By Dan Mulvaney, PMI U.S.
For decades, tax stamping has been a cornerstone of most state excise tax systems for cigarettes. The stamping works, in part, because of the per unit tax and packs of cigarettes are uniform in size and distribution. By requiring wholesalers to purchase and affix tax stamps before products reach retail, states have created an efficient, centralized model for tax collection—one that depends on the wholesale channel to function effectively.
What is often overlooked is the role wholesalers actually play. They are not passive participants—they are, in effect, the state’s tax collection agents. They purchase stamps, invest in specialized equipment, manage inventory controls, and maintain strict compliance and reporting protocols. This is not theoretical; it is an operational reality requiring significant time, labor, and capital.
That is why stamping allowances have historically existed: to offset the cost of collecting and remitting excise taxes on behalf of the state.
Yet in recent years, policymakers have moved in the wrong direction. Across the country, stamping allowances have come under pressure—often viewed as a revenue opportunity rather than compensation for a mandated service. In some cases, policymakers have even considered eliminating them altogether, disregarding the real costs imposed on wholesalers.
Fortunately, the Louisiana Legislature understands the importance of stamping allowances and what a modern, risk-aligned tax framework should look like. The state has reduced the excise tax rate by 65% for certain products that meet the high bar of being an FDA-authorized Modified Risk Tobacco Product (MRTP). Currently, two unique products – Philip Morris International’s (PMI’s) heated tobacco product, IQOS, and 22nd Century Group’s low nicotine cigarette, VLN – have received this designation, recognizing their distinct profile from traditional cigarettes.
Just as important, Louisiana paired this approach with practical supply chain incentives. Wholesalers will receive a 10% discount on MRTP tax stamps, while the existing cigarette stamp discount increases from 5% to 6.5%. This preserves operational stability while creating a clear differential that favors modified-risk alternatives.
Together, these changes reinforce the right market signals—supporting state revenue, maintaining system integrity, and accelerating the transition from traditional cigarettes to modified-risk alternatives.
By increasing the cigarette stamping allowance, policymakers have taken an important step toward restoring balance—acknowledging that the system only works when the entities responsible for executing it are properly supported.
This outcome did not happen in a vacuum. It reflects sustained engagement by manufacturers, such as PMI, to ensure that wholesalers and retailers have a voice in the policymaking process. At a time when many stakeholders remain focused solely on tax rates or product restrictions, PMI has consistently focused on the operational realities facing the trade.
More importantly, PMI has demonstrated leadership as a true partner to the wholesale and retail community. This new law is a clear example of that commitment translating into tangible economic value.
This is more than a policy update. It is a recognition of the essential role wholesalers play in maintaining efficient, compliant tax systems—and proof that collaboration between policymakers and industry can deliver better outcomes.
In an environment where allowances have too often been reduced or overlooked, this represents a meaningful course correction. It strengthens the supply chain, supports compliance, and reinforces a simple truth: when policymakers and industry partners work together—and when manufacturers are willing to lead—the entire system benefits.
Dan Mulvaney is director of industry engagement for Philip Morris International Inc. (PMI) U.S. The businesses of PMI U.S. are on a mission to improve public health in America by providing the roughly 30 million legal-age consumers who still smoke traditional cigarettes with better, smokefree alternatives. PMI U.S. is committed to responsible marketing practices that help prevent access to its products by people under the age of 21.
