E-Vaping & Taxation
NATO's Briant offers tobacco insider's view to future
LAS VEGAS -- Could be 2016 before the U.S. Food & Drug Administration (FDA) takes formal watch of cigars, pipe tobacco and electronic cigarettes.
In the meantime, myriad proposals, from President Obama's near-doubling of the federal excise tax to a spate of local and state initiatives to hike tobacco taxes and restrict sale of e-cigarettes, should keep the country's 175,000 merchants of tobacco products on heightened alert for some time to come.
National Association of Tobacco Outlets (NATO) executive director Tom Briant's alarm is not to deter tobacco purveyors from continuing their trade. Rather, it is vital operators be informed and engaged in the efforts of governmental bodies, from big cities to rural hamlets, to generate revenues off the backs of tobacco sellers.
Through just the first quarter of 2014, NATO has already tracked 56 proposals across local and state governments to restrict the sale of tobacco, outpacing the organization's forecast of some 200 measures nationwide this year. Spurring such activity is the $1.4 billion economic stimulus package made available to local governments to restrict tobacco sales. With many municipalities cash strapped, some have tapped stimulus monies by proposing to raise the legal age from 18 to either 19 or 21, to erect marketing restrictions and impose higher taxes on all tobacco products, including, in many cases, e-cigarettes.
As has been his practice at the NATO Show, Briant reviewed court decisions of recent years and updated operators on measures under consideration across the nation. Among the most disconcerting measure, Briant cited, is New York City's efforts to ban couponing and promotional pricing. While a similar ordinance was upheld in Providence, R.I., Briant said NATO and others are challenging New York's move since it falls under a different circuit court.
NATO's goal, he said, is to prevent New York from becoming a "precedent for other cities trying to do the same thing."
Last month a federal judge issued a stay, halting New York City from enforcing Section 6 of the city's tobacco ordinance. In addition to prohibiting coupons and multi-pack discounts, the measure mandates a minimum price of $10.50 for cigarettes and little cigars sold in packs of 20 or more.
"Even if they issued these proposed regulations tomorrow, it could be at least two years before they would go into effect," he said.
Briant was speaking about the much-discussed deeming regulation anticipated from the FDA concerning electronic cigarettes and vaping systems, as well as traditional cigars and pipe tobacco.
Why the delay? The regulatory process involves nine steps. Once the FDA issues its proposed regulations (step 5), the public would have at least 60 days to comment, from which the FDA must review each and every comment. From there, any adjustment to the proposed regulations must go to the federal Office of Management & Budget (OMB) to assess the financial impact. And only once that is signed off, would the regulations take effect. Put another way, it has been longer than two years since the FDA took up the issue of menthol cigarettes and no formal restrictions or ruling has been issued limiting their sale.
Still, Briant echoed many in the e-cigarette industry, agreeing that certain regulations are virtually certain--and that many manufacturers and retailers have already assumed these practices--including minimum-age requirements, restricting self-service displays (except at age-restricted shops like tobacco outlets), disclosure of ingredients and no free samples.
What the FDA by statute cannot do is ban online sales, prohibit e-cigarette advertising or impose federal taxes. Those powers reside with Congress.
While it remains uncertain exactly what Mitch Zeller, director of FDA's Center for Tobacco Products (CTP), will propose, many have sought to decipher Zeller's past statements in speculating what could be forthcoming. Briant, at the NATO Show, was no different.
He spoke positively about Zeller's language of a continuum of risk within the realm of risk reduction. Briant translated that as follows: "Traditional combustible cigarettes are on one end of the risk continuum and electronic cigarettes are on the other end of the risk continuum."
Combining this observation with Zeller's repetition that all policy will be based on rigorous science, Briant offered an optimistic future for the world of electronic vaping.