Massachusetts’ Flavor Ban Fiasco is Costing the State Millions in Tax Revenue

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Posted by Karl Abramson on Tuesday, May 4th, 2021, 5:06 PM PERMALINK

On June 1, 2020, a law signed by Massachusetts Governor Charlie Baker went into effect, prohibiting all flavored tobacco products from being sold in Massachusetts. Since then, cigarette sales in the commonwealth have plummeted as Massachusetts retailers sold 17.7 million fewer cigarette tax stamps between June and November of 2020 than they did in that same time period the previous year.  

While a quick glance at this policy makes it appear successful, Massachusetts’ flavor ban has been a monumental disaster for the state. Neighboring states have more than made up for the decrease in sales in Massachusetts, clear evidence that the flavor ban has done nothing to decrease smoking rates. Rather, Massachusetts has lost tens of millions of dollars in tax revenue while surrounding states like New Hampshire and Rhode Island have seen massive spikes in revenue as a result of Massachusetts’ failed policy. 

report from the New England Convenience Store & Energy Marketers Association provides concrete data on the topic. Here are some of their findings. 

Key Findings

  • Between June 1, 2020, and September 30, 2020, New England states (Massachusetts, Maine, New Hampshire, Vermont, Rhode Island and Connecticut) have sold over 230 million tax stamps for cigarettes. In that same period in 2019, the same states sold 225 million tax stamps. This increase in cigarette tax stamp sales shows that even with Massachusetts’ tobacco flavor ban, cigarette sales have increased in a year where they were expected to decrease by 2% nationally. 

  • Excise tax revenues on cigarettes in Massachusetts are down significantly with estimates showing that “excise tax losses for Massachusetts are over 10 million dollars a month”. 

  • As Massachusetts revenues decrease, New Hampshire’s cigarette excise tax revenues have increased $28 million in 2020 compared to the same period the previous year. 

  • New Hampshire isn’t the only beneficiary of Massachusetts’ flavor ban. Rhode Island’s cigarette excise tax revenue increased by over $12 million in 2020 compared to the same period the previous year with an additional $2 million in sales tax revenue. 

This data clearly illustrates that instituting a flavor ban on tobacco has been a complete and utter disaster for Massachusetts. 89% of legal cigarette sales occur in convenience stores and over 54,000 Massachusetts residents are convenience store employees. The total economic cost of this policy has been massive. 

Not only has the flavor ban harmed businesses, but it will also have unintended consequences on children as well. Massachusetts’ excise tax revenue from cigarettes funds tobacco prevention programs. With tax revenue losses over $10 million a month, there will be considerably less resources available to teach school children in the Bay State the dangers of combustible cigarettes. The flavor ban was aimed at decreasing youth use of tobacco products. Unfortunately, it may very well have a paradoxical effect and lead to an increase in youth smoking.  

Politicians in at least thirteen states are considering flavor bans, many identical to Massachusetts’. In the interests of public health, protecting state tax revenue, and defending small businesses, these lawmakers must drop these senseless initiatives. 

Photo Credit: Kyle Klein Photography

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