The Economic Effects of Cigarette Sales and Flavor Bans on Tobacco Retail Businesses

This Report was written by John A. Tauras and Frank J. Chaloupka. The report compares the trends in cigarette sales with measures of convenience and tobacco store business in the United States. The findings suggest that declines in cigarette sales do not harm retailers. The number of convenience stores, total sales revenues, cigarette sale revenues, and profits have increased despite cigarette sales declining across the country. For convenience stores, cigarettes have the lowest profit margin, while food services have the highest profit margin. Further, the share of revenues from cigarette sales in convenience stores has declined over time. The ban on the sale of flavored tobacco products similarly does not harm retail business. Data from states that banned the sale of flavored products, such as Massachusetts, New York, and Rhode Island, suggest that these bans did not lead to a reduction in the number of convenience or tobacco stores, employees, or wages. This assessment demonstrates that tobacco control policies can be implemented without negatively impacting tobacco retail businesses.