Tobacco sales down in Minnesota, up in North Dakota
In the months since Minnesota raised taxes on tobacco products, more cigarettes were sold to retailers in North Dakota.
And at the same time, it’s too early to tell whether the tax hike has reduced the number of smokers, one of its intended effects.
According to data from the North Dakota Tax Commissioner’s Office, the number of cigarettes sold by distributors to retailers in August and September this year were up 12 percent and 5.5 percent, respectively, than those sold in the same months last year. Those are the only two months this year in which sales were higher than 2012 months.
“It likely has to do with Minnesota’s tax increase,” said John Quinlan, a compliance officer in the North Dakota Tax Commissioner’s Office.
The Minnesota Legislature raised the state’s tax on a pack of cigarettes by $1.60, which went into effect in July. The state’s tax is now $2.83, compared to North Dakota’s 44 cents per pack. North Dakota hasn’t raised its rate since 1993.
Meanwhile, the number of stamps that the state of Minnesota has sold to distributors to put on cigarette packs in July and August were significantly lower than last year. But tax collections increased by $12 million and $24 million, respectively, compared to the same months in 2012.
Several cashiers and managers of gas stations and convenience stores in northwest Minnesota said they’ve noticed significantly fewer people buying cigarettes. They suspect many are heading across the border for a cheaper nicotine fix.
“They’re going across the river,” said John Yuric, manager of the Valley Oil gas station in Warren, Minn. He said some people still come in to buy a pack to hold them over until they can make another trip to North Dakota.
He added that fewer people buying cigarettes means fewer people are stopping in and buying other items.
Tracy Gonzalez, a cashier at the River’s Edge Bait & Convenience shop in Greenbush, Minn., said customers may be traveling to North Dakota for cigarettes, but they haven’t seen a dramatic drop in sales.
“They still buy them here because it’s more convenient,” she said.
Jeanne Prom, executive director of the Center for Tobacco Prevention and Control Policy in Bismarck, cautioned against citing differing tax rates as the sole factor for any increase in cigarette sales. However, she said the center hopes to help convince the North Dakota Legislature to raise the tax in 2015.
“One of the best ways to prevent kids from ever starting to use tobacco products is to make them less accessible,” Prom said. “And one of the best ways to make them less accessible is the price.”
North Dakota’s smoking rate among adults steadily declined in the past decade to 17.4 percent in 2010, according to the North Dakota Department of Human Services. The number of high school students who have tried smoking also declined in that same period.
The tobacco tax hike was promoted as a way to reduce smoking in Minnesota, and to discourage young people from starting. But while more people are showing interest in quitting, it’s unclear whether they’re following through.
Mike Sheldon, senior communications manager for ClearWay Minnesota, said the number of phone calls and online inquiries about its QuitPlan services have increased by between 200 and 250 percent since the tax increase. But he said it’s too early to tell whether more people are actually quitting.
“It’ll be a little while until we can quantify successful quits since the tax increase,” Sheldon said. He said they consider a successful quitter as somebody who has gone without smoking for six months.
It’s also unclear whether smokers in northwest Minnesota have switched to an alternative. That may be because some popular methods, like electronic cigarettes, simply aren’t available in many small gas stations there.
“We just thought it’s a really high expense for us to have because we’re a very small gas station,” said Shirley Schmit, manager of the Cenex in Red Lake Falls, Minn.
Minnesota’s law also raised the tax on other tobacco products from 70 percent of the wholesale price to 95 percent.
Yuric said sales of chewing tobacco have gone down along with cigarettes. He added that they don’t sell e-cigarettes.
“We’re kind of a small town so our customer base isn’t asking it for yet,” Yuric said. “We had tried it a few years ago when all that e-cigarette stuff was starting, and it just didn’t sell.”