The Troutman Sanders Tobacco Team will attend the Tobacco Merchants Association’s Annual Meeting and Industry Conference in Williamsburg, Virginia on May 20-22.  We look forward to seeing our clients and friends at the conference.

Bryan M. Haynes /  bryan.haynes@troutmansanders.com / 804.697.1420 / http://www.troutmansanders.com/bryan_haynes/

In a notice stating that FDA intends to issue a solicitation for proposals to identify tobacco advertisements, FDA recently stated that it intends to issue this summer so-called “deeming regulations” covering additional tobacco products under the Tobacco Control Act.

The Tobacco Control Act gave FDA immediate authority over cigarettes, roll-your-own tobacco and smokeless tobacco.  The Tobacco Control Act also gave FDA authority to issue regulations covering additional tobacco products, such as cigars, pipe tobacco and electronic cigarettes.  After indicating in 2011 that it intended to issue the regulations later that year, FDA did not issue the regulations in 2011.  At a recent conference on tobacco regulatory issues, the head of FDA’s Center for Tobacco Products Dr. Lawrence Deyton advised that the process for issuing regulations was more complicated than originally thought.

The notice indicates that FDA intends to issue the “deeming regulations” this summer, but it does not specify the tobacco products that will be covered by the regulations.  The notice indicates that FDA has the authority to regulate cigars, cigarillos, hookah tobacco and e-cigarettes, but does not indicate whether all of these products will be covered by the deeming regulations (or whether pipe tobacco will also be covered).  In the meantime, there are federal legislative proposals that would strip FDA of authority to regulate so-called “traditional” large cigars.  Stay tuned this summer for which products FDA decides to regulate, and how FDA decides to regulate those products.

Bryan M. Haynes /  bryan.haynes@troutmansanders.com / 804.697.1420 / http://www.troutmansanders.com/bryan_haynes/

Last week, anti-tobacco Senators Durbin (D-IL), Lautenberg (D-NJ) and Blumenthal (D-CT) introduced the so-called “Tobacco Tax Equity Act,” Senate Bill 3081.  Similar in form to legislation previously introduced by Senator Harkin (which has yet to get a hearing), the bill purports to equalize taxes for various types of tobacco products.

Specifically, the bill would:

• Raise the pipe tobacco rate by almost 800%, from $2.83 per pound to $24.78 per pound (equivalent to the rate for roll-your-own tobacco)
• Raise the snuff rate by almost 800%, from $1.51 per pound to $13.42 per pound
• Raise the chewing tobacco rate from 50 cents per pound to $5.37 per pound
• Maintain the same rate for large cigars (52.75% of the sale price), but impose a minimum tax of 5.033 cents per cigar (equivalent to the rate for cigarettes) and raise the maximum tax to $1.00 per cigar.

The bill has been touted by its sponsors as requiring all tobacco consumers to pay the same rates as cigarette consumers, although the rates for smokeless tobacco remain lower.

One provision that has not been discussed in the various press releases regarding the bill is a provision entitled “Other Tobacco Products.”  This provision imposes a new tax on “other tobacco products,” a definition which has been expanded to include “any other product containing tobacco that is intended or expected to be consumed.”  The provision taxes “other tobacco products” (including products determined to be a “tobacco product” by the FDA) at a rate equivalent to the tax rate for cigarettes, to be determined in accordance with regulations to be issued by the Treasury Department.

Given that the federal excise tax already covers cigarettes, roll-your-own tobacco, pipe tobacco, smokeless tobacco and cigars, the most obvious candidate for the new tax is e-cigarettes.  E-cigarettes (at least to the extent they contain tobacco) could be considered a product that is “intended or expected to be consumed.”  It is not clear how the Treasury Department would implement or collect the tax, given that there is currently no mechanism for licensing manufacturers or importers of e-cigarettes, or for reporting their sales.

Bryan M. Haynes /  bryan.haynes@troutmansanders.com / 804.697.1420 / http://www.troutmansanders.com/bryan_haynes/

Much has been written about the so-called “Baucus amendment” to the $109 billion federal transportation bill.  The amendment, ostensibly designed to provide financing for rural schools, would classify tobacco stores that offer in-store cigarette rolling machines as “manufacturers of tobacco products” under the Internal Revenue Code.  The legislation would thereby require the store owners to obtain federal permits and to pay additional taxes.  But the amendment also presents additional, perhaps unintended, consequences. [Read more →]

An article by the Troutman Sanders Tobacco Team appears in the April issue of Smokeshop Magazine. [Read more →]

Troutman Sanders Tobacco Team member Nancyellen Keane participated in a panel discussion at the Food and Drug Law Institute’s Annual Conference on April 24th [Read more →]

The Troutman Sanders Tobacco Team will be at the National Association of Tobacco Outlets Trade Show on April 24-26 in Las Vegas.  We look forward to seeing our clients and friends at the show.

Bryan M. Haynes /  bryan.haynes@troutmansanders.com / 804.697.1420 / http://www.troutmansanders.com/bryan_haynes/

A federal court in Massachusetts has ruled unconstitutional an ordinance that banned outdoor advertising of tobacco products in the City of Worcester, Massachusetts. [Read more →]

A bill that would have exempted Subsequent Participating Manufacturers (SPMs) to the Master Settlement Agreement from Mississippi’s so-called “equity tax” or “nonsettling manufacturers fee” has died in committee. [Read more →]

Earlier this month, FDA offered draft guidance for requests for approval of modified risk tobacco products under the Tobacco Control Act.  Comments on FDA’s draft guidance may be submitted by June 4, 2012. [Read more →]