Minnesota’s $3 Billion Habit

The real cost of tobacco and nicotine use in Minnesota

The average price of a pack of cigarettes in Minnesota is currently legally bound at $8.40. The price, set by the Minnesota Commerce Department, is a crucial component in the state’s strategy to keep tobacco products expensive and to reduce tobacco and nicotine consumption that in 2016 alone cost Minnesotans taxpayers over 3 billion dollars.

Minnesota’s Commerce Department based the figure on known manufacturers’ list prices and included a sampling process of the entire cigarette market in the North Star State.

The new price per pack passed into law on September 25th, 2017 and according to the Minnesota Statutes Chapter 325D, includes minimum prices for unlisted products from brands not affected by the ‘Non-settlement fee.’

As such, wholesale carton prices are set at $35.90 + manufacturer’s price + $5.00 non-settlement fee + $0.97 wholesale cost of doing business. Retail prices are set at +8% of the wholesale price. Add to this the annual UCSA fee cigarette distributors are required to pay under the Unfair Cigarette Sales Act, and you start to question if selling cigarettes in Minnesota is even a viable business option.

The Price of Popularity

Of course, hiking the price of a pack of cigarettes alone will not deter hardened smokers. The addictive power of nicotine is a supremely persuasive argument when it comes to bending a budget to fit the habit. But studies have shown that keeping the price of tobacco products high can be a smart move in bolstering the reluctance and the resolve of non-smokers toying with the idea of purchasing their first smoke.

It’s a hard battle to fight.

However, with Big Tobacco calling the shots for many past decades, the popularity of well-known brands is near-to ingrained into our culture’s sub-conscious.

Nevertheless, the average set by the Minnesota Commerce Department has forced tobacco’s top brands to seriously rethink their pricing strategy.

Here’s a quick look at the current retail-pricing situation for a pack of the top dozen cigarette brands:

  • KOOL $9.21
  • USA Gold $8.18
  • Marlboro $8.67
  • Camel $8.67
  • L&M $8.24
  • Newport $9.13
  • Lucky Strike $10.10
  • Benson & Hedges $9.81
  • Now $10.10
  • Black & Gold $10.97
  • New York Cut $9.25
  • Export A $9.06

Cigarette and Tobacco Tax Breakdown

Minnesota charges excise tax at 95% of the wholesale sales price on all tobacco, cigars and moist snuff products. Tobacco tax, however, is not to be confused with cigarette tax. Cigarettes in Minnesota are levied at a rate of 15.2 cents per cigarette, and 57.4 cents on a pack of 20. The state also has a specific tax regime for sales of tobacco products and cigarettes on Native Reservations.

Conclusion

Raising the price of cigarettes and tobacco products, plus adding significant tax measures are useful tools in Minnesota’s fight against the smoking habit. Studies in some European countries have shown that a 10% price hike on a pack of cigarettes has reduced demand by up to 4%.

Tobacco taxes benefit smokers who successfully quit, reduce overall consumption, and put smoking cessation on the radar of people that continue to smoke, not to mention the reduction in secondhand smoke, and making a considerable contribution to the cost of treating the thousands of smokers that suffer from the long-term impact of a nicotine habit.

Minnesota’s War On Tobacco

How the Land of 10,000 Lakes is Stepping Up to Help Smokers Quit

Smoking rates in Minnesota are lower than the national average, but that doesn’t mean the state is resting on its laurels. The Minnesota Department of Health provides support to a wide range of community organizations, public health bodies, and tribal governments in their efforts to further reduce the harm caused by tobacco.

Evidence-based measures such as the Clean Indoor Air policy and an initiative to keep tobacco prices high are proving to be useful tools in the fight against a habit which kills over 6,000 Minnesotans every year and costs the state over 3 billion dollars in annual medical bills.

How Minnesota is working to reduce the harm caused by tobacco

Minnesota’s Department of Health follows a distinct prevention and control strategy with the goal of saving lives and reducing the financial burden of its taxpayers. To that end, it has activated a number of initiatives to help its citizens either quit smoking or to persuade them not to start.

These initiatives include:

  • Improving access to cessation resources
  • Reducing youth access to tobacco products
  • Reducing exposure to secondhand smoke
  • Addressing tobacco-related disparities

The state has already booked first successes in moves to combat the harmful impact smoking has on its citizens. Incidents of smoking among 11th graders fell by almost 5% between 2013 and 2016, and almost 3% in adults from 2010 to 2014. But Minnesota’s Department of Health knows there is still a lot of work to do.

Many communities within the state suffer disproportionately from the effects of smoking, and efforts have been devised to treat these disparities in a way that is both community-led and culturally appropriate. Groups exposed to economic hardship, for example, are more prone to tobacco use than people from financially stable backgrounds.

Further, the percentage of 11th graders that turn to smoking differs significantly according to culture and community:

  • Asian 5.9%
  • Black 10.4%
  • Hispanic 12.4%
  • White 13.6%
  • Town/Rural 16.7%
  • Bi/gay/lesbian 22.5%
  • Native American 22.1%
  • Economic hardship 27.4%

E-cigarettes and other vaping products

The recent e-cigarette and vaping trends have gained high numbers of followers, especially among Minnesota’s youth. Health Department studies show that in 2016, 17,1% of 11th graders participated in the use of various forms of smoking, as opposed to 8,4% who smoked conventional cigarettes.

As a result, the Department has boosted efforts to raise the awareness of the highly addictive nature of these products, and the lasting damage nicotine can do to adolescent brains.

Medical assistance, grants and referral programs

Most tobacco users want to quit. Minnesotians that wish to stop smoking can take advantage of a whole range of Medical Assistance and Minnesota Care resources– including counseling and free medication.

Services such as QUITPLAN, grant programs, and the ‘Call it Quits’ referral program are just some of the resources provided free of charge and are designed to make giving up smoking as comfortable as possible.

These resources include free patches, anti-smoking gums, lozenges, nicotine sprays and inhalers, plus access to the smoking cessation aids Buproprion and Chantix.

For further information, tobacco users can go to www.quitplan.com.
Or they can visit Quit Tobacco for access to more free smoking cessation resources.