2024 Tobacco Regulation Outlook
By Hannah Hammond on Jan. 19, 2024The tobacco regulatory picture for 2024 will largely be shaped by what the U.S. Food and Drug Administration determines when it comes to premarket tobacco product applications (PMTAs), the proposed menthol-cigarette and flavored-cigar bans, and a potential very-low-nicotine standard for cigarettes.
Here’s what convenience stores should know going into the new year.
Menthol-Cigarette, Flavored-Cigar Bans
Perhaps top of mind for convenience-store retailers and suppliers when it comes to the tobacco category is the proposed menthol-cigarette ban, which NACS, the Energy Marketers of America (EMA), members of Congress and more have spoken out against in the name of business revenue and avoiding a black market.
Menthol cigarettes account for 34% of cigarette sales, and flavored cigars account for 51% of cigar sales in convenience stores today. Collectively, menthol cigarettes and flavored cigars accounted for $23.7 billion in sales last year, according to NACS data.
The FDA’s proposed rules to ban menthol cigarettes and flavored cigars reached the final stages of review in October when the agency submitted them to the Office of Management and Budget (OMB) for final review.
This is the end of a multistep process that the FDA must take to put in effect new tobacco product standards. Once the OMB completes its final review, the next step would be for the FDA to publish the final regulations in the Federal Register, which would include the effective date of the regulations. The expected publication date for the final rules on banning menthol cigarettes and flavored cigars has been pushed to March, according to the Biden administration’s Fall 2023 Unified Agenda.
If approved, it would be at least a year until the rules took effect.
The FDA has said the menthol-cigarette standard will reduce the appeal of cigarettes, decreasing the likelihood that nonusers who would otherwise experiment with menthol cigarettes would progress to regular smoking; and improve the health and reduce the mortality risk of current menthol cigarette smokers by decreasing cigarette consumption and increasing the likelihood of cessation.
“Finalizing these two product standards remains a top priority for the FDA,” FDA’s Center for Tobacco Products Director Brian King previously said in a statement provided to CSP.
C-stores and others have raised concerns about a menthol ban creating a black market and hurting small businesses.
“Undoubtedly FDA’s proposed product standard for flavored cigars is top of mind in 2024,” said Chris Howard, Jacksonville, Florida-based Swisher executive vice president, external affairs and new compliance. “The product standard is too vague, is not supported by the science and will have devastating economic effects—all issues that the Center for Tobacco Products has not sufficiently assessed in its rulemaking process.”
The EMA, which represents 47 regional energy marketing and convenience-store trade associations in the U.S., called on President Joe Biden to abandon his administration’s proposal.
“Banning the use of menthol in cigarettes would have a cascading effect on companies who supply fuel to independently owned and operated small business gas stations,” Rob Underwood, president of the Washington, D.C.-based EMA, said. “Retailers will likely be unable to pay for their next load of fuel and pay for [electric-vehicle] charging equipment due to the potential major revenue loss from a menthol flavor ban. Many small businesses will likely go out of business given the magnitude of this proposed rulemaking.”
Illegal Vapor Products
The FDA is ramping up its enforcement efforts against those selling and distributing illegal e-cigarettes, especially those that appeal to youth.
While data from the 2023 National Youth Tobacco Survey showed that e-cigarette use among high school students is declining, CTP director King said the FDA remains concerned about youth tobacco product use, and it cannot let its guard down on the issue.
The survey, from the FDA and the Centers for Disease Control and Prevention, found that among U.S. high school students, current overall tobacco product use declined from 16.5% in 2022 to 12.6% in 2023. The decline was primarily attributable to reduced e-cigarette use, which was down from 14.1% to 10% during the past year, the FDA said.
Elf Bar products, an unauthorized disposable e-cigarette, is the most popular brand among youth, according to the survey. The FDA announced in November it was seeking civil money penalties against retailers who sold Elf bar products.
To date, the FDA has issued about 630 warning letters to companies for manufacturing or distributing illegal e-cigarette products and devices. It has also issued more than 400 warning letters to retailers for the sale of unauthorized e-cigarettes, filed civil money penalty complaints against 35 e-cigarette manufacturers and 45 retailers, and worked with the Department of Justice to seek injunctions against six manufacturers of unauthorized e-cigarettes.
Still, some are asking the FDA to increase enforcement of unauthorized vapor products.
In El Dorado, Arkansas-based Murphy USA’s third-quarter 2023 earnings call, President and CEO Andrew Clyde shared that tobacco manufacturers have voiced frustration with illicit tobacco products being sold.
“If you did a survey of many of our rural markets, you’ll find that many of those smaller operators are selling products that were not approved by the FDA … and we may even be the only retailer responsible in that market not selling those products,” Clyde said. “And I know that is having an effect on combustible products, as well as some of the other vapor products.”
- Murphy USA is No. 4 in CSP’s2023 Top 202 ranking of U.S. c-store chains by store count.
For tobacco company R.J. Reynolds, Winston-Salem, North Carolina, the potential menthol cigarette ban and enforcement against illegal disposable vapor products is top of mind going into 2024.
“Today, the legal market is being overrun by illegal and unregulated flavored disposable vapor products made and distributed by companies flagrantly violating virtually every rule and guidance FDA has issued,” a spokesperson told CSP. “These products continue to pour across our borders and target youth.” Respondents to Goldman Sachs third-quarter 2023 Nicotine Nuggets survey said e-cigarette performance has been severely impacted by the popularity of disposable e-cigarettes and an increase in black-market activity.
The New York-based company’s Nicotine Nuggets survey represents about 60,000 retail locations across the United States. Goldman Sachs Managing Director Bonnie Herzog and others summarized key findings in a report.
Retailers and wholesalers noted that e-cigarette volumes were down 2.2% year-over-year in the third-quarter survey, compared to being down 1.7% in the second quarter. However, while they previously predicted e-cigarette volumes will decline 2.9% overall in 2023, expectations now are that it may only decline by 1.6%, Herzog said.
Survey respondents said e-cigarette performance has been severely impacted by the popularity of disposable e-cigarettes and increased black market activity—something the FDA is trying to curb.
“Retailers remain hopeful for e-cig category volume to improve once the FDA improves its enforcement efforts to remove non-compliant products/flavors and once [Altria] gains traction behind Njoy,” she said.
PMTA Review
The CTP has made determinations on 99% of PMTAs, which represented about 26 million tobacco products, that were submitted by the Sept. 9, 2020, deadline. But some decisions for major e-cigarette players’ applications remain. The agency has said in a status report filed in the U.S. District Court for the District of Maryland on Oct. 23 that it would not finish review of covered applications by the end of 2023 as previously expected. It told the court it would file another status report on or before Jan. 22.
Covered applications include new electronic cigarette/vapor products that were on the market as of Aug. 8, 2016, that had a PMTA filed with the FDA by Sept. 9, 2020, are sold under the brand names of Juul, Vuse, Njoy, Logic, Blu, Smok, Suorin or Puff Bar, and reach 2% or more of the total retail sales volume in Nielsen’s retail e-cigarette sales reports. The FDA has resolved 69% of covered applications, it said in its court update.
The FDA is also working to improve its efficiency and transparency of the PMTA review process after it was recommended through the Reagan-Udall Foundation evaluation. FDA Commissioner Robert Califf requested this operational evaluation of the agency’s CTP to help ensure the CTP has the tools to address today’s challenges as it works to prevent tobacco use among youth and to reduce tobacco-attributable death and disease, the agency said.
Since the report was released, the CTP hosted a two-day public meeting on the PMTA process in October. It has also hired a PMTA coordinator and substantial-equivalence coordinator to enhance program management and implementation.
Meanwhile, companies are submitted new PMTA applications. Altria Group Inc., Richmond, Virginia, has said it plans to file a PMTA for On Plus modern oral nicotine pouches in 2024. Juul Labs, Washington, D.C., has applied for its next-generation vapor platform, and Philip Morris International (PMI), Stamford, Connecticut, applied for its heat-not-burn tobacco product Iqos Illuma.
Very-Low Nicotine Standard
The FDA has also said it will require tobacco companies to reduce the nicotine in all cigarettes sold in the United States to minimal or nonaddictive levels.
“The FDA continues to work on a proposed rule for a nicotine product standard,” the FDA told CSP in September. “This proposed rule, as well as the final product standards for menthol in cigarettes and characterizing flavors in cigars, are a high priority for the agency.”
The rule would still have to follow a nine-step rulemaking process before being adopted.
Nicotine is a highly addictive chemical compound present in the tobacco plant, according to the FDA. Nicotine is what keeps people using tobacco products; however, it is the thousands of chemicals contained in tobacco and tobacco smoke that make tobacco use so deadly, the agency has said. Reducing the addictiveness to certain tobacco products would give addicted users a greater ability to quit and help prevent experimenters—mainly youth—from initiating regular use and becoming regular smokers, according to the proposal.
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