CVS built up too much, too fast. Such bubble expansions court disaster, both because you do not see overexpansion, and it is extra hard to go into a stability mode.
When I go into a CVS what I notice are that its prices for everything are a third to a half higher than for Walgreens.
Importantly, cigarettes are both low volume and high margin for retailers, despite the greedy federal and state taxes, so I imagine that CVS is going to take a hit to the bottom line, and get nothing out of the deal.
In as precarious as their economic circumstances, that may be like waving a needle around their bubble.
You may be right, but I'd bet when you factor in all the costs (there are many) associated with selling tobacco, it's a break even for CVS...
Retailers just don't cut out profits for altruistic reasons...