logo
















logo

logo
August,
2008

FDA Oversight: Just How Big is the Risk to Retailers?
It Could Put You Out of Business

With the industry’s largest tobacco company supporting legislation that would grant the Food and Drug Administration (FDA) power to regulate the promotion, marketing, and sale of tobacco products, it’s easy to be lulled into a false sense of trust that somehow, someway, the proposed changes must not be all that ominous.

That would be a grave mistake, because the sweeping powers that Congress is proposing to grant the FDA pose the biggest threat that tobacco retailers have ever faced.

Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO), sums it up thusly: “Proposed FDA regulations put the very existence of retail business at stake…Tobacco retailers need to be alarmed…”

Under the proposal, the FDA, other federal agencies, state, and local governments could all routinely and regularly adopt new and more restrictive regulations on how tobacco products are sold. “The uncertainty that such ominous regulatory powers would create could lead to the certain demise of retailers that sell tobacco products,” writes Briant.

There are four main areas of the legislation that concern NATO so far as retailing is concerned:

  • POWER TO PROTECT: In the name of protecting the public health, the FDA could adopt almost any regulation it wants on how tobacco products are displayed. Worst case scenario, like Canada’s tobacco display ban, is to force retailers to hide all tobacco merchandise from the customer’s view.
  • POWER TO BAN: Explicit permission, written into federal law, would be granted to all levels of government the ability to outright ban the advertisement, promotion, or sale of tobacco products in retail stores.
  • POWER TO ELIMINATE: The FDA bill would eliminate all in-store color advertising of cigarettes and smokeless tobacco, allowing only brand names and prices to be listed in black type on white background, despite the fact that the First Amendment to the U.S. Constitution protects advertising as a form of commercial free speech. As other tobacco products gain market share and cigarettes lose share, there’s no reason to believe premium cigars wouldn’t be a target down the road.
  • POWER TO TAX: How to pay for all of this new regulatory oversight? Tax the tobacco consumer, of course. The bill levies a “user fee” to the tune of $7.6 billion over 10 years.
With no objective limits on the regulations that the FDA could enact to protect public health, “The cumulative effect of these powers under the FDA bill could destroy tobacco retailing as we know it,” concludes Briant.

To that end, NATO has proposed an amendment to the bill that exempts tobacco retailers that bar access to individuals under the age of 18 (or accompanied by an adult) from the advertising restrictions, and to limit sales restrictions to congress, not all levels of government as proposed.

E. Edward Hoyt III