State Cigarette Minimum Price Laws - United States, 2009

Cigarette price increases reduce the demand for cigarettes and thereby reduce smoking prevalence, cigarette consumption, and youth initiation of smoking. Excise tax increases are the most effective government intervention to increase the price of cigarettes, but cigarette manufacturers use trade discounts, coupons, and other promotions to counteract the effects of these tax increases and appeal to price-sensitive smokers. State cigarette minimum price laws, initiated by states in the 1940s and 1950s to protect tobacco retailers from predatory business practices, typically require a minimum percentage markup to be added to the wholesale and/or retail price. If a statute prohibits trade discounts from the minimum price calculation, these laws have the potential to counteract discounting by cigarette manufacturers. To assess the status of cigarette minimum price laws in the United States, CDC surveyed state statutes and identified those states with minimum price laws in effect as of December 31, 2009. This report summarizes the results of that survey, which determined that 25 states had minimum price laws for cigarettes (median wholesale markup: 4.00%; median retail markup: 8.00%), and seven of those states also expressly prohibited the use of trade discounts in the minimum retail price calculation. Minimum price laws can help prevent trade discounting from eroding the positive effects of state excise tax increases and higher cigarette prices on public health.