The Food and Drug Administration has recently announced that it is drafting potential regulations of nicotine levels in cigarettes. Obviously, this is not good news for the industry. This would cause serious problems for big tobacco and it will be interesting to watch if they will comply or try to fight back.

Earlier this year, the FDA issued an advance notice of proposed rulemaking on lowering nicotine levels to minimal or nonaddictive levels. The FDA will first seek public input on how low those levels should be. The signature component of the plan is to reduce nicotine levels in cigarettes to nonaddictive levels, except that no one actually knows just how low that is. Some claim that it would take almost complete removal of nicotine to achieve non-addictive levels, the impact on the tobacco industry would be devastating, if such regulations were passed.

Like most federal agencies the FDA’s rule promulgation is slow moving. This means it will most likely be years before big tobacco actually has to make any changes. However, to plan ahead and be able to take the hit in the event the FDA does pass harsh nicotine level regulations, tobacco companies such as Altria have begun investing and expanding into other industries such as the marijuana industry. Another way companies are trying to reinvent themselves is to create vapor cigarettes, which is the new craze.

The FDA was given the power to regulate the industry under the Family Smoking Prevention and Tobacco Control Act. The FDA does not have authority to explicitly outlaw smoking or manufacturing nicotine, but that doesn’t mean it couldn’t use other regulatory methods to achieve the same ends.

These measures could cause additional issues that the FDA likely would be unhappy with such as a black market of higher level nicotine cigarettes or smokers might actually smoke more to compensate for the lack of nicotine in their cigarettes.

It will be interesting to watch how these rules develop and impact the industry. Additionally, it is possible that the decrease in nicotine levels in cigarettes will cause lower revenue in taxes for federal and state governments. We will continue to monitor these regulations and their impact on the industry.

About the Author: Paula Savchenko is an associate attorney at the Law Offices of Moffa, Sutton, & Donnini, P.A, based in Fort Lauderdale, Florida. Ms. Savchenko joined the firm in 2013 and practices primarily in the areas of Taxation and Administrative Law matters, as she counsels and represents businesses and individuals in their dealings with government agencies. More specifically, most of her work involves tax and regulatory matters, with an emphasis on state and local taxation.