A Year-End Review of Tobacco Legislation, Regulations

Governments dramatically increased number, kind of restrictions

Thomas A. Briant, NATO Executive Director


MINNEAPOLIS -- During 2013, state legislatures continued to pursue increases in cigarette and tobacco taxes, the Food & Drug Administration (FDA) moved forward on several regulatory matters and local governments dramatically increased the number and kind of local tobacco restrictions.

State Cigarette and Tobacco Taxes

This year, 35 state legislatures considered cigarette tax and tobacco tax bills. Of these, Arkansas enacted a 50-cent cap on the state's cigar tax; Kentucky lowered the tax on chewing tobacco to 19 cents per 1.5-ounce unit; Massachusetts raised its cigarette tax rate by $1 per pack to a new rate of $3.51, with the cigar and RYO tax increased to 40% and moist snuff and chewing tobacco raised to 210%. In Minnesota, the cigarette tax increased July 1 by $1.60 per pack to a new rate of $2.83 per pack and the tax on other tobacco products rose to 95%. Texas enacted a new tax of 55 cents per pack on nonsettlement cigarettes.

The other states which considered, but did not pass, bills to raise taxes on cigarettes or other tobacco product included Alabama, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Louisiana, Maine, Maryland, Michigan, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, West Virginia and Wyoming.

E-Cigarette Taxation

Minnesota is currently the only state that assesses an excise tax on electronic cigarettes. As of July 1st, e-cigarettes sold in Minnesota are now taxed at a rate of 95% of the wholesale cost. Five other states considered bills this year that would tax e-cigarettes, but none of these bills were enacted. A bill in Hawaii would have applied the state's cigarette tax rate to e-cigarettes. In Massachusetts, a bill is still pending that would tax e-cigarettes at a rate of 90% of the wholesale cost. Bills were also introduced in Oklahoma and South Carolina that would establish a different method of taxation for e-cigarettes. Rather than classifying e-cigarettes as a tobacco product, the bills define e-cigarettes as a vapor product and apply a tax of five cents per nicotine cartridge, with a limit on the tax per cartridge being no greater than one-tenth of the tax on traditional cigarettes. Finally, Utah had a bill to tax e-cigarettes as a tobacco product tax and would have applied an 86% tax to e-cigarettes.

FDA Regulatory Action

While the FDA did not propose or adopt any new specific tobacco regulations this year, the agency did take other action on tobacco-related issues. One major action was the request by the FDA for public comments on the use of menthol in cigarettes. More than174,000 public comments on menthol cigarettes were submitted to the FDA online using the www.regulations.gov website and estimated 40,000 to 50,000 comments were mailed to the FDA. The FDA is now in the process of reviewing all of the comments. The Family Smoking Prevention and Tobacco Control Act does not require the FDA to propose any additional regulations on the use of menthol in cigarettes, but the agency did seek the public's comment on whether additional regulations should be considered. There is no timeline for the FDA to complete its review of the menthol comments.

In addition, the FDA announced several times during 2013 that proposed regulations on cigars, pipe tobacco, e-cigarettes or hookah tobacco would be released sometime this year. Just earlier this month, the FDA issued a Unified Agenda indicating that the agency planned to issue the new proposed regulations sometime this month. The FDA has completed its draft of proposed regulations likely applying to cigars, pipe tobacco, e-cigarettes or hookah tobacco and the regulations are currently under review by the White House Office of Management and Budget.

Local Tobacco Regulations

This year, NATO monitored and/or responded to more than 100 local tobacco-related restrictions. These restrictions included bans on the retail redemption of coupons, prohibitions on selling promotionally priced tobacco products (e.g., buy one, get one), outlawing the sale of flavored tobacco products, raising the legal age to purchase or use tobacco products, restrictions on the display and advertising of tobacco products, limitations on the number of retailers licensed in any particular city or town and various restrictions on the use and sale of e-cigarettes. In contrast, during 2012, NATO monitored and/or responded to some 50 local ordinances.