CDA Adopted Position on Cigarette Stamping
As the national trade association representing convenience distributors, CDA is not currently in favor of encrypted/digital/pressure sensitive stamping or any other new cigarette stamping technology that would add cost to the cigarette distribution system, particularly, for distributors. Any changes that add cost will ultimately increase the retail price of cigarettes. Such increases in the cost of cigarettes at retail exacerbate the potential for contraband cigarette activity.
However, in those particular situations where a state is intent upon mandating encrypted/digital/pressure sensitive stamping or another new stamping system, and distributors in that state are actively working to ensure their concerns are understood with respect to such an initiative, then CDA would support those distributors, provided the following six criteria are met:
- Prior to changing the current stamping system, the state should conduct a study focusing on the new stamping technology and the return on investment (ROI) to the state of any new stamping technology. Further the state must engage all stakeholders in discussions to determine whether changes in stamping technology are necessary.
- Any new stamping system should be built on open architecture, allowing multiple hardware manufacturers to supply the equipment needed to apply stamps.
- The adoption of a new stamping system by a state MUST be accompanied by increased enforcement. Any stamping system can only be effective when accompanied by an adequate number of trained and equipped field inspectors.
- New stamping technology requires significant capital investment on the part of distributors. The adoption of a new stamping technology by a state MUST be accompanied by reimbursement by the state to any and all licensed stamping agents (distributors) for the costs to those distributors to implement such new stamping technology. Such reimbursement can come in the form of either an upfront payment for capital expenses by the state to its licensed distributors/stamping agents or by adopting or increasing the state’s stamping allowance to adequately cover the cost of the necessary equipment. Reimbursement should include payment for all warehouse renovations. The state must also adopt or continue a stamping discount for other costs like labor, computer lines, electricity, glue, etc. The determination of the specific reimbursement amount must be made in consultation and collaboration with the state’s licensed stamping agents/distributors.
- The adoption of new stamping technology by a state MUST be accompanied by an adequate amount of time for implementation.
- The state shall not increase the cigarette excise tax rates, or levy any additional fees on manufacturers, wholesalers, distributors or retailers to cover any costs for the adoption of enhanced stamping technology.
CDA Adopted Position on OTP Stamping
The Convenience Distribution Association (CDA) adopted a formal position on the stamping of Other Tobacco Products (OTP) at the CDA Board meeting in Orlando, FL on February 13, 2017. The vote on the below position was unanimous:
Convenience Distribution Association (CDA), the national trade association representing convenience distributors, opposes tax stamping of Other Tobacco Products (OTP). Any OTP stamping will add onerous expenses to the OTP distribution system in the form of labor, equipment and software which would likely increase OTP’s retail costs and increase the potential for contraband OTP activity.