Friday Fax – Legislative Update

Happy New Year! We hope the Holiday Season was good for your businesses and for those operating in the pharmacy world that Medicare Part D is running smoothly. While the North Carolina General Assembly does not reconvene until May 9, 2006 , Raleigh is full of activity warranting a Special Edition of NCRMA's Friday Fax.

We have written you a couple of short summaries on some issues currently being discussed in and around Jones Street and have provided you with some timely media reports on these issues as well. Please feel free to give us a call or send us an email if you need additional information on any of the items below.

Between now and May 9, 2006 , you will receive Special Editions of NCRMA's Friday Fax. In addition to these Special Editions, you will continue to receive timely updates from us on a number of subjects with the news you need to know that is of importance to your business.

January 6, 2006

1) Minimum Wage Update

2) Methamphetamine Law Goes Into Effect Next Week

3) North Carolina Lottery Update

4) Eminent Domain Study

5) Special Session to Repeal Gas Tax Increase Likely Stalled

6) Health Care Update

7) Alcohol Update

8) North Carolina Law Enforcement Conducts Tobacco Stings

9) North Carolina Political Happenings of Note

2) Methamphetamine Law Goes Into Effect Next Week -- North Carolina's new Methamphetamine law goes into effect on January 15, 2006 . You should have received several pieces of correspondence on this issue as well a sample training manual, a sample log, a sample sign and the required training guidelines. If you need additional copies of these documents or help with questions about implementing this new law in your store, please do not hesitate to email or call NCRMA General Counsel Andy Ellen at andye@ncrma.org or 919.832.0811.
In an ironic development, news media this week reported that the number of methamphetamine labs in North Carolina actually dropped this year even in the absence of restrictions on pseudoephedrine products. See the end of this update for a copy of this article.

3) North Carolina Lottery Update -- The North Carolina Lottery Commission and the Executive Director of the North Carolina Lottery, Tom Shaheen, continue to push full-steam ahead in their attempt to get scratch-off tickets to North Carolina retailers by April, 2006. NCRMA has been attending the weekly meetings of the Commission and met with Mr. Shaheen to discuss how to best communicate with North Carolina 's retail community.
Many retailers have already placed their name on a notification list with the North Carolina Lottery and are anxiously awaiting applications and the contract to be named an approved Lottery retailer. These applications are currently at the printer and should be available for distribution in the next two weeks.

4) Eminent Domain Study -- The January 2006 issue of Governing lists Eminent Domain at the top of their "2006 Issue to Watch" list. The timeliness of this issue surrounds a recent United States Supreme Court case (Kelo v. New London) allowing for a local government to condemn property to build a hotel and convention center. States are permitted to control state and local governments' eminent domain powers through state laws or their state constitution.
This issue is already under discussion in North Carolina with the House Select Committee on Eminent Domain Powers holding their first meeting yesterday. This Committee's discussion will revolve around whether North Carolina needs to revamp its eminent domain law to prohibit state and local governments from taking private property for quasi-public purposes. See the end of this update for a media report on yesterday's Committee meeting.

5) Special Session to Repeal Gas Tax Increase Likely Stalled -- The Joint Select Committee on Energy and Fuel Costs held its first meeting yesterday. In this all-day affair, the main two topics were whether North Carolina should rollback the $0.03 increase in the North Carolina gasoline tax that went into effect on January 1, 2006 and an explanation of external pressures that affect the price of gasoline in North Carolina. For the past two months, Republican lawmakers have been calling for Governor Easley to call a Special Session to rollback the gas tax and now some Democratic lawmakers have taken up the cause as well. North Carolina's gasoline tax is recalculated twice each year based on the average wholesale cost of fuel and is among the highest in the United States.
There were competing views yesterday with the North Carolina Department of Transportation, the Carolina Asphalt Pavement Association and the North Carolina State Chamber alluding to the fact that rolling back the gas tax would hurt road construction due to a loss of funds to the Highway Trust Fund while the National Federation of Independent Businesses argued that higher gas prices were crippling small businesses and North Carolina's high gas tax was part of the problem. One of the more interesting statements was made yesterday by Gary Harris, Executive Director of the North Carolina Petroleum Marketers. In response to a question as to whether gas stations would reduce their gas prices if the gas tax was reduced, Mr. Harris responded that consumers may not see a reduction in gas prices especially if the price of crude oil increased.
Mr. Harris' comment resulted in some Democratic lawmakers publicly questioning the need for a Special Session to reduce the gas tax if consumers would not receive any noticeable relief at the gas pump. Many Republican legislators smiled in response as they see the gas tax issue as a major issue for the 2006 elections. See the end of this update for a media report of yesterday's meeting.

6) Health Care Update -- The four subcommittees of the House Select Committee on Health Care continue to meet fast and furious - some with overlap of presentations between subcommittees. Health care continues to be an area of focus for NCRMA and will likely be a hot button issue in the 2006 Short Session and 2006 November elections. Of particular interest to NCRMA are the Access to Health Care and the Medicaid Subcommittees. NCRMA is closely watching the Medicaid Subcommittee for developments that could affect retail pharmacies. NCRMA is closely following the Access to Health Care Subcommittee for potential legislation requiring North Carolina employers to devote a specific amount of payroll for paying for health care benefits.
A bill requiring employers of a certain size to dedicate 8% of payroll was enacted and vetoed in Maryland and an attempted override of the Governor's veto will occur next week. Yesterday, the issue took on more significance when the AFL-CIO announced plans to introduce similar legislation in 30 states. NCRMA will aggressively oppose this type of legislation if it is introduced in North Carolina.

7) Alcohol Update -- NCRMA remains active in working on issues of importance to its members who sell alcohol in North Carolina. NCRMA has been in continuing negotiations with the North Carolina Beer and Wine Wholesalers Association and Anheuser-Busch over allowing retailers to utilize coupons and loyalty cards in the sale of alcohol. We expect some resolution on this issue in the next couple of weeks so that the issue can be brought before the North Carolina Alcoholic Beverage Control Commission.

8) North Carolina Law Enforcement Conducts Tobacco Stings -- In December, North Carolina Alcohol Law Enforcement agents recently cited 48 store clerks in Durham and Orange (Chapel Hill) counties for selling tobacco to underage customers. According to media reports, ALE agents conducted tobacco compliance checks in 146 retail stores in these two counties as part of a statewide campaign in which agents checked 6,078 stores and issued 1,286 citations in 2005. There were 135 checks and 41 citations in Durham County, and 117 checks and 40 citations in Orange County. Wake County (Raleigh) had 230 checks and 68 citations.
Store clerks cited for selling tobacco to underage people are charged with a class two misdemeanor. If convicted, offenders might face up to 60 days in jail and/or a fine along with other court-imposed penalties. Under North Carolina law a store clerk is supposed to ask for the identification of anyone who appears to be under 18. Those with a red border around their state identification are under 18; it's yellow for ages 18-20 and green for those 21 and over.

9) North Carolina Political Happenings of Note -- Some Political News and Notes:

1) Former Chairman of the powerful House Rules Committee, Bill Culpepper, was sworn in Tuesday as a member of the North Carolina Utilities Commission. A replacement for Culpepper, both for his legislative seat and to chair this committee is forthcoming. Numerous names are being mentioned to chair the Rules Committee but there has been little news on who will actually take Culpepper's legislative seat.

2) Three-term Senator Scott Thomas (D-Craven) announced this week that he would not seek another term and would instead run for the office of District Attorney in a three-county area closer to his home. Thomas cited the birth of his third child and the struggles of running a law practice while jointly serving in the "part-time" General Assembly that last year lasted nine months. Many believe that Thomas is positioning himself for a run at Attorney General should current Attorney General Roy Cooper not seek a third term for this office.

3) The State Board of Elections recently announced that the filing period for 2006 elections opens February 13 th and closes February 28 th at noon. Primaries will occur on May 2, 2006.

4) Political Action Committee Reports must be filed with the North Carolina State Board of Elections by January 27, 2006.

HAPPY NEW YEAR

Fran Preston
Andy Ellen

Carolinas Food
Industry Council



South Carolina Retail Association



Retail Loss
Prevention Association