The economy and Big Tobacco

No. In fact, Big Tobacco’s products carry a hefty price tag for all Californians – from the addiction and diseases they cause,8 to the premature deaths of far too many loved ones – it affects our communities and families in many costly and profound ways.   

A study found tobacco-related healthcare costs for California was $15.4 billion annually.9 That means each Californian pays nearly $400 each year for the cost of smoking – whether you use tobacco or not.9

Compare that to California’s tobacco tax revenue. In fiscal year 2022-23, California tobacco tax revenue was approximately $1.7 billion.10 

It’s easy to see the cost of tobacco far outweighs any tax revenue generated.

Tobacco tax revenue is directly related to the number of tobacco products sold, so as tobacco use in California falls, so does the tax revenue generated from those product sales. California’s tobacco tax revenue has been falling as tobacco use has been declining.101112 Less tobacco revenue means less resources for tax-funded organizations like First 5 California who are already anticipating the need to change their funding source to more sustainable ones in order to keep their critical services for Californians in place.1314

Despite a tobacco industry-created myth, research shows that tobacco products are not essential for retail store survival.15 In fact, cigarettes have the lowest profit margin for convenience stores, and tobacco revenue for retailers only accounts for a small portion of overall sales. 1617

In states that have banned the sale of flavored tobacco products, data shows no significant reduction in the number of retail stores, no significant decrease in employees at these stores, and no significant reduction in wages.16

There are over 29,000 retailers that sell tobacco in California – far more than Starbucks or McDonald’s.181920 In fact, there are nearly 10 times the amount of tobacco retailers than there are Starbucks in the state.1820 With those kinds of numbers, retailers can make a huge impact by choosing their neighbors’ health over tobacco profit.

Yes. Some retailers are proactively choosing to stop selling tobacco products all together, transitioning to other consumer goods and food items that generate more income over time.2122 There have been examples of local business organizations, government agencies, and community-based organizations supporting retailers in their transition away from tobacco, putting their community’s health over Big Tobacco’s profits.2324

Because tobacco impacts all of us, not just people the tobacco industry addicts, California’s leadership demonstrates that a comprehensive approach – community engagement, addiction interventions, research, and bold public education campaigns – designed to change social norms around tobacco is necessary and has a much greater impact than focusing solely on helping people who are addicted to tobacco quit.28 

Over one million lives have been saved since the beginning of the UNDO program.29303132 Today, California has the lowest youth vaping rate in the US, and the adult smoking rate in California has decreased by more than 60 percent over the past three decades, ranking the state the third lowest in the US.1233

Since UNDO’s beginning, we have saved taxpayers a staggering $500 billion in healthcare costs – and, what’s more, for every dollar California spent on tobacco control and prevention, healthcare costs fell by $231.34

It’s not only possible to succeed without tobacco product sales, while still maintaining and promoting a vibrant business community and economy – it’s already happening.34