Record numbers of exhibitors and retailers gathered in Las Vegas for the 2012 Tobacco Plus Expo International in February.
   
Retailers attending this year’s TPE show enjoyed browsing the sold-out exhibit space, learning about industry issues and trends at the event’s educational seminars, and mingling with peers at the event’s opening night reception.

Even as the show floor teemed with buying activity, many in the industry expressed concern about the future of tobacco retail. “The FDA’s plan as far as I can see is to drive the tobacco industry out of business,” asserted Seth Mailhot, special counsel for the Food and Drug Law Group at Sheppard Mullin Richter & Hampton LLP, who delivered the Tobacco Plus Expo 2012 keynote address. “Fortunately the Family Smoking Prevention and Tobacco Control Act is specifically designed not to allow that to happen, but you wouldn’t know that from some of the actions the agency has taken over the last few years.”

Of particular concern to Mailhot are the more than 1,350 warning letters issued by the FDA to tobacco manufacturers and retailers since 2009. For the most part the alleged violations cited in the letters tend to concern failure to verify the ages of customers, sale of tobacco to minors, and violations of tobacco display regulations.

“The numbers are startling, and there is nothing to indicate that they won’t continue to rise over time,” Mailhot noted, adding that the onslaught is an indication that the FDA sees the retail landscape as the battleground for its war on tobacco. “When I look at where things stand, my greatest concern is the issue of retailers. I think if FDA is going to get us it will be through the retailer chain. That is where they see the easiest pathway.”

Retailers, he warned, will need to exercise caution. “The thing about these warning letters is that once you get one, for any reason, you will not get another,” Mailhot noted. “It will be your second offense and at that point you will start dealing with having penalties assessed. If you have five or more violations within a given period of time, you can get charged with a no tobacco sale order, which bars you from selling any tobacco products.”

At a cigar industry panel discussion following the keynote, Bobby Newman of J.C. Newman Cigars seconded Mailhot’s message of threats facing the industry and the need for the cigar industry to band together to fight egregious taxation. “It’s very important that each and every one of you gets involved in politics,” he said, in an impassioned speech in which he likened the cigar industry to a “sleeping giant” that is now, by necessity, waking up and taking action. “My brother and I never dreamed we would be so involved in politics, but we have been woken. And I tell my kids, ‘You will have to spend the rest of your life being politically active.’ The cigar industry has been energized and we need to take action. Everyone in our industry needs to join the Cigar Rights of America and get involved.”



Despite the serious issues explored during the educational sessions, the mood on the trade show floor was optimistic, with many retailers expressing interest in expanding their assortment of products and finding new categories to offer. E-cigarettes and in-store rolling machines were of great interest to many participants, including Jason Carnahan of Battle Ground, Wash.-based Bubba’s Rock & uRollm stores. Like several retailers we spoke with at the show, Carnahan is a newcomer to tobacco retail.

“We see a lot of opportunity in the business, particularly in the roll-your-own area,” says Carnahan, who was interviewed at one of the many displays of e-cigarettes. “We have two locations now, both with in-store rolling machines, and we came to the show to find new products to add to our inventory.”

For more news from the show, see the upcoming March/April issue of Tobacco Outlet Business.