Details of New Tobacco Retailing Rules Under FDA

WASHINGTON -- With less than a week to go before new tobacco retailing and marketing restrictions issued by the Food and Drug Administration (FDA) go into effect, NACS hosted a Webinar presented by Jim Barnette, partner with Steptoe & Johnson LLP, outlining the new regulations for retailers and answering some of their most common questions.

The issue of FDA restrictions on tobacco retailing and marketing has been around since 1995, during the later stages of former President Bill Clinton's first term, according to Barnette, who said the FDA attempted to regulate cigarettes as nicotine delivery devices and reached a final rule in 1996, but was deemed invalid. Later, when democrats regained control of both houses of Congress in 2006, they were "very quick to move on tobacco legislation, which was introduced but never acted on in the years of the Bush presidency, when Republicans were in control of both houses of Congress," he said.

President Barack Obama signed the Smoking Prevention and Tobacco Control Act in June 2009, with most of its provisions going into effect one year following the signing or June 22, 2010, Barnette said. He explained the law gave the FDA the option to republish its final rule, which was first published in 1996. The restrictions under the final rule apply only to cigarettes and smokeless tobacco products and include:

-- A prohibition on tobacco sales to consumers under the age of 18;
-- Requires age verification for tobacco customers who appear to be under the age of 27;
-- Requires all cigarette and smokeless tobacco transactions be conducted face-to-face (prohibits vending or self-serve displays in all instances except adult-only facilities);
-- Bans free samples of cigarettes, and allows only very limited free samples of smokeless products;
-- Restricts the descriptors used on cigarette packs, such as "light" and "mild;"
-- Bans the act of selling cigarettes in any package size smaller than a pack (no single sales or mini-packs); and,
-- Prohibits gifts or free items in connection to tobacco purchases.

The Webinar also answered some of the most common questions NACS received regarding the retailing and marketing rules, which are outlined below as answered by Barnette.

Age verification and frequent customers: As stated in the FDA rulemaking, retailers have to card everyone appearing under the age of 27 whenever he or she makes a tobacco purchase, even if the consumer is a loyal and frequent tobacco customer known to be of legal tobacco consumption age. Because the appearance issue is subjective, the FDA has issued guidance for retailers, but they should use their best judgment to protect themselves and the customers. Card customers when there is any conceivable doubt, and educate loyal customers that the new requirement is a federal law, not necessarily store policy.

Pass-through sales of cigarette packs with descriptors: Recognizing that there may be some cigarette manufacturers producing packs with descriptor words between now and the enforcement date of June 22, the FDA will allow packs with descriptors put into distribution up until July 22 to be sold at retail indefinitely.

Free items with the sale of tobacco and loyalty programs: The FDA has ruled that matches are permitted to be given with the sale of cigarettes, however a ruling has not yet been made for lighters, so retailers are advised to not give away lighters as of the effective date, June 22. In addition, the FDA issued guidance recently saying tobacco purchases must be separate from loyalty programs rewarding customers with cash back, rewards, points and discounts on non-tobacco items. Said another way, tobacco purchases cannot count toward loyalty programs. However, a buy one, get one free promotion or similar restricted to tobacco items would be permitted.

Branded merchandise gifts: Manufacturers that own the rights to tobacco brands are not permitted to make non-tobacco merchandise containing the brand, such as shirts or hats, and retailers are not permitted to sell or give away such items.

Enforcement policies: While state laws over enforcement might be different from federal law, the FDA said owners of the store in which the violation took place are ultimately responsible for the violation and fined, not the clerk or person who violated the rule. Violations are also tallied by each store location, and as penalties increase, the first violation will attach to that particular store, not across an entire chain of common ownership locations.

A ban on color advertising: The ban on color tobacco advertising, requiring only black and white -- or "tombstone" -- ads at retail has been successfully challenged in a Kentucky court, which stuck down the measure on First Amendment grounds in January. While the FDA appealed the decision to a higher court, it also said it would not enforce the ban on color advertising at this time. As such, color advertising is permitted at retail locations.

"As much as we should be rightfully an appropriately concerned about one week from today, [be] aware that we aren't out of the woods yet. The FDA has the authority to make the regulations much more stringent. It can regulate all tobacco products, including cigars, and it has indicated it is likely to do so," Barnette said, noting the FDA is also exampling menthol additives in cigarettes, and has a great deal of flexibility in terms of regulatory power going forward.

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