By YAEL KOEHN
Special to the Sun
New York's cigarette tax means big business for a small Kentucky company that sells cartons of smokes though the mail to city residents who want to save a few dollars.
El Diablo's Tobacco Shack, a five-employee operation, sent out 250,000 mailers to New York City residents and has sold 10,000 cartons of brand-name cigarettes in the two months they have been in business.
"We're building up to saturate New York City with these mailers," said El Diablo co-owner Douglas Smith.
By mid-December, Mr. Smith said, his company will send 1 million order forms to New Yorkers.
Afederal court found that states couldn't prohibit companies from selling cigarettes because it violated interstate commerce. New Yorkers can buy only 2 cartons tax-free -- and must declare anything over that.
But enforcing the rule has proven tough, said the assistant commissioner for enforcement for the city's Department of Finance, Bruce Kato.
"There is no mechanism to monitor cigarette sales," Mr. Kato said adding that the city is working with the state to supeona lists of customers from New York Internet and mail-order vendors.
A federal law also requires vendors who sell cigarettes between states to provide a list of their customers to the state government.
Mr. Kato said the city is trying "to generate an enforcement plan to get the out-of-state Internet companies to comply" with a federal law. This law has not been largely enforced, he added.
Mr. Smith of El Diablo said, however, he would never turn over a list of his customers. "We flat out refurse to give over customer lists to any state. I'm not going to do it."
Mr. Smith said he plans on filing with federal court within 60 days to have the federal law overturned on grounds that it violates interstate commerce.
Newports are the El Diablo's biggest-seller, Mr. Smith said of the 103 brands that he sells. The company has sold 6500 cartons of Newports, and at $38.99 a carton that means El Diablo's has raked in more than $250,000 on that brand name alone. Mr. Smith said Marlboros, Winstons, and Camels, which also sell at nearly $40, are also popular choices.
"It wouldn't bother me if everyone quit smoking today," Mr. Smith said. "But in the meantime, I'm going to save some people money and make myself a profit."
On June 1, the city increased the cigarette tax from 8 cents to $1.50 per pack.
El Diablo's Tobacco Shack started when Mr. Smith, one of the company's owners, was watching the news with his best friend and lung cancer patient Leon Tackett.
"I mean I was looking at what you all have to pay and what I have to pay --that means a lot of room for profit," Mr. Smith said.
And even though smoking killed the 68-year-old Tackett recently, Mr. Smith said his friend would have wanted him to go ahead with the business venture.
"He was the one who encouraged me to get into it first," Mr. Smith said adding that the tax is unfair to smokers. "He still had the right to smoke, he had the right to choose."
Unless we join together in this fight they will never know it. If you don't care about the extra tax burdens they are going to put on us as smokers, then buy from the companies who aren't fighting for your rights.
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In Face of Bloomberg Tax
"I don't know why it aggravated me so much," said Mr. Smith, who smokes three cartons a week. "I'm not even from New York and it makes me angry. It really drives me nuts."
After a few cigarettes, a light bulb went on. "There's an opportunity for people to go in there and make literally millions of dollars," said Mr. Smith, a former landfill operator. With the tax in place, New Yorkers now pay about $7 a pack.
Two months ago, Mr. Smith and a neighbor started El Diablo's Tobacco Shack to sell cheaper cigarettes to New Yorkers. Kentucky has the second-lowest cigarette tax in the country, at 3 cents a pack. Virginia, at 2.5 cents is the lowest, while New York City is the highest with a combined state and city tax of $3.
Interstate tobacco retailers have grown in recent years. Federal law requires mailorder customers to pay tax in their own states, but the law is rarely enforced.
El Diablo's is probably alone among the interstate retailers in marketing only to New York City. Working with a direct mail company, El Diablo's has started to blanket the city with red-and-white fliers, asking :"fellow New Yorkers" it they are tired of paying high prices for cigarettes. Of the 250,000 pieces mailed so far, 10,000 have replied yes, Mr. Smith said.
Newport menthols, traditionally marketed to blacks and Latinos, are the most popular. People in the South Bronx and eastern Brooklyn have been big buyers.
"We just figured that's where the working-class people are," Mr. Smith said. "Most of your smokers are people who can't afford the extra taxes."
To that end, El Diablo's accepts payments not only by credit card, but also by personal check and even c.o.d. These easy payment options don't sit well with some observers.
"I've never heard of this before," said Eric Lindblom, a policy analyst for the Campaign for Tobacco-Free Kids, a Washington advocacy group. "It's preying on poor people." Like Mayor Bloomberg, Mr Lindblom voices hope that the higher taxes will be an incentive for people to quit.
Mr. Smith sees it differently. "Our plan is to make sure everybody has access," he said. "People have the right to smoke. I'm waiting for Bloomberg to quit drinking, so he'll start calling for prohibition." DENNY LEE
El Diablo's is the ONLY tobacco company taking up for your rights as well as other smokers rights!!
