Steve Pappas, country manager for Costco, sent me this response. "Costco was set up to serve, supply and support the independent trader and strives daily to ensure it offers the lowest prices possible to members on all products sold. Costco also provides membership for specific, limited groups from the public. These individual members have similar rights to buy products made available to trade members. It is entirely legal for Costco to sell tobacco to its individual members, although the large pack sizes in which the product is sold tends to limit the appeal to most individual members, who account for less than 2% of tobacco sales."