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WILLIAMSBURG, Va. — The Food and Drug Administration's (FDA) final deeming rule was published in the Federal Register on the first full day of the Tobacco Merchants Association's (TMA) 101st Annual Conference and Meeting. And while the long-awaited new regulation was a hot topic at the event, it was not the only topic.
Taxation Equation & Public Health
There have been studies pointing to taxation differential based on relative risk as a way to give adult tobacco consumers an incentive to switch products along the "continuum of risk" spectrum, according to David Sweanor, a professor at the University of Ottawa. However, not all participants on the "Better Aligning Industry With Public Health" panel agree with the concept.
"The differential taxation equation is just part of the story," said Daniel Herko, executive vice president, research and development, for R.J. Reynolds Tobacco Co. Innovation is key, he added.
Also speaking against the idea was James Dillard, senior vice president, research and development and regulatory affairs, and chief innovation officer at Altria Client Services Inc., who explained that "taxation in the tobacco control arena has been problematic." As just one example, he said it has created a black market the industry has been fighting to overcome.
Taxation will not solve the problem of moving consumers along the spectrum, Dillard argued.
Just Say No — For Now
While the push to legalize marijuana is generating buzz and taking hold in a few states, the convenience store community is still holding back. During a panel discussion entitled "Assessing the Opportunities in New Product Lines," Anne Flint, senior category manager of tobacco for Cumberland Farms Inc., said it's not likely the Framingham, Mass.-based convenience store chain would get into the cannabis segment as it stands now.
"We realize we can't be all things to all people," Flint said, noting Cumberland Farms is based in the "conservative Northeast."
Even Smoker Friendly International Inc., which calls Colorado home, has chosen not to enter the cannabis pool. Colorado legalized recreational marijuana last year and Smoker Friendly did take "a hard look" at it, according to Terry Gallagher, managing partner, but the company decided against getting into the business until it is legal at the federal level. Smoker Friendly is, however, in the cannabis accessory business.
Reflecting on Seven Years of Tobacco Control
The Family Smoking Prevention and Tobacco Control Act was signed into law in June 2009, thrusting not only tobacco companies, but also law firms and legal advisories into an unknown world. Over the past seven years, the act itself hasn't changed, but the implementation of the act has been significant, Jim Solyst, vice president, federal governmental affairs at Swedish Match NA, said during "The Tobacco Control Act Seven Years Later" session.
Bryan Haynes, partner at Troutman Sanders, began tobacco litigation in 2003 and since the Tobacco Control Act was passed, he said he spends more time on day-to-day challenges facing tobacco companies.
"It has become harder and harder to give clients clear answers to their questions," he said, particularly when the Food and Drug Administration has not spelled out enough of the details. The deeming rule adds another wrinkle to advising tobacco clients.
For Ben Haas, partner at Latham & Watkin, the true question for his clients has become: "How can we run the business while mitigating FDA enforcement, while acknowledging that in most every case the FDA has taken a Draconian view?"
Azim Chowdhury, partner at Keller & Heckman, said he's been working to educate his clients and "bring them up to speed" before the deeming rule was finalized. Chowdhury, who works with multiple clients in the vapor segment, said the most difficult conversation to have with clients is whether the deeming rule will kill their business.
As for the Tobacco Control Act overall, he pointed out that "the FDA didn't draft the statute, but at every turn they have taken the most conservative approach." You can go even one step further and question whether the FDA is the right agency to have authority over tobacco, according to Chowdhury.
The Tobacco Merchants Association's 101st Annual Meeting and Conference was held May 9-11 at Kingsmill Resort and Spa in Williamsburg.