Blog - Tobacco Reporter

Governor to Veto ‘No Flavor Bans’ Bill

Ohio Governor Mike DeWine appears primed to veto a bill just passed by the state legislature that would prohibit cities like Columbus from regulating vaping and other tobacco products.

DeWine told ABC 6 On Your Side he supports the Columbus ordinance passed Monday banning the sale of flavored vaping and other tobacco products.

“Making a decision not to have flavored cigarettes is a logical decision that will save many, many lives and will save taxpayers a lot of money,” DeWine said. “Smoking costs the citizens of Ohio hundreds and hundreds of millions of dollars every single year.”

The day after the Columbus tobacco ban passed, Republicans who control the legislature added a proposal to an unrelated bill mandating that only the state can regulate tobacco products in Ohio. The bill would wipe out attempts by local governments, such as that in Columbus, to rein in the use of tobacco products.

December 19, 2022

Altria Abandons Expiring Cronos Warrant

Altria Group has notified Cronos Group of its irrevocable abandonment of its warrant to purchase additional common shares of Cronos and all rights that it may have held in the warrant or any common shares underlying the warrant for no consideration, according to an Altria press release.

In March 2019, Altria acquired, through its subsidiaries, a 45 percent ownership interest in Cronos and the warrant. The warrant was exercisable until March 8, 2023, at an exercise price of CAD19 ($13.93) per common share. Prior to abandonment of the warrant, Altria, through its subsidiaries, owned 156,573,537 common shares of Cronos (representing approximately 41 percent of the Cronos common shares issued and outstanding) and, by fully exercising the warrant, could increase its ownership by 84,243,223 Cronos common shares to 240,816,760 Cronos common shares (representing approximately 52 percent of the Cronos common shares that would be issued and outstanding following full exercise of the warrant).

The closing share price of Cronos common shares on Dec. 15, 2022, was CAD3.81, and the Cronos common shares have not traded above CAD6 over the past 12 months. Given the Cronos trading levels and the March 2023 expiry of the warrant, Altria elected to abandon the warrant on Dec. 16, 2022. As a result of the warrant abandonment, Altria expects to claim a capital loss of $483 million on its U.S. federal consolidated income tax return for 2022. Altria continues to own 156,573,537 common shares of Cronos.

Altria, through its subsidiaries, holds the Cronos common shares for investment purposes. Altria will continue to evaluate Cronos’ business and prospects and all other factors it deems relevant in determining whether it or its affiliates will acquire additional common shares of Cronos or dispose of common shares of Cronos in the open market, in privately negotiated transactions (which may be with Cronos or with third parties) or otherwise.

December 19, 2022

BAT to Close Swiss Plant

BAT will close a cigarette manufacturing plant in Switzerland in 2023, reports Reuters.

The closure will cause the layoff of 226 workers. Employees will be given an “advantageous social package,” according to SwissInfo.

“BAT Switzerland confirms that a final decision has been made to transfer cigarette production from Boncourt to larger factories within Europe and to close the Boncourt site,” BAT said in a statement.

Boncourt Mayor Lionel Maitre said the closure is “a shock, a disappointment, a feeling of desperation and a mess.” The factory closure will cause Boncourt to lose its biggest taxpayer.

“Let’s be clear—this is a hard blow, but we will overcome it, and the situation is not hopeless,” said Jura government President David Eray. “This decision brings us face-to-face with the painful consequences that we feared.”

In 2014, BAT closed a research and development facility in Boncourt, laying off about 15 people.

December 16, 2022

GPS-Based App to Launch in India

India’s Tobacco Control Cell will soon launch its GPS-based app “StopTobacco” that the population can use to lodge complaints of smoking in public places, reports The Hindu.

The Cigarettes and Other Tobacco Products Act 2003 (COTPA) was initiated to reduce smoking in public places and protect nonsmokers from involuntary tobacco smoke exposure. Anyone violating the COTPA can now be turned in using the new app—users simply upload a picture of the public place where the smoker is located and the state’s anti-tobacco squad will respond to the area and issue a penalty to the violator.

“We cannot be waiting for the police or municipal enforcing agency to be overburdened. This app will give us the opportunity to increase awareness about COTPA law and rules in public places, increase social responsibility for the citizens and impact positive health. This app draws a fine balance for awareness and enforcement,” said Vishal Rao, member of the state’s High Power Committee on Tobacco Control.

A similar pilot system was launched in 2019, allowing COTPA violations to be lodged via email in 10 districts. It could not be implemented across the state, however, due to the pandemic.

“After downloading the app, the photo of the public place where the violation is happening, such as a shop, bakery, hotel, school/college, bus station, railway station, playground, etc., can be clicked and uploaded. Then there will be an option to enter the district, taluk and mobile number of the complainant. The photo will reach the district tobacco control unit and be forwarded to the taluk tobacco control unit. As the app is GPS-based, the location from where the complaint has been lodged will be highlighted on the map, and the squad will rush to the spot,” said a senior official, adding that seven-member squads have been set up in every taluk to act on the complaints.

December 15, 2022

Study: PMI Uses Ad Loopholes in Israel

Philip Morris International has exploited loopholes in smoking product advertisement bans in Israel, a new study shows, reports The Jerusalem Post.

The study, published in Tobacco Control, analyzes PMI’s advertising expenditure over four years across the general population, the ultra-Orthodox (haredi) public, Arab speakers and Russian speakers.

“We conducted a comparison among the advertising expenditures for all Philip Morris cigarette brands and the IQOS brand (a heated-tobacco stick that entered the local market in December 2016) in light of regulatory changes that restricted the advertising of tobacco products,” said doctoral student Amal Khayat.

Advertising restrictions led to a reduction in PMI’s marketing expenditures, but it exploited legal loopholes in the printed press, according to the study.

“Even after the law came into effect, the company continued to spend almost NIS3 million [$872,566.93] on advertising with a focus on the printed press,” said Yael Bar-Zeev, lead researcher. “While the law restricted print advertising to one advertisement in each newspaper, 40 percent of the IQOS adverts placed were giant, two-page ads, effectively doubling the product’s advertising space while still being considered a single advert as allowed by the letter of the law.”

PMI also used QR codes, allowing consumers to scan and view additional information. Before the law went into effect, according to the study, PMI significantly increased its advertising to the studied population groups, particularly the Haredi population, which previously had the lowest smoking rates in Israel.

“Our data shows that since the introduction of the IQOS e-cigarettes, 216 targeted ads were published, of which 55 percent were created for the Haredi public, 6 percent for the Arab public and the rest for the Russian-speaking public,” said Bar-Zeev. For regular cigarette brands, 87 percent of advertisements were targeted at the Haredi population.

“We expected that the company would focus on populations with the highest rates of smoking in Israel—Arab men—and not on the population that had hardly any smokers,” said Bar-Zeev.

Following the study, the 24th Knesset decided to remove the printed press advertisement exception but deferred implementation for seven years. In the interim, coupons, QR codes and advertisements featuring cigarette packs that do not have mandatory plain packaging are banned in the printed press.

December 15, 2022

Ohio Passes Ban on Cities’ Flavor Bans

The Columbus City Council in the U.S. state of Ohio voted unanimously in favor of banning the sale of flavored tobacco and vaping products within city limits on Monday, Dec. 12. On Wednesday, the Ohio Senate approved a bill that would make what the Columbus City Council did illegal.

The Ohio Senate passed H.B. 513 by a vote of 23-8. It includes an amendment that will prohibit local governments in Ohio from enacting any laws regarding tobacco or vaping products that are stricter than state law, a mechanism known as preemption, according to Halfwheel.

Because of this amendment, the bill now heads back to the Ohio House of Representatives, where it must be approved before heading to the desk of Governor Mike DeWine. Reports indicate that the House vote is expected this week.

If approved, the state law will effectively void the law passed by the Columbus City Council on Monday. The Columbus city law is set to take effect on Jan. 1, 2024.

Preemption clauses have been a successful tool in blocking bans on the sales of flavored vaping products and other tobacco products. The city of Philadelphia lost a federal lawsuit that overturned its flavored tobacco ban due to Pennsylvania’s preemption clause.

December 15, 2022

CTP Director Overruled Logic Approval

Memos recently submitted to the U.S. Court of Appeals for the 3rd Circuit show that the Food and Drug Administration’s Center for Tobacco Products (CTP) allowed its director, Brian King, to reverse a recommended marketing approval of Logic Technology’s menthol vaping products, ignoring the advice of FDA scientists, according to Logic’s lawyers. The new documents were made available to Logic after it had filed its motion for a stay of its marketing denial order (MDO) for its menthol vaping products.

Attorneys for Logic, which is represented by Troutman Pepper, stated that the new documents reveal the “extraordinary fact that CTP’s Office of Science (OS) reversed its science-based recommendation to issue marketing granted orders for Logic’s premarket tobacco product applications (PMTAs) for its menthol-flavored electronic nicotine-delivery systems (ENDS) after receiving pressure from the new CTP director and his office, the Office of Center Director (OCD).”

Logic attorneys claim the company is entitled to a stay of the agency’s MDO for the Logic menthol products because the OCD overruled the OS’ initial recommendations to approve Logic’s products based upon its “science-based evaluation” of Logic’s submission. However, because the OCD said in the memos that menthol as a category would be “treated disfavorably,” Logic is asking the court to recognize that the agency’s actions of “basing product-specific decisions” on “unpromulgated, across-the-board policies” that were never subject to notice-and-comment rulemaking is “arbitrary and capricious.”

In the first memorandum, dated Oct. 25, the OS explains that it evaluated Logic’s PMTAs, including its product-specific evidence, and concluded that authorization of the marketing of Logic’s menthol-flavored ENDS was appropriate for the protection of public health. However, the memo shows that the OS changed course after the new CTP director and the OCD, to whom the OS reports, concluded that menthol-flavored ENDS should be treated as a “disfavored” product category despite the evidence to the contrary.

The second memorandum reiterates the same policy shift and suggests that meetings were held to address the concerns of OS staff regarding the appropriateness of the decision-making process behind the denial of Logic’s menthol PMTAs. The OS also had concerns that the new OCD approach would eliminate all nontobacco-flavored ENDS products.

Earlier this week, a unanimous panel of the United States Court of Appeals for the 4th Circuit denied Avail Vapor’s petition to have its MDO invalidated. Avail also argued that the FDA’s review process for PMTAs, although not specifically menthol, were arbitrary and capricious.

The U.S. Court of Appeals for the 11th Circuit stayed an MDO issued by the FDA to Bidi Vapor earlier this year, which also argued the agency’s rulemaking was arbitrary and capricious.

These two rulings were all made before the release of the Logic documents. Industry experts suggest that this revelation of FDA memos could be “game changing” for industry lawsuits.

December 15, 2022

Companies Strengthen Sustainability Creds

Leading cigarette makers are strengthening their sustainability credentials.

Philip Morris International, for example, recently announced new ambitions to “preserve nature” via biodiversity and water stewardship.

These ambitions include protecting nature by achieving no net loss on ecosystems connected to PMI’s value chain by 2033; contributing toward a net positive impact on nature by 2050; scaling solutions toward a positive impact on water resources, measured as volume of water optimized and restored, by 2033; and contributing toward a positive impact on water resources by 2050.

“As our new ambitions demonstrate, PMI understands that decarbonization, biodiversity protection, forestry management and water stewardship are deeply connected. We aspire to lead by example in the responsible and sustainable management of natural resources that can allow the promotion and protection of natural ecosystems,” said Jennifer Motles, chief sustainability officer, in a statement.

PMI’s strategies to “tackle climate change” and “preserve nature” have been recognized by CDP, a not-for-profit charity that runs a global disclosure system for investors, companies, cities and regions to manage their environmental impacts. On Dec. 13, 2022, PMI received the Triple A score for its efforts across climate, forests and water stewardship.

Imperial Brands, meanwhile, recently received a CDP Climate A score for a fourth successive year. The company has committed to reaching science-based net zero emissions by 2040 through a five-step approach outlined in its 2022 annual report. Earlier this year, the business was named as a Supplier Engagement Leader by CDP for a third successive year and as a Climate Leader by the Financial Times.

“There is no other path than for all companies, all governments and all of society to pull together and get behind the decarbonization commitments that have been made,” said Tony Dunnage, global ESG (environmental, social and governance) director at Imperial, in a statement. “Our A score reflects our commitment to reducing our impact on the climate throughout our value chain, and we know that we can make a meaningful contribution.”

Imperial was also rated A- by CDP for water security—an improvement on the B rating achieved a year earlier—and a C for its first response in a number of years to the forests survey.

Japan Tobacco, too, has strengthened its commitment to sustainability. The company has been included in the Dow Jones Sustainability Asia-Pacific Index (DJSI Asia-Pacific) for the ninth consecutive year.

The DJSI is a globally recognized ESG stock index and sustainability benchmark that tracks the stock performance of the world’s leading companies in terms of governance and economic, environmental and social dimensions, with constituents selected on the basis of the S&P Global Corporate Sustainability Assessment. The DJSI Asia-Pacific is an index of companies in the Asia-Pacific region, which is reviewed once a year and whose constituents are selected from approximately 600 major companies in the region.

“We are honored that this year, again, JT has been selected in the DJSI Asia-Pacific,” said JT Senior Vice President and Chief Sustainability Officer Hisato Imokawa in a statement. “We believe that our inclusion in the index for the ninth consecutive year is the recognition of our earnest efforts to address ESG issues across our value chain. We are committed to promoting transparent and accurate disclosure of nonfinancial information, which has been a vital part of our agenda in recent years, and we recognize
that this is an important initiative to promote stakeholder engagement and dialogue.”

December 14, 2022

Swedish Match Calls Post-Takeover Meeting

Swedish Match will hold an extraordinary general meeting on Jan. 16 in Stockholm following Philip Morris International’s takeover of the company.

Shareholders can register online.

The total number of shares and votes in Swedish Match at the time of notice to the general meeting amounts to 1,525,000,000, of which 4,285,810 shares are repurchased own shares, which may not be represented at the general meeting.

The entrance to the venue for the general meeting will open at 10:30 CET.

December 14, 2022

Dual Users Likely to Keep Smoking: Study

Most adults who both smoke and vape are likely to carry on smoking or continue dual use over the long term, according to new research published in Tobacco Control.

Researchers looked at 545 dual users in waves one through five (2013/2014 to 2018/2019) of the U.S. Population Assessment of Tobacco and Health Study.

Over the six years of data, quitting vaping early but continuing to smoke was the most common pattern for almost half of participants (42 percent). Only 10 percent of participants quit both vaping and smoking early, and 15 percent of dual users continued to use both products.

The frequency of vaping and smoking, nicotine dependence, use of cannabis and other tobacco products at wave one were all influential. Dual users who smoked less frequently at wave one were more likely to quit both products early or to gradually quit smoking.

This is an observational study, and product use was based on self-report and not biochemically verified. No information was available for product use between waves.

“Our findings suggest that smoking reduction could help dual users to quit using both products; additionally, for those smokers unable or unwilling to quit using nicotine, cutting down on smoking could help them switch to exclusive [vape] use,” wrote the authors.

Their results also suggest that “before 2019, [vaping] did not contribute to substantial smoking cessation at the population level.”

“Continued monitoring of trajectories and their predictors is warranted considering the rapid evolution of the [vaping] marketplace,” the authors wrote in a press release.

December 14, 2022