Changes in Price, Consumption, Prevalence, and State Revenue of Transitioning Cigarette Sales to State-Controlled Outlets

Abstract

Introduction

Policies that phase out the retail sale of tobacco products have been recommended to accelerate the tobacco endgame and reach negligible tobacco use rates. Using simulation modeling, this study assessed how a policy that transitions cigarette sales to state-controlled outlets may change prices and thus affect state revenue, cigarette pack sales, and smoking prevalence.

Methods

Using data from the Behavioral Risk Factor Surveillance System and Tax Burden On Tobacco, models were developed to examine 3 potential scenarios resulting from a policy that transitions the sales of cigarette products to state-controlled outlets in Oregon, Pennsylvania, Vermont, and Virginia. In Model 1, each state would keep cigarette pack prices at their current retail price but retain markup; in Model 2, cigarette pack prices would increase by 7%; and in Model 3, each state would increase prices to meet a consumption target reduction of 5%. For each price scenario, additional models that also considered changes to consumer travel and time costs were run.

Results

Across all models, state revenue increased in each state. Results suggest that the policy would increase revenue by at least 16% in Oregon to 302% in Virginia. In models that assumed that the cigarette pack price would increase, cigarette pack consumption and smoking prevalence declined. Declines in pack consumption and smoking prevalence ranged from 1% to 5% across states. Findings were robust to different assumptions about total own-price elasticities in sensitivity analyses.

Conclusions

Transitioning cigarette sales to state-controlled outlets may increase state revenue while reducing cigarette consumption and smoking prevalence.