Effect of a minimum floor price law for tobacco products on tobacco sales in Oakland, California, USA: a synthetic difference-in-differences analysis.

BACKGROUND

In May 2020, Oakland became the most populous city in California to implement a minimum floor price law (MFPL), requiring tobacco retailers to sell cigarettes and cigars at $8 or more per pack/package. Policy enforcement began in August 2020.

METHODS

We estimated changes in cigarette and cigar prices and unit sales for Oakland versus a matched comparator during the first 20 months following MFPL implementation using a synthetic difference-in-differences approach. We estimated outcome changes overall and by lower-priced (<$8) versus higher-priced (≥$8) segments based on pre-MFPL prices. We also assessed retailer compliance with the MFPL. We further estimated cross-border shopping as a means of price increase avoidance and substitution to electronic nicotine delivery systems (ENDS) and nicotine replacement therapy (NRT) products as alternative consumer responses to the MFPL.

RESULTS

Retailer compliance was high for cigarettes (97.5%) but extremely low for cigars (7.4%). Lower-priced cigarettes in Oakland exhibited: increased median price per pack of 9.0%, a decline in mean monthly sales of 25.2%, and no evidence of significant cross-border shopping (-1.2%) following MFPL enforcement. Lower-priced cigars in Oakland experienced no price change, yet a large sales decline post-enforcement (-58.8%), with a partially-offsetting increase in cross-border shopping (11.0%) post-enforcement. We observed no significant product substitution to higher-priced cigarettes or cigars nor to ENDS or NRT products.

CONCLUSIONS

Oakland's MFPL produced an aggregate decline in cigarette sales of 15%. MFPLs hold promise as a complement to tobacco taxation for reducing tobacco use, especially in localities that pre-empt local tobacco taxation.