On January 25, 2018, the United States Department of Justice (“DOJ”) announced a new policy that bars DOJ from using its enforcement authority to convert federal agency guidance documents into binding rules.  The policy follows a November 16, 2017 memorandum by Attorney General Jeff Sessions indicating that agencies should not establish binding obligations through guidance documents, which can be viewed as an attempt to subvert the notice-and-comment rulemaking process that is required when agencies create rules and regulations. 

In July 2017, California Attorney General Xavier Becerra filed a lawsuit against a Canadian cigarette manufacturer, Grand River Enterprises Six Nations (“Grand River”), for failing to comply with California laws governing nonparticipating tobacco product manufacturers (“NPMs”). The lawsuit alleges that Grand River, an NPM, sold hundreds of millions of cigarettes in California in 2014, 2015, and 2016, and failed to make escrow payments of over $13 million.

Pending before the New Jersey Legislature is Assembly Bill No. 1586, which, among other things, would “impose[] the New Jersey Tobacco Products Wholesale Sales and Use Tax on electronic cigarettes.” New Jersey does not currently impose excise taxes on electronic cigarettes. The bill has been referred to the Assembly Health and Senior Services Committee, where it remains under consideration.

Another challenge from the cigar industry has been filed against the FDA’s Deeming Regulations. Among the plaintiffs are a premium cigar retailer/lounge, a premium cigar manufacturer, and a non-profit association comprised of premium cigar manufacturers and retailers. The case is En Fuego Tobacco Shop LLC, et al. v. U.S. Food & Drug Administration, et al., No. 4:18-cv-00028 (E.D. Tex.).

A series of challenges to the Deeming Regulations has recently been filed by several vapor-product manufacturers, retailers, and a non-profit supporting the industry. These are constitutional challenges, advanced with representation from the Pacific Legal Foundation (“PLF”). The cases are Rave Salon, Inc. v. Gottlieb, et al., No. 3:18-cv-237 (N.D. Tex.); Hoban, et al. v. Food & Drug Administration, et al., No. 0:18-cv-269 (D. Minn.); Moose Jooce, et al. v. Food & Drug Administration, et al., No. 1:18-cv-203 (D.D.C.).

While the major tobacco companies pursue modified risk tobacco applications with the Food and Drug Administration, a number of bills are pending in state legislatures that would lower or eliminate tobacco product excise taxes for products that receive an FDA modified risk order.

Pending before the Mississippi Legislature is House Bill 906, which, if enacted, would increase the “tobacco equity tax” applicable to cigarettes manufactured by non-signatories to the State’s 1997 tobacco settlement agreement in Moore ex rel. State v. American Tobacco Co., et al., No. 94-1429 (Miss. Ch. Ct. Jackson Cnty.) (the “tobacco settlement agreement”). On January 11, 2018, the bill was referred to the House Ways and Means Committee, which is chaired by the bill’s principal author, Representative Jeffrey C. Smith (R-Dist. 39).

Troutman Sanders Tobacco Team leader Bryan Haynes will be in attendance at the 2018 Tobacco Plus Expo in Las Vegas.  The trade show is January 31 to February 1, and brings together many of the top brands in the tobacco and vapor products industries.  We look forward to seeing our …

Coming under scrutiny in the 2017-18 session of the New York State Legislature, electronic cigarettes and other vapor products have been the subject of various proposed bills. Pending legislation could affect excise taxation, discounts, and warning labels. Some bills would even prohibit certain types of vapor products.