In this episode of “At Your Convenience,” CSP Editor Diane Adam talks with Mitch Morrison, vice president of retailer relations at Informa Connect, about the latest news and trends in the tobacco category. The two talk about staff changes at the Food and Drug Administration's Center for Tobacco Products (CTP), how artificial intelligence might speed up the agency's premarket tobacco product application (PMTA) review process, growing illicit vape sales and more.
“At Your Convenience” brings industry experts and analysts together with CSP editors to discuss the latest in c-store news and trends. From mergers and acquisitions to foodservice and technology, the podcast delivers the story straight to listeners in short-format episodes, perfect for the morning commute or a quick break at the office.
Listen to their conversation above, or read the transcript here, which has been edited for length and clarity:
Mitch Morrison: It is Thursday, June 5, and I think it’s amazing because no matter what day you would say on the calendar, this is a category that's never stagnant. It’s always brewing with activity and a lot of muscle. Some of the most breaking news I would have to say is with the CTP. It was just weeks ago when they removed CTP Director Brian King and recently named Brett Koplow as acting director. What are some of the hopes in our industry about the new CTP acting director?
Diane Adam: We know that Koplow’s been with the FDA since 2011. He’s served as an attorney that’s worked in various legal roles for the agency, so that can work to his benefit tremendously. There was a lot of uncertainty with the Department of Health and Human Services (HHS) layoffs. We can all remember on April 21st, a group of Democratic senators sent a letter to the HHS expressing concern over the FDA and CTP cuts. I think Koplow’s hiring as acting director mitigates that a little bit.
I talked to several c-store retailers before Koplow was named acting director and one thing Lonnie McQuirter told me, who is the owner of 36 Lynn Convenience Store in Minneapolis, is that he would like to see decision makers give c-store operators a bigger seat at the table when it comes to CTP and the things that they do. He told me that if the recent layoffs forced the FDA to refocus its priorities, it should begin by rebuilding a collaborative framework with convenience retailers, harnessing, their proven compliance tools and decades of partnership.
Morrison: That's an excellent point and I know at our CSP tobacco forum last fall one of the concerns that retailers mentioned was the whole premarket tobacco product applications (PMTAs) process. What are they hoping for from the CTP?
Adam: Like Lonnie said they want to have a seat at the table and to help with these compliance tools. We know there’s a backlog there. C-stores just want to sell products that are FDA authorized. There's a lot of gray area and they are business owners that want to follow the law and sell their products. So hopefully that backlog can start to be quickened and that's what they're looking to do.
Morrison: The FDA recently unleashed the new generative AI platform. I’m curious about what are the hopes and expectations of this new platform and could that help accelerate the approval process?
Adam: The first thing I thought was how is this going to be used over at CTP? The agency said the rollout will allow the FDA scientists and subject matter experts to spend less time on “tedious, repetitive tasks.” David Spross, who is the executive director of the National Association of Tobacco Outlets told me NATO is intrigued about the possibility of the tool if it creates efficiencies and speeds up the PMTA review process.
Morrison: I'd like to now move a little bit to the legislative side—both on the federal and state. With the Trump administration, some of the major concerns such as a potential menthol ban, ultra-low nicotine implementation, those have all either been removed or placed on the deep back burner. On the other hand, we're also seeing where there are concerns that cuts from the federal to the state is now prompting a widespread onslaught of bills to raise taxes on nicotine related products, even in many red states. And I thought if you can share a little bit about some of your observations on the federal and then talk a little bit about maybe one or two states that are looking to pass legislation.
Adam: Many states are looking to raise excise taxes on nicotine products and Indiana is one of them. This is because of reduced federal aid coming to the states. The Indiana General Assembly has passed a $2 per pack increase in the state cigarette tax. The budget also increases taxes on other tobacco products, including e-cigarettes. This increase will take effect July 1st and bring Indiana's cigarette tax rate just under $3 a pack.
Morrison: I want to move a little bit into the world of vape. I thought we would see significant reductions in illicit vape enforcement. What are you seeing on that front?
Adam: When it comes to the illicit market, state attorney generals have announced enforcement actions, including investigations and litigations to combat the illicit vapor market. Everybody is saying that enforcement is key, both from the state level and from the federal level. The FDA seized close to $34 million worth of illegal cigarettes. The FDA has issued more than 750 warning letters to companies for manufacturing, selling or distributing unauthorized new tobacco products. It's also issued more than 800 warning letters for retailers for selling these products and filed civil money penalty complaints against over 80 manufacturers and more than 175 retailers for the distribution of sales.
Morrison: Looking at our operators back bars, one of the more exciting, I think, relatively newer, nascent subcategories is modern oral nicotine. I've been covering the c-store industry now for 27 years so when you look at modern oral, is it a fad or a trend in your eyes? And is there any data to support your opinion?
Adam: It’s a standout in the smokeless category and I think it has staying power and c-store retailers are telling me that. Chicago market research firm Circana data reports modern oral tobacco increased units 44% year over year in 2024. It now makes up nearly 6 % of total tobacco dollar sales.
I think that as c-store retailers condense their combustible cigarette section, I think you're going to see more and more growth of modern oral and it'll continue. In fact, one retailer told me they're seeing double digit growth in the modern oral segment.
Morrison: Going maybe in the opposite direction, my hometown of Brookline, Massachusetts, is one of these where we have seen some local municipalities, primarily in Massachusetts, adopt these nicotine-free generation policies. You’re born on Jan. 1, 2000, and you are not allowed to purchase nicotine. Now let’s go 10 or 15 years from now. You're a 35-year-old, and you can have anything and everything, but a nicotine product. It just doesn’t seem to make sense to me. I'm curious if you think other states or other large metro markets are going to embrace this?
Adam: I think that might be difficult. I don't see this happening in the near future because I think a nicotine-free generation will be difficult to sustain in the long run. But on the flip side, the whole aim of the nicotine-free generation is to prevent new users. This is something that I think that could gain traction and go either way.
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This post is sponsored by Cenex®