With 100 percent of the precincts reporting Wednesday, Proposition 29 trailed by a 51 percent to 49 percent margin, or by 63,176 votes out of the 3.85 million cast, according to The Associated Press.
But with more than 1 million vote-by-mail and provisional ballots still uncounted, it could be days or longer before a winner is officially declared.
David Howard, a R.J. Reynolds Tobacco Co. spokesman, said the company was "pleased that California voters recognized that this ballot initiative was flawed. All indications were that it was going to be close, and that certainly was the case."
But the Yes on 29 campaign said "sponsors and supporters of Prop 29 were not conceding defeat."
"Prop 29 is and has always been about saving lives and fighting tobacco-related diseases. With less than 1 percent separating defeat from victory, we remain vigilant and ever hopeful, no matter how long the odds."
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