Duluth convenience stores are retaliating against a 2018 city ordinance which restricts the sale of menthol and flavored tobacco to designated smoke shops.

The Holiday Stationstore on Grand Avenue in West Duluth and the Korner Store in Gary-New Duluth are building smoke shops within the stores - something that Derek Medved said he hopes will restore the 19 percent drop in sales his Korner Store endured in the year since the ordinance was adopted.

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"This was a no-brainer," said Medved, the owner of convenience stores in Duluth, Chisholm, Superior and Hermantown. "If it's disrespectful, if it looks bad, if it's throwing shade at the City Council - they had no problem doing the same to business development within the city."

CBS 3 Duluth first reported Holiday's smoke shop expansion earlier this month. In a statement to the News Tribune, Holiday Vice President of Operations Rick Johnson said the tobacco shops opened only after being in regulatory compliance with the city.

"When Holiday opened its first tobacco shop in Duluth, Minnesota last week, it did so only after obtaining city approval and licensing," he said. "This was not a workaround or a loophole, rather the shop was created in complete compliance and support of the Duluth City Council's ordinance moving the sale of flavored tobacco out of convenience and grocery stores into 'smoke shops.'"

Medved argued the ordinance fails to curtail the use of flavored tobacco products, and instead shifts sales to retail outposts surrounding city limits.

The Duluth City Council passed the restriction in February 2018. Last month, the City Council further restricted tobacco sales to people 21 and over - a maneuver City Council President Noah Hobbs called "the more appropriate route."

"There is a lesson here," Hobbs said. "You can have well-intentioned policies and have poor outcomes and this is an example of that."

The 21-and-older ordinance will go into effect in June. Hobbs added that he wasn't surprised by the exposure of the loophole, and called the addition of smoke shops to convenience store interiors "valid pushback."

Johnson stressed that Holiday Stationstores would do everything possible to ensure tobacco products are not sold to anyone under the legal age.

"At Holiday, we fully recognize the need to prevent young people from using tobacco products, and we take great pride in our stellar record concerning the sale of age-restricted products," he said in a statement. "Our new tobacco shops will card everyone 100 percent of the time, and we will not take any chances of selling tobacco to those under the legal age."

Medved said he was glad to let another entity lead the way.

"I didn't want to be the pioneer on this, and I'm glad Holiday took the first steps to do it," he said, describing how the smoke shops are walled-in and designed to be autonomous with separate entrances, purchasing registers, employees, invoices, the works. He said working with the city to secure building and tobacco sales permits and undergo requisite inspections has gone smoothly.

"Very pleasant," he said. "I appreciate the timely manner it was addressed."

The Korner Store smoke shop will open within a matter of weeks, he added. Holiday's is already open.

Pat McKone was not so understanding of the workaround. The regional senior director for the American Lung Association in Duluth called the emergence of the smoke shops "very disappointing."

"Is that clever?" she said. "Or is that just profit over health? The intent of the (ordinance) was to limit access to these products - the most widely used products by our youth."

Flavored tobacco comes in a litany of candied flavors and various forms, including flavor-infused leaf tobacco and oils used in the electronic cigarettes used for vaping - the inhalation of nicotine-laced water vapor.

The rate of teenage vaping has risen sharply, presenting a challenge for schools and reversing what had been a downward trend of smoking among teens.

"The need for our community to take action to protect youth from tobacco is more urgent than ever," Duluth East High School Principal Danette Seboe wrote in a column for the News Tribune earlier this year. She cited a 78 percent increase nationally in high school e-cigarette use from 2017 to 2018, using figures from the Centers for Disease Control and Prevention.

Medved said customers will need to show proof of age when they enter the smoke shop, and products will be sold once a person is determined to be 21 or older.

"I feel that convenience stores and liquor stores do a good job of keeping things out of the hands of minors," said Medved, who said he'd been forced to reduce staff size and alter hours at his Gary store in the wake of sales drops since the flavored tobacco ordinance went into place last year.

"Being a small-business owner in today's world," he said, "it's a constant worry. We're surviving by a string and when you take a lifeline away, it makes it unfair."

Earlier this month, the Food and Drug Administration outlined a national proposal that would force retailers to wall-off flavored tobacco products - a measure the new smoke shops would seem to meet.

The city of Duluth defines a smoke shop as one that receives 90 percent of revenues from sales of tobacco and tobacco products. The loophole model would seem to be able to achieve that threshold easily - given that the stores aren't likely to risk it by selling anything else.

City Clerk Chelsea Helmer said the city acknowledges the smoke shops as separate retail establishments. The shops will be subject to enforcement by the Duluth Police Department, which can respond to complaints and conduct periodic investigations using undercover folks to do compliance checks, Helmer said.

Since the original ordinance restricting flavored tobacco sales to smoke shops went into place in February 2018, Helmer said no violations have come before the city's alcohol, gambling and tobacco commission. The commission has the authority to recommend penalties to the City Council, depending on the severity of the violation.

Said Helmer, "We work hard with our businesses to make sure they comply with regulations and I do think businesses take that seriously."