Influence of the Tobacco Industry on Wisconsin Tobacco Control Policies

 

 

 

 

 

 

A report of the

Monitoring and Evaluation Program

University of Wisconsin Comprehensive Cancer Center

 

 

 

October 2002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table of Contents

 

Sections

                                                                                                                             

                                                                                                                            Page

·         Executive Summary                                                                                     5

·         Introduction                                                                                                 8

o        Early History                                                                                   9

·         I) Tobacco’s Economic Impact in Wisconsin                                                 11

o        Corporate Overview                                                                        11

o        The Tobacco Institute                                                                      12

§         Lobbying and Legislative Activity                                         13

·         Youth Access                                                         14  

·         Market Expansion                                                   14

·         Clean Indoor Air                                                     15

·         “The List”                                                               16

§         Manipulating the Media                                                        17

§         Undermining Science                                                           19

§         Conclusion                                                                          19

o        Philip Morris (Altria)                                                                        20

§         Lobbying and Political Action                                               22

§         Media Advocacy                                                                 26

§         Opposition of Organized Tobacco Control Efforts                  29

§         Federal Action from Wisconsin                                            31

§         Opposition to Tobacco Excise Taxes                                    32

§         Opposition of Clean Indoor Air Activities                              33

o        R.J. Reynolds                                                                                  35

o        Brown and Williamson                                                                     37

o        U.S. Tobacco                                                                                  37

o        Lorillard Inc.                                                                                   38

o        Agriculture                                                                                      40

o        Manufacturing                                                                                 42

o        Advertising and Promotions                                                              42

o        Philanthropy                                                                                    46

o        Cigarette Prices and Tobacco Taxation                                             48

o        Tobacco Retail Sales                                                                       53

o        Cigarettes and Convenient Stores                                                     53

·         II) Tobacco and the State Political Process                                                   57

o        Allied Industry Organizations                                                            58

§         Petroleum Marketers of WI / WI Association of

      Convenience Stores (PMAW/WACS)                                  59

§         Wisconsin Grocers Association                                            60

§         Wisconsin Restaurant Association                                        61

§         Wisconsin Tavern League                                                    65

§         Wisconsin Tobacco Growers Association                              66

o        Political Action                                                                                66

§         Issue Campaigns                                                                 66

§         Industry Contributions to Campaigns                                     67

§         Individual Contributions from Tobacco

      Industry Employees                                                             69

§         U.S. Senate                                                                        70

§         U.S. House of Representatives                                            71

§         Governor                                                                            72

§         Wisconsin State Senate                                                        74

§         Wisconsin State Assembly                                                   76

§         Lobbying Expenditures                                                         80

§         Opposition to Tobacco Industry Proposals                             82

o        Impact on Tobacco Policies                                                             89

§         Youth Policy                                                                       89

§         Tax Policy                                                                          92

§         Clean Indoor Air                                                                 93

§         Funding Tobacco Control                                                     95

§         Securitization of the Master Settlement Agreement                96

§         Summary                                                                            97

·         Conclusion                                                                                                  98

 

 

Tables

 

·         Table 1: Philip Morris Wisconsin Subsidiaries                                                22

·         Table 2: Estimated Wisconsin Revenues and Profits                                      39

·         Table 3: Wisconsin Tobacco Production Trends                                             41

·         Table 4: Estimated Cigarette Advertising and Promotional

Expenditures in Wisconsin                                                                            44  

·         Table 5: Philanthropic Sponsorship of Wisconsin Events                                 47

·         Table 6: Cigarette Excise Tax Data for Wisconsin                                         50

·         Table 7: Cigarette Sales and Convenience Store Revenues                             54

·         Table 8: Tobacco Campaign Contributions to Members

      of U.S. Congress                                                                                         71

·         Table 9: Tobacco Company and Allied Industry’s Contribution

to Scott McCallum                                                                                       74  

·         Table 10: Tobacco Contributions to Wisconsin State Senators                         75

·         Table 11: Tobacco Contributions to Campaign Committees                             76

·         Table 12: Tobacco Contributions to Wisconsin Assembly Members                77

·         Table 13: Campaign Finance Contributions                                                    80

·         Table 14: Lobbying Expenditures                                                                  82

·         Table 15: Anti-Tobacco Lobbying Expenditures                                             88

 

 

 

 

Figures

 

·         Figure 1: Tobacco Crop Production in Wisconsin                                           41

·         Figure 2: Estimated Tobacco Advertising and Promotional

      Expenditures in the State of Wisconsin                                                          43

·         Figure 3: Cigarette Sales in Wisconsin by Fiscal Year                                    49

·         Figure 4: Cigarette Tax as a Percent of Average Retail Price

      Per Pack of Cigarettes                                                                                50

·         Figure 5: Wisconsin Tobacco Revenues (1990-2001)                                     51

·         Figure 6: Cigarette Volume Trends by Retail Segment                                   55

·         Figure 7: Number of Packs sold in WI and State Excise

      Tax per Pack (1982-2000)                                                                           93

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Summary:

The purpose of this report by the Monitoring and Evaluation Program of the University of Wisconsin Comprehensive Cancer Center is to assist policy makers and tobacco control advocates in understanding the role of the tobacco industry in forming state and local policies on tobacco in Wisconsin. These activities in policy-making play an integral role in the level of tobacco use in the state.  The late John Slade formulated a public health model of tobacco addiction where the agent (of the disease) is tobacco, the host is the smoker and the vector is the tobacco industry. Slade went on to hold that the environmental conditions, which include the political conditions, laws and regulations either foster the ability of the vector tobacco industry to claim more lives or reduce their toll.[1] The research question is therefore whether the tobacco industry influenced the political, economic and regulatory environment in Wisconsin and if so, how that influence occurred and the nature of its effects.

Based on an examination of primarily tobacco industry internal documents, news sources and government data sources we conclude that the tobacco industry in Wisconsin has played a dominant role in shaping public policy on tobacco through the use of its economic and political power and strategic alliances with influential industries. Tobacco industry policies have contributed to higher than average rates of smoking among young

people in the early nineties, higher rates of smoking among young adults than the national average and higher than expected smoking rates among adults in Wisconsin given its socio-economic characteristics.  

This report should increase understanding of the political and economic

dimensions of Wisconsin’s tobacco industry and how it influences public policy related to tobacco use.  This report describes the structure of the major tobacco companies, their economic interests in Wisconsin and their activities to secure their public policy agenda in regard to tobacco.  The report also describes the critical role played by the industry’s primary allies, the tavern and restaurant association, the convenience store association, the grocer’s association and their political agency, the now defunct Tobacco Institute. We also examine the development and efforts of the Wisconsin tobacco control movement regulating the environment and opposing the tobacco industry. Finally, the report examines in detail the history of the tobacco industry’s lobbying effort and political contributions in Wisconsin.

            Cigarette sales in Wisconsin declined by 15% in the period, 1991-2001. Although sales declined, profits for the tobacco industry substantially exceed those of comparable consumer product businesses.  Gross cigarette sales in Wisconsin are slightly less than 400 million packs per year and constitute approximately $1 billion in revenue to the industry. In addition to tobacco sales, Philip Morris, the dominant tobacco company in Wisconsin has operating revenue of $8 billion and profits of over $1 billion from its major subsidiaries Oscar Mayer, Tombstone Pizza and until recently, Miller Brewing in which it continues to own a significant minor share. Philip Morris is also a major buyer of dairy products for its Kraft Cheese division and manufactures approximately half of the cigarettes sold in Wisconsin. 

            For over 40 years, the tobacco industry has initiated and maintained strong inter-institutional relationships with tobacco retailers, tavern and restaurant operators and a decreasing number of tobacco farmers.  This effort has included initiating and sustaining a series of organizations and coalitions for the purpose of mobilizing the “grassroots” of their economic allies in support of the tobacco industry policy agenda.

            Lobbying, grassroots mobilization, media advocacy, philanthropic gifts to non-profit organizations and contributions to candidates, committees and political parties have been the major tools for influencing public policy.  These activities have enabled the tobacco industry to realize most of their specific policy goals:[2]

·                A constant level of cigarette tax as a percentage of price

·                State preemption of local authority to regulate cigarettes

·                Clean indoor air ordinances limited to a small percentage of the population and to a small number of public places.

·                Largely unregulated youth access to cigarettes

 

Reported contributions by the tobacco industry to Wisconsin non-gubernatorial political candidates, committees and parties totaled $356,572 in the three and a half year period from 1/1/99 to 8/26/02.  It is likely that “soft money” contributions to federal and state organizations and non-reported contributions to “issue” advocacy organizations such as the Wisconsin Manufacturers and Commerce supplemented their direct and reported contributions.  Though the industry and its major allied organizations tend to favor the party in the majority, contributions in the past six years have overwhelmingly been directly primarily to Republican office holders at the state and federal level.

            The tobacco industry and its allied organizations spend considerable resources on lobbying for their policy agenda.  Since 1997 the industry has spent over $7.2 million on lobbying the state legislature.  They hire former Democratic and Republican legislators and other influential individuals as well as lobbyists who often also lobby for health organizations.

            These policies have contributed to:

 

Despite some changes in statements on intent and attempts to re-position itself as a “new tobacco industry” over the past year, there is no indication that the overall policy goals of the tobacco industry and its primary allies have changed.

 

 

 

 

 

 

 

 

 

 

Introduction:

The purpose of this report by the Monitoring and Evaluation Program of the University of Wisconsin Comprehensive Cancer Center is to assist policy makers and tobacco control advocates in understanding the role of the tobacco industry in forming state and local policies on tobacco in Wisconsin. These activities in policy-making play an integral role in the level of tobacco use in the state.  The late John Slade formulated the now familiar public health model of tobacco addiction where the agent (of the disease) is tobacco, the host is the smoker and the vector is the tobacco industry. Slade went on to hold that the environmental conditions, which include the political conditions, laws and regulations either foster the ability of the vector tobacco industry to claim more lives or reduce their toll.[3] The research question is therefore whether the tobacco industry influenced the political, economic and regulatory environment in Wisconsin and if so, how that influence occurred and the nature of its effects.

The Master Settlement Agreement negotiated between the states’ Attorneys General and the tobacco industry in 1998 required the tobacco industry to make previously confidential industry documents available through the Internet. These documents supplemented the millions of documents previously made available to the public and researchers as a result of the litigation between Minnesota and the tobacco industry. As a result of the Master Settlement Agreement and other litigation approximately 30 million industry documents are now available for examination online. Over one thousand documents directly reference Wisconsin and several hundred pertain to the policy concerns and practices of the tobacco industry.

Much has been written over the years on the scope and magnitude of the health burden created by tobacco use in Wisconsin.[4]  There has also been considerable research and action aimed at the methods of reducing this harm through prevention, cessation, changes in the social environment in which tobacco is used and reducing harm to non-smokers as a result of exposure to second hand smoke.

Spurred in part by the weight of scientific evidence and in some instances personal experience, health professional and advocates as well as local citizens decided to take action to reduce tobacco use in their communities. However, as health advocates in Wisconsin began meaningful initiatives to reduce tobacco use in local communities and the state, they were often frustrated by visible and at times, invisible but powerful opposition.

Practical methods that might prevent tobacco use such as requiring retailers to place cigarettes out of the reach of minors were strongly opposed by powerful interests such as the convenience store industry at the state and local level. The state government increasingly prevented the local communities from enacting laws that would reduce tobacco use among minors. Over time, many advocates came to a common conclusion that much of the opposition to their initiatives came from a common source: the tobacco industry. 

 

Early History

In his thesis entitled, “Unenforced Legislation in Wisconsin” submitted in support of his Bachelor’s Degree received in 1912 from the University of Wisconsin, G.H.A. Jenner wrote,

            “The one law in Wisconsin which is violated most openly and generally throughout the whole state is the cigarette law . . . That the law is flagrantly and openly violated is a fact which is known to every person in the state. Immediately after the law was passed, many places which sold cigarettes stopped it, but when they saw that no attempt was made to enforce the law, they all gradually took it up again and now there are as many places selling them as there were before the law was passed . . .

            The object of this law is to prevent boys getting into the habit of smoking when it is likely to injure their health. In spite of the law, however, it is safe to say that a majority of minors at the age of nineteen or twenty have acquired the habit of using tobacco. No tobacco man stops to question a young who asks for a package of tobacco whether he is old enough to smoke and in fact few dealers refuse it even to small boys whom the dealer cannot help knowing are too young to smoke.”[5]

 

Despite the fact that the 1891 law restricting sale of cigarettes to minors was rarely if ever enforced, it was repealed in 1959. That year, the Child Welfare Committee of the Legislative Council noted in its rationale for repeal, “These provisions (relating to different ages of permissible sale for different tobacco products) are confusing because of the gaps and inconsistencies between them. More important, they are, for the most part, completely ignored.”[6]

The following session there were four attempts to reinstate the prohibition on sale to minors. All were unsuccessful. In response to the state repeal attempts, a number of cities still made sale of tobacco to minors illegal.  Cities from Milwaukee to Cassville passed such ordinances as well as ordinances prohibiting children from smoking in taverns unless accompanied by parents or guardians.