Cigarette tax worries businesses

A forthcoming tax increase on cigarettes has local business owners concerned sales will drop.

Smokedale store manager David Yousef and customer Johnathan Martiny discuss e-cigarette options on Tuesday, June 18, 2013, at Smokedale in Stadium Village. Yousef believes e-cigarettes are likely to become much more popular after the cigarette tax is implemented.

Jaak Jensen

Smokedale store manager David Yousef and customer Johnathan Martiny discuss e-cigarette options on Tuesday, June 18, 2013, at Smokedale in Stadium Village. Yousef believes e-cigarettes are likely to become much more popular after the cigarette tax is implemented.

by Meghan Holden

Abraham Elsayed is worried about the upcoming cigarette tax increase.

The new tobacco tax signed into law last month will raise the tax on a pack of cigarettes by $1.60 starting July 1, and Elsayed, who owns Royal Cigar and Tobacco in Dinkytown, gets a lot of his business from cigarette sales.

Anti-smoking groups say the tax increase will encourage nearly 37,000 Minnesota smokers to quit, and Elsayed said customers have been telling him they’ll give up smoking come July.

Other local businesses said they’ve heard similar pledges from customers.

Metro Petro employee Casey Sanwick said customers are constantly complaining about the new tax, adding that cigarettes are probably their biggest seller after gas.

“People are going to go

ballistic,” he said.

A 2012 study by the Small Business Survival Committee found New York City’s 2002 tax increase of $1.50 hurt about 85 percent of businesses selling tobacco.

Maxwell’s Market owner Ramadan Hussein said many customers say they’ll quit once the cigarette tax increases, but he doesn’t think they’ll follow through.

“People will never stop smoking,” he said.

The new tax also comes at a time when University of Minnesota officials are working to establish a smoke-free campus.

About 20 percent of students reported using tobacco in the 2012 Boynton College Student Health Survey.

National anti-smoking groups estimate Minnesota’s tax increase will prevent more than 47,700 kids from smoking.

Individualized studies sophomore Erica Crooker said she smokes occasionally but will probably buy cigarettes less often after the tax increase.

With the 130 percent tax increase less than two weeks away, smokers are buying in bulk.

“One customer bought 27 cartons,” said Smokedale Tobacco manager David Yousef.

The ‘next big market’

While cigarette sales may start to decline, the sale of electronic cigarettes has been on the rise in recent years, Hussein said.

The GfK MRI Survey of the American Consumer found Millennials made up 44 percent of smokers who used e-cigarettes.

Because of the growing demand for the smokeless alternative, Smokedale is in the process of developing its own brand of e-cigarettes.

Along with his usual pack of cigarettes, Smokedale customer Joe Thomas bought e-cigarette cartridges, which he says helps him quit smoking.

“I’m trying to supplement with e-cigarettes,” he said. “You feel like you’re smoking.”

Stadium Village’s Smokedale  has also seen an increase in e-cigarette sales, Yousef said.

“I believe it’s going to be the next big market,” Hussein said.