Shares Slide on Nicotine Reduction Discussions

Shares in big tobacco companies plunged on Tuesday following reports that the U.S. government may allow only cigarettes with nonaddictive levels of nicotine and may also ban menthol, reports Bloomberg.

Altria Group fell 6.9 percent Tuesday, losing more than $11 billion in market value since Friday. British American Tobacco (BAT) dropped 8.3 percent in London Tuesday. Analysts estimate BAT derives up to a third of its earnings from menthol brands such as Newport.

In Asia, Japan Tobacco’s stock was near 2 percent lower. Philip Morris International shares, however, ended the day up over 2 percent and the company reported strong results on Tuesday; the company does not sell cigarettes in the U.S.

On Monday, The Wall Street Journal reported that President Joe Biden’s administration is considering new regulations requiring tobacco companies to reduce the nicotine levels in cigarettes sold in the U.S. to the point at which the products are no longer addictive.

Meanwhile, the administration faces a deadline over whether to ban menthol flavoring in traditional and electronic cigarettes.

While the established tobacco sellers took a stock market hit following the news, shares in 22nd Century Group jumped, according to The Motley Fool. The company genetically modifies tobacco plants to contain less nicotine, enabling it to offer low-nicotine cigarettes, alongside growing reduced-cannabinoid cannabis.

22nd Century has staked its existence on persuading the FDA to approve the company marketing and selling very low-nicotine traditional cigarettes. In a press note, 22nd Century said it was prepared to license its reduced nicotine content tobacco technology to every cigarette manufacturer.