With most state legislatures adjourned until January, recent tobacco regulatory and legislative developments have centered around Congress and the Food and Drug Administration’s (FDA) Center for Tobacco Products (CTP).

Congressional Bills

Two separate bills have been introduced that would substantially increase the federal excise tax on all tobacco products. The “Care for Moms Act” and the “Tobacco Tax Equity Act of 2023” federal tobacco tax increases provisions are similar in nature:

• Double the tax on cigarettes from $1.01 to $2.02 per pack.
• Implement a new e-cigarette tax that would equalize to the tax on cigarettes (methodology based per 1,810 milligrams of nicotine).
• Increase the tax on moist snuff from 11 cents per 1.2-ounce tin to $2.02 per can.
• Establish a new tax on smokeless tobacco sold in discrete single-use units (e.g. modern oral products) to $100.66 per thousand units.
• Double the tax on small cigars.
• Change to a new weight-based tax methodology (to $49.56 per pound) on large cigars, resulting in a substantial tax increase.
• Double the tax on roll-your-own tobacco (from $24.78 per pound to $49.56 per pound).
• Equalize the tax on chewing tobacco and pipe tobacco to tax these products like cigarettes.
• Include an annual adjustment in the proposed rates based on inflation.

The “Care for Moms Act” supports the maternal health workforce, promotes access to both prenatal and postpartum care, and provides resources to mothers. In the news release that announced the introduction of the “Tobacco Tax Equity Act of 2023,” the bill’s sponsors are seeking to close tax code loopholes for tobacco products by establishing a new federal tax on e-cigarettes, updating the federal cigarette tax rate in order to restore its public health impact, and harmonizing the tax rate across tobacco products. These bills have been considered and subsequently failed in past Congressional sessions.

FDA CTP Developments

In the last few months, CTP has made announcements and statements regarding rulemaking for banning menthol cigarettes and flavored cigars and establishing very low nicotine content in combustible products; vapor product enforcement; and premarket tobacco product application (PMTA) review status.

CTP Director Brian King stated that the agency plans to issue a final rule prohibiting menthol in cigarettes and characterizing flavors in cigars by the end of 2023. (At press time the FDA had sent the final version of its proposed plan to the White House for review.) Previously, the agency indicated that these final rules would be published by August 2023. When the final rules are released, it will also likely include an effective date of one year post publication of the rule, which could be pushed out further if the rules are challenged in court by the industry.

King has also indicated that a proposed rule regarding setting a maximum cap on nicotine in cigarettes and possibly other combustible tobacco products will likely be published sometime after the final menthol cigarette and flavored cigar regulations are released. This proposal is much earlier in the rulemaking process compared to the menthol/flavored cigar ban as there are a number of steps the agency needs to take before these regulations take effect, which include:

• Submitting the proposed regulations to the White House Office of Management and Budget (OMB) for review. The OMB needs to approve of any proposed regulations that would have a significant impact on the country’s budget and economy.
• Publishing the proposed regulations in the Federal Register, allowing the public to be able to review the regulations.
• Providing the public a time period of 60-90 days to submit comments to the agency about the proposed regulations.
• Deciding whether any changes are to be made to the proposed regulations after reviewing and responding to all relevant public comments that were submitted.
• Re-submitting the final version of the proposed regulations to the OMB a second time for an additional review and approval.
• Publishing the final regulations in the Federal Register and setting a date for the regulations to go into effect.

CTP has also expressed its intent to increase its efforts to conduct compliance inspections at retail to check if stores are selling tobacco and vapor products that have been denied marketing authorization by the agency or are under FDA PMTA, but for which no final order has yet been issued by the agency.

To date, the FDA has only authorized the sale of 45 tobacco products through the PMTA process, which include 23 e-cigarette/vapor products/devices. (Note: most traditional tobacco products may be lawfully sold without having been approved through the PMTA process.) The FDA has stated it is prioritizing enforcement on products that did not submit a PMTA application, products that have received a marketing denial order and flavored disposable vapor products that have high youth usage rates. To that end, in September, the FDA issued warning letters to 15 online retailers and three manufacturers of e-cigarette products, including Elf Bar, EB Design, Lava, Cali, Ban and Kangertech, and for the first time issued the maximum ($19,102) civil monetary penalty fine to 22 retailers selling Elf Bar/EB Design vapor products.

The FDA is expected to file an updated status report on its review of pending vapor PMTA applications as part of a Maryland Federal District Court order by Oct. 23. In previous filings, the FDA indicated that it expects to complete its review of 68% of the 189 Covered Applications by Sept. 30. A “Covered Application” is for vapor products that reach 2% or more of the total retail sales volume. These products include JUUL, Vuse, NJOY, Logic, Blu, SMOK, Suorin and Puff Bar. The FDA expects to finish review of all Covered Applications by Dec. 31.

David Spross is the new executive director of the National Association of Tobacco Outlets (NATO), a national retail trade association that represents more than 66,000 stores throughout the country. He comes to this position with 23 years of tobacco industry experience previously working in the government affairs departments at UST Inc. and at Reynolds American.