brands in the American snus test-marketing front.
Skoal Snus, Grand Prix Snus, Triumph Snus, Klondike Snus, Nordic Ice Snus..........
The point is who knows how many one or two city test-markets exist for who knows how many brands. New ones keep appearing all the time. Why the sudden urgency? Why is everyone jumping on the snus or alleged snus bandwagon? WHY NOW?
Because of H.R. 4081: PACT Act; short for Prevent All Cigarette Trafficking Act of 2008.
Its stated purpose is "To prevent tobacco smuggling, to ensure the collection of all tobacco taxes, and for other purposes."
On September 10, 2008, the House of Representatives voted across Party lines to overwhelmingly approve the PACT Act: 379 Yeas and only 12 Nays.
So off to the Senate it went. I held off writing this article because the Senate adjourns today. If they don't have time to get to it or have to reconcile H.R. 4081 with their Senate counter-parts, then the process starts again in 2009.
The Senate typically doesn't post their actions until the following day but writing this on a Sunday is just wrong. But as to the Senate's willingness to accept the PACT Act as written and vote on it? It seems that the Senate has their own version of the PACT Act; S. 1027, which is IDENTICAL to H.R. 4081!
President Bush is said to be opposed to the two bills but even if it stalls until the end of his term, either McCain or (the nicotine-addicted ) Obama will sign them into Law next in 2009.
• WINNERS: The New Axis of Evil: a Tax Hungry Government, the Anti-Smoking Zealots backed by the FDA, and Big Tobacco, of course. They won't have to compete on quality or quantity, or reduced harm or competitive pricing because they'll be the only option available, for all practical purposes.
• LOSERS: 46+ million Americans addicted to nicotine. They'll pay more for less: Camel SNUS and Marlboro Snus only give 0.6 grams a portion. The Swedish regular portion is 1 full gram. And the Swedes give you 24 portions to a can. Camel only gives 15 and Marlboro 12 portions...for $1 to $2 more! Big Tobacco won't give a damn about taste OR making a reduced harm product either. They want to maintain cigarette profits with their "snus"....user be damned as long as they buy it.
Swedish Snus will become OUR Cuban Cigars, except not only the Government-run Post Office, but UPS, FEDEX, DHL and the other commercial carriers will lose massive amounts of revenue and incur huge infrastructure charges to ensure they comply with PACT as a Law....if they don't, it's now a FELONY. I don't think they were bought off, either. I think "some people" locked the commercial carriers in a room and beat them with baseball bats of even more restrictions on their businesses until they just caved in.
All is not lost yet though, and through our history, Americans have proven themselves to be a resourceful bunch. Prohibition didn't work: it made huge fortunes for the bootleggers and jump-started some gangs; crews we would call them today, into the Organized Crime Empire that created Las Vegas, took over whole industries like sanitation, construction and which now is connecting to the Mexican Drug Cartels.
And as bankrupt America marches on, it's politicians pandering for votes, sex and secure careers in Congress (courtesy of big campaign donors like.....Big Tobacco) while the economy and ALL the people are one thin step away from disaster........
During Prohibition, people made bathtub gin" and" moonshine. I found a number of overseas websites which supply everything from seeds to growing supplies for folks who want to grow marijuana at home. How long until someone starts marketing a Home Swedish Snus Factory?
SnusCENTRAL.org has feeds to specifically track in real-time the progress of both the House and Senate versions of PACT andother anti-cigarette/anti-tobacco legislation. Check back often to see where the bills stand.
As for Swedish Snus Activism? De Tocqueville wrote centuries ago about the "Tyranny of the Majority". We can make noise and write Congress but the reality is we're outnumbered three to one as voters.
We had a Revolution back in 1776 over the Tea Tax which was nothing compared to the taxes of today. And then as in now, we have taxation without representation: our State and Federal politicians are too busy worrying about staying in office for life then to care about us..... Except on Election Day.
A final thought about the TRUE agenda behind this and the reason not to panic.
Since Internet Shopping began, all 50 State Governments started screaming about the sales tax revenue they were losing. But the VAST majority of the American people (and Voters) screamed "NO!" even louder. The compromise was that if you purchased something over the Internet and the company you were buying from had a physical presence in your State, you paid Sales Tax. Otherwise NO.
If the PACT Act were meant to ONLY stop the delivery of unpopular tobacco products, why the Free Age Verification System they are providing the shipping companies with (strange they never developed that for alcohol deliveries to "protect the children"). And why the wording "to ensure the collection of all tobacco taxes, and for other purposes." There's going to be some pain involved for the Government, the Shipping Companies, and especially Overseas Internet Vendors in the beginning.
Big chain stores like Best Buy or Sears which have a physical presence in almost, if not all, States, already have the State Tax Collection system built into their websites and an automated process to pass the tax money on to the appropriate State. Smaller US Internet Stores may be set up with their home State, but not with the rest of the United States.
Overseas Internet Vendors, especially in the EU, have a similar process in place for shoppers required to pay the VAT tax.
It will take a year or two in order to make the process seamless from beginning to end.
THEN Rep. Weiner or one of colleagues will, in the name of National Security, alert us to the CRISIS that terrorists are smuggling in iPod's or Wireless Phones or toilet paper over the Internet and made $2MM to finance acts against the security of the United States.
Congress will sponsor, pass overwhelmingly, and the President will sign the CRAP Act - (Consumers Really Are Powerless).
The NEXT DAY when an American goes to purchase ANYTHING over the Internet, there will be a new line item under "Sub-Total": SALES TAX.
And unlike Americans past, there will be an outcry, but National Security will take precedence. People who try to organize or are too vocal will be branded "weak on terror", or even "Traitors". And uniquely, our former Representative Republic is becoming both Socialist AND Fascist at the same time. Taxation of all Internet goods and services WILL STAND.
The attack on tobacco is just a means to developing and perfecting the methods necessary for taxing EVERYTHING purchased on the Internet.Tobacco (except cigars) is just the product being used to develop and perfect the process. No one cares if smokers andtobacco users are inconvenienced..we're the testing ground. It has to be easy, seamless, work, and be immediately deployable when ALL Internet purchases are taxed.
Big Tobacco will have a big head start on training the nicotine-addicted on what "snus" is supposed to taste like and building brand loyalty......just like they did with cigarettes. Instead of being a competitor, Swedish/Nordic Real Reduced Harm, High Quality, Bargain Priced Snus will be a niche market or an inconvenience.
As I mentioned earlier, since 95% of all Swedish Snus is produced by Swedish Match, if they haven't already, someone like Altria could just buy either the whole company or just the 43% of Swedish Match that comprises it's Snus operations: whether SM likes it or not, if necessary. SM is a public company and Big Tobacco certainly has the money for a hostile take-over.
So to quote the British TV character Doctor Who as brilliantly played by Tom Baker many years ago, "Brave Heart, Tegan!" One way or another, we will overcome this. We'll pay a lot more, but we will survive.....still cheaper and especially safer than using American Snus.
September 21, 2008