E-Cig Regulations and Harm Reduction
Lorillard's CEO addresses flavors, taxes and tanks at the NATO Show
LAS VEGAS --Although state and federal regulations have certainly affected Lorillard Inc., the company's president and CEO isn't calling for a less regulated environment. In fact, during his general session at this year's NATO Show, Murray S. Kessler said he "firmly embraces the fact that regulatory oversight is here to stay" and even called for reasonable electronic cigarette regulations.
"The diversity of tobacco products demands diversity of modified risk assessments and statements," he said. "Some continuing smokers are not willing to switch to a product radically different from traditional cigarettes. They should be given the choice of potentially reducing their risk through the availability of modified risk products that provide even modest reductions in harmful smoke constituent exposures."
Clearly, electronic cigarettes fall into that category.
"E-cigarettes might possibly represent the most important harm reduction potential in the history of cigarettes," said Kessler. "Blu has given Lorillard a meaningful seat at the table in the harm reduction debate."
Using that seat, Greensboro, N.C.-based Lorillard has advocated for "balanced regulatory actions" that will encourage current cigarette smokers to switch to electronic cigarettes and future modified risk tobacco products.
"A one-size-fits all policy that treats e-cigarettes similarly to tobacco cigarettes could only result in e-cigarette consumers returning to traditional cigarettes," Kessler continued, "an outcome that simply does not make sense from a public health perspective."
Kessler took the time to address some of the most pressing regulatory issues facing the nascent segment, including:
- Flavors: "I've fought and disagreed on that 'kiddie flavor' concept," Kessler said, pausing to take a dip of apple-flavored MST. "I enjoy flavor. There's no real substantial data that says that e-cigarettes are appealing to kids, just scare tactics. If you're trying to save lives, flavors play an important role in this product--in talking to e-cig smokers, after they've stopped smoking cigarettes, they don't want to be reminded for that tobacco flavor. A few of my peers disagree with me on this topic, but I respectively disagree with them. If you're trying to make this product a success, and you understand consumers that are trying to gravitate away from cigarettes, flavors play a role."
- Taxes: "There are states and cities trying to plug budget holes by taxing vapor products," said Kessler, referencing New Jersey governor Chris Christie's proposal to apply the cigarette excise tax to e-cigs. "I'm wildly against an OTP variable tax rate because as a percentage, depending on the way e-cigarettes are sold in so many different ways, you come up with much, much higher rates per equivalent product. Christie says he wants to tax them like cigarettes, but the truth is, he wants to tax them at ten times the level of cigarette tax for something that arguably causes a hundredth of the harm. How does that make sense? We understand that taxes are a possibility, but they should reflect the continuum of risk. Based on the science, excise taxes are done to punish products that deliver harm--I think we're a long way from any science that demonstrates that e-cigs cause harm."
- Tanks/Open Systems: "It's an interesting concept," Kessler said of the growth in tank and vaporizer sales, noting that while he opposes a ban, he isn't sure they represent the industry's future. "Today, a consumer enters the e-cig category by trying a disposable or rechargeable and get excited but don't fully get the performance they're looking for. When they try these tanks and mods, they get a much better vapor and battery performance. But when I look at the history, I see that technologies over time get smaller (such as with cell phones). I think that's the direction. Consumers want the common experience of products that feel like cigarettes. What we need to do is close that performance gap, to drive the technology so you get just as much vapor and battery power out of the preferable, tighter format that you do out of a mod. Over time, I think you'll see that. For Lorillard, that's a matter of months, not years."
"Five years after the Tobacco Control Act became law, we are on the cusp of a new era in tobacco policy," Kessler said. "This new era presents alternative perspectives that are unsettling for some. But it will require the efforts of all stakeholders to make the promise a reality."
"It is time to cease the moment to align the interests of business and public health and adopt sensible regulatory policies," he added. "Five years from now, I hope I can stand here and say our goals were achieved."