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Santa Monica Shoppers React to CVS Tobacco Ban

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By Daniel Larios
Special to the Lookout

February 27, 2014 -- Shoppers at a Santa Monica CVS store Wednesday had mixed reactions to the news that the country's most profitable drug store chain will stop selling tobacco products by October.

The move is expected to cost the company, which is projected to reap almost $133 billion this year, $2 billion per year in lost profits across its 7,600 stores.

Shoppers at the local CVS on Wilshire Boulevard had mixed reactions to the news.

“I think it's great,” said Susie Hawkins, a Santa Monica resident and mother of two.  “It's kind of ridiculous and hypocritical to have a health store like CVS be selling something that causes cancer.  Good for them.”

“I buy my cigarettes at CVS because it's cheaper here,“ said Santa Monica College student Anthony Rossi. “I'm going to have to go somewhere else for my fix.”

Shopper Marie Anderson had mixed feelings. 

“Well they still sell chips and alcohol, don't they?” Anderson said, “I'm not saying they shouldn't, but only banning tobacco and not the other unhealthy things is kind of two steps forward, one step back.”

This policy coincides with news that CVS wants to grow its 800 Minute Clinics, small, retail clinics located in CVS stores and staffed by board-certified healthcare practitioners.  By 2017, the company hopes to expand to 1,500 clinics, which provides treatments, physicals and vaccines, said company officials.

That's why the decision to stop selling tobacco products “was really more of a discussion about how to position the company for future growth,” said Larry J. Merlo, President and CEO of CVS Caremark..
"Ending the sale of cigarettes and tobacco products at CVS/pharmacy is the right thing for us to do for our customers and our company to help people on their path to better health," Merlo said. "Put simply, the sale of tobacco products is inconsistent with our purpose."

Pharmacies accounted for 3.6 percent of the nearly 290 billion cigarettes sold in 2012, according to Euromonitor International.

Gas stations topped the list with 47.5 percent, followed by tobacco stores with 21.1 percent, and convenience stores with 15.9 percent.

Although CVS Caremark will halt tobacco sales this fall, media reports claim that the pharmacy chain still has connections to more than $17 million invested in tobacco companies, according to press reports.

The tobacco stocks are included in mutual-fund investments offered to employees in CVS Caremark's 401(k) and employee stock-ownership plans.  The tobacco-related stocks account for less than 1 percent of the $6 billion being invested on behalf of more than 200,000 employees.

The plans have investments in major U.S. tobacco companies. including R.J. Reynolds American Inc., Lorillard Inc., Imperial Tobacco Group, Altria Group, and Philip Morris International.

In a prepared statement, CVS Caremark said that, by law, its 401(k)-plan investments are made by independent investment trusts, whose decisions are made to “promote the interests of plan participants and their beneficiaries."

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