The Future of Flavored Tobacco Products Remains Up in the Air

LAS VEGAS — Next month could bring some clarity to the future of flavored tobacco products. However, while the Biden Administration delayed its decision on the U.S. Food and Drug Administration's (FDA) proposed product standards for menthol products and flavored cigars until March, many in the tobacco industry aren't holding their collective breath for a decision anytime soon. 

Participants in the "Future of Flavors" panel discussion at Total Product Expo (TPE) 2024 mostly agreed that they were not surprised the administration pushed the decision back from yearend 2023 to early 2024. Even if a decision does come through sometime this year, it will not bring an end to the debate on flavors, they believe.  

The panelists included Terry Gallagher, CEO of Smoker Friendly; Bryan Haynes, a lawyer at Troutman Sanders LLP; David Spross, executive director of the National Association of Tobacco Outlets; and Jessica Zdinak, chief research officer at Applicated Research and Analysis Co. 

"I was pleasantly surprised. It's a fool's errand trying to predict the FDA's timing on anything," said Haynes, adding that in hindsight, it makes sense to delay a decision on an issue that would have a big impact in an election year. 

Added Gallagher, "I am not surprised by anything the government or a government agency does, and I think we will see this go on for years."

In late April 2022, the FDA proposed two product standards, one to prohibit menthol as a characterizing flavor in cigarettes and the other to prohibit all characterizing flavors (other than tobacco) in cigars. The public comment period ended on July 5, 2022, and after reviewing hundreds of thousands submitted comments, the FDA submitted the final proposals to the White House Office of Management and Budget (OMB) in October 2023. The OMB reviews potential regulations to assess their economic impact — a necessary step before a new FDA rule can be implemented.

Prohibiting the sale of menthol cigarettes and flavored cigars would have a huge impact on the convenience channel from both a consumer and retailer perspective.

[Read more: Multiple Factors Are Driving an Uncertain Future for Tobacco]

According to Zdinak, roughly 40% of the sample in Applicated Research and Analysis Co.'s focus groups and surveys are menthol cigarette smokers. Menthol cigarettes are favored by the non-Hispanic Black population, among whom say, "don't take my menthol cigarettes away from me," she noted.

On the retailer side, Gallagher cited NACS data that puts menthol at 34% of the c-store market. Additionally, 51% of flavored cigars are sold in c-stores. 

What can tobacco retailers do to prepare for any potential federal ban? According to Gallagher, they should:

• Stay focused on what they do day to day; 
• Look for alternative products to take the place of flavored products on the backbar; and
• Work with their manufacturer and distributor partners to manage inventory. 

What to Expect

Although questions swirl around a federal ban on flavors, states such as California and Massachusetts have already approved statewide prohibitions. Smoker Friendly licensee dealers in those states prepared for the implementation dates by eliminating products from their shelves, Gallagher explained.

After implementation — January 2021 in California and June 2020 in Massachusetts — retailers in both states lost sales, he shared, adding that Massachusetts retailers saw business cross the border into New Hampshire. 

"What really hurts them is that there are a lot of outlaws in the retail business who continue to sell those products and there is very little enforcement on the state and local levels," Gallagher said. "[Bans] force the consumer to either go across the border or look for black market products, and that impacts retailers' sales." 

Industry watchers trying to predict which states will follow the lead of California and Massachusetts should look to how Tobacco 21 spread across the United States, Zdinak pointed out, noting Hawaii was the first state to raise the legal minimum age to buy tobacco products to 21 years old. 

Vermont "is really popping now," Spross added. 

If the day comes when a federal ban on flavors gets the greenlight, Haynes expects the rule will face several legal challenges. "The big part of legal challenges depends on justification for the rule and how the FDA responds to comments during the rulemaking process," he explained. 

According to Haynes, the common theme is that menthol is not an inherently more dangerous ingredient in cigarettes. Additionally, the FDA has a statutory obligation to consider the economic impact of a ban and the legal obligation to consider the possibility that a ban will give rise to contraband trade. 

TPE 2024 took place Jan. 30 through Feb. 2 at the Las Vegas Convention Center. Chemular, a tobacco regulatory consulting firm, sponsored of the education portion of the event.