DULUTH - The Duluth City Council on Monday, Feb. 12, will decide whether to place new restrictions on where menthol cigarettes and other flavored tobacco products can be sold.
An ordinance proposed by At Large councilors Barb Russ and Zack Filipovich would confine the sale of flavor-infused tobacco products in Duluth to adults-only smoke shops that derive 90 percent or more of their revenues from tobacco and tobacco-related items.
If adopted, the ordinance would leave many local convenience stores out in the cold, according to Brandon Kaisersatt, vice president of operations for four Short Stop convenience stores in Duluth.
"It's over 30 percent of our business, and that's just the (tobacco) products alone. That's not taking into consideration what we call market basket sales - that customer who comes in to purchase one product is also likely to stop and purchase their milk, their pop, their sandwiches and their gas. Unfortunately, if this passes, those consumers are just going to stop in Hermantown or Superior or somewhere else. So we're not just going to lose that product but all the other products as well," he said.
While he acknowledged proposed restrictions would cut into convenience store sales, Filipovich said he doesn't want young people to be constantly exposed to menthol cigarettes and other types of flavored tobacco any longer.
"For me, the main issue is keeping this deadly product out of the hands of kids as much as we can," he said.
"Menthol flavoring is the way that these large tobacco corporations are targeting our youth in Duluth and all across the country. We want to do something here in Duluth to combat that," Filipovich said.
Pat McKone, regional senior director of the American Lung Association of the Upper Midwest, applauds Filipovich's efforts to keep such products away from impressionable young people.
"When it comes to kids, menthol is how they learn to smoke. It's a numbing agent. It makes the smoke go down smoother. It's got everything the industry wants to get the smoke in, including the nicotine, and that means a potential lifetime customer," she said.
Kaisersatt didn't attempt to defend tobacco use, saying: "Everyone knows that cigarettes are harmful and not a good product, but it's the customer's choice whether they're going to partake in that."
While Kaisersatt maintains that adults should have the right to smoke, he said convenience store owners are on the same page as Filipovich when it comes to keeping tobacco out of the hands of young people.
"We take not selling to minors very seriously," Kaisersatt said, noting that compliance tests by the U.S. Food and Drug Administration indicate local convenience stores sell to underage customers only 3.7 percent of the time.
Andy Verhel, owner of the Piedmont Milk House, said he knows many of his customers and their family members by name. Over the past 38 years, Verhel has seen his customers' kids grow up and said he feels a sense of personal accountability to them.
"I run a neighborhood store. There is no problem with underage sales here, but the city is trying to make a problem where there is none," he said.
At the Short Stop stores Kaisersatt oversees, clerks must scan a driver's license or enter a date of birth from another form of positive identification in order to process the sale of any tobacco product.
He said local smoke shops have a more spotty FDA track record, failing more than one in five compliance checks - 21.7 percent to be exact.
"So you're going to hand that business over to them? It just doesn't make sense," Kaisersatt said.
The proposed ordinance would give Duluth's six smoke shops an unfair advantage in the eyes of 5th District City Councilor Jay Fosle.
"Council is stepping over its bounds by saying who can sell a legal product and who cannot," he said, questioning the motives of the ordinance's supporters.
"Do these councilors have a hidden agenda with the smoke shops?" Fosle asked.
With many already operating on thin margins, Kaisersatt predicted: "Stores will close over this, not necessarily us, but if you're a single owner/operator, unfortunately it's the small businesses that are going to be affected by this most."
McKone questioned some of the dire predictions.
She noted that at the National Association of Convenience Stores State of the Industry Summit in July of 2016, the organization reported that in-store sales of tobacco represented 36 percent of their total revenue. But those sales accounted for just 17 percent of total profits, including sales of all tobacco products, not just flavored varieties.
Kaisersatt said many convenience stores don't have much financial wiggle room.
"Our margins are already tight, and now they're going to take this away. It's tough to be an operator," he said.
"Why should the city get to pick who wins?" Kaisersatt asked. "That goes against the American way of free business."
McKone views the situation differently.
"For me, the tobacco industry is picking winners and losers when they're targeting some of our most vulnerable populations. It might be difficult to adjust a business plan or make modifications, as this will require. This will require some entrepreneurial readjustments. But when you've got lung cancer or you've got a diagnosis of COPD (chronic obstructive pulmonary disease), that's really winning and losing. That's what this is about for us and what it's about for the community," she said.
"No one wants kids to smoke," Kaisersatt said. But he said city leaders have been reluctant to consider alternatives to what has been proposed. Kaisersatt said convenience store operators remain open to other options, including mandatory ID checks for all tobacco sales, new rules governing the placement of tobacco products and advertising, and even the possibility of increasing the required age for purchase to 21.
But so far, he said the city has been unreceptive.
"They're unwilling to even work with the 85 convenience store operators in Duluth on some of these other solutions that would accomplish the same goals," Kaisersatt said.
Filipovich contends the proposal to restrict sales of flavored tobacco products to adults-only smoke shops makes good sense, despite convenience store operators' concerns.
"It would be a loss of a product that they're able to sell currently, but we do have a four-month window after this passes so they should be able to sell down their current inventory. They're not going to lose out on what they already have in stock. But one thing I do know from being an accountant and kind of talking with businesses is: Businesses do adapt, and I believe they will be able to adapt to this, as well," he said.