Doug Kantor:
Hey Carolyn. Thanks for having me.

Carolyn Schnare:
For sure! Next, we have Anna Ready-Blom, NACS Director of Government Relations, my friend and new mom. Hello, Anna!

New Speaker:
Hello! Good to be with you.

Carolyn Schnare:
And finally we have my colleague and amateur baseball analyst, Jon Taets, NACS Director of Government Relations, as well. Hey Jon.

Jon Taets:
Hey Carolyn. Good to be here.

Carolyn Schnare:
All right. So we have a lot to cover in a short time to do it in and it’ll help for this episode for me to tell you that we’re recording this in mid-October of 2021, because any number of things can change by the time you’re listening to this episode. But today these are the facts as we know them. Okay, guys, here’s how we’re going to play. I’m going to pick an issue affecting retailers out of my list and whoever is the most versed in that issue has three minutes to tell me everything you know about it and what’s happening. I’ve got my stopwatch ready to go. Are y’all ready?

Jon Taets:
Yep. We’re ready.

Carolyn Schnare:
All right. Let’s have some fun. Okay. I’m going to dig in. And first I’m going to go to Jon. What’s the political situation out there.

Jon Taets:
Difficult. I think it’s a quick way to say that. We’ve got very narrow majorities in both the House and the Senate. In fact, it can’t get any narrower in the Senate with a 50 50 split and in the House with a few vacancies, there’s only a three vote margin over there. So you’re seeing a lot of push and pull between the extremes in the Democratic party. Not that we haven’t seen this before – the Republicans had the same problemin the not too far recent past, so it’s not new, but it’s not all that frequent. Right now, they’ve got the Progressives fighting with the Moderates over a number of different issues, how far to go with a number of different things. And with only a three vote margin in the House, it makes it very difficult for Speaker Pelosi to get much of anything done over there.

Jon Taets:
And in the Senate, you have essentially two Senators running the show, and neither of them are officially Senate Leadership. You’ve got a Senator Joe Manchin and Kyrsten Sinema who are essentially holding up everything based on what they want in the Infrastructure and Reconciliation packages we’re going to get into later. And we’ve seen a lot of these attempts to go on their own with the Democrats, with the fact that they have the House and the Senate majorities, and the White House. They’re trying to do as much as they can without Republican votes. And that has led to an even further partisan division that we’ve seen growing for quite a while now. It hasn’t been much worse in my recent memory at least, but I don’t know if Doug or Anna want to chime in with anything else. So that’s kind of the overview of what we’re looking at for the near and unfortunately far future too,

Doug Kantor:
I mean, the truth of the matter is that most people like to talk about how Washington’s different and it’s the problem and that sort of thing. But right now, Washington actually reflects the rest of the country, which is people just hate each other. It’s not good out there. And the countriy’s split and Washington split and they hate each other here too. So it’s not a good atmosphere.

Carolyn Schnare:
Well, it’s a good thing. We all love each other, right? And you throw in a global pandemic and, you know, recessions all these things and it’s great fun.

Doug Kantor:
Yes it is!

Carolyn Schnare:
There we go. All right, well thank you, Jon. Okay. Up next. Let me see, what do I want to do next? I am going to go to Doug on infrastructure. Where does that stand? What’s likely to happen? A little tiny issue. Three minutes – GO!

Doug Kantor:
So the one exception, everybody hating each other is bipartisanship on Infrastructure. Everybody agrees and has agreed for years that, hurray, we should all build roads and invest in infrastructure. And it’s a good thing. And not only that, it wasn’t just lip service. They actually agreed in the Senate on a bill. The Administration agreed. Everybody was happy. Except it hasn’t passed yet. It went from the Senate where they passed it back to the House where everybody knew well, yeah, of course the House will pass it. The Senate passed it overwhelmingly. The Administration agrees. Everybody’s happy. And now we’re all bogged down because the House and Congressional Leadership on the Democratic side want to link Infrastructure to this broader Reconciliation Bill, which I’m sure we’ll talk about. But that means we’ve got a problem because the Progressive – sort of the left of the Democratic party – have said ‘no way, we’re not passing this bi-partisan bill,’ unless we pass the more progressive reconciliation bill along with it.

Doug Kantor:
Moderates in the Democratic party who are really worried about getting kicked out of office at the next election, say, “Hey, wait a minute, we better pass something or we look really bad. So why don’t we do this bill that everybody likes, then we can go home and campaign and make everybody like us.” We’ll see where that turns out. Right now, the Administration, President Biden, Speaker Pelosi are all saying, “nope, you know, we’re going to tie these two things together.” We’re in sort of the all-or-nothing free-fall here. I think most people believe something will have to pass because the Democrats all see their fate is tied to it and the conventional wisdom is certainly that the very ambitious Reconciliation bill, which, many folks in the party have said, it should cost $3.5 trillion. They’re going to have to cut that price tag, how much nobody knows. Joe Manchin in the Senate who holds a key votes since any Democrat not voting for a bill means it can’t pass the Senate. He said, $1.5 trillion is the right number. There’s lots of rumors about where some of his other colleagues are like Senator Sinema of Arizona and whether their number is lower higher, who knows, or whether Joe Manchin may be willing to move and go a little higher than that. And of course you have some of the lefties like Bernie Sanders saying that anything less than $3.5 trillion is completely unacceptable, less than $3.5 trillion is either going to be acceptable or the number’s going to be zero. That’s my prediction,

Carolyn Schnare:
Fun. Anything on that? Anna, Jon $3.5 trillion. Okay. Well, who knows? We’ll see where that goes now in terms of Reconciliation. I wanted to say that because it’s a big old word. I’m going to go back to Jon, where does that stand? What’s likely to happen there. And how does any of this affect convenience retailers?

Jon Taets:
Thanks, Carolyn. Doug laid the framework with what we’re looking at with Reconciliation. I mean, that’s…we call it reconciliation because its the process by which it’s going to get passed eventually if it gets passed., But really it’s the Democrats social infrastructure or social safety net legislation. So it’s basically everything that they wanted to put in the overall infrastructure package, but could not because negotiations knocked it out. Basically Republicans wouldn’t go that far on these pieces. They put it into this massive conglomeration of a bill. There’s a lot of stuff in there. Most of the policy front stuff, actually, it does affect everyone, but it’s no…they’re not really key convenience store issues. However, the big debate, and this is what Doug was talking about with how much it’s going to cost, whether it’s three and a half trillion dollars or one and a half trillion dollars – the fact that we’re talking trillions of dollars is a whole other issue, but that’s what it is – is how they’re going to pay for it.

Jon Taets:
And that’s essentially how they’re going to raise taxes. And that’s where this comes very much to the heart of convenience store issues, because they are talking about making a lot of changes to things like how pass-through entities pay taxes, how much they have to pay, what their deductions can be, what the top interest…what the top tax rates going to be, which obviously affects, pass-throughs as well. They want to make some significant changes to the corporate tax rate and want to raise that for some larger companies. So a lot of this “pay for” stuff is where you see the impacts on our industry, as opposed to the policies within the bill, as for what’s going to happen. That’s a very question, I think Doug laid it out well. You’ve got some kind of Progressive-size is really mostly a Senate play, but the House obviously matters this as well, but whether or not, it’s currently at $3.5 trillion. Like I said, Bernie Sanders doesn’t think that’s enough.

Jon Taets:
Senator Joe Manchin has said he might be okay with $1.5 trillion. But whether we go up from that, we don’t know. They basically got to settle on that number before they can get anywhere. And that has held everything up. So it was under the Infrastructure package, which was supposed to pass week before last, I think, based on an agreement that they had over on the House side between the Speaker and the Moderates, that clearly didn’t happen because they didn’t get the votes for the Instructure package put together. And I think it was just this morning or yesterday, where Josh Gottheimer of New Jersey, leading the House Moderates, put out a letter, essentially blasting Pelosi again for not doing this, not getting this done on time. And now there’s a pseudo-deadline on that to the end of October because they passed Surface Infrastructure Authorization, extended it until then. I guess that will get extended again, rather than be an actual deadline. Good chance all of this is going to get cobbled together with the government funding and the debt limit and everything else into one massive fiscal cliff type package we’ll see in December. But exactly what it will look like is anybody’s guess.

Anna Blom:
Yeah. And Carolyn, just to add some color to that. So as they just said, you know, the difference right now between Moderates and Progressive Democrats on that number is about 2 trillion and trillion is a term that gets thrown around these days in DC so easily, but $2 trillion- if you were to spend a dollar a second, you would get to two trillion in 635 years.

Carolyn Schnare:
And that’s a trillion with a T.

Anna Blom:
A capital letter T.

Carolyn Schnare:
And I can’t even think of how many zeros that that I would put in there. I’d have to go back to high school math on that one. Thank you for that clarification. And Anna, I’m going to go to you next with this topic, which I know is really interesting to a lot of our retailers, which is the Federal excise tax on tobacco. And…go!

Anna Blom:
It is. And as Jon was mentioning, they’re looking for “pay fors” to get to that number. And unfortunately, one of the “pay fors” that’s included in the House’s version of the bill is an increase in the Federal excise tax on tobacco and nicotine products. And this isn’t just a modest increase. It would double the current tax on cigarettes and apply tax parity to all other tobacco and nicotine products. So we’re talking smokeless, vape, et cetera. So NACS strongly opposes the inclusion of this increase. We believe an increase of this magnitude is bound to have unintended consequences. It’s going to push current users to an illicit market, which we know their products are counterfeit. They’re unregulated. IDs, aren’t checked. Taxes, aren’t collected. And this really undermines the efforts that our retailers make to be responsible tobacco retailers. So far this language stayed in the House package through the Ways and Means Committee markup. We have been actively meeting with members of the House and the Senate to raise all of these concerns that I just mentioned and why this needs to come out of the bill.

Carolyn Schnare:
Well, that is something that we probably might need some help from, which we’ll go to later when we ask for your help {from} listeners on that end. You know what, while we’re still here, let’s stick to a somewhat similar topic, which is vaping. Anna, can you tell us a little bit more where that stands?

Anna Blom:
So right now, FDA is still in the process of announcing decisions made on that PMTA pre-market approval applications that all e-cigarette manufacturers had to submit in order to keep their products on the market. And to date, FDA has actually issued marketing denial orders for more than a million products. They’ve been through 98% of applications and just a week or two ago they actually approved the first ends product to be on the market which was R.J. Reynolds VUSE solo device and the accompanying original tobacco flavor. Where our issue has been with this process is, it’s really lacked transparency. Our retailers need to know as FDA makes these decisions which products they’ve issued denials for so that we know which products we can legally sell. And we’ve asked the agency to provide this list for us and they actually have said we can’t release the names of the products for which we have issued marketing denial orders because that is confidential commercial information, which to us, again, how do you know what is legal to be on shelves and not if they’re not releasing that information? So we’ve sent several letters to the agency asking them for it and we are waiting on a response.

Doug Kantor:
Yeah. And I’d just say, look, this may sound made up to people out there. It doesn’t make any sense, right? FDA regulates in this area, they’re saying certain products are not approved and are illegal to sell, but they won’t tell us which ones? This is basic good government stuff that it is remarkable that they’re not doing, especially when we pointed out to them and say, “Hey, there’s confusion. Just tell us what’s illegal.” They still won’t do it. So, this is an area that is among the toughest for our members to deal with. It’s among the toughest for us to deal with because you have an Agency that is not doing the basic everyday blocking-and-tackling of what an Agency has to do that is set clear rules and ready can understand and communicate them to the regulated community so that people can comply with it. It’s a really bad situation right now. And we really hope they will clear that up soon.

Carolyn Schnare:
So yeah, that definitely is, is hard to follow. And just as another side note still we’re in October of 2021. So if you’re listening to this in a few months, then maybe we’ve got…well, let’s hope…there’s a solution by then. And I’m sure keeping an eye on Convenience.org, we’ll certainly have the latest guidance. Okay. Now switching gears to just as easy a topic, let’s go over to the OSHA COVID-19 vaccine mandates. Doug, what do you got for us?

Doug Kantor:
Yeah. Talking about confusion. How about the OSHA rules? So the President last month made this big announcement, “we’re in trouble on COVID. There are too many cases and so every business across the country that has a hundred or more employees, here’s what you’re going to have to do.” According to the President’s announcement, that is you have to mandate all your employees get the vaccine – one of the vaccines – one option. Option two, you have to test them every week to see if they have COVID. For plenty of businesses, they’re doing some of those things already. Wonderful. For lots of businesses, there are reasons why they’re not. One of the reasons why they may not be, is it’s really complicated to figure out. Where do you get everybody tested? You might have a lot of people, do you want lines around the block with people not being able to do it?

Doug Kantor:
What happens…do people get paid time off? Do they not? What do you do about people who object to the vaccine for various reasons? There’s all kinds of questions, concerns, issues, you name it. In fact, NACS put together a very long letter of more than 20 questions just to ask OSHA, “hey, the President told you, you have to write a rule on this, how are you going to deal with all these things?” We’ve not heard an answer from OSHA. We did have one conversation with OSHA just after the announcement, and I have to tell you, it sounded like the announcement was as much news to them as it was to the rest of us. So they’re figuring out how to write regulations that deal with all of these things. Hopefully once they do that, there will be some clarity and some flexibility that allows people to do what makes sense for their business, in their particular locations, all those sorts of things.

Doug Kantor:
But one thing we know is this. The biggest challenge, our faces right now appears to be a lack of employees. There’s a big labor shortage. We hear every day from businesses in the industry that they can’t hire enough people. And it’s not just c-stores, right? You name it, across the board, restaurants, are having this problem all over the place. If you put in place too restrictive a set of requirements on these businesses for what their employees do and don’t have to do, and those employees are not willing to do it. It may really make that situation much, much worse. So we’re hoping that OSHA makes some reasonable choices here. We’ll see how that turns out. Thankfully, the COVID situation around the country is getting better as they do this. Maybe that will help relieve a little bit of the pressure where they might have otherwise made more difficult to follow decisions, but we’ll see. This could come out at any time. They haven’t given us any real timeline. It’s also not clear how long they’ll give employers to put this into place. Once they come out with regulations. And it’s not clear to what extent there will be enforcement because we know enforcement resources are stretched. So a lot of uncertainty. A lot of real concern among our members about how this will play out. And the best we can do is keep pushing OSHA to really think through the naughtiest logistical problems that are going to come up.

Carolyn Schnare:
And you said, there’s no real timeline on that.

Doug Kantor:
There is no real timeline. There’s not even a fake timeline, Carolyn.

Carolyn Schnare:
Fun times, fun times.

Jon Taets:
We’ve already seen real world impact of labor shifting of these mandate policies. There are a number of businesses out there who have put down their own vaccine mandate policies. And we’ve seen a shift of people who have looked to leave those businesses and go to other ones that don’t have a mandate right now. And since this mandate is supposed to impact employee or businesses with 100 or more employees, we may see some more of that – of people trying to go from larger employees to smaller ones, but with an understanding that they’re smaller employers only. So there’s only so many spots available anyway. So that could be an interesting dynamic. We’ll see what they do when they finally put it out, depending on how they write it.

Carolyn Schnare:
Thank you for that. Let’s see, I have one more thing on my list that I wanted to throw to Anna in terms of payments and antitrust. We’ve heard a lot about high-tech companies and how the payments issues fit into this. What have you got Anna?

Anna Blom:
Payments issues fit in because of the monopolistic nature of the global card brands. As the Administration and Congress had really focused, as you mentioned, on those high-tech companies. They’re looking overall though, where antitrust issues exist within our current economy. And we have really made a point to both regulators and Members of Congress, you need to look at the card brands. Our retailers have seen their costs in accepting cards increase year after year. Just last year, this industry alone paid close to $11 billion in swipe fees. Even though the cost to process these fees, these transactions are way down. And so recently actually the Federal Trade Commission sought feedback on contract terms that harm competition and NACS filed a letter pointing out to look at those global brands and their card rules and specifically, an example if you are a bank issuing a Visa or issuing a credit card and you put Visa or MasterCard on that card, the card brand rules prevent you from putting a competing network on that card to process that transaction. And to us, the efforts made by those card brands to inhibit competition like that, it’s what it’s doing is it’s really hurting innovation in this country. It’s hurting security in payments as as they continue to evolve. Doug, do you have any thoughts on this space and all of the work we’re doing in it?

Doug Kantor:
I have lots of thoughts in this space, Anna. This is part of a broader rethinking of the antitrust laws. Generally, there’s been more and more recognition about isolated areas within the economy that big, incumbent, monopolistic players play and what that does in terms of having negative impacts across the economy. The tech world is the most exciting one that people pay attention to because it’s new and different and we’ve suddenly had these huge dominant players spring up out of nothing. So everybody’s looking at that and that’s really, I think, spurred a lot of the rethinking of any antitrust law. But clearly payments is almost the prototypical example. You’ve got, what are these network platforms, just like a tech platform. All they’re doing is connecting the sides of the payments market, banks, merchants, consumers, in these transactions.

Doug Kantor:
But lo and behold, not only are they doing that in a way that monopolizes the market and causes really high fees and has actually depressed innovation in things like payments and security, where the rest of the world has passed us on a lot of these things. You also find the technologies now they’re…where they might not even be necessary anymore. There are lots of ways to connect people with these little phones we all carry around and the technology to do it. So it’s a really interesting time and we’re very curious to see whether the FTC and the Department of Justice do some things to take advantage of that and change the payments market.

Carolyn Schnare:
Thank you both. Well, if we were taking a game show format here, I’d say there are no winners. You have all done great with this. And I think somehow or another, like we said, in the very beginning, there just are no winners. There’s no getting along. I’m kidding. Of course. Thank you guys for that. Now we’re going to go onto the super-fast lightning round, which is going to be always fun and hopefully a new component of all of our episodes going forward. Alright. 30 seconds or less, Jon, who’s going to win the baseball World Series.

Jon Taets:
I think we’re going to see San Francisco and Boston. I’m going to go with San Francisco,

Carolyn Schnare:
Doug?

Doug Kantor:
Same.

Carolyn Schnare:
Anna.

New Speaker:
I am not equipped to answer this question. No, I live with a Milwaukee Brewers fan. So, Not the Milwaukee Brewers.

Carolyn Schnare:
There you go. It’s not the Washington Nationals, either, our home team here. All right. Anna, I’ll go back to you. What’s your favorite convenience store food?

Anna Blom:
I love the yogurt parfaits. Very healthy, but I love a healthy option like that.It’s my favorite.

Jon Taets:
I’m going to go kind of a complete dead opposite of Annaand I just go with the fried chicken more,

Doug Kantor:
It’s all good. Smoothies though are my favorite.

Carolyn Schnare:
That, that is a good one too. All right. One more. Two more. All right. Doug – favorite cookout, food: hamburgers or hot dogs?

Doug Kantor:
Burgers.

Carolyn Schnare:
Jon?

Jon Taets:
Hot dogs.

Carolyn Schnare:
Anna.

Anna Blom:
Burgers.

Carolyn Schnare:
All right. One more question. Very easy – midterm elections. What’s going to happen next, Anna.

Anna Blom:
I think you’re going to see Republicans take back the House. I don’t think they’re going to keep the…I don’t think…I think the Senate will stay blue, but I do think there is a wave right now in moderate districts and just poll numbers, especially if you look at the President’s most recent poll numbers around the country. I think you’re going to see Republicans take back.

Carolyn Schnare:
OK Jon.

Jon Taets:
I’m going to go ahead and agree with Anna on both sides of that. I think they’ll probably take the House back. I like to think its gonna be a bit tougher than…the map’s not great. Democrats may hang on there. Maybe even add a seat or two, depending on how the number of races develop the next year.

Carolyn Schnare:
And, Doug?

Doug Kantor:
My colleagues are reading it, right. Republicans take the House. That’ll be the headline.

Carolyn Schnare:
There we go. Well, thank you – that lightening round I’m still not going to pick a winner. You’re all winners in that one. So I do want to ask one more thing. Anna, I’m going to ask you – there were a couple issues in there that I know maybe more than a couple that our members..we would love to have their help with. Is there a way that folks can get involved and are there are specific asks that you have for them?

Anna Blom:
Absolutely. So we have the NACS Grassroots program that we manage on the Government Relations team. And it truly is how we move the needle on our issues. It’s when retailers take action using our Grassroots portal to send a pre-drafted email to their Members of Congress, or even when they’re willing to pick up the phone if you want to get involved, you can go to convenience.org/grassroots. We right now on the issues mentioned today, have two live calls to action. One on opposing the increase of the Federal excise tax on tobacco and nicotine products, and then another raising our concerns with the Reconciliation package as a whole.

Carolyn Schnare:
Perfect. Well, thank you so much for that. I appreciate that. I’m going to stick those links in our show notes on our episode webpage. So if you can go ahead and learn some more. There we have all of the the issues up to date on there as well, and keep an eye on NACS Daily, if you’re not a subscriber, because we will cover these issues as they break. And maybe there’ll be some change by the time you’re listening to this. So with that, thank you, Doug, Jon and Anna, I appreciate your time today and I hope you enjoyed our fun format. And I also, listeners, thank you for listening to Convenience Matters.

Convenience Matters Outro:
Convenience Matters is brought to you by NACS and produced in partnership with Human Gactor. For more information, visit convenience.org.

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