Judge rejects big tobacco’s effort to end case that found industry concealed smoking dangers

A federal judge has rejected the tobacco industry’s latest effort to end a case in which the companies were found to have concealed the dangers of smoking for decades.

The nation’s largest cigarette manufacturers had argued that U.S. District Judge Gladys Kessler no longer has jurisdiction in the government’s landmark lawsuit against the companies because a 2009 law empowers the U.S. Food and Drug Administration to regulate the industry.
The companies say that in light of the FDA’s powers, there is no longer a reasonable likelihood they will commit violations. Kessler ruled that argument unconvincing.

The judge is considering forcing the companies to pay for a campaign of “corrective” statements on the addictiveness of nicotine and the lack of health benefit from cigarettes sold as “low tar,” ‘’ultra-light” or “mild.”

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S.C. man Terrence Bryant sold boys tobacco, for chance to spank them, say cops

Authorities in South Carolina say they arrested 50-year-old convenience store clerk Terrence Bryant for selling cigarettes and smokeless tobacco to boys - in exchange for letting him spank them.

According to deputies, the father of a 12-year-old boy found out that his son got a pack of Newport cigarettes from Bryant. Detectives say they determined that the man gave the boy cigarettes on five occasions over a two month period, in exchange for the boy letting Bryant spank him with his clothes on, reports CBS affiliate WLTX.

Deputies say Bryant also gave two 15-year-old boys smokeless tobacco in exchange for spanking them.

Bryant kept the cigarettes and smokeless tobacco stored in the glove compartment of his 2002 pickup truck, according to investigators. Officers say Bryant purchased the tobacco products that he provided to the boys.

Bryant is charged with three counts of committing a lewd act upon a child under the age of 16.

Bryant faces a maximum penalty of 60 years in prison if he is convicted on all four counts, WLTX reports. He is detained on bail of $105,000.

House GOP pushes back against health measures affecting school lunches, tobacco

House Republicans are pushing back against a series of public health measures, including school lunch standards and tobacco regulation, teeing up a confrontation with Senate Democrats and the White House over the reach of government in daily life.

The Republicans have used an agriculture appropriations bill to send several messages: They don’t want the government to require school meals that are more nutritional but also more expensive, they don’t want the government to prod food companies to restrain marketing to children, and they don’t want the Food and Drug Administration to regulate any substance based on anything but “hard science.”

They took aim at measures that are part of the Obama administration’s efforts to combat obesity among children and adults as well as some initiatives enacted by the previous Congress.

On Tuesday, the GOP majority on the House Appropriations Committee approved a 2012 spending plan that directs the Agriculture Department to ditch the first new nutritional standards in 15 years proposed for school breakfasts and lunches. The lawmakers say meals containing more fruits and vegetables, whole grains and low-fat dairy will cost an additional $7 billion over five years — money they say the country can ill afford in difficult economic times.

The committee also directed the USDA to scale back participation in an effort to develop voluntary guidelines for companies that market food to children. And it directed the FDA to exempt grocery and convenience stores and other businesses from regulations set to take effect next year requiring that calorie information be displayed.

“Our hope is that the Senate will reiterate their strong support for these policies rather than try to roll back important progress on obesity prevention,” said Margo Wootan, direction of nutrition policy at the Center for Science in the Public Interest.

The most intense reaction was generated by a provision offered by Rep. Denny Rehberg (R-Mont.) that would block the FDA from issuing rules or guidance unless its decisions are based on “hard science” rather than “cost and consumer behavior.” The amendment would prevent the FDA from restricting a substance unless it caused greater harm to health than a product not containing the substance.

“The FDA is starting to use soft sciences in some considerations in the promulgation of its rules,” said Rehberg, who defined “hard science”, as “perceived as being more scientific, rigorous and accurate” than behavioral and social sciences.

“I hate to try and define the difference between a psychiatrist and a psychologist, between a sociologist and a geologist, but there is clearly a difference,” he told the committee.

Rehberg said his rider was not targeted at tobacco, but anti-smoking advocates said Wednesday that the rider would make it impossible for the FDA to regulate menthol in cigarettes, a major decision pending at the agency.

“This would undermine a law that Congress passed with overwhelmingly bipartisan support two years ago,” said Matthew L. Myers, president of the Campaign for Tobacco-Free Kids. “It would undo the one thing that all members of Congress agreed upon, which was to protect kids from tobacco.”

ITC’s cigarette business kicked the growth habit in fiscal 2011

Are smokers finally kicking the habit? Cigarettes remain ITC’s flagship business, but failed to deliver the customary boost to sales and profits in the March quarter.
During the quarter, cigarettes contributed to 68% of its consumer product sales, 43% of overall sales and, more importantly, 82% of profit before interest and tax. But the business grew at a relatively sedate pace of just under 13% year-on-year (y-o-y) during the March quarter, and around 14% in the full year.

The year that went by saw the full impact of price hikes taken to counter the 17% increase in excise duties in the Union budget of 2010-11. The industry was spared any excise duty hikes in this year’s budget, giving rise to hope of better sales growth in future. While price hikes have dampened growth, the March quarter cigarette sales also reflect a high base effect, as sales in the year-ago period had risen by 18%. Some of this may have been due to stocking up prior to March, when the excise duty hike was implemented.

The cigarette segment’s profitability improved, however, as the company implemented price hikes and launched new products. Profit margin improved 2 percentage points y-o-y in the March 2011 quarter to 53%.

ITC’s focus in 2010-11 in its non-cigarettes consumer business was to cut losses, which fell 14% to Rs. 68 crore in the March quarter, while sales rose by 17%. Competition has increased with firms such as P&G (Procter and Gamble Co.) and Hindustan Unilever Ltd upping the stakes for growing their share of the market. If ITC can grow sales faster in fiscal 2012, even as it cuts losses, it will send a positive signal to shareholders.

Among its other main businesses, hotels turned in a good performance with profits rising at a higher pace than its sales growth of 17%. Paper and paperboard had a subdued quarter with both sales and profits growing by 14-15%.

ITC’s overall sales rose by 14% during the quarter, and operating profit rose by around 17.5% during the quarter; but a near 70% increase in other income, only a 7% increase in depreciation, and lower tax incidence contributed to a 24% growth in its net profit.

Its share trades at around 29 times its fiscal 2011 consolidated earnings per share. With full year operating profit growth at 17%, and net profit growth of 20%, ITC will have to deliver higher growth to justify its valuation and investor faith.

Shareholders will be hoping its cigarette business rises to the occasion in fiscal 2012. If it does not, its shares are likely to underperform during the year. They fell by 2% on Friday, after the results were announced.

Feds charge 11 in NY contraband cigarette case

Federal prosecutors in New York say 11 people have been indicted on charges of conspiring to sell untaxed cigarettes.
The U.S. attorney's office says some of the cigarettes came from the Poospatuck Indian reservation on Long Island, where the state does not impose a tax.
The prosecutor says federal agents seized more than 3,000 cartons of cigarettes and $135,000 in the operation.
The indictment announced Wednesday says the defendants would obtain up to 1,000 or more cartons at a time. It says they stored the cigarettes at rented locations in Yonkers, Mount Vernon and elsewhere. They allegedly hired workers and rented vehicles to distribute them and even paid bail for those workers who were arrested.

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Cigarette tax could create dangerous atmosphere for smuggling tobacco

In a bid to keep money flowing for the state construction program, Illinois Senate President John Cullerton has floated a plan to raise the state cigarette tax to $1.98 per pack.
Fine, say some nonsmokers. We don't buy cigarettes, so we won't feel the pinch. But what if the hike resulted in more criminal behavior in Illinois, including the Metro East area?

A recent study by a Michigan research institute forecasts that a $1 per pack increase could result in rampant, large-scale cigarette smuggling. Across the country, the opportunity by criminals to profit from trafficking tobacco has led to violence against people and police, including small-scale retail cigarette theft, murder-for-hire schemes, the growth of a counterfeit cigarette market and even the financing of Middle East terrorist organizations.

Research shows smuggling occurs at higher rates when government increases prices -- usually through a tax -- and when the increased prices are significantly higher than in neighboring states.
In 2009, a modest 5.9 percent of all cigarettes consumed in Illinois were smuggled in from other states, according to the Mackinac Center for Public Policy. By contrast, Michigan's smuggling rate is more than 26 percent of total consumption -- the 10th-highest smuggling rank in the nation. Why? One reason is that Michigan levies a $2 per pack tax on cigarettes, which is higher than neighboring states.
Through 2009, Illinois ranked 30th in the nation when it came to smuggling. However, the state's smuggling rate could leap to 26.3 percent if the $1 cigarette tax increase passed, and Illinois would displace Michigan as having the 10th-highest smuggling rate in America.
Should Illinois' tax go to $2 a pack, Missouri's 17-cents per pack tobacco tax would make it worth criminals' time to up their smuggling into the Prairie State.
As with hard drugs, smuggling can lead to violence. And too often, blameless bystanders can get caught up in the mix.

In 2008, an elderly New York couple was accidentally killed in a high-speed chase between Canadian police and a suspected cigarette smuggler. In 2002, a would-be cigarette thief rammed a Michigan police cruiser, dragging the officer down the street. YouTube has plenty of videos showing thieves breaking into stores to steal cash and cigarettes.
Cigarette truck hijackings also have long been a problem. Mafia Don John Gotti's first major arrest was for stealing a trailer of cigarettes. In Michigan, several hijackings led Detroit's last remaining wholesaler to hire armed security teams.
In July 2009, the Bureau of Alcohol, Tobacco, Firearms and Explosives confiscated 12 million counterfeit cigarettes in Virginia alone. That same year, agents arrested two men for attempting to swap cocaine for 600,000 untaxed cigarettes. Perhaps worse, profits from contraband trafficking have been funneled to anti-American terrorist groups like Hezbollah in Lebanon.

Illinois has porous borders. Traffickers and consumers will find a way to acquire the products they want at the best price. Shortly after Florida hiked its tax, a prison guard was caught smuggling cigarettes for distribution to inmates. It is na've to think that the state's security apparatus could dramatically dampen the massive new inflow of illegal cigarettes.
Some believe a $1-per-pack cigarette tax hike would generate about $377 million in annual revenue. While a steeper cigarette tax could raise state coffers, smuggling alone could limit the take to about $250 million -- just two-thirds of what is expected.
Illinois lawmakers might crave new sources of revenue to keep the state capital program moving, but new spending should not come at the expense of public safety.