This year, there has been no shortage of legislative challenges for the tobacco industry. From the federal cigarette and tobacco tax increases, to FDA tobacco regulations, 2009 has been a very real test for manufacturers, wholesalers and retailers. While the impact from the federal tax increases has rippled across the country, other federal and state tobacco issues continue to affect the industry and, in some cases, the industry has pushed back.
In just a six week period from the end of August to the middle of October, three lawsuits have been filed against the U.S. Food and Drug Administration and the agency’s attempt to implement certain tobacco regulations. One lawsuit filed by R.J. Reynolds Tobacco Company, Conwood Company, Commonwealth Brands, Lorillard, National Tobacco Company and Discount Tobacco City & Lottery against the U.S. Department of Health and Human Services and the Food and Drug Administration seeks to protect the constitutional right of tobacco manufacturers and retailers to communicate to adults through tobacco product advertising.
The FDA issued a letter on Sept. 14 notifying the industry about the ban on flavored cigarettes which included a sentence that other flavored tobacco products may also be banned. The result was a federal lawsuit filed by Kretek International against the FDA seeking an injunction against banning flavored little cigars.
Most recently, a third lawsuit was filed in federal court by BBK Tobacco & Foods, d/b/a HBI International seeking to protect the right to sell flavored cigarette rolling papers that are sold in separate packages. While the new FDA law bans flavored cigarettes and their component parts including the tobacco, filter and paper, the law does not specifically refer to a ban on flavored rolling papers that are separately packaged.
The need to file lawsuits demonstrates not only that the FDA lacks a fundamental understanding of different tobacco products, but is willing to proceed with implementing new tobacco regulations before communicating with those in the tobacco industry that are directly affected by such regulations.
In an effort to pass federal legislation that should have a positive impact on the tobacco industry and be a benefit for brick and mortar retailers, NATO has joined a coalition to encourage the U.S. Senate to pass S. 1147, the Prevent All Cigarette Trafficking Act (PACT Act) This coalition includes the American Wholesale Marketers Association (AWMA), the National Association of Convenience Stores (NACS) and the Society of Independent Gasoline Marketers of America (SIGMA).
The PACT Act would close a number of loopholes in current federal law regulating “remote” or “delivery” sales of cigarettes and smokeless tobacco products sold over the Internet or by mail order. These remote sellers typically sell untaxed or low-taxed cigarettes to consumers in higher-tax jurisdictions, without paying the taxes owed to the states. This results in states losing substantial excise tax revenue, opening the door for underage youth purchases of tobacco products and reducing sales of tobacco products by law-abiding retailers.
The PACT Act contains a number of provisions to decrease illegal Internet sales of tobacco products by requiring payment of state excise taxes, regulating delivery methods including age verification of the consumer when the delivery is made and prohibiting cigarettes and smokeless tobacco from being mailed through the U.S. Postal Service.
New York City
In a first of its kind ban, the New York City Council on a 46-1 vote approved a new law that bans the sale of flavored cigarettes, cigars, smokeless tobacco, pipe tobacco and hookah tobacco products with various characterizing flavors including any fruit, chocolate, vanilla, honey, candy, cocoa, dessert, alcoholic beverage, herb or spice flavor. Flavored tobacco products that contain only tobacco, menthol, mint or wintergreen flavors are allowed to be sold.
The only location under the new law allowed to sell otherwise banned flavored tobacco products is a “tobacco bar.” New York City Code defines a “tobacco bar” as a bar that annually generates 10 percent or more of its total annual gross income from the on-site sale of tobacco products and the rental of on-site humidors and is also registered with the Department of Health.
NATO wrote to all of the city council members and New York City Mayor Michael Bloomberg urging them to oppose the ban. It was passed and Mayor Bloomberg signed it into law. Just like with the FDA tobacco regulations, various tobacco manufacturers are currently considering a lawsuit against New York City to overturn this excessive and unfair ban on flavored tobacco products.
(Thomas Briant, the Executive Director of NATO, can be contacted at 1-866-869-8888 or via e-mail at firstname.lastname@example.org).