Monday 25 July 2022

Tobacco end games

The latest round of proposed tobacco rules amount to prohibition. 

If not in two years, when low-nic rules come in that might be low enough to be de-facto prohibition, depending on where the Government sets the levels, then a few years later when the effects of a 1 January 2009 cut-off birth date for cigarette purchases works its way through. 

By the late 2030s, you'll have the absurdity of store clerks checking whether a purchaser is 28 or 29 - one will be allowed, and the other prohibited. 

And at that point there seem reasonable odds that the absurdity either has the whole regime thrown out (the better case), or full prohibition extended to all ages. 

If the low-nic rules do not amount to full prohibition, then the sinking lid on tobacco outlets will wind up mattering. The government proposes licensing tobacco retailers with a view to reducing the number of licensed outlets. 

If only very low nicotine cigarettes are allowed, then the sinking lid won't matter. Few people would want to buy very low nicotine cigarettes. But if the cap on nicotine content only prohibits the highest-strength cigarettes, then the right to sell cigarettes will be a valuable commodity. 

Basically the structure would provide local monopoly rents to local retailers, constrained by whatever mail order options remain allowed. If licenses transfer on sale of outlet, they'll capitalise into the price of licensed venues - like alcohol licenses in parts of Australia. If they expire on the sale or transfer of an outlet, they'll discourage some otherwise-efficient changes in ownership - similar to a stamp duty. 

None of it seems a particularly good idea as compared to giving more support for flips to vaping, legalising alternatives like snus, and sharpening the distinction between vaping and smoking in the regulations. Vaping is generally prohibited in places where smoking is prohibited; it should be allowed in more places where smoking is not. 

The current set of proposals risks strengthening the already growing illicit market, at a bad time. If people flip now from high-tax real cigarettes to illicit cheap real cigarettes, to avoid very low nicotine cigarettes, it will be less likely that they flip from there over to vaping. Illicit cigarettes don't carry over a thousand dollars in excise per kilo. 

I still like one additional option for reform. 

It's currently illegal to smoke in places like bars and restaurants - and to vape there. I think, in both cases, it should be up to the owner's discretion. But government isn't keen on that.

It's currently legal, but expensive, to provide ventilation and air filtration in bars and restaurants to reduce Covid risk. Few venues compete on that margin: Wellington's Hashigo Zake is one. Government is reluctant to regulate for better air quality, presumably because they do not want to be seen to be loading regulatory costs onto hospitality outlets - many of which will be on the verge of teetering anyway. A wave of bankruptcies following regulation would not be a great look, if that were the result.

But if a venue is able to clean the air to a standard that keeps Covid risks to trivial levels, the marginal cost of also cleaning smoke and vape plumes out of the air will not be high. If regulation allowed a venue the option of catering to smokers and vapers, if they met an air quality standard that also kept out Covid, that could be interesting right? Instead of loading a new cost onto businesses, it would be offering them an option they currently don't have. 

What argument could people have against that latter option? If the air is clean, the air is clean. The only risk is the risk of 'renormalisation', which seems a bit silly relative to the benefits of Covid-free indoor air. 

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