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

Abstract

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.