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Military Tobacco: The story behind our investigation

A few years ago I found myself standing inside a Coast Guard Exchange in Elizabeth City, North Carolina, waiting for a friend to buy a bottle of rum. Exchange is the name for the base stores (think Target but with Uniforms) that sell goods to service members and their families. Everything from computers to boots. And because products there, are sold tax-free, and mostly at a discount, the stores are considered a perk, and a privilege. The right to shop there is something to be used, but not abused. Alcohol at the exchange was cheap. And so my friend's mother had asked her to pick up a bottle for an upcoming party. Why not?

During the plane ride back to New York I became curious. The country was still in a tangle over health care and at the same time we were deep in debt. So when I got home I sent an email to my friend in Elizabeth City. Do the exchanges, I asked, also sell cigarettes at a discount? "Yes," she wrote back, "and the irony is rich."

The Department of Defense (DOD) requires tobacco products to be sold on military bases for no less than 5 percent below the lowest local price. While the Coast Guard is overseen by the Department of Homeland Security, it says it also follows DOD 1330.09, the pricing rule which sets the 5 percent tobacco discount.

But as Keith Haddock, director of the Institute for Biobehavioral Health Research at the National Development and Research Institutes, tipped me off, some base stores were not adhering to the restriction and tobacco was being sold for much less then was legal. Using Marlboro Reds as a pricing benchmark, I called base stores. How much for a pack? How much for a carton? About ten months and 600 phone calls later to base and civilian stores around the country I found out the researcher's info had been right.

Click on the image above to explore an interactive map of U.S. military bases that violate the military's tobacco pricing law. And listen to the Marketplace story.

Tobacco is a big seller. Army and Air Force bases around the country sell hundreds of millions of dollars of the stuff every year. But profits from all Army and Air Force Exchange Stores (AFES) go to what's called MWR, or Morale Recreation and Welfare. It pays for services like outdoor recreation and classes in automotive skills even child development centers. It's an interesting link to think about when you see shoppers at the Fort Hamilton store in Brooklyn push shopping carts full of more clinking glass bottles of alcohol than I'd ever seen shoppers anywhere buy. Shoppers at base stores also get discounts on alcohol. Depending on the state, they get between 5 percent and 10 percent off local prices.

During my visit, albeit a short one, the smokers at Fort Hamilton are buying cartons, not packs. And even though my contact at AAFEs tells me prices are on their way up, they're still getting a whopper of a discount - anywhere up to 40 percent off prices outside the base gates.

But for the military to sell tobacco at all is a big change from decades ago when cigarettes were given out free in rations. Timothy Sterlachini, a Marine who fought in the battle of Nasiriyah in Iraq tells me everyone in the military, even those not on the front lines have it pretty crummy.

"Even if you're a cook, you're trained as a rifleman. And if the s*** hits the fan, just because you're sitting back stirring beans, you're gonna be called up to the front lines and you better remember how that rifle operates." Sterlachini tells me he thinks tobacco should still be free for service members, but only in combat.

But the military charges for tobacco so I asked Matthew Farrelly a researcher at RTI about the impact of price. He told me the effect of pricing on tobacco is well established. As the military raises its prices, consumption will go down. But less than the price increases. Farrelly says the Army and Air Force would make more money if they raised their prices.

But even if they raise their prices and the stores make a larger profit, I can't help wondering, what's the real bottom line?

For more coverage from this investigation, listen to the Marketplace radio story and explore the interactive map. You can also follow this story on my blog, FivePercentRule.org.

About the author

Sally Herships is a regular contributor to Marketplace.
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There are few if any comforts for a soldier in a combat zone. If cigarettes or chewing tobacco bring relief from the stress, so be it. These are the men/women who fight for us. They are the few doing it now that there is no draft. Lay off. Let them have their smokes at a reduced price.

Why are reports like this almost always done by people who most likely have never smoked? How can anyone who's never smoked (the doctor included) tell a smoker that it doesn't reduce their stress. When I was in the service I smoked two packs a day and still shot "Expert" on the M14 rifle. So much for shaking hands. I still passed the PT test with flying colors. So much for shortness of breath.

Though I no longer smoke (now I chew) I am tired of the smokers of American being considered second class citizens. Some day the 20% who still smoke will realize the power as a group they could have with their vote.

If I hear more of this type reporting on Market Place, Market Place will have just lost a listener.

Dear Ms. Herships --

Thank you for this story. I am from a Navy family (31 years) and know full
well the sacrifices military families make. And I know that exchanges help
make up the difference between lower pay and retail costs.

But I have also long wondered about the discounts provided at the package
stores for tobacco and alcohol. The problem is not necessarily what active
duty military purchases, especially in war zones. But the number of retired
military who shop at exchanges for decades after retirement at those lower
prices really adds to this "benefit". Add to that the price taxpayers
supplement towards military health care benefits, again especially for
retired and older military. (Tricare premiums haven't been increased in
almost 2 decades. Compare that to the average civilian policy.)

So, thanks for the report. It was a question worth investigating.

Not only did the reporting (as broadcast) sound spurious at best - the attitude was near reprehensible.

As a veteran myself, I'm pretty sure I would be well supported by others in saying that the reporter might do her smug BS a good bit of good by spending some time breaking her back for this country out on the lines or on a ship.

Save taxes - yeah right - the money would just be used elsewhere to support the military. AND with republicans having such a pathetic record on veteran issues - you bet the savings won't be sent there either.

Go spend some time where you can bet comforts will be far and few between.

Ungrateful twit - hey why not go after the jerks that screwed the economy? Far more tax dollars to be saved there.

Aren't you big - being hard on those who work so hard for you. Go be hard on the jerks in finance for a change.

GUTLESS. VILE - HEARTLESS

There are few if any comforts for a soldier in a combat zone. If cigarettes or chewing tobacco bring relief from the stress, so be it. These are the men/women who fight for us. They are the few doing it now that there is no draft. Lay off. Let them have their smokes at a reduced price.

Why are reports like this almost always done by people who most likely have never smoked? How can anyone who's never smoked (the doctor included) tell a smoker that it doesn't reduce their stress. When I was in the service I smoked two packs a day and still shot "Expert" on the M14 rifle. So much for shaking hands. I still passed the PT test with flying colors. So much for shortness of breath.

Though I no longer smoke (now I chew) I am tired of the smokers of American being considered second class citizens. Some day the 20% who still smoke will realize the power as a group they could have with their vote.

If I hear more of this type reporting on Market Place, Market Place will have just lost a listener.

Isn't there something more important to report than that our dedicated, courageous soldiers are getting a "deal" when they pay $9 pack for a pack of smokes in NYC? The winey-voiced reporter I heard delivery this report on the radio was pathetic. Can't a soldier have any comforts as he defends us on the battlefield without the nanny state calling foul?

The report goes on to mention that the US military (i.e. the Tax Payer) spent $5 Billion on tobacco related illnesses last year. Go ahead and smoke. Just don't expect the tax payer to pay for your oxygen when you get emphysema.

Right. Then you wouldn't mind if the people in the military have the right to choose who to fight for, ie die, right. You'd be right up there on the walkaway list.

Hey Corporate America has no problem not paying to clean up the messes they have left behind in the form of abandoned buildings and industrial sites - instead - leaving the clean up to us.

I'm sure you were among the war-mongering that urged the start of the unnecessary war in Iraq, too. What about the 14-18 billion that mysteriously disappeared there?

Bet you vote for the party best known for defecating on returning veterans as well, you know the GOP.

Enlisted people don't get paid a great amount to begin with, are you so tight you can't see the way for them to do whatever within reason to assuage their discomfort as they see fit? Wow - send em out to get shot up - and while you're there - go screw yourself - that seems to be your idiot attitude.

The U.S. taxpayer pays the majority of everyone's health care expenses, tobacco-related or otherwise. Ever heard of Medicaid, Medicare, and public employee health benefits? In the middle of 3 foreign wars, why pick on slightly discounted chew and smokes for the people who defend us? The reporter's obvious disdain for the military and their sacrifices is what I object to. (I'm not a vet or a smoker.) She would never last a minute in Iraq or Afghanistan without her crutches of lattes, arugula, and Chardonnay.

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