The Philadelphia City Council’s Committee on Commerce and Economic Development will held a public hearing last week. Among the agenda items are tobacco retailer permit regulations that took effect Jan. 1.
The Philadelphia Board of Health adopted the ruleslast fall, citing an estimated 2,000 smoking-related deaths in the city, a high number of tobacco retailers per capita and the desire to curb youth smoking rates.
The updated regulations increased tobacco retailer permit fees from $50 to $300, barred new permits within 500 feet of any K-12 school, imposed a one-year suspension for retailers who are caught selling tobacco to minors three times within a two-year period, and established a maximum density of one tobacco retailer permit per 1,000 people in the city’s 18 planning districts.
The last item is one of the most contentious of the rules, drawing fire from business owners and organizations who say the rule jeopardizes retailers in the 12 districts currently over the limit. According to the city’s website, as of Feb. 27, there were 2,834 tobacco retailers — about 1,300 more than allowed under the rule for a population of 1.56 million people.
Tom Briant is executive director and legal counsel for the National Association of Tobacco Outlets, a trade group that defends the interests of its 50,000 retail members and adult tobacco consumers. In an Q&A with Watchdog.org, he says that while the regulation has a grandfather clause for current permit holders, vague wording means trouble could arise when a retailer wants to sell the store or transfer ownership.
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“If [the owner] would go to sell the store or transfer the store, the store has to have an ‘arm’s length’ transaction. We don’t know what that means because the ordinance never defines it,” explained Briant. “So, for example, if a set of parents wants to gift the store to their son or daughter to take over and operate, is that an ‘arm’s length’ transaction? We don’t know. If not, then that store cannot sell tobacco any longer. Or, if a mother or father would pass away and the store would be inherited by the children, is that an ‘arm’s length’ transaction? We don’t know. If not, then they can’t sell tobacco products.”
“I’ve never seen a requirement like this before,” he added.
The following is an edited version of the rest of the conversation.
Watchdog.org: Why is the sale of tobacco products so important to these retailers?
Briant: “Because generally, up to 38 percent of in-store sales are tobacco sales for your average convenience store. If you do not sell gasoline out of the pumps and tobacco in the store, the business model doesn’t work and you don’t remain in business as a convenience store. You need both gas and tobacco.”
“So if they were not able to keep their retail license, either through a gift of a store or the inheritance of a store, the store would most likely close. What does that mean? All of the store’s intrinsic value is lost. The equity in the store is gone.”
Watchdog.org: You also have concerns over the fact that this regulation came from a government agency rather than a vote elected leaders.
Briant: “Our main question is this: How can an unelected body, being the Philadelphia Board of Health, adopt an ordinance that literally would wipe out hard-earned equity in law-abiding businesses without elected officials voting on that very law?”