Business

Florida Tobacco Company Packs Legislative Punch

Dosal dodges another attempt to make it pay into settlement fund
By: Kenric Ward | Posted: April 21, 2010 12:21 AM

If you're not a cigarette smoker, chances are you've never heard of Dosal Tobacco Co. Lawmakers in Tallahassee apparently want to keep it that way.

Exempted from the state's Big Tobacco settlement in 1997, the little-known Opa Locka-based cigarette maker has quietly grown to be the third largest seller in Florida. Dosal has thrived as a bargain brand that doesn't have to pay the settlement costs required of its competitors.

By some estimates, that loophole has the state missing out on $200 million a year.

But Dosal is paying in other ways. Since 2000, it has shelled out more than $1 million in lobbying fees to protect its lucrative loophole. Its investment paid off again this year, as legislation that would have brought Dosal into the Big Tobacco ranks failed to get a committee hearing.

With Tuesday the last day of Senate committee hearings, Sen. Thad Altman's SB 2344 appears dead. Similar to its ill-fated predecessors, the bill would have levied a tax of 40 cents per pack.

"We just couldn't get any traction," said Christine Wayne, legislative aide to Altman, R-Melbourne.

Sen. Dennis Jones, chairman of the Regulated Industries Committee, was not available to comment on why SB 2344 never came up for a hearing.

Former Attorney General Bob Butterworth says smart politics by Dosal doesn't make for enlightened public policy. Nor does it make financial sense for Florida taxpayers.

Grabbing nearly one-quarter of the state's cigarette market, Dosal reaps bigger profits because it can undercut firms that are required to pay into the health fund established by the Big Tobacco settlement.

At the time of the settlement, Dosal accounted for just 2 percent of cigarette sales.

"Dosal markets the same product, creating the same health risks as other cigarette companies, and Florida should hold it to the same standards," Butterworth says.

Tobacco-related illness is responsible for more than 28,00 Florida deaths each year, according to the American Lung Association. The economic cost due to smoking in Florida is estimated to exceed $12.5 billion annually.

Dosal says the state had its chance, and brands any move to extend fees as blatant manipulation by Big Tobacco purveyors who have lost market share.

Dosal executives say their company was exempted from the 1997 settlement because it never engaged in deceitful marketing or targeted children, as Big Tobacco did.

In a lobbying venture of its own, Philip Morris' parent company, Altria, recently ran radio ads calling on the Legislature to bring Dosal and smaller cigarette makers under the settlement umbrella.

Philip Morris estimates that levying equal fees on Dosal & Co. would generate $200 million in new revenues for health-care needs each year. The proceeds could be used to pull down Medicaid matching funds.

Dosal said the tax would raise only about $40 million.

Though Butterworth and Big Tobacco were adversaries 13 years ago, they're on the same page now.

"If Dosal refuses to conduct itself appropriately, perhaps it is time to take the company to court," Butterworth said.

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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.


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