Tobacco Documents Online

__ ~- h , t o 1 'L't K- ° ° .1 / I _ - W , ~l d ilWrs ~ Co~tit .,~ ~o t -:.,1 T y ....r, Cb-jjrj8,a., PHii: P MORRIS U.S.A. INTER-OFFiCE CORRESPOND 120 PARK AVfNUE, NEW YORK. N.Y. 10017 l S 83 S tan ey . Scott 1 DATE: 11/17/ lo: FROM:, Jack Nelson t~9V 17 1983 SUBJECT, 25-Pack Situation in Ohio SjM~lY S. j"'nff Background In June Representative Dean Conley (D), Chairman of the House Ways and Means Committee, introduced a bill (H. 425) to convert Ohio's cigarette.tax basis from a per-10 to per-stick. We managed to contain the bill in committee an& prevent it from being attached to an~omnibus budget bill that passed last summer. During the summer RJR intensified its efforts for a fall push on H.425 and enlisted the support of the state's farm bureau, tobacco distributors and newspaper association. Unconfirmed reports indicate that the outdoor advertisers association refused to support the bill despite RJR's threats of economic retaliation. Above all, RJR and a new ally, B'&W', contributed a total of $35,000 to the state Democratic leadership's campaign against the tax-reduction initiatives on the November ballot. (PM-USA contributed $10,000 to that campaign.) Current Situation On November 15, Conley held a final hearing on H.425. Charles deSeve, an economist who consults for PM, testified on the negative fiscal and administrative impact of the bill. Though well-received, the testimony did not prevent the committee from reporting by a 15-1 vote the tax change to the House. Yesterday, the full House passed the measure by a 89-3 vote. The bill now moves to the Senate. Prospects for Passage The Senate Democratic lead'ership will bring H.425 to the floor during the week of November 28. Unless some radical change in the situation occurs, the bill will pass and be signed by the Governor in early December. It would take effect on January 1, 1984 and Century would be in~ the retail outlets by April 1. Options We have three options: 1. Instruct our lobbyist, Keith Brooks, to start a floor fight in the Senate using the argument that the passage of H.425 is a quid pro quo for the R'JR/B&W campaign contribution. Comments: This battle would essentially be a: partisan effort by Republicans to take control of the state senate which the Democrats now, control by one vote. It would' unquestionably sour our relationship to the Ohio Democratic leadership and the bill still might pass. It is, however, the only chance we have to kill the bill or force a: compromise.

2 2. Have Mr. Pollack phone Senate Democratic Leader Harry Meschel an& ask him to delay passage of the bill until January '84. Comments: Meschel is basing his rush-to-passage in part on a conversation with Mr. Pollack at the NCSL conference in August. If Mr. Pollack restated our opposition and asked for a delay, Meschel might relent. However, he has pledged to pass the bill this year. This option would not do anything more than d'eLay passage for a month. 3. Do nothing but remind the State Democratic Leadership that they "owe us one" and accept the loss of Ohio on this issue. Comments: This alternative would leave our relationship with the legislative leaders intact and put us in a better position to fight any anti-tobacco bills including a state-wide sampling ban bill to be considere& next year. Nonetheless, the loss of Ohio will weaken our position in the states where RJR has not yet been able to change the law. jms cc: B. Robinson M. Irish