Under new rules, the Government is set to outline its plans to introduce a licensing programme to reduce the number of businesses permitted to sell cigarettes to just 600
New Zealand
The Dairy and Business Owners Group says proposed laws to control cigarette retailing could see the number of dairies in this country slashed by half and thousands left unviable.
The Government this month is set to outline its plans to introduce a licensing programme to reduce the number of businesses permitted to sell cigarettes to just 600, under new rules expected to come into effect from June 1 next year.
Sunny Kaushal, Chair of the Dairy and Business Owners Group, called the government’s new plans “a lottery” scheme, allowing some store owners to “win the jackpot” while others would be left to try to fill the void with half of their revenue wiped out.
Not only would this make certain dairies more sought-after than others, he said it would guarantee certain dairies would be targeted for organised crime.
“There are over 6000 businesses currently selling cigarettes and I can tell you nearly 97% are compliant with the rules,” said Kaushal.
“What we’re fearing for is that thousands of businesses will be on the chopping board because they won’t be able to survive.”
The Dairy and Business Owners Group had been asking the Government to delay its plans to allow businesses more time to make the transition and draw up contingency plans, he said.
Dairy owners were already stretched for ways to generate profit, with many now retailing AT Hop Card transport top-ups, Lotto tickets, vapes and grocery and convenience items, with limited new categories to get into, he said.
Asked “It’s going to be very hard for businesses to survive because how would they replace such a huge chunk of 50% to 60% of revenue?”
Kaushal said a kilogram of tobacco in tax alone was worth $700 – more than a kilogram of silver.
Sunny Kaushal, Chair of the Dairy and Business Owners Group, said new regulations could result in the growth of a black tobacco market, similar to that of the growing illicit vape market servicing youth, fuelled by ram raids and retail crime
He said the move would result in even more aggravated retail crime.
“Fewer outlets and then low-nicotine tobacco from 2025 invites the gangs to set up ciggie houses. If illegal cannabis is easily available, how hard will full-nicotine tobacco be to grow and supply?” he said.
“The gangs will get richer while compliant legal businesses get destroyed. Dairies and service stations were 100% compliant in the first quarter of 2023 with cigarette sales.
But, Sunny Kaushal, chair of the Dairy and Business Owners Group, said new restrictions could leave thousands of businesses no longer profitable. He said cigarette sales accounted for about 50% of all sales in dairies, convenience stores and petrol stations.
He was concerned that new regulations could result in the growth of a black tobacco market, similar to that of the growing illicit vape market servicing youth, fuelled by ram raids and retail crime.
A map of indicative allocated licences for business permitted to sell cigarettes released by the Ministry of Health in January indicated there would be just 33 stores in Auckland that would be granted licences to sell tobacco products, 32 in Wellington, 72 in Canterbury region, and 94 in the Southland-Otago region.
Just 369 would be granted in the North Island, compared to 228 in the South Island.
Three duty-free stores would also be granted licences.
Cigarette sales are worth around $2.2 billion, with around $1.8b collected by to the Government in the form of excise tax and GST.
Divided by 600 outlets permitted to sell, Kaushal said it was expected that each licensee would generate about $3.5 million a year in revenue.
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