Philadelphia Retailers Battle Tobacco and Soda Regulations

While new tobacco ordinances make it challenging to get tobacco permits, a soda tax threatens sales in the beverage category.

It’s a tough time to be a convenience store owner in Philadelphia.

The City of Philadelphia’s Health Department, looking to protect children, early this year started snuffing out permits for selling tobacco products.

According to Philly.com, it used a two-prong approach. First, it looked to decrease the number of retailers in areas it thinks have too many stores. Secondly it looks to ban sales of tobacco within 500 feet of any school, creating a “red zone.”

The city then denies cigarette sales permits to stores in a red zone once a store changes ownership. Area c-store retailers who planned to sell their small chain before retirement or hand it down to a next-generation family member are finding their plans might no longer pan out or bring in the nest egg they had counted on.

Philly.com pointed out that more than half of the 60 7-Eleven stores in Philadelphia are in red zones, and also impacts Lukoil and Sunoco mini-marts and up to 1,500 small retailers. Wawa will not be impacted because it is owned by a corporation, so ownership does not change hands.

Manzoor Chughtai, president of the Delaware Valley 7-Eleven franchisers organization told Philly.com, that previous plans for 35 additional stores in Philadelphia and the jobs those stores would bring are now a no go, as most of the stores would need to open without a cigarette sales permit, which would strongly hurt the stores’ ability to make a robust profit.

Soda Tax Woes
Unfortunately, the cigarette permit issue is only one problem for retailers in the city. Stores impacted by the tobacco regulation are also getting hit from a 1.5-cent-per-ounce tax on sweetened beverages that began on Jan. 1.

If retailers pass on the full amount to customers, ABC News reported that the soda tax would amount to 18 cents on a 12-ounce can of soda or $1.44 on a six-pack of 16-ounce bottles.

The Philadelphia Business Journal reported that Coca Cola recently downsized 40 employees at its local bottler following a drop in sales across several of its drink categories during the first quarter of 2017 due to the impact of the Philadelphia Beverage Tax. The tax brought in $5 million in tax revenue in January, $6 million in February and $7 million in March.

 

 

 

 

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