Troutman Pepper Locke Tobacco Practice

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What is and is not a cigarette has become increasingly difficult as states attempt to subject more and more cigars to their generally higher cigarette tax rate.  To clarify these issues, in November, the Tennessee Department of Revenue has recently issued a guidance document (“Notice #11-15”)[1]  to assist wholesalers and manufacturers in ensuring that tobacco products, particularly little cigars, are taxed correctly.

On Monday, U.S. District Judge Richard Leon issued a preliminary injunction blocking implementation of FDA’s new graphic warnings requirements, which would have required, beginning September 22, 2012, all cigarette packages to display one of nine new textual warnings showing the dangers of smoking, graphic images on the top fifty percent of both the front and rear panels.

Earlier this week, the California Attorney General’s Office filed a lawsuit against Huber Enterprise Smoke Shop, a tribal tobacco shop located on the Wiyot Table Bluff Reservation, and its owner, Ardith Huber, claiming the tobacco shop’s sales of untaxed, non-fire-safe-certified, off-directory cigarettes to non-Native Americans beyond the reservation’s boundaries violates California law, including California’s Unfair Competition Law. 

On October 14th, 2011, Senators Lautenberg (NJ), Blumenthal (CT) and Brown (IL) wrote to FDA Commissioner Hamburg to request FDA’s action to regulate additional tobacco products under the Tobacco Control Act.

The Tobacco Control Act requires FDA to regulate certain tobacco products, including cigarettes, roll-your-own and smokeless, and permits FDA to regulate others, such as pipe tobacco, cigars and electronic cigarettes.  FDA must promulgate regulations in order to assert authority over these tobacco products.

Earlier this week, FDA published guidance to help small businesses understand and comply with FDA’s regulations regarding the new required cigarette warnings.  These regulations take effect on September 22, 2012 and, as previously reported, require all cigarette packages and advertisements to contain one of nine new textual warning statements, a corresponding graphic image, and a specified toll free smoking cessation assistance resource phone number.  Roll-your-own and cigarette tobacco are not covered by the regulations.  Further, small advertisements of less than 12 square inches need not comply with the smoking cessation assistance resource requirement.    

The World Series contest between the St. Louis Cardinals and Texas Rangers is underway, but the World Series been used as a opportunity for politicians to advocate another contest – smokeless tobacco.  Before the start of this week’s first game a number of Democratic senators sent a letter urging the Major League Baseball Players Association to agree to ban tobacco during the World Series. 

On October 13, 2011, the Smuggled Tobacco Prevention (“STOP”) Act was again introduced in the U.S. House of Representatives.  Designed to enhance law enforcement’s ability to combat illegal tobacco trafficking, the STOP Act has been introduced in various forms since 2004.  The bill would make it virtually impossible for unlicensed tobacco product manufacturers to continue operating. Suppliers of unlicensed manufacturers, including machinery and raw materials suppliers, would be subject to criminal penalties. Customers of unlicensed manufacturers would be subject to the same penalties. The bill would also make it more expensive for licensed manufacturers to operate by requiring new packaging – probably a digital stamp – to facilitate tracking and tracing of cigarettes.