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STATE PLAN: 1997 HAWAII I. STATE OVERVIEW The legislature meets every year and will convene the 1997 session on January 13, and will meet until early May . Sessions can extended. Both houses have Dem super-majorities. Senate members (25) serve 4 year terms, House members (25) serves 2 year terms. II. STATE OBJECTIVES A. Pass AAA/Youth Access: B. Continue to monitor Medicaid Liability/AG issue C. Defeat excise Taxes - major threat D. Defeat attempts to allow ballot initiatives III. STRATEGIES & TACTICS A. Grassroots mobs to support anti-tax sentiment over the interim; enlist wholesalers, retailers , anti-tax groups, Chamber and consumers to educate legislators regarding the tax issue. B. Implement WE CARD program in HI. Send letter to all legislators regarding the WE CARD program and industry support for the program. Press conference with retailers announcing the successful implementation of WE CARD. IV. RESOURCES A Sponsor seminars for trade associations, including retailers B. Sponsor existing anti-tax groups C. Support allies focused on defeating initiativer, D. Targeted committee mobs: 4 (2/tax, 2/AAA); 2 Statewide mobs: 1 consumer; 1 retailer E. Sales force assistance on educating retailers on tax and AAA issues.

STATE PLAN: 1997 IDAHO I. STATE OVERVIEW A. Politics The legislature meets every year and will convene its 1997 session on Monday, January 13. There are no limits to the length of the sessions, aithough leadership usually targets April 1. In 1996, they has a quick session (election year), and ended on March 15. The Senate (35 members) and the House (70 members) both serve 2 year terms. The R's have super majorities in both chambers, and the R's will retain control. The Senate majority leader is retiring, which will have a spillovers effect on leadership. No new statewide office holders in 1997. The political environment is somewhat favorable for business. B. State Objectives 1. Pass AAA/Youth Access legislation (vending, minor possession, sting enforcement) 2. Assist Federal office on Federal Initiative 3. Defeat excise tax threat; if the 1% property tax initiative passes, the threat for a tax increase will be moderate to major. II. STRATEGIES AND TACTICS A. PR program aimed at educating members and public regarding the WE CARD program. Includes letters and presentations to legislators on industry/retailer efforts. Media support around committee dates for AAA bill. B. Help promote Governor's alternative solutions to tax problem should 1% Property Initiative pass. C. Brief leadership about PM business issues. D. Continued support of party allies including taxpayers, IACI, and retailers. {II. RESOURCES A. Continued sponsorship of trade association/allied coalition partners. B. Targeted Committee mobs: 2 committee mobs/House/ 2 committee: Senate. 2 statewide mobs for AAA. 2 committee mob/House for possible tax threat, I Senate mob. C. Sales force help with both AAA education of retailers and possible tax threat.

Draft Kansas State Plan I. State Overview: • Politics The legislature meets every year and will convene the 1997 session on January 13th and will run through mid April. There is no limit on the number of days they can meet. The 125 House members serve two-year terms and the 40 Senators serve four year terms. The interim study period is usually June through October. Republicans currently control the House 81-44. and the Senate, 27-13. The political environment remains somewhat favorable to our issues. Both the Governor and legislative leadership have been supportive in the past and expect '97 to be no different, The Kansas Attorney General has filed a Medicaid liability suit against the industry with apparently little support from the legislature. The Governor has assured us he would not support any state funds being used to support the Attorney General's lawsuit. The president of the Senate will be retiring in January and the heir apparent will be influenced by the November elections. Possibilities are Senator Bond, Senator Harris and Senator Kerr. The first two would be good for tobacco and the third would not hurt us, but would not be a strong supporter. Kansas has a strong economy exceeding revenue expectations and the Governor continues to exercise cost containment. Major opposition in the state will come from the rejuvenated and strong Coalition for Smoke Free Kansas. They are heavily funded by the Robert Woods Johnson Foundation. Expect considerable local activity and legislative activity regarding smoking accommodation and earmarking of taxes. Kansas passed a good youth access bill in '96 and all will be watching its impact on youth access. • State Objectives 1. Pass employment discrimination legislation. 2. Look for opportunity to pass medical liability and defense bill (i.e. North Carolina language), Medicaid offset language and prohibition of contingency fee arrangements. 3. Look for opportunity to continue implementing objectives of AAA program (control or monitored self-service). 4. Support Washington Relations office at Federal level (i.e. FDA initiative, OSHA etc...). 5. Support legal Department in medical 1D liability suit. 6. Defeat any excise tax on tobacco products. 7. Continue to broaden and grow coalition base. 8. Expand public relation efforts in Johnson City.

Draft Kansas State Plan II. Strategies Add local lobbyist in Johnson County to work with new Overland Park Mayor in order to diffuse further smoking restrictions. • Use public relation consultants and media affairs to support attainment of objectives by developing the right public atmosphere. • Use public relations firm to track and promote the positive impact achieved through the youth access legislation passed in '96 (retail spokespeople to comment on support and pride in accomplishments). Identify third party allies supporting employment discrimination legislation in 1992. Enlist support and develop new third party allies to support passage of employment discrimination legislation. Meet with Governor and legislative leadership to help educate on economic and social values associated with such legislation. • Enlist the assistance of wholesalers, retailers, and anti-tax groups to educate legislators and executive branch regarding the potential economic downside new excise taxes will have on economy. • Use political consultant to help develop and implement pro- active strategies aimed at improving public opinion as relating to Attorney General Medicaid liability suit. • Use Kansas Petroleum Marketers Association to endorse We Card program and publicize program impact/success. • Work closely with the department of revenue on monitoring compliance checks (youth access) and encourage adoption of the We Card program as the approved training vehicle vis a vie the Kansas new youth access law. III. Recommended Activities/Tools Arguments/Talking Points/Studies Need updated arguments and state specific materials from issues management and talking points from media affairs and legal. - Excise Tax - Medicaid Liability - Employment Discrimination - Smoking Accommodation

Draft Kansas State Plan Mobilizations Possibly, three targeted phone bank mobilizations and 2 targeted letter writing campaigns. - Excise Tax Mobilization (smokers & retailers) - Employment Discrimination Mobilization (smokers) Accommodation TAP to aggressively market program in Overland Park, Wichita. and Topeka (advertising, exhibits and recruitment). Sales Force Ask PMUSA sales force to assist in getting information out to the retail community and to identify other potential allies/spokespeople (FDA, OSHA, Accommodation, etc....)

Draft Louisiana State Plan t. State Overview: • Politics The legislature meets every year. The regular session convenes on March 31, 1997, for 60 legislative days in 85 calendar days. The regular session may not consider tax matters. A special session on fiscal issues is possible in early 1997 or following adjournment of the regular session. In 1995, voters overwhelmingly approved a constitutional amendment limiting members of the legislature to three terms in office. The measure was not retroactive, so the clock started ticking for both incumbents and new members in 1996. In addition, the amendment does not prohibit legislators from serving three terms in one house and then seeking election in the other chamber. One U.S. Senator and all members of the U. S. House of Representatives will be up for election in November, 1996. All major statewide elected officials and the entire state legislature -- elected in November, 1995 -- took office in January, 1996. Except for special elections and judicial elections, no major state elected offices or legislative seats will be on the ballot again until 1999. Changes in the legislative leadership are not expected in 1997. The Senate is comprised of 25 Democrats and 14 Republicans. The House of Representatives has 78 Democrats and 27 Republicans. However, the legislature is not organized along party lines. Governor Mike Foster, who will be serving his second year in office in 1997, is a Republican. Senate President Randy Ewing and House Speaker Hunt Downer are Democrats. Effective September 1, 1993, local communities were pre-empted from adopting smoking restrictions more stringent than state law. Effective August 28, 1994, local communities were pre-empted from adopting marketing restrictions more stringent than state law. • State Objectives Achieve tort objectives, i.e., pass comment (i) from 2nd Restatement of Torts and apply it to pending cases, if possible; defend the 1988 product liability statute; defeat legislation which would permit the state to recover in Medicaid reimbursement cases without having to prove causation and actual damages for individual claims; and defeat the legislative agenda of the state trial bar. Defeat excise tax increases during any special session or limit the increase to a single digit. Defend uniform state laws imposing marketing and smoking restrictions. Defeat divestment legislation. Defeat constitutional amendment to add an initiative provision to the state constitution. If passage unavoidable, establish strict requirements for ballot certification.

Draft Louisiana State Plan II. Strategies Strengthen coalition of wholesalers, retailers, convenience store owners, oil marketers, etc., to fight excise taxes. Enlist the support of anti - tax groups to oppose excise taxes. Strengthen business coalition on liability issues. Build coalition of business, labor and allied groups to oppose constitutional amendment to add an initiative provision to the state constitution. Increase participation in the Louisiana Association of Business and Industry and key state business and public policy organizations to augment issue representation. Improve relations with the Louisiana Retailer's Association and other allied organizations and establish better communications. Utilize political/media consultants and allies, in addition to the Regional Director, to increase direct representation and articulation of PM point of view to all branches of state government, business and trade organizations, and other interested parties. Utilize organizational contributions to improve relationships with allied groups and public officials. Increase monitoring and intervention ability by effectively utilizing strong PM and industry lobby team. Ill. Recommended Activities/Tools Arauments/Talking Points/Studies Update arguments and state specific materials from issues management and talking points from media affairs and legal an Medicaid liability/product liability and divestment. If tax legislation is introduced, update cross border and regressivity studies and polling data. Publicize such studies/polls/research on tax issue via press releases, etc. Mobilizations Possible use of mass mobilizations on tax issue. Sales Force Educate retail and wholesale accounts on excise taxes and other key state issues. Additional Resources Add a state lobbyist and a public relations consultant. Possible use of LTE's and OPED's on tax issue.

Draft Missouri State Plan I. State Overview: • Politics The legislature meets every year and will convene the 1997 session on January 8 and will run through May 16. There is no limit on the number of days they can meet. The 163 House members serve two-year terms and the 34 Senators serve four year terms. The interim study period is usually from June to December 1. Democrats currently control the House 87-76, and the Senate, 19-15. There is an outside possibility that the House could become Republican following the November election. The political environment is somewhat favorable. The Missouri Attorney General does not plan to sue the tobacco industry. The Governor is not pro-tobacco, but has done nothing to hurt the industry. Leadership in the House and the Senate are generally supportive. There will be a change this year in the Senate Pro Tem, Bill McKenna will assume that role and he is supportive. Missouri is the only state in Region 8 that does not have licensing and has very few youth access provisions (AAA). Legislation was attempted in '96 but retailers refused to advance after preemption was eliminated. These laws are needed in order to curb local ordinances. We saw several in '96 and expect increased activity in '97. State revenues are excellent. Any excise tax increases will be earmarked taxes and not more than 3 cents as the Hancock Amendment in Missouri limits taxation without a populous vote. • State Objectives 1. Pass AAA type youth access bill. 2. Look for opportunity to move medical liability and defense bill (i.e. North Carolina language), Medicaid offset language and prohibition of contingency fee arrangements. 3. Support Washington Relations office at Federal level (i.e. FDA initiative, OSHA etc...). 4. Defeat any excise tax on tobacco products. 5. Prevent Medicaid liability suit. 6. Prevent expansion of State Health Department powers. 7. Prevent indoor smoking restrictions. 8. Look to develop non-traditional allies. II. Strategies • Meet with House and Senate leadership to educate and seek

Draft Missouri State Plan support ior youth access legislation. • Use public relation consultants and media affairs to support attainment of objectives by developing the right public atmosphere. • Use media affairs to reach out to editorial boards prior to youth access bill in order to clarify industry & retail positions. • Convince retail associations and industry counterparts AAA type youth access legislation is needed even if preemption cannot be obtained. Demonstrate how this type of legislation offsets the need for local activity. • Position We Card Program as state-wide approved training vehicle to support new legislation through Attorney General's office (i.e. Nevada). • Utilize traditional and new third party allies to support proactive youth access legislation. • Enlist the assistance of wholesalers, retailers, and anti-tax groups to educate legislators and executive branch regarding the potential economic downside new excise taxes will have on economy. Identify alternative funding sources for earmarked taxation. • Closely analyze Departments of Health and Education detail budgets. III. Recommended Activities/Tools Arguments/Talking Points/Studies Need updated arguments and state specific materials from issues management and talking points from media affairs and legal. - Excise Tax - Medicaid Liability - Sales & Marketing Preemption - Youth Access AAA Mobilizations Possibly, three targeted phone bank mobilizations and 2 targeted letter writing campaigns. - Excise Tax Mobilization (smokers & retailers) - AAA Mobilization (retailers) - Preemption Mobilization (retailers)

Draft Missouri State Plan Accommodation TAP to aggressively market program in St. Louis, Kansas City, and Springfield (advertising, exhibits and recruitment). Sales Force Ask PMUSA sales force to assist in getting information out to the retail community and to identify other potential allies/spokespeople (AAA, FDA, Accommodation etc....)

I. State Overview: Montana Politics The legislature meets biannually and will convene the 1997 session on January 6th. The session will last 90 days. There are 50 Senators that serve for 4 year terms; the 100 House members serve 2 year terms. Both houses are expected to remain republican controlled with new Senate leadership. This is not a favorable state for many of our issues. This is a strong local government control state. The AG and Gov have both indicated a willingness to file a Medicaid lawsuit if it could be demonstrated to ease school finance. State Objectives Introduce AAA/Youth Access bill Defeat possible marketing and smoking bans in legislature and local communities Proactively work on OSHA. Assist federal office on federal issues. Work with MU team. {I. Strategies/Tactics Continue to build coalitions to support PM objectives. Ill. Recommended Activities/Tools Hire additional governmental affairs consultant. Current lobbyist has had help during sessions in the past and has requested assistance again this year. Need continuous development of coalition for AAA, AG lawsuit issues, FDA, local activities and other issues as they develop. Need updated arguments and state specific materials re Medicaid lawsuit, FDA, and local issues. Possibly, 2 statewide general and an undetermined number of local mobilizations on smoking/marketing issues, possibly MU issues. Strengthen relationship with sales force.

1. State Overview: North Dakota Politics The legislature meets biannually and will convene the 1997 session on January 7th. The session may last 80 days, but often adjourns earlier. There are 49 Senators that serve for 4 year terms; the 98 House members serve 2 year terms. Both houses are expected to remain republican controlled with no new leadership. This is not a favorable state for many of our issues. This is a strong local government control state. The Governor's wife has become the spokesperson for Tobacco-Free Kids and is supporting self-service merchandising ordinances at the local level. The AG has indicated that she is not interested in filing a Medicaid lawsuit. State Objectives Introduce AAA/Youth Access bill Defeat possible smoking bans in legislature and local communities. Proactively work on OSHA and FDA issues. Defeat Excise taxes. Defeat Marketing restrictions at the state and local levels. Defeat Divestment issues. II. Strategies/Tactics Continue to build coalitions with retailers, hospitality and wholesalers to support PM objectives at the state and local level. Strengthen relationships with sales force and their accounts. 111. Recommended Activities/Tools Need continuous development of coalition for AAA, local activities and other issues as they develop. Need updated arguments and state specific materials re federal legislation, divestment and local issues. Possibly, 2 statewide general and an undetermined number of local mobilizations. Need to better identify local government activities through better communications with local retailers and through the sales force.

Draft Nebraska State Plan t. State Overview: • Politics The legislature meets every year and will convene the 1997 session on January 7 and will run through June 5. There is a 90 day limit on the number of days they can meet in '97. Nebraska is a non-partisan Unicameral legislature in which all 49 members are Senators elected for a 4 year term. The interim study period is usually from September 1 to Decernber 10. The political environment is reasonably favorable. The Nebraska Governor is currently running for U.S. Senate with a 21 point lead. If elected, Lt. Governor Kim Robak will fulfill the remaining 2 years of Governor Nelson's term. The Lt. Governor was appointed to this position by Governor Nelson, and is expected to be reasonable on tobacco issues and concerned about youth access to tobacco products. The Nebraska Attorney General has been reluctant to file suit against the tobacco industry, but is receiving considerable pressure from the Department of Social Services and we expect a legislative attempt in '97 requiring him to file suit. This is not likely to pass. The majority of Nebraska legislators are reasonably stable on tobacco issues and not prone to support a great deal of change. There is however, a small contingent of anti-tobacco legislators that will push the limits on such things as divestiture, advertising bans, Florida Medicaid legislation, taxes etc... And we expect in '97 to see all of these. The'96 session was limited to 60 days and youth access legislation pushed by retailers was not a priority. Local activity throughout Nebraska has been minimal. Center of anti activity resides in Omaha. State Objectives 1. Pass AAA type youth access with sales & marketing preemption. 2. Pass employment discrimination legislation. 3. Look for opportunity to move medical liability & defense bill (North Carolina language), Medicaid offset language and prohibition of contingency fee arrangements. 4. Support Washington Relations office on Federal level (i.e. FDA initiative, OSHA etc...). 5. Defeat the following anti initiatives expected this year: - Divestiture - Increased Excise Tax - Statute of Repose - Advertising Restrictions - Florida type Medicaid legislation 6. Cultivate new allies.

Draft Nebraska State Plan II. Strategies • Meet with key Senate leadership to educate and seek support for youth access legislation. • Use pub4ic relation consultants and media affairs to support attainment of objectives by developing the right public atmosphere. • Use media affairs to reach out to editorial boards prior to youth access bill in order to clarify industry & retail positions. • Convince retail associations and industry counterparts AAA type youth access legislation is needed even if preemption cannot be obtained. Demonstrate how this type of legislation offsets the need for local activity. • Position We Card Program as state-wide approved training vehicle to support new legislation. Worked through Attorney General's office for support (i.e. Nevada). • Utilize traditional and new third party allies to support proactive youth access legislation. • Enlist the assistance of wholesalers, retailers, and anti-tax groups to educate legislators and executive branch regarding the potential economic downside new excise taxes will have on economy. Identify alternative funding sources for earmarked taxation. • Develop business coalition willing to support employment discrimination legislation. Ill. Recommended Activities/Tools Arauments/Talking Points/Studies Need updated arguments and state specific materials from issues management and talking points from media affairs and legal. - Excise Tax - Medicaid Liability - Sales & Marketing Preemption - Youth Access AAA - Divestiture - Advertising (Freedom of Speech) - Employment Discrimination Mobilizations

Draft Nebraska State Plan Possibly, 5 targeted phone bank mobilizations and 2 targeted letter writing campaigns. - Excise Tax Mobilization (smokers & retailers) - AAA Mobilization (retailers) - Employment Discrimination Mobilization(smokers) Accommodation TAP to aggressively market program in Omaha and Lincoln (advertising, exhibits and recruitment). Sales Force Ask PMUSA sales force to assist in getting information out to the retail dommunity and to identify other potential allies/spokespeople (AAA, FDA, Accommodation etc....)