State Rep. Stephanie Kunze is a “strong conservative leader” with “the heart of a mother”, according to her slick advertising campaign.

She was named an “emerging leader” by GOPAC—the Newt Gingrich/ Pete DuPont training program that teaches Republican candidates how to use certain types of repeated phrases and memes to establish their brand.

Stephanie Kunze has been rewriting her own history ever since. She’s come a long way from her run for Hilliard City council in 2009, when her eligibility to appear on the ballot was questioned because she was working as a school secretary (Ohio law prohibits classified employees from running for partisan office). She quit her secretarial job and the county prosecutor declined to look into the matter.

These days, Kunze doesn’t mention ever having been a school secretary. Being a public employee doesn’t fit her GOPAC brand.

Once elected to the legislature, Kunze continued to promote her brand by dropping HB 144, a bill to outlaw the sale of electronic cigarettes to minors. The thought of her teen daughters buying e-cigs was breaking Stephanie Kunze’s heart (never mind that heroin is running rampant through suburban school districts, including the one her daughters attend).

She continually stated that her only intention was to protect her two girls (the subjects of numerous slick ads during her negative campaign against award-winning teacher Maureen Reedy in 2012). On its face, HB 144 bans sales of e-cigs to minors. Sounds like something a good mother would do, right? But with her bill, she nurtured the fledgling e-cig industry as well as big tobacco could ask for, and ask for it they did.

Kunze went straight to the experts for help with her e-cig bill. She didn’t ask the experts on nicotine addiction and smoking, like the American Cancer Society, the Ohio State Medical Association or the American Lung Association. Apparently that’s not in the GOPAC candidate handbook. She went to big tobacco itself. She went to Kurt Lieb, lobbyist for the Lorillard Tobacco Company, the makers of Blu, the top selling e-cigarette.

The resulting bill, which came only from the purity of Kunze’s heart (and the best attorneys big tobacco money can buy), was model legislation used across the country to create an alternative classification for electronic cigarettes, exempt them the federal Clean Air Act, and provide a favorable tax status versus traditional cigarettes. Kunze, a photogenic blonde All-American mother next door, served as the perfect delivery system for big tobacco’s self-regulatory legislation. Even the Columbus Dispatch called it a “Trojan Horse.”

In Ohio, Kunze’s bill exempts e-cigs from the indoor smoking ban, so that her teen daughters can check out the cool Vape shop at the mall (offering Rocket Fuel products like the Cat’s Meow Buttercream Cookie, and Razz My Berries Raspberry Lemonade). Too bad if you suffer from allergies or asthma (major killer of African-American children) that is triggered by inhalants. Kunze expressed surprise that the American Cancer Association and other groups opposed her bill.

Other mothers, like Leader Tracy Maxwell Heard (an expert on criminal justice issues), and state Rep. Nickie Antonio (a noted health policy leader), tried to warn Kunze that HB 144 would not protect children. Studies have shown that price and predatory marketing (which Lorllard is proven to have engaged in) are more important factors driving youth smoking than age limits.

Kunze doggedly persisted and said her bill was for the benefit of her kids and she couldn’t understand the opposition. Her message discipline was worthy of a GOPAC training session, or a Newport ad campaign—although Kunze’s kids aren’t Newport’s direct targets. Perhaps the other representatives’  words didn’t count for her because, as the Rolling Stones song Satisfaction suggests, a consumer of a different brand just doesn’t count (“he can’t be a man cause he doesn’t smoke the same cigarettes as me).

We tend to think of electronic cigarettes as a new industry and a more innocuous form of smoking than traditional cigarettes. The way these products are marketed, they seem like rivals of traditional cigarettes. But in fact, they really are more like siblings. The Lorillard Tobacco Company is particularly expert at thriving in just the right amount of regulation, and quickly jumping into a new model whenever the regulatory environment gets too tight. Their number one product isn’t the e-cig Blu (acquired in 2012), it’s Newport. The brand famous for being marketed directly at African-American children accounts for 90 percent of Lorillard’s sales.

Market analysts consider Newport a particularly resilient and valuable brand because its consumption is declining less compared to other cigarettes (since Lorillard targets the most vulnerable consumers and is rewarded with intense loyalty). In the 1990s, Lorillard spent millions building their brand in the coveted prison market—providing free sneakers, basketball equipment and plenty of other perks (even cash kickbacks) to Rikers Island among other prisons. Why? Because prisons are thought to be a great cultural gateway market for tobacco brands. If smoking is considered cool in prison, it will be considered cool outside of it too. Such is the nature of prison chic, according to big tobacco and its advertising agents.

Lorillard has admitted that its base market is African-American high school students.

What kind of mother would seek out Newport’s lobbyist for help with an anti-youth smoking bill? One that doesn’t live in a neighborhood that Lorillard targets, perhaps. And Lorillard certainly knows how to build a successful brand, while Kunze needs help building her own brand. Reynolds, the Joe Camel folks, made a bid for the menthol market with Kool and Salem, but the Newport brand is so strong, that Reynolds is now adopting an “if you can’t beat ‘em, join em” strategy.  Lorillard’s brand development expertise is so strong, it has more than quadrupled Blu’s market share and sales. Of course, Joe Camel has proven appeal to all kinds of kids—thanks to Reynolds own marketing strategy—not just African American children.

A few days ago, Federal Trade Commissioners approved a merger between Lorillard and Reynolds. One of the key issues in making the deal happen is Lorillard’s willingness to divest itself of Blu—the e-cig brand will reportedly be sold to the British company Imperial. This allows the Reynolds product Vuse, (available in regular and menthol), with its heftier nicotine kick, to dominate the future market.

By trading Blu for Vuse, the new Lorillard/Reynolds company protects itself from regulation at a time when the FDA is looking skeptically at refillable vaporizers which could contain unknown substances (like liquid THC), and candy and fruit flavorings which seem oriented toward children. Vuse is more similar to a traditional cigarette than Blu (“the perfect puff, first time, every time”).

Just how valuable was Stephanie’s Trojan Horse legislation to Lorillard? A deal like the Lorillard/Reynolds merger is generally considered anti-competitive and violates anti-trust laws. But the higher the market share for e-cigs, the more significant Blu is for federal regulators.

Blu thrived under protective legislation like Kunze’s HB 144, and similar bills in other states—now controlling an estimated 47 percent of the e-cig market. That’s significant enough to be of interest to antitrust regulators.

Reynolds is divesting several major brands—Winston, Salem, and Kool. Lorillard’s contribution to reducing antitrust issues is the divestment of Blu, and of a North Carolina production facility. If Blu’s brand hadn’t risen to such heights with the help of state legislators like Kunze, Lorillard wouldn’t have such a strong card to play to help the merger survive antitrust scrutiny.

This merger will not only transform the tobacco industry, it will save Lorillard’s investors if the FDA ever bans menthol cigarettes completely, which it has come close to doing in the past.

We don’t know exactly the dollar figure that Kunze’s legislation contributed to Lorillard’s bottom line, and we can’t measure the human cost. Health organizations report that e-cigs aren’t the healthy alternative that big tobacco suggests.

If she had sought help from the American Cancer Society or a medical or health organization to write her bill, instead of letting big tobacco regulate itself, Ohio might have had a real deterrent to youth smoking and illegal use.

But here’s what we got from Stephanie Kunze, the mother who says she just cares about HER children:  ever since Kunze introduced her bill, Lorillard stock has been rising, and the Lorillard/Reynolds deal is estimated to be worth $27 billion.

Kunze’s bill created controversy when it passed, but overall how has it built her own brand? What will her reward be? She’s come a long way, and how much farther will she go, with the help of her new friends at Lorillard/Reynolds? Time will tell… Public comment about the proposed merger will be open until June 25. The FTC is accepting them here.

 

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