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Cigarette Pricing Bill Clears Ohio House

5/17/2019


Legislation designed to bring clarity to mark-up law moves to the forward. 

This week, a bill introduced by State Representatives Gary Scherer (R-Circleville) and Jack Cera (D-Bellaire) on cigarette pricing passed by Ohio House of Representatives in a 90-3 vote. The bill, introduced in February, is designed to bring clarity to Ohio's cigarette minimum mark-up law as it applies to wholesalers. 

According to Beth Wymer, executive director of the Ohio Wholesale Marketers Association, the leading proponent of the bill, during testimony in March, "Ohio's cigarette minimum mark-up law was enacted in the 1940s to address predatory below cost pricing at the wholesale and retail levels. It requires wholesalers and retailers to apply a cost of doing business markup before selling cigarettes.” 

While HB 71 does not make any changes to the stated statutory mark-ups (3.5% at wholesale; 8% at retail), the bill does create a new duty for retailers.  The legislation prohibits a cigarette retailer from purposely inducing, procuring, or attempting to induce or procure the purchase of cigarettes at a price, including any related concessions, that is less than the cost to the wholesaler.  The legislation also prohibits a cigarette wholesaler from advertising or selling cigarettes at less than its cost or offering or giving a concession in connection with the sale of cigarettes, except under specified conditions and if approved by the Tax Commissioner.

The association worked closely with Rep. Scherer and other stakeholders over the course of multiple meetings to secure changes to the legislation during the committee process that would lessen the liability imposed upon retailers, with the exception of those retailers intentionally engaging in the prohibited activities. 

HB 71 now heads to the Ohio Senate for review and consideration. The association remains actively engaged with policymakers on the proposal. Watching futures issues of FuelingMatters for updates. 


 

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