Letter to the Editor: H. 3681 is Bad for South Carolina

By: J. D. Graham, www.jdgrahamauthor.com

In Latin, they ask “cui bono?” In English, they ask “who benefits?” In American, we respond “follow the money.” I present South Carolina House Bill H.3681. Let’s find out who benefits from a bill that denies municipal governments the ability to regulate nicotine sales.

Procedural History

H.3681 is short. Including its title, the bill is only 390 words. If passed, the bill would prevent any local government (e.g, a city) in South Carolina from regulating the sale of nicotine products. The State would have the exclusive right to such regulation.

It is important to note what the bill does not do. As I read the bill, a city could still require businesses to have a regular business license. A city could still ban smoking in certain areas. But a city could not, for example, ban the sale of certain vape flavors. Again, only the state would have that power.

On April 7th, the bill was approved in the S.C. House by a vote of 80 to 23. The next day, the bill passed to the S.C. Senate, where it was read for the first time and referred to the Senate Committee on Medical Affairs. The bill was not on that Committee’s most recent agenda.

Pros and Cons

I pass over the merits of smoking. You may feel very strongly about that. The American Cancer Society certainly feels strongly about the merits of smoking, and they oppose the bill. So does the American Lung Association. These professional organizations oppose the bill because they oppose smoking. You ask who benefits, they answer Big Tobacco. For reasons I will explain below, they are correct. But this post is not about the merits of smoking.

At a March 10th meeting of the House Judiciary General Laws Subcommittee, Mr. Fred Allen explained why he thinks the bill is important (you can find the video on this page). Mr. Allen is a lobbyist for Reynolds American Tobacco (RAT, for short).

Mr. Allen said that the bill’s purpose is “[to prevent] a patchwork of inconsistent local restrictions.” While RAT and RAT’s trade partners have “aggressive policies on preventing underage purchases,” Mr. Allen said that RAT “support[s] the right of adults to have choices in the marketplace.”

Mr. Allen pointed out that the bill also protects a state interest: Money. In addition to the state sales tax (6%), South Carolina has an excise tax on tobacco products—57¢ per pack of 20 cigarettes, and 5% of the manufacturer’s price on “other tobacco products” (there is currently no excise tax on vape products). If Charleston and Columbia banned all flavored tobacco, Mr. Allen said, the State would lose over $12 million in revenue. To protect this state interest, the bill seeks to reserve for the State the power of regulating these flavored products.

Follow the Money

Whatever direct revenue South Carolina might lose, RAT et al would obviously stand to lose much more. Assuming that all the lost tax revenue is the lower tax of only 5% on the manufacturer’s price, RAT et al stand to miss out on $240 million in sales of “other tobacco products” (because I have not yet seen their methodology, I cannot say what period of time this covers) (Update: their chart covers fiscal year 2020). That’s almost as much as Charleston’s adopted budget for 2021 (see page 77 of this document). Perhaps RAT has something other than South Carolina’s revenues in mind, in its support of this bill.

Or consider the economic impact that smoking has on the state. Some parties estimate that just the healthcare for smokers costs South Carolina $1.9 billion dollars each year, and $2.35 billion in lost productivity. Even if the actual cost to the state is only 1% of alleged healthcare costs, that means that smoking still costs South Carolina $19 million every year. I freely admit that the my figure here is somewhat speculative (as is Mr. Allen’s), but my point is not: a decrease in tobacco sales will lower tobacco-related healthcare expenses.

But I remind you that this is not a post about the merits of smoking. This is a post about why H.3681 is bad for South Carolina.

What has Charleston to do with Greenville?

The glib answer to this question is plenty. They are both cities in South Carolina, and as South Carolina politics (or revenue) goes, so do they. To some extent, this is true. But Greenville and Charleston are also separate cities, with separate communities, facing separate problems. (For your sake, bright reader, I refrain from referencing Dickens.)

Consider: Charleston is facing rapid population growth. Greenville is growing slowly but steadily. However, Charleston’s population growth is spread out over 150-odd square miles, while Greenville’s growth is confined to just under 30 square miles. If someone suggested that Charleston and Greenville should handle their population growth in the same way, well, we would rightly laugh at that person and go on about our business.

Consider: Charleston floods at high tide, never mind a good rainstorm. Greenville does not have coastal flooding problems (although they have flooding problems of their own). Again, it would be silliness for someone to suggest that our two cities approach flooding in the same way.

Local Problems, Local Solutions

It is common sense that Charleston and Greenville should each be free to find local solutions to their local problems. This principle is sometimes called subsidiarity—the idea that the smallest possible unit of government should handle a problem, and that any larger units of government should support the smaller as necessary.

In other words, the State should support cities as needed with their city-sized problems, but should not substitute its own authority. The State should only take over when the issue is state sized. The more central the governing body, the more supportive its role should be. This way, local communities have both the support and the flexibility they need to solve local problems.

Now John, I hear you murmur, surely you are not suggesting that smoking is a city-sized problem. Surely you realize that smoking is a nation-sized problem, or even a globe-sized one. Smoking is universal.

Every problem is, to some extent, global and universal. The rain, it raineth every day, and it raineth everywhere. When the rains come down, the floods come up, and the city by the river gets wet. Often, that city may need support from State and even Federal government agencies, like FEMA.

But imagine a law requiring that every time that rain came down, the city could not put out sandbags until the State approved the use of sandbags (by a three-reading process wherein the party of the first part appeals to the party of the second part…). The wheels of state government do not turn so quickly as the river rises. If a State passed such a law, that State would be governing poorly.

Economy and Scale

I return to the original question: who benefits from a bill that denies municipal governments the ability to regulate nicotine products? Put slightly differently, who benefits from concentrating regulatory power in a higher level of government? The answer is simple: RAT benefits.

As the law stands now, if a local community needs to address a local problem, it can. Say that Greenville notices that a lot of children are getting bubblegum flavored vape fluid at the local head shop. For now, Greenville can pass a local ordinance that bans bubblegum flavored vape fluid and regulates how the local vape shop trains its employees.

Perhaps RAT takes a bit of hit in sales. Still, RAT should be happy—after all, they have “aggressive policies on preventing underage purchases.” RAT should be all the more happy that adults are making choices about their marketplace.

If H.6381 goes through, Greenville now has to convince their representative, who has to convince the State House, who has to convince the State Senate, who then has to convince the Governor, that one naughty Greenville vape shop necessitates a ban on bubblegum flavored vape fluid throughout the state.

The Charleston representative weighs in and argues that all the head shops in Charleston are angelic, perfectly behaved institutions, and Charlestonians are particularly fond of bubblegum flavored vape fluid. He asks, what has Charleston to do with Greenville?

Mr. Allen returns with a chart detailing how much revenue the State is going to lose, should the State actually exercise the power he so eloquently argued the State should reserve to itself. If two cities banning flavored nicotine products would reduce state funds by $12 million, surely a state-wide ban would reduce the funds even more.

With Charleston, Greenville, and Mr. Allen all duking it out in Columbia, RAT sits comfortably in Winston-Salem, enjoying the fruit of its labor. Based on the difference in budget, it was never a fair fight.

What to do

This kind of political machination does not serve South Carolinians. Instead, it puts our citizens’s needs second to the financial interests of an industry that already costs our state millions or billions each year. Even if this bill was on something totally separate from tobacco use, though, this kind of bill frustrates good government. South Carolinians should have the freedom to choose how their local communities will handle local problems.

If you live in South Carolina, call your S. C. State Senator and insist that they vote against this bill. This is especially important if your Senator is on the Committee for Medical Affairs. Explain to your Senator that you expect them to put the needs of South Carolinians ahead of the financial interests of Big Tobacco. Also, send this post to a friend.

If you do not live in South Carolina, keep an eye out for similar legislation in your state.

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