State Lawmakers Be Wary, Flavor Tobacco Bans Result in Loss of Revenue, Increased Costs for Enforcement

Despite tax data indicating that the Massachusetts flavor ban has resulted in less revenue and increased costs, researchers continue to cherry pick sales data purporting that the draconian prohibition has worked. The latest comes from a study by researchers from Massachusetts’ Department of Public Health (MDPH) that claim that “menthol restrictions are effective.”

Unfortunately for the public the full study is behind a paywall, but looking over the details makes apparent that there are serious flaws in this study, and it is not the first time that academic journals have published such “studies.”

The researchers rely on UPC (Universal Product Codes) scanner data that was obtained from the Nielsen Company. The study notes that “Nielsen captures only large chain retailers and convenience stores, so only a quarter of retailers in Massachusetts are represented.” Only one-fourth of retailers in all states examined are represented as all state data came from Nielsen. 

The authors note that among individual states, “total sales decreased in New York, Rhode Island, and Vermont” between 2019 and 2021. And, in New Hampshire, that overall tobacco sales had increased by 22.6 percent in the first three months after the ban went into effect, but “menthol sales then decreased in the following six months.”

The newest study could be considered somewhat of an improvement from the January 2022 study from researchers at the American Cancer Society (ACS) who claimed that Massachusetts’ flavor ban was effective by examining the same Nielsen sales data from just 33 states, with only one – Connecticut – being a border state.

Nonetheless, both studies are entirely misleading to policymakers as they claim flavor bans work at reducing cigarette sales by using data that does not capture all cigarette sales. Lawmakers should instead rely on something they ought to know: state excise tax data. 

In the MDPH study, the authors claim that “most neighboring states did not see increases in overall tobacco sales,” yet state cigarette excise tax data indicate that three out of five of Massachusetts border states saw excise tax revenue increases between 2020 and 2021. Moreover, these increases came after previous declines.

For example, between FY 2018 and 2019, cigarette excise tax revenue in Rhode Island had decreased by 6.3 percent, yet between FY 2020 and 2021, revenues increased by 13.8 percent. In Vermont, which had seen a 3.66 percent decrease between FY 2019 and 2020, cigarette excise tax collections increased by 3.68 percent between FY 2020 and 2021.

New Hampshire seems to have benefited greatly from the Massachusetts’ flavor ban. While the January ACS study conspicuously ignored the Granite State, the recent MDPH study claims that there has not been a significant increase in tobacco sales after the ban went into effect.

Tax data shows a different story. In 2021, New Hampshire collected $228.3 million in cigarette excise taxes, a 14.4 percent increase from 2020’s $199.5 million. Further, between 2019 and 2021, cigarette excise tax revenue increased by 20.5 percent.

It is worthwhile to note that among the 46 states, plus the District of Columbia, that did not increase their cigarette excise tax rates in 2020 or 2021, average cigarette excise tax revenue declined by 0.85 percent between 2020 and 2021. Only 16 states saw increases to their revenues, three of which were states that border Massachusetts. Further, among all states with increases, the average increase was 4.4 percent, whereas in Massachusetts border states with increases, the average increase was 10.6 percent.

Studies not examining tax revenue fail to inform policymakers that cigarette tax collections have dramatically declined in Massachusetts after the ban. In fact, the Bay State reported a 22.3 percent decrease in cigarette excise tax revenue between 2020 and 2021, only second to D.C., which reported a 28.1 percent decrease. The next state with the largest decrease was Montana, reporting a 7.4 percent decline.

And while Massachusetts has lost money, the Bay State has been forced to allocate additional state funding to its Illegal Tobacco Task Force to enforce the ban. Between the FY 2020 and 2021 budgets, state funding increased by 73 percent from $589,911 in 2020 to more than $1 million in 2021 and 2022.

Policymakers should be wary of shoddy research purporting that flavor bans work. Prohibition is a centuries-long social experiment that has always created greater problems with adult consumer goods, all the while depleting resources that could help to address harms caused by those adult consumer goods.

Lindsey Stroud is Director of the Taxpayers Protection Alliance’s Consumer Center.