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November 3, 2006

A Newsletter of the National Association of Tobacco Outlets, Inc.

Celebrating NATO’s Success

elebrating NATO’s success was the theme during the NATO Annual Awards Dinner held on April 23rd at the Las Vegas Hilton Hotel. This year marked NATO’s seventh anniversary since being formed in 2001. Over the past seven years, NATO has become one of the most aggressive grassroots retail trade associations in the country by working to protect retailers from state and federal anti-tobacco legislation. 

his event was sponsored with the generous support of the following NATO members:

• R.J. Reynolds Tobacco (Platinum Sponsor)
• Philip Morris, USA (Gold Sponsor)
• Conwood Sales Co., LLC (Gold Sponsor)
• Altadis, U.S.A. (Gold Sponsor)
• Swedish Match/General Cigar (Silver Sponsors)
• John Middleton, Inc. (Silver Sponsor)
• Swisher International (Silver Sponsor)
• UST Public Affairs (Silver Sponsor)
• National Tobacco Company (Bronze Sponsor)
• Republic Tobacco Company (Bronze Sponsor)
• Santa Fe Natural Tobacco Co. (Bronze Sponsor)
• Bic Corporation (Patron Sponsor)
• CAO International (Patron Sponsor)
• Cusano Cigars/Domrey Cigars (Patron Sponsor)
• Drew Estate (Patron Sponsor)
• First Data USA (Patron Sponsor)
• Kretek International (Patron Sponsor)
• Liggett Vector Brands (Patron Sponsor)
• M & R Holdings (Patron Sponsor)
• Miami Cigar Company (Patron Sponsor)
• Premier Manufacturing (Patron Sponsor)
• Rouseco, Inc. (Patron Sponsor)

he annual NATO Pinnacle Awards were presented to four retail members and two manufacturer members. The NATO Pinnacle awards are given to those retail and manufacturer members that demonstrate extraordinary support for NATO and who show the highest degree of commitment and dedication to assisting NATO on tobacco legislative issues.

etail recipients of the 2008 NATO Pinnacle Awards included Mitchel Hirsh of Cigar King, Bob Roberts of Smoke’m Phoenix, Robert Hesla of 11th Avenue Liquor and Smoke Shop and Joe Valls of Wilsonsville Liquor. These retailers worked tirelessly to oppose state ballot questions that sought to ban smoking or raise cigarette and/or tobacco taxes.

Andrew Kerstein (NATO President), Bob Sunblad (Smoke'm Phoenix), Bob Roberts (Smoke'm Phoenix), Mitchel Hirsh (Cigar King), Robert Hesla (11th Avenue Liquor and Smoke Shop) and Mary Szarmach (NATO Vice-President). Not Pictured: Joe Valls of Wilsonville Liquor.

(Continued on Page 4)

The NATO Annual Awards Dinner is a time for the association and its members to look back at the prior year accomplishments and look forward to the legislative challenges that face the tobacco industry. To recap 2007 tobacco legislation, fifteen states failed to pass cigarette tax increases while eight states adopted higher tax rates. Also, ten states failed to pass OTP tax increases and only four states enacted higher rates. In sixteen states, bills to limit smoking restrictions were defeated, and only nine states adopted some level of statewide restriction. In eight of these nine states, retail tobacco stores were exempted. Finally, eight states attempted to raise the legal age to purchase and use tobacco products and all eight attempts failed. Overall, this equates to a 70% rate of defeating legislation that would have negatively impacted NATO members.

    However, NATO cannot rest on its laurels. Already, 2008 is proving to be as challenging a year as 2007. Besides being an integral part of helping defeat so many tobacco-related state legislative bills, NATO had other accomplishments as well. This year, our entire staff worked tirelessly to help NATO members respond to the proposed federal excise tax increases on ALL tobacco products to expand the State Children’s Health Insurance Program known as SCHIP. This legislation was vetoed twice by President Bush in large part because of the tax increases, and Congress failed to override the vetoes.

    Since the beginning of the year, NATO has been working to oppose the retail regulations in the bill pending before Congress that would grant the Food and Drug Administration the power to regulate tobacco products. NATO opposes the FDA bill for some very important reasons. First, the FDA would have sweeping jurisdiction to enact virtually any kind of restriction on the advertising, promotion, and selling of tobacco products. Second, the bill bans all flavored cigarettes including clove cigarettes. Third, the FDA can extend its regulatory authority to all other tobacco products such as cigars and pipe tobacco. Fourth, the legislation bans the sampling of ALL tobacco products in retail stores. Fifth, the bill grants in writing to all other federal agencies, states, counties and cities the power to ban the advertising, promotion and sale of tobacco products.

   NATO’s overriding concern is that between the FDA regulations spelled out in bill today, and the potential for so many other government entities as well as the FDA to issue more restrictive regulations, our future as tobacco retailers is in real jeopardy. And when the ability of our members to remain in business is threatened, NATO will not remain neutral. NATO was formed seven years ago with the main purpose of helping tobacco retailers protect their livelihood. While we acknowledge the differences of opinions among manufacturers on the bill, and have intentionally remained silent regarding those manufacturer issues, NATO will not lose sight of who we are obligated to protect.

   The upcoming Presidential election may also have a profound impact on the future of our industry. In fact, 2009 may be a defining year in the how the industry is regulated and taxed. While we are not saying that any of the leading presidential candidates is a true friend of the industry, as retailers we must look at the record and the statements made by all the leading candidates. A careful review shows that retailers would have a better chance of survival if Senator McCain is elected President rather than Senators Clinton or Obama. I have a personal passion for this industry and for NATO. I want to assure you that as long as I serve as your association president, NATO will continue to carry out its mission to protect our right to sell legal tobacco products to adult consumers.

-Andrew Kerstein, NATO President

Legislative Update

ince January, NATO’s legislative staff and association members have been fighting unfair excise tax increases and restrictions on the right to smoke tobacco products and other kinds of tobacco legislation. Below is a brief update:

State Cigarette Tax Increases

State OTP Tax Bills

Smoking Restriction Bills

FDA Update

lthough the FDA bill has been passed by the U.S. House Energy and Commerce Committee, the bill has yet to be taken up by the full House of Representatives. In April, U.S. House Ways and Means Committee Chairman Charles Rangel and House Natural Resources Chairman Nick Rahall sent letters to House Speaker Nancy Pelosi requesting that the FDA bill (H.R. 1108) be referred to their respective committees. Representative Rangel is seeking to review the bill because he believes the “user fees” that will be charged to manufacturers constitute a new tax which would fall within the Ways and Means Committee jurisdiction. Representative Rahall is asking that the bill be heard by the Natural Resources Committee because of the provisions that would regulate Native American tribe cigarette sales.

NATO Annual Dinner (con’t)

oth Altadis, U.S.A. and Nat Sherman International were recognized for their commitment to NATO and their respective lobbying efforts on tobacco legislative issues. Each of these companies were well deserving of the 2008 NATO Pinnacle Awards.

Andrew Kerstein (NATO President), Joel Sherman (Nat Sherman International), Jim Colucci (Altadis, U.S.A.) and Mary Szarmach (NATO Vice-President).

Welcome New Members

New Retail Members

New Members (con’t)

• Londsales Fine Cigars (AZ)
• Payless Wholesale Stores (CA)
• Puffin’ (NV)
• Renegade Tobacco Company (NC)
• Richmond Masters Distributors, Inc. (IN)
• Sayegh, LLC (NV)
• Sheltans, Inc. (CA)
• Smoker’s Pararadise & Spirits (LA)
• Smokers Outlet (MI)
• Smoky’s Cigarette Outlet (MI)
• Specialty Tobacco Outlet (CA)
• The Boston Cigar Company (MA)
• Tobacco Joe’s (MI)
• Tobacco Leaf (CA)
• Tobacco Tin (TX)
• Tobacco Unlimited (KY)
• United Refining of Pennsylvania (PA)
• Yongro, Inc. (NH)

Manufacturer Members

• A & T Tobacco Imports, Inc.
• Bahama Mamas Cigars
• Star Scientific

Associate and Wholesale Members

• ICOM Information & Communications
• R & R Distribution
• Ruyan America
• Shore to Shore USA
• Tabacalera del Oriente International

Fighting for Retailers; Protecting the Industry

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