Cigarette sales dip in California after tax hike goes into effect

Initial numbers are in for cigarette sales in California, just a couple months after the tax hike went into effect, and numbers are down.

In November of 2016, voters approved Proposition 56, a $2 tax increase on cigarettes which went into effect on April 1st. While some local stores told ABC10 earlier this year there was an increase in sales in the months leading up to and in the days after the tax hike went live, there wasn't enough data available to correlate the sales with the tax hike.

While it's still too early to know how the tax hike is affecting people's buying habits, the Legislative Analyst's Office recently released an initial look into cigarette sales from the past year-to-date. The analyst's office looked at numbers from the months leading up to the November vote, as well as the numbers for the months in between and after the tax increase went into effect.

The chart shows what each month's sales looked like compared to the same month the year before. October 2016 sales dipped four percent compared to October of 2015 whereas September 2016 numbers reflect the same as 2015. Overall, there isn't any drastic change in cigarette sales from June 2016 to February 2017 from the prior year.

In contrast, a major spike can be seen on the chart in March and April, with a 24 percent and 37 percent increase in sales from the year before, respectively. According to the analyst's office, one reason for this could be that people were stockpiling on cigarettes right before the tax hike went into effect. However, the author notes, there's no way to calculate consumer stockpiling without more data as evidence.

The chart also reveals a 64 percent drop in sales in May of 2017 from May of 2016. Again, the study notes it's still too early to know the solid reason behind the decrease in sales, but speculates it could be due to a combination of temporary responses, such as stockpiling, with more permanent responses, like lower smoking rates.

As time goes on, analysts will have a better idea of why there was such a major change to cigarette sales during these months.

© 2017 KXTV-TV


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