In 1998, California's Proposition 10 - a constitutional amendment that significantly raised taxes on cigars, OTP, and cigarettes - was passed by a mere 65,000 votes out of eight million cast. The public face of the bill wasn't one that would impose an unfair tax on the state's small population of specialty tobacconists, forcing them out of business and driving tobacco sales and tax collections out of state, but rather it was packaged as The California Children and Families Act to position it as a public health initiative.

California's cigar industry and specialty tobacco retailers were outmaneuvered, but the real sting was losing by only the slimmest margin. Once again, California faces another tobacco tax breaking point with The Tobacco Tax Act of 2006, which will be decided by California voters in November. If passed, the tax on cigarettes will increase to $3.47 per pack from $0.87 currently; for cigars, the rate jumps from 46.7% of the wholesale cost currently to a whopping 135%. The effect on California's cigar industry would be immense, and would extend well beyond state borders: California has become the epicenter for the nationwide movement to raise tobacco taxes. The industry must win in California in order to ensure the longevity and prosperity of the cigar industry nationwide.

Back in 1998, the industry wasn't terribly organized in its opposition to Proposition 10 and didn't put up a particularly strong fight. This time, the California tobacco industry must take action. To that end, Keith Park, president of California-based Prometheus International, informs us that the industry has formed the California Association of Liberty and Choice (CALC) in order to fight The Tobacco Tax Act of 2006. Membership will be open to all consumers, retail tobacconists, manufacturers, and distributors. All donations are voluntary.

Recognizing the national precedent that California's lead often sets, major manufacturers have committed to donating "whatever it takes to set CALC up and running and get the ball rolling immediately." Early participants included Ashton; Tabacalera A. Fuente y Cia; Davidoff USA; God of Fire, Inc.; J.C. Newman Cigar Co.; Prometheus International; and the Retail Tobacco Dealers of America (RTDA).

Key facts about The Tobacco Tax Act of 2006:

• Special interest groups (such as California Hospital Association and Association of California Nurse Leaders) have sponsored The Tobacco Tax Act of 2006 to fund special interest activities such as: Nursing Education and Training and Hospital Emergency Services.
• Less tobacco tax revenue will be collected, black market trade of cigarettes and cigars will increase, and legal cigar sales will be driven to out-of-state mail-order and Internet companies.
• It will put small California enterprises, which are the backbone of the state's economy, out of business.

E. Edward Hoyt III