Just before completing his term in office, Michael Bloomberg, Mayor of New York signed legislation into law that has far reaching effects on tobacco products and electronic cigarettes and also initiated action to eliminate the delivery of contraband cigarettes. Till now, smokers could turn to e-cigarettes to satisfy their craving for nicotine in places where cigarette smoking was not permitted.
The bill concerning e-cigarettes effectively changes the Smoke Free Air Act to include e-cigarettes within its ambit. This amendment ensures that the electronic devices are now banned in all places where smoking is banned. The Smoke Free Act imposes a complete prohibition on smoking in all public places including parks, beaches, restaurants and work places.
With this change, Bloomberg has ensured that e-cigarettes will be treated on par with traditional cigarettes and users of e-cigarettes will no longer be able to use the device wherever they please.
In addition to being allowed in places where smoking is allowed, use of e-cigarettes will also be permitted in vapour lounges and retail e-cigarette stores.
Reuters reports that a lawsuit has been filed in Manhattan’s U.S. District Court by the New York City, suing FedEx Corp. The lawsuit seeks to recover unpaid taxes and fines aggregating $52 million from FedEx Corp. which is alleged to have been involved in the home delivery of contraband cigarettes, evading taxes in the process.
At the heart of the issue is FedEx’s tie-up with Shinnecock Smoke Shop which is based in Shinnecock Indian Nation reservation. The city claims that the courier company indulged in what they termed as a public nuisance, by partnering with the Southampton, New York, cigarette suppliers, delivering cigarettes to the residences of customers without paying applicable taxes.
FedEx had in February 2006, agreed with the attorney general of New York State, Eliot Spitzer, to cease all such deliveries within the state. The agreement was then extended to stop similar deliveries all over the country. It is alleged that the deliveries continued not only while the negotiations were in progress but also later, in contravention of the agreement.
FedEx are estimated to have delivered 9,900 cigarette shipments to residents of the city between 2005 and 2012 with a combined weight of approximately 19.5 tons. This translates around 55,000 cartons, each carton containing an average of 200 cigarettes. The revenue loss to the city is estimated to be to the tune of $15 per carton.
The city stated that FedEx’s activity was in contravention of both state and federal laws which include a statute to prevent racketeering.
The city seeks to recover a fine of $5000 per shipment which amounts to $49.5 million and another $2.48 million being three times the unpaid taxes. It also proposes that FedEx should appoint an independent agency to monitor its compliance in the future as well as to provide training.
FedEx which operates from Memphis, Tennessee, issued a statement to the effect that it had discontinued accepting business from known untaxed-cigarette dealers.
FedEx pointed out that their contract with the customer does not permit the shipment of tobacco to end users and considers the city’s claims to be exaggerated and unable to withstand legal scrutiny. FedEx made clear their intentions of defending themselves in this case while pledging to support the efforts of the authorities in curbing the prohibited tobacco shipments.