Except for the override of a veto by the Maryland Governor Larry Hogan, which enacted a $1.75 per pack increase on cigarettes and an increase in the tobacco product tax rate to 53%, bills in 23 states to raise cigarette and/or tobacco product excise tax rates did not pass.
In addition, only California, Indiana and Maryland enacted a tax on electronic cigarettes/nicotine vapor products out of a total of 28 states that considered taxing these products. Also, 21 state legislatures introduced bills to ban the sale of some or all flavored tobacco products, but none of the bills were passed.
Federal Cigarette, Tobacco and Vapor Taxes
A budget reconciliation bill in Congress originally included significant tax increases in the federal cigarette and tobacco tax rates.
These tax increases were removed from the budget reconciliation legislation, but then the Build Back Better bill initially included a new tax on vapor products and modern oral tobacco products; however, these vapor and modern oral taxes were ultimately removed from the Build Back Better bill and the legislation has yet to receive consideration by the full U.S. Senate. NATO commissioned an economic study to estimate the effect of these proposed federal excise tax increases.
The U.S. Food and Drug Administration (FDA) did not complete its review of all 15,000 premarket tobacco product applications (PMTAs) by the court-ordered Sept. 9, 2021, deadline. To date, the agency has completed its review of about 98% of the applications and continues to work on finishing its review of the remaining PMTAs. As of part of the PMTA process, the FDA has refused to file manufacturer applications, refused to accept manufacturer applications, and issued marketing denial orders for almost 7 million flavored electronic cigarette/nicotine products.
The FDA has issued marketing authorization orders for certain Vuse Solo electronic nicotine products. The marketing authorization orders, which allow these products to remain on the market, were issued to R.J. Reynolds Vapor Co. for the following products:
- Vuse Solo Power Unit
- Vuse Replacement Cartridge Tobacco Flavor Original 4.8% G1
- Vuse Replacement Cartridge Tobacco Flavor Original 4.8% G2
The effective date of the FDA’s graphic cigarette health warnings, which would replace the Surgeon General warnings on cigarette packages and advertisements, is now Jan. 9, 2023. Two lawsuits are pending which seek to overturn the graphic cigarette health warnings. One of the lawsuits was filed against the FDA by R.J. Reynolds Tobacco Co., Santa Fe Natural Tobacco and ITG Brands and the second lawsuit was filed by Philip Morris USA.
In April of 2021, the FDA announced that it would issue new proposed regulations by April of 2022 that would prohibit the use of menthol in cigarette and ban all characterizing flavors in cigars.
On Dec. 2, 2021, FDA Director Mitch Zeller presented a live webinar to NATO members with an update on FDA regulations and other agency matters.
Thomas A. Briant is the executive director of NATO, a tobacco retailing association based in Lakeville, Minn. Reach him at email@example.com.