The following testimony was given by Reason Foundation to the Arizona Senate Appropriations Committee.
Chairman David Gowan and members of the committee, thank you for allowing me the opportunity to submit testimony on Senate Bill 1245. My name is Guy Bentley, and I’m the director of consumer freedom at Reason Foundation, a 501(c)3 nonprofit think tank. Reason’s consumer freedom project analyzes and promotes policy solutions that improve public health while avoiding unintended consequences and protecting consumer choice.
The intention behind Senate Bill 1245 to limit tobacco use, especially among youth, is to be applauded. The principle of local control is crucial for a well-functioning government. Allowing Arizona towns and cities to regulate tobacco sales and use in the way that best fits their citizens’ needs has a number of advantages. But reserving the power to prohibit entire categories of tobacco products to the state legislature avoids the unintended consequences of inconsistent local prohibitions which can severely disrupt the state’s public health goals and distort the wider economy, through increases in the illicit tobacco trade and the reallocation of legal transactions such as groceries and alcohol to other jurisdictions.
Protecting youth from tobacco use
The last time Arizona’s youth smoking and vaping rates were recorded was in 2019 when the state ranked below the national average in both categories. Since 2019, youth vaping nationally has fallen to its lowest point in seven years. According to the 2021 National Youth Tobacco Survey (NYTS), 89 percent of high schoolers are not using e-cigarettes at all and 95 percent are not using them frequently.
These declines have all been enjoyed in the absence of prohibition of flavored tobacco products, with the exception of Massachusetts, which banned the sale of such products in June 2020. But thanks to cross-border trade, Reason Foundation analysis shows Massachusetts and its bordering states experienced a net increase in cigarette sales of seven million packs instead of the sharp decline that was hoped for. Furthermore, data released by the Centers for Disease Control and Prevention (CDC) shows flavors are not the leading reason why youth initiate vaping. According to the CDC, the primary reason youth initiate vaping is “curiosity,” followed by “friend or family member used them,” with “they are available in flavors, such as mint, candy, fruit, or chocolate” coming a very distant third.
Nevertheless, it’s vital that youth access to tobacco products is further restricted by bringing Arizona’s minimum age of sale in line with the federal age of 21, which may assist in limiting the social sourcing of tobacco products to minors. Furthermore, if Arizona fails to update its minimum age of purchase it risks losing 10 percent of the federal government’s Substance Abuse Prevention and Treatment Block Grant.
Senate Bill 1245’s proposal for the Department of Liquor Licenses and Control to take responsibility for the licensing aspect of tobacco outlets has significant efficiency advantages which can be utilized to prevent sales to youth. Currently, Arizona’s municipalities are responsible for policing tobacco retails. This can be a costly burden for many jurisdictions and may be inefficient. Because there is significant overlap between tobacco and alcohol retailers, the Department of Liquor Licenses and Control can bring enforcement uniformity, which stands a greater chance of finding businesses selling tobacco products to youth. Combined with harsh penalties for violations, the new regulatory environment presented by SB 1245 raises a significant opportunity to accelerate the already diminishing rates of youth tobacco across the state of Arizona.
Case Studies of local tobacco prohibitions: San Francisco and Canadian Provinces
When localities seek to prohibit tobacco, nicotine, or alcohol they expose themselves to cross-border trade and illicit markets. Such bans can also be detrimental to the state’s public health goals and distort economic activity across the region.
In 2018, San Francisco banned the sale of all flavored tobacco products, including e-cigarettes. Yale University’s Abigail Friedman found that after the ban was enacted, San Francisco area youth had double the odds of smoking compared to similar jurisdictions with no tobacco flavor ban. “While neither smoking cigarettes nor vaping nicotine is safe per se, the bulk of current evidence indicates substantially greater harms from smoking, which is responsible for nearly one in five adult deaths annually. Even if it is well-intentioned, a law that increases youth smoking could pose a threat to public health,” said Friedman.
Furthermore, according to a study published by the Journal of Law and Economics, Canadian provinces’ prohibition on menthol-flavored cigarettes has significantly increased non-menthol cigarette smoking among youths, resulting in no overall net change in youth smoking rates. As for adult smokers, the study discovered, provincial menthol bans shifted smokers’ cigarette purchases away from grocery stores and gas stations to First Nations reserves (where the menthol bans do not apply). These results are important not just because they demonstrate an immediate economic impact on jurisdictions that introduce prohibition but thanks to cross-border trade and the substitution of non-menthol cigarettes, any health benefits are severely limited. In other words, the loss in tax revenue is unlikely to be made up of lower healthcare costs.
Arizona’s cigarette tax is higher than four of its neighbor states and no state bordering Arizona has implemented a ban on flavored tobacco products. The emergence of prohibition potholes throughout the state will leave Arizona vulnerable to cross-border trade from other states as well as increased exposure to illicit market activity.
Food and Drug Administration review and tobacco harm reduction
Last year, the Food and Drug Administration authorized an e-cigarette as “appropriate for the protection of public health” for the first time. The FDA is also currently reviewing e-cigarette product applications that contain reams of data on safety, efficacy, and potential threats to youth. If the FDA finds that any vaping product is a net harm to public health, it will be removed from the market. But if the product is deemed to be a net benefit, it will be authorized for sale as appropriate for the protection of public health.
If Arizona municipalities choose to ban these products prior to the FDA concluding its review it would limit consumer access to products the FDA may deem as a positive for public health. According to a survey conducted by the International Tobacco Control Policy Evaluation Project, 57 percent of vapers said they would continue vaping if flavors were banned, but half said they would find a way to get their preferred flavor. Of most concern for public health, was the finding that close to one-in-five vapers said they would stop vaping and smoke traditional cigarettes instead.
According to a 2020 study by researchers at Yale School of Public Health, the use of e-cigarette flavors is positively associated with smoking cessation outcomes for adults but not associated with increased youth smoking. The prestigious Cochrane Review also concluded e-cigarettes are more effective than traditional nicotine replacement therapies for helping smokers quit.
More than 8,000 Arizonans die each year from smoking-related diseases. Smoking is responsible for 28.7 percent of the state’s cancer deaths. The prohibition of products that are helping to reduce this burden would have grave consequences. If Arizona wishes to continue to reduce the number of deaths from smoking each year, the power to regulate the legal sale of safer nicotine products should be reserved for the state legislature itself.
Thank you for your time. I’d be happy to answer any questions.
Director of Consumer Freedom, Reason Foundation
Correction 2/14: The previous version of this testimony stated that 87 percent of high schoolers are not using e-cigarettes at all and 92 percent are not using vaping devices frequently. This has been updated to 89 and 95 percent, respectively.