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Big bucks to help fight anti-tobacco measures

Reynolds American Inc.,  nation’s second-largest cigarette maker,  plans to spend $40 million to defeat smoking ban plan  as well as ballot efforts to raise cigarette taxes in California and Missouri.
/ Source: The Associated Press

In Arizona, they’re called the Non-Smoker Protection Committee. In Ohio, it’s simply Smoke Less Ohio.

Anti-smoking advocates? Hardly. Both are staunchly pro-tobacco and supported in part by North Carolina-based cigarette maker Reynolds American Inc., which is working hard this year to defeat proposed smoking bans in those states, as well as ballot efforts to raise cigarette taxes in California and Missouri.

The nation’s second-largest cigarette maker plans to spend $40 million to defeat all four measures, enough that company officials have warned investors the campaigns will affect the company’s earnings in the second-half of 2006.

“This is the first time that we have been involved in ballot initiatives in quite some time,” said Carole Crosslin, a company spokeswoman. “It is a significant amount of money, but it’s very expensive to do these because it’s like a political campaign.”

In both Ohio and Arizona, it’s exactly like a political campaign, as the company is financing efforts that would compete with anti-smoking ballot measures also headed before voters in November.

Along with the bar and restaurant industry, Reynolds is working to place an effort to amend Ohio’s state constitution on the ballot. The measure would, among other things, rollback anti-smoking ordinances already passed by more than 20 local governments and prevent local communities from passing stronger anti-tobacco laws.

Relentless battle
“The tobacco industry has fought us every step of the way. They have taken out more than 30 lawsuits against us,” said Shelly Kiser, a spokeswoman for SmokeFreeOhio, one of numerous backers of a competing proposed ballot measure that would ban smoking in most public places, including offices and factories. “It’s been horrible.”

But Crosslin said the measure Reynolds supports would ban smoking in at least 90 percent of businesses, yet still allow bars and other businesses the option to allow smoking.

“It doesn’t even mean they have to allow smoking,” she said, noting that nearly 1.4 million Ohio residents already live in communities with smoking restrictions similar to the one the company supports. But the Campaign for Tobacco-Free Kids counters that offices, factories and retail stores could get around the ban supported by Reynolds by declaring minors off-limits.

In Arizona, Reynolds is a key backer of the Non-Smoker Protection Committee, which succeeded in placing an initiative on the November ballot that would overturn smoking bans in several cities, including Tempe and Prescott. As in Ohio, the tobacco-friendly proposal would compete on the November ballot with a separate measure — the Smoke-Free Arizona Act — that would ban smoking in most public places.

In Missouri, a constitutional amendment targeted for the November ballot would raise the cigarette tax from 17 cents to 97 cents a pack and increase taxes on other tobacco products by 20 percent. The tax hikes would generate at least $351 million a year for health care programs and other projects.

But Reynolds’ focus for November appears to be in California, where Proposition 86 would boost the state’s tax on cigarettes and other tobacco products by $2.60, to $3.47 per pack. It would generate about $2 billion a year for emergency medical services, health insurance for children, training for nurses and anti-smoking efforts, and other health care efforts.

“California is the real lightning rod within the initiatives,” Diane Neal, Reynolds’ chief financial officer, said this week during a conference call with analysts.

The company said only about $177 million of the money generated annually by the Proposition 86 tax hike would go specifically to anti-smoking programs, and Neal said that is “one of the messages that resonates well with voters in California.”

Ann Goure, a spokeswoman with the American Cancer Society in Sacramento, Calif., said anti-tobacco programs will get all the money they need from the tax.

“It’s all health,” she said. “I mean, they’re already out there spinning that this is not health care.”

Ballot efforts
Goure said the tobacco industry has always fought cigarette tax hikes and smoking bans in California, far outspending opponents. But the state’s largest tax hike ever proposed on tobacco products is expected to bring an even bigger battle from cigarette companies.

“They are pretty consistent about battling and spending a lot of money on television in California because it’s such a large market for them,” said Cyndy Lewis, western states director for the Campaign for Tobacco-Free Kids. “They’ve got to keep people smoking.”

Indeed, Reynolds isn’t alone in the California fight. In the past two months, Virginia-based Phillip Morris USA, the nation’s top cigarette maker, invested about $1.4 million in two committees opposed to Proposition 86, according to campaign finance filings in California.

But Philip Morris spokesman Bill Phelps said the company hasn’t made a decision about whether it also will lobby against the tax in Missouri, but has decided not to fight the ballot initiatives to restrict smoking in Arizona and Ohio.

Neal sounded cautiously optimistic about Reynolds’ success in California, where voters have consistently approved anti-smoking measures and the percentage of adults who smoke has dropped about 38 percent since 1988.

“We will plan for success but we will be working on contingency plans,” she told the analysts, noting that Reynolds will consider using “every lever we have.”