California Governor Signs Bill Raising Tobacco-Purchase Age to 21--Update
DOW JONES & COMPANY, INC. 8:17 AM ET 05/05/16
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California Gov. Jerry Brown on Wednesday signed into law a bill raising the legal purchase age for cigarettes and other tobacco products to 21 years from 18.
The new law, which takes effect June 9, is a big boost to a movement that is turning into the next major challenge to the $100 billion tobacco industry.
It capped a difficult day for the tobacco industry. The European Union's top court on Wednesday upheld a 2014 law that would ban menthol cigarettes and mandate bigger warning labels on cigarette packages. On the same day, India'sSupreme Court ordered tobacco companies to comply with a new rule requiring graphic warnings cover 85% of every cigarette pack.
In the U.S., lawmakers in more than 10 other states are considering similar legislation including New York, Kentucky, Oregon and Illinois. The Massachusetts Senate passed a bill last month to raise its legal purchase age to 21. The bill still must be voted on by the state House of Representatives.
Hawaii last year became the first state to pass such a law. It followed cities including New York City; Boston; Kansas City, Mo.; and Evanston, Ill.
The nation's largest tobacco company, Altria Group Inc.(MO), has opposed raising the minimum age, encouraging states and municipalities to defer to Congress and let it have "an informed debate based on science" about the matter.
A spokesman for Reynolds American Inc.(RAI), the second-largest tobacco company, agreed, saying the Food and Drug Administration should "do its job and send a report over to Congress, and then we can have an intelligent debate about whether the age should be raised or not."
An Altria(MO) spokesman has said the company wouldn't fight the bill, but didn't rule out a referendum opposing other tobacco legislation passed in March.
In addition to signing the bill boosting the age limit on cigarette buying, Mr. Brown signed another measure that prohibits e-cigarette use where smoking is forbidden.
But he vetoed a law that gives local municipalities the ability to levy cigarette taxes. The tax measure had the potential to increase tobacco prices and cut into cigarette sales.
"Although California has one of the lowest cigarette tax rates in the nation, I am reluctant to approve this measure in view of all the taxes being proposed for the 2016 ballot," Mr. Brown said in a veto message.
As the nation's most populous state, California's move to raise the tobacco-purchase age will hurt U.S. tobacco sales. It is expected to reduce sales by 43 million packs of cigarettes over the 2016-to-2017 fiscal years, according to estimates by California'sBoard of Equalization, one of the state's tax agencies. At an average price of $5.96 a pack, that would equate to about $256 million in lost cigarette sales.
Cowen and Co. analyst Vivien Azer said the law itself wouldn't have a "material impact" on national cigarette sales volumes, which would fall an estimated 0.04%. But that would change if it influences other states to follow. Raising the purchase age to 21 nationwide would cost the tobacco industry about $2 billion, or 2%, in near-term cigarette sales, according to a 2014 article in the American Journal of Public Health by Jonathan Winickoff, associate professor of pediatrics at Harvard Medical School.
Proponents of raising the legal age say they want to disrupt cigarette use before it becomes an adult habit. Nearly nine out of 10 smokers first light up by age 18, and 99% start by 26, according to a 2012 report by the U.S. Surgeon General. About two-thirds of smokers start before 18, according to the Surgeon General's report.
According to a separate government-commissioned study last year, increasing the purchase age to 21 would " substantially" reduce the numbers of 15- to 17-year-olds who begin smoking.
The study, conducted by the Institute of Medicine, found that raising the age nationally would eventually reduce the number of Americans who smoke by 12% and result in 249,000 fewer premature deaths related to cigarette smoking for people born between 2000 and 2019.
About 75% of American adults and 70% of cigarette smokers favor increasing the tobacco purchase age to 21, according to a report in the American Journal of Preventive Medicine.
Write to Tripp Mickle at Tripp.Mickle@wsj.com and Alejandro Lazo at alejandro.lazo@wsj.com
(END) Dow Jones Newswires
05-05-160817ET
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