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Industry Associations Urge Retailers to Speak Against Menthol Ban

NACS and CDA express concerns regarding the bans, such as growth of the illicit tobacco market.
Danielle Romano

NATIONAL REPORT — Trade associations are speaking out against the U.S. Food and Drug Administration's (FDA) move to ban menthol from cigarettes and flavored cigars.

This week, NACS sent a letter to the White House urging President Joe Biden to reconsider the proposal, and expressed concerns regarding bans, such as the growth of the illicit tobacco market, sales of unregulated products and the detrimental impact the loss of the tobacco products will have on small businesses, reported NACS Daily.

[Read more: Small Operator Trade Groups Rally Against Proposed Menthol Ban]

Addressing the proposed bans, NACS wrote, "if implemented, they are likely to usher in an array of negative unintended consequences by adding to the already burgeoning illicit tobacco market, moving business away from legitimate companies to unregulated foreign producers, and removing the consumer guardrails put in place by responsible sellers like the convenience store industry."

The push comes less than a month after the FDA sent a final product standard that would prohibit the use of menthol in cigarettes, roll-your-own tobacco and heated tobacco products to the White House Office of Management and Budget (OMB) for final review. 

The OMB reviews potential regulations to assess their economic impact — a necessary step before the FDA's rule can be implemented.

Menthol cigarettes account for 34 percent of cigarettes sales and flavored cigars account for 51 percent of cigar sales in convenience stores. Collectively, menthol cigarettes and flavored cigars combined for $23.7 billion in sales last year, according to NACS, who said banning these products will drive demand toward the illicit market instead of small businesses like c-stores. 

"Sixty percent of American convenience stores are owned and run by single-store operators who follow age-verification laws while collecting federal, state and local taxes and providing jobs in their communities," the association wrote.

[Read more: Increased Consumer Pressures Reflect in Backbar Sales]

Another consequence of the proposal, NACS also emphasized, would be the sale of unregulated tobacco products. Products in the illicit market are often imported from sources outside the United States and lack the quality control and safety standards that FDA-regulated products meet. This means consumers to face the risk of unknowingly exposing themselves to potentially dangerous ingredients.

"Lastly, the proposed ban on menthol cigarettes and flavored cigars would have a detrimental impact on small businesses, including approximately 93,250 small operators in the U.S. convenience store industry," wrote NACS. "If implemented, a single convenience store would lose $72,285 a year in non-tobacco sundry sales, representing close to 4 percent of inside sales, on top of the $160,107 lost due to the reduction in sales of tobacco products."

NACS encourages convenience retailers to use the NACS Grassroots portal to send a message to the White House voicing concerns for their businesses and the industry at large if the bans were to go into effect. The portal has a text box where they can send a personalized message to the White House, or they can send the prewritten message that NACS has provided.

Alexandria, Va.-based NACS is a leading global trade association dedicated to advancing convenience and fuel retailing, serves as a trusted advisor to over 1,300 retailer and 1,600 supplier members from more than 50 countries.

Distributors Speak Out

The Convenience Distribution Association (CDA), the trade organization working on behalf of convenience products distributors in the United States, is urging its members to ask lawmakers and the White House to not finalize the rule to ban menthol cigarettes because the benefits do not outweigh all of the associated costs.

"The FDA has submitted the rules that would ban menthol cigarettes and flavored cigars to the Office of Management and Budget [OMB] for final review. This is step eight of the nine-step rule making process. It is unclear how long these rules will stay at OMB for evaluation before either being 'cleared' or 'sent back for further review' to the FDA," the CDA wrote. "Given the unclear timeframe, we are requesting immediate action by all CDA members to call on the administration and members of Congress and share perspectives on how the ban will impact your businesses."

If the ban on menthol proceeds, CDA said, it will put public health at risk and create an illegal, unregulated, untaxed market for these products. Additionally, a nationwide ban of menthol cigarettes is estimated to result in $1.9 billion in lost tax revenue within the first year. 

The association has scheduled a meeting with OMB on Nov. 13 to discuss the issue further. It is urging its members to refer to this call to action on how to engage.

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