overview-the-current-status-of-global--us-tobacco-regulation316 (1)

The Current Political-
Economy of Nicotine &Economy of Nicotine &
Tobacco in the US and
Around the World
F ll D lFarrell Delman
Darryl JaysonDarryl Jayson
Chris Moll
TMA’s 99th Annual Meeting & Conference
M 20 2014
Chris Moll
@TMA_org conference.tma.org
May 20, 2014
Williamsburg, Virginia

World Cigarette
Production vs. Consumptionp
(Billions of Pieces)
6,185
6,166
6,500
5,230
5,341
5,691
5,555
5,761
6,166
5 617
5,928 5,997
5,500
6,000
4,693
5,230
5,170 5,110
5,294
5,443
5,617
5,000
5,500
4,658
4,000
4,500
,
1984 1988 1992 1996 2000 2004 2008 2012
Production Consumption
Source: USDA-FAS (1984-2004), Various Sources (2005-12)

Global Smuggling Estimate
(Billions of Pieces)( o s o eces)
700
800
659.49 678.57
715.81
669.39 666.68
500
600
700
510.15
659.49
588.58 611.99
669.39 666.68
200
300
400 340.39
0
100
1993 1997 2000 2003 2005 2007 2009 2011 2013
Total World Smuggling
Note: Smuggling figures include counterfeit units
Note: Smuggling figures include counterfeit units.
Source: TMA Estimates from various sources

World Cigarette “True”
Production vs. Consumptionp
6,598 6,664
7,000
5 451
5,804
6,115
6,228
6 003 6,085
6,341 6,445
6,000
6,500
4,693
5,230
5,451
5,170 5,210 5,413
6,003
5,000
5,500
4,658
4,000
4,500
,
1984 1988 1992 1996 2000 2004 2008 2012
Sources: USDA-FAS (1984-2004), Various Sources (2005-12), TMA Estimate

World (excluding China)
Cigarette Prod. vs. Cons.g
5,000
3 991 3 980
4,500
3,630
3,685 3,697
3,991
3,878 3,887 3,980
3,655
3,772 3,758 3 7323 500
4,000
3,595 3,613 3,488 3,635
, , 3,732
3,506
3,000
3,500
,
1984 1988 1992 1996 2000 2004 2008 2012
Source: USDA-FAS (1984-2004), Various Sources (2005-12)

China’s Cigarette Market
(Billions of Pieces)(Billions of Pieces)
2 354
2,511
2,513
2,600
2 022
2,206
2,354
2 196
2,338
,
2,200
2,400
1 722
1,874
2,022
2,008
2,196
1 800
2,000
Production
Consumption
1,677
1,722
1,671 1,708
1,859
1,600
1,800
1998 2000 2002 2004 2006 2008 2010 2012
Consumption
The China National Tobacco Corp. (CNTC) is the largest
cigarette producer in the world and
China accounts for 42% of the world’s consumption.
Source: CNTC

China Cigarette Annual
C ti G th (%)Consumption Growth (%)
10
6.05
5 3.80
4.87
2.93
4.93
3.13
3.73
2.66
3.18 3.24
0
1.21
2.66
0.89
S T A T b Chi
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: TMA’s Tobacco China

China’s Cigarette Market & Forecast
(Billions of Pieces)(Billions of Pieces)
2,513 2,510
2,600
2 196
2,338
, ,
2,490
2,200
2,400
2,008
2,196
1 800
2,000
Production
Consumption
1,6711,708
1,859
1,600
1,800
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Consumption
The China National Tobacco Corp. (CNTC) is the largest
cigarette producer in the world and
China accounts for 42% of the world’s consumption.
Source: CNTC, TMA Estimate

China vs. Rest-of-World Cigarette
Consumption ForecastsConsumption Forecasts
3 500 3 387
3 000
3,500 3,387 3,367
3,320 3,287
3,253
2 500
3,000
2,510 2,500 2,485 2,470 2,450
2 000
2,500
, 2,450
2,000
2014 2015 2016 2017 2018
China Cig. Consumption World minus China Cig. Consumption
Source: TMA Estimates
g p g p

China
2014 Expectations:
• Export Growth
L Ci G h• Large e-Cig Growth
M k O i d R f• Market-Oriented Reforms
• More Brand Integration• More Brand Integration
• Tobacco control expansion• Tobacco control expansion
conference.tma.org@TMA_org

U.S. Consumer Expenditures
By Nicotine Product - 2012By Nicotine Product 2012
(% of total expenditures)
0 33 0.78 0 98
7 62
0.13
0.33
0.48
7.91
0.78 0.98
Cigarettes7.62 Cigarettes
Large Cigars
Small Cigars
Smoking Tobacco
Chewing Tobacco
82.47
Chewing Tobacco
SnuffSnuff
EE--VaporVapor
NRT's
F 2012 l U S di $100 448 billi
For 2012, total U.S. consumer expenditure was $100.448 billion.
Source: TMA Estimate

U.S. Cigarette Consumption
(Billi f Pi )(Billions of Pieces)
450
400
415
400 388
376 372 364
345
300
350
345
315
304 297
288
274
‐34.0%
200
250
S USDA ERS TMA
200
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Billions of Pieces
Source: USDA-ERS, TMA
TMA’s Tobacco USA

Cigarette Price Hikes (2002-14)
On January 1 2002 the manufacturer’s price for a 20 piece packOn January 1, 2002, the manufacturer’s price for a 20-piece pack
of premium cigarettes was $2.68 including FET.
April 2002 $2.76 (+8¢) 39¢ FET
D mb r 2006 $2 86 (+10¢) 39¢ FETDecember 2006 $2.86 (+10¢) 39¢ FET
September 2007 $2.91 (+5¢) 39¢ FET
May 2008 $3.00 (+9¢) 39¢ FET
December 2008 $3.05 (+5¢) 39¢ FETDecember 2008 $3.05 (+5¢) 39¢ FET
February 2009 $3.14 (+5¢) 39¢ FET
March 2009 $3.85 (+71¢) 100.33¢ FET
October 2009 $3.91 (+6¢) 100.33¢ FET( )
May 2010 $3.99 (+8¢) 100.33¢ FET
December 2010 $4.07 (+8¢) 100.33¢ FET
July 2011 $4.16 (+9¢) 100.33¢ FET
December 2011 $4.21 (+5¢) 100.33¢ FET
June 2012 $4.27 (+6¢) 100.33¢ FET
December 2012 $4.33 (+6¢) 100.33¢ FET
J 2013 $4 39 (+6¢) 100 33¢ FETJune 2013 $4.39 (+6¢) 100.33¢ FET
December 2013 $4.46 (+7¢) 100.33¢ FET
May 2014 $4.52 (+6¢) 100.33¢ FET

NPM Market Share (%)
1010
6.45
8.17 8.03
7.39
6.29
5 82 6.10
5 3.73
3.39
4.36
5.82
5.11
6.10
5.06
2.52 2.35
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Price Waterhouse Cooper

MSA “Allocable Share”
Previously Settled States – 1997-98 [4]
Approved in 2003 (includes HI) [15]
Approved in 2004 (includes AK) [22]
Approved in 2005 (includes DC) [7]
Approved in 2006 [1] Approved in 2007 [1]
Source: TMA’s MSA Guide

State Cigarette Excise Tax Increases
(2002-13)( )
# of States Avg. Tax Inc. Wgt. Tax
2002 21 43.00¢ 61.15¢
2003 17 34.94¢ 72.85¢
2004 7 39.07¢ 78.02¢
2005 12 60.38¢ 92.22¢2005 12 60.38¢ 92.22¢
2006 5 24.50¢ 94.54¢
2007 10 62.50¢ 107.25¢
2008 8 73.75¢ 119.74¢
2009 15 52.23¢ 132.52¢
2010 6 87.58¢ 145.36¢2010 6 87.58¢ 145.36¢
2011 4 33.50¢ 147.48¢
2012 2 52.00¢ 149.87¢
2013 2 130.00¢ 152.50¢
2014 (as of 5/20) 1 13.00¢ 152.60¢

U.S. Cigarette Annual
C ti D li (%)Consumption Decline (%)
10
8 70 SCHIP8.70 SCHIP
?
5
2 35
3.61
3.00 3.09
2 15
5.22
3.49
2 30
3.03
4.86
?
0
2.35
1.06
2.15 2.30
S USDA ERS TMA
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Billions of Pieces
TMA’s Tobacco USA

Cigarette Brand Market Share
(%)(%)
50
30
40
32.3
37.7 38.2
41.0 40.6
20
30
24.4
9 8 11.6
0
10
1992 1996 2000 2004 2008 2012
4.8 6.1 7.6
8.0 9.8 11.6
4.1 4.6 5.4 5.8 6.7 7.4
1992 1996 2000 2004 2008 2012
Marlboro Newport Camel
Source: Maxwell Consumer Report

U.S. Cigarette Forecast
320
304
280
300
304
274
240
260
280
243
220
240
223
205
200
2010 2011 2012 2013 2014e 2015e 2016e 2017e
Forecast 1 (-3%) Forecast 2 (-5%) Forecast 3 (-7%)

U.S. Large Cigars
15
10
9.79
12.36
13.03 13.04
12.44
SCHIP
5
4.94 4.88
5.30 5.55 5.76
0
5
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales
@TMA_org conference.tma.orgSource: US-TTB

U.S. Little Cigars
10
5
2 70
3.77
4.16
4.77
5.47
SCHIP
0
2.70
2.15
0.98 0.80 0.75 0.67
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales
@TMA_org conference.tma.orgSource: US-TTB

U.S. Roll-Your-Own Tobacco
(Billions of Pieces [converted])(Billions of Pieces [converted])
10
5 75
6.34 6.06 5.97
6.76
6.15
5
5.75
3.82
3.07
2.41 2 27
SCHIP
0
2.41 2.27
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales
Source: USDA-AMS
1 cigarette = 0.0325 ounces of RYO

U.S. Pipe Tobacco
(Milli f P d )(Millions of Pounds)
20
15
12.29
13.87
SCHIP
10
5 29
6.51 5.93
7.26 7.34
8.47 8.87 8.53
0
5
5.29
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales
@TMA_org conference.tma.orgSource: USDA-AMS

U.S. “True” RYO Tobacco
(Billions of Pieces [converted])(Billions of Pieces [converted])
10
5 75
6.34 6.06 5.97
6.76
SCHIP
5
5.75
4.64 4.93 5.24 5.22
3.85
TTB
00
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales
Source: USDA-AMS
1 cigarette = 0.0325 ounces of RYO

Retail Manufacturers
SCHIP Excise Tax Increase – April 1, 2009
Inequality between roll-your-own and pipe tobaccoInequality between roll your own and pipe tobacco
Cigarette rolling machines begin appearing in retail
tobacco shopstobacco shops
TTB ruling – September 2010
Any retailer who provides the use of a machine forAny retailer who provides the use of a machine for
consumers to roll their own cigarettes is deemed to be a
cigarette manufacturer
Temporary restraining order by US District Court for the
Northern District of Ohio – November 2010

Retail Manufacturers
Federal Highway Funding Bill - July 2012
Provision that designates retail stores offering roll-your-
own cigarette machines to customers as manufacturers,
subjecting them to applicable taxes and Federal and
State regulations.
U.S. Sixth Circuit Court of Appeals upheld TTB's
September 2010 rule - August 2012
The Federal court in Ohio which granted the preliminaryThe Federal court in Ohio which granted the preliminary
injunction against the TTB rule did not have proper
jurisdiction.

U.S. Chewing Tobacco
50
40 37.90 37.70 37.30
34.40
31.60
28 30
32.50
29 60 28 00
20
30 28.30 29.60 28.00 26.40
0
10
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales

U.S. Moist Snuff
125
100 95.80
100.50
105.10
109.90
75
100
74.70 76.70
81.50
86.20
91.30 91.40
95.80
50
75
50
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Production Sales

Tobacco Product
Per Capita ConsumptionPer Capita Consumption
(Pounds)
5
4
5
2
3
1
2
0
1992 1996 2000 2004 2008 2012
Cigarettes Cigars Smoking Tob. Chewing Tob. Snuff
Source: Various News Sources@TMA_org conference.tma.org

By Nicotine Product - 2012By Nicotine Product 2012
(% of total)
0 33 0.78 0 98
7 62
0.13
0.33
0.48
7.91
0.78 0.98
Cigarettes7.62 Cigarettes
Large Cigars
Small Cigars
Smoking Tobacco
Chewing Tobacco
82.47
Chewing Tobacco
SnuffSnuff
EE--VaporVapor
NRT's
F 2012 l U S di $100 448 billi
For 2012, total U.S. consumer expenditure was $100.448 billion.

Estimates By Nicotine Product 2020Estimates By Nicotine Product - 2020
(% of total)
1 50
0.39
10.16
1.50
Cigarettes
8.20
0.06
0.16
0.39
9.06
Cigarettes
Large Cigars
Small Cigars
Smoking Tobacco
Chewing Tobacco
70.47
Chewing Tobacco
SnuffSnuff
EE--VaporVapor
NRT's
F 2020 t t l U S dit i ti t d t $92 74 billi
For 2020, total U.S. consumer expenditure is estimated at $92.74 billion.

Types of E-Vapor
Disposable E-Cigarettes
Rechargeable E-Cigarettes/Kits

Types of E-Vapor
Tobacco Vaporizers
MOD’s (Modified e-cigarettes)

Retail Sales of E-Vapor
(Millions of US$)(Millions of US$)
8,000
6,000
6,000
4,000 3,600
4,800
2,000 1,700
2,600
0
2008 2009 2010 2011 2012 2013 2014e 2015e 2016e 2017e
20 39 82 195
800
2008 2009 2010 2011 2012 2013 2014e 2015e 2016e 2017e

When will E-Vapor Outsell
T diti l Ci tt ?Traditional Cigarettes?
 Bonnie Herzog (Wells Fargo) –
Within 10 years [2024]
 Kenneth Shea (Bloomberg) –
33 years [2047]
 Nik Modi (Royal Bank of Canada) –
?: Market trends tend to slow

E-Vapor Product Lifestyle
From Disposable E-Cigarette …
to Rechargeable E-Cigarette …g g
to Tobacco Vaporizers …
to Mods
Some e-cigarette makers believe that the
product’s life-cycle evolution will cause the
p y
disposable market to disappear within 5 years.

Product Price Comparison
Premium Cigarettes Disposable E-Cig Personal Vaporizer
lPremium Cigarettes E‐Cigarette Personal Vaporizer
Price $6.20 per pack of 20
(Nat. Avg.)
$4 12 per pack
$5‐10 per disposable
$2+ per cartomizer
$30+ per kit
E‐Liquid ‐ $(4‐10)/10 ml
Battery/tank replacement:$4‐12 per pack
(range)
$2+ per cartomizer ‐
rechargeable
Battery/tank replacement:
$20 per month
Smoking
Amount
20 cigarettes
(200 puffs)
240‐300 puffs
(24‐30 cigarettes)
About 7,500 puffs
(≈ 750 cigarettes)Amount (200 puffs) (24 30 cigarettes) ( 750 cigarettes)
Cost per
Puff
3.1 cents 2.778 cents (disposable)
1.296 cents (rechargeable)
0.080 cents

Sales of NRT’s
(Milli f US$)(Millions of US$)
1,500
1,300
1,000
1,000
1,060
1,120
1,180
1,240
1,300
,000
500
0
2012 2013 2014e 2015e 2016e 2017e
Sources: The Mintel Report, TMA Estimate

Google Interest Trends

U.S. Cigarette
C ti D li (%)Consumption Decline (%)
10
8 70 SCHIP8.70 SCHIP
E-Cig
5
2 35
3.61
3.00 3.09
2 15
5.22
3.49
2 30
3.03
4.86
g
0
2.35
1.06
2.15 2.30
S USDA ERS TMA
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
TMA’s Tobacco USA

The Effect of E-Vapor on the
Ci tt M k t
Price
D
Cigarette Market
(1) The cigarette
S
D (1) The cigarette
market
P11
Quantity
D
Q
Q1

Ci tt M k t
Price
D
Cigarette Market
(2) The effects
S
D (2) The effects
of a price
increase on the
i k
P1 
P2
cigarette market
1
Quantity
D
QQ
Q1Q2
A price increase lowers the quantity demanded.

Ci tt M k t
Price
D
Cigarette Market
(2) The effects
S
D (2) The effects
of a price
increase on the
i k
P1 
P2
cigarette market
Added revenue
1
Quantity
D
QQ
Lost
revenue
Q1Q2
A price increase lowers the quantity demanded.

Ci tt M k t
Price
D
Cigarette Market
(3) The effects
S
D1
D2
(3) The effects
of the growth of
e-cigs in the
i k
P1
cigarette market
1

Quantity
D1
QQ
D2
Q1Q3
The substitutability of e-cigs creates a shift
in the demand curve.

Ci tt M k t
Price
D
Cigarette Market
(3) The effects
S
D1
D2
(3) The effects
of the growth of
e-cigs in the
i k
P1
cigarette market
1

Quantity
D1
QQ
D2
Lost
revenue
Q1Q2
The substitutability of e-cigs creates a shift
in the demand curve.

Ci tt M k t
Price
D
Cigarette Market
(4) The
S
D1
D2
(4) The
combination of
a price increase
f h h f
P1
of the growth of
e-cigs in the
cigarette marketLost
revenues
P2
Added
revenue
1

revenues
Quantity
D1
QQ
D2
Q1Q2

Big 3: Sales vs. Net Income
(Billions of Packs Billions of $)(Billions of Packs, Billions of $)
40
33 5 34.9 35.2 35.2 34.8
30
29.4 29.9 30.4 30.4
33.5 34.9
10
20
16.4 16.2 15.4 14.8
13.3 12.8 12.4 12.2 11.6
7 7 7 7 8 0 8 1 9.3 9.4 8.7
11.5
0
10
2005 2006 2007 2008 2009 2010 2011 2012 2013
7.0 7.7 7.7 8.0 8.1 8.7
2005 2006 2007 2008 2009 2010 2011 2012 2013
Cigarette Sales Net Sales ($) Operating Income ($)
Source: Altria RAI & Lorillard Annual ReportsSource: Altria, RAI & Lorillard Annual Reports
(2005-13)@TMA_org conference.tma.org

Parties to FCTC (as of 5/18/14)
/Signed/Ratified FCTC [178 countries]
Signed, but has not ratified FCTC [8 countries]
Has not signed or ratified FCTC [40 countries/territories]
Source: FCTC

FCTC: Current Key Issues
Conference of the Parties 6 (COP6) will be held in
Moscow from October 13-18, 2014.
A decision to recommend a ban on ingredients,
flavorings and additives in the manufacture of tobacco
products will be made at COP6products will be made at COP6.
“The Protocol to Eliminate Illicit Trade in Tobacco
P d ” ill h i Fi M i f h P i iProducts” will have its First Meeting of the Parties in
Moscow from October 20-22, 2014, following COP6.
Internal WHO documents indicate that WHO officials
wish to classify e-cigs as tobacco products under FCTC

Complete Smoking Ban - 2005
Complete Smoking Ban Law Implemented
[3 countries – Ireland, New Zealand, Norway]
Source: TMA’s International Public Policy Guide

[12 countries]

[34 countries]

Smoking Bans - 2014
Complete Smoking Ban Law Implemented [34 countries]
Workplace Smoking Ban [30 countries]

Smoking Bans - 2014
Other Public-Area Smoking Bans/Restrictions [60 countries]

Smoking Bans - 2014
State/Province
Other Public-Area Smoking Bans/Restrictions [60 countries]
/
Bans/Restrictions
[Australia, Canada, US]

Graphic Health Warnings - 2004
Graphic Health Warnings Law Implemented
[3 countries - Brazil, Canada, Singapore]

[26 countries]

[77 countries]

Graphic Health Warnings Law Implemented [77 countries]
GHW to be Implemented in 2014 [Turkmenistan]
GHW Implementation Pending [United States]

Plain Packaging – 2014
Plain Packaging Law Implemented [Australia]
Plain Packaging Legislation Introduced [6 countries]

E-Cigarettes - 2014
E-Cigarette Sales Ban [19 countries]

E-Cigarettes - 2014
E-Cigarette Smoking/Vaping Ban [5 countries]
Other E-Cigarette Laws [7 countries]

E-Cigarettes - 2014
E-Cigarette Proposals [15 countries]
Other E-Cigarette Laws [7 countries]
E-Cigarette Smoking/Vaping Ban [5 countries]

The EU
Tobacco Products Directive
• Graphic Health Warnings
• E-Cig Regulation
• Flavor Ban (menthol in 2020)
• Track & Trace

China
Tobacco Control
• Restrictions on Government
OfficialsOfficials
• Considering Indoor Smokingg g
Ban
• WHO Urging Graphic
WarningsWarnings
conference.tma.org@TMA_org

Scandinavian Snuff Sales
(Millions of US$)(Millions of US$)
400
300
220
285
100
200 190 200
220
0
100
2003 2004 2006 2012
15
2003 2004 2006 2012
Norway Sweden
Source: Various News Sources

EU Cigar Sales
(Millions of Pieces)(Millions of Pieces)
6,000
5,357 5,260 5 222 5 183
4,000
5,000
, 5,260 5,222 5,183
2,000
3,000
0
1,000
2005 2006 2007 2008
1,150 1,150 1,100 1,0751,119 1,035 1,102 1,129
2005 2006 2007 2008
Germany Spain Total EU
Source: Various News Sources

Cigarette Tax Incidence - 2005
5-40% [36 countries] 40-60% [57 countries] 60-80% [58 countries] >80% [1 country]

5-40% [31 countries] 40-60% [54 countries] 60-80% [58 countries] >80% [9 countries]

5-40% [19 countries] 40-60% [58 countries] 60-80% [49 countries] >80% [27 countries]

FCTC and U.S. Law
FCTC Checklist:
 (Article 5) General Obligations
 (Article 6) Price and Tax Measures [SCHIP]( ) [ ]
 (Article 8) Protection from ETS [State/Local]
 (Article 9) Contents of Tobacco Products [FDA]
 (Article 10) Tobacco Product Disclosure [FDA]( ) [ ]
 (Article 11) Packaging & Labeling of Tobacco Products
[FDA]
 (Article 12) Education, Communication, Training & Public( ) , , g
Awareness [FDA, Health Care]
 (Article 13) Tobacco Advertising, Promotion & Sponsorship
[FDA][ ]
 (Article 15) Illicit Trade in Tobacco Products [CCTA, PACT
Act, FDA/GAO]
 (Article 16) Sales to and By Minors [FDA, State]
( ) y [ , ]
 (Article 19) Liability [MSA, Progeny Engle, History]

U.S. Fed. Bill Tracking: 2013-14
(As of Ma 15 2014)(As of May 15, 2014)
• The U.S. House (7) and Senate (6)
combined have introduced 13 tobacco-
related bills during the 113th Congress.
• There have been no tobacco-related
bill l d i h 113thbill approvals during the 113th
Congress.

U.S. Fed. Bill Tracking: 2013-14
(As of Ma 15 2014)(As of May 15, 2014)
• The 7 U S House bills include:The 7 U.S. House bills include:
Prohibition of E-Cig Marketing to Minors
“STOP Act” Proposalp
Excise Tax Increase
Premium Cigar Exemption to FDA-CTP
• The 6 U.S. Senate bills include:
Prohibition E Cig Marketing to MinorsProhibition E-Cig Marketing to Minors
Excise Tax Increase (2 bills)
Premium Cigar Exemption to FDA-CTP
g p

State Legislative Tracking – 2014
(As of Ma 15 2014)(As of May 15, 2014)
• St t h i t d d 572 t b• States have introduced 572 tobacco-
related bills (compared to 1,021 in full
2013 d 667 i f ll 2012)year 2013 and 667 in full year 2012).
• States have enacted 98 tobacco-related
bills (compared to 240 in full year 2013
and 187 in full year 2012.

State Legislative Tracking – 2014
(As of Ma 15 2014)(As of May 15, 2014)
Introduced States Approved States
Tob. Prod. Excise Tax 47 (48) 32 1 1
(Alabama)( )
MST (Ad Val. vs. Spec.) 3 (23) 11 0 0
Minors (E-Cigs) 63 (45) 35 10 9
(and D.C)
NOTES: Carry-over bills are in parentheses following Introduced.
y p g

Cigarette Excise Tax Legislation
( f 5/18/14)(as of 5/18/14)
No Legislation Introduced [30 States]
Legislation Introduced [20 States including Hawaii]
Legislation Passed Both Houses [VT]
Source: TMA’s Legislative Tracking

State Legislative Bill Type Approvals:
E-Vapor (2009-14)E Vapor (2009 14)
# of # of Ban on Smoking
Approvals States Minors Restrictions Definition OtherApprovals States Minors Restrictions Definition Other
2009 1 1 1 1 1 0
2010 4 4 3 0 4 1*2010 4 4 3 0 4 1
2011 2 2 2 0 2 0
2012 6 6 4 2 5 2
2013 16 14 13 2 14 4
2014 11 79 10 1 10 0
Total 38 30 31 6 34 7
* Effective August 1, 2010, Minnesota redefined “tobacco products” to
include e-cigarettes (95% of WSP).
2014 figures through May 15th

FDA-CTP Achievements
Flavored cigarette ban goes into effect
(September 22, 2009)
Ci f b i li f ll ddi i bCigarette manufacturers submit list of all additives by
brand/subbrand/quantity [e-submitter tool]
(December 22, 2009)( )
Descriptor (“light”, “mild”, “low”) ban on cigarettes
goes into effect (June 22, 2010)g (J )
“Substantial equivalence” registration
[30 brands reviewed in 2013 – 17 approved, 13 rejected[ pp , j
4 brands reviewed in 2014 – 4 taken off market]
CTP coordinates with States concerning tobacco
CTP coordinates with States concerning tobacco
retailer inspections to prevent sales to minors.

FDA-CTP “Deeming Regulations”
(April 24 2014)(April 24, 2014)
Would extend the CTP’s authority to cover additional
tobacco products such as:p
• e-cigarettes/vapor/e-liquid, provided nicotine is derived from
tobacco
• all cigars with the possible exception of hand-madeall cigars with the possible exception of hand made
“premium cigars” weighing 6 lbs. or more per 1,000 made
with long-filler and 100% cigar binder and sold for $10 or more
per piece at retailp p
• pipe tobacco
• nicotine gels
• waterpipe or hookah tobacco• waterpipe or hookah tobacco
• dissolvables
• components or parts such as a flavored hookah charcoal but
not accessories such as hookah charcoal burners cases for
not accessories such as hookah charcoal burners, cases for
carrying tobacco, etc.

FDA-CTP : User Fees
• Section 919 under the FSPTCA.
• Payment calculation derived by FET collectionsPayment calculation derived by FET collections.
• Initially included cigarettes, cigarette tobacco,
droll-your-own tobacco and smokeless tobacco
(as defined in Sec. 901(b)).
• Annual payments are as follows:
$85 mn in FY09 $505 mn in FY13 $635 mn in FY17
$477 mn in FY12 $599 mn in FY16 and beyond
y

FDA-CTP : User Fees
• Through FY13, about $1.42 bn. of the nearly $1.75
bn. in collected user fees has been spent by the
FDA CTP ( 81 1%)FDA-CTP (over 81.1%)
• Payment now required from tobacco producty q p
sectors covered in April 2014 “Deeming
Regulations”
• Hookah/Waterpipe tobacco taxed as “smoking
tobacco”; Dissolvables/Nicotine gels taxed as
“snuff”“snuff”
• E-Vapor excluded from current payment criteria as
p p y
it currently faces no Federal Excise Tax

Ongoing FDA-CTP Activities
Graphic Health Warning on cigarette packs
(Scheduled Implementation Date: September 22, 2012)( p p , )
Ruling on menthol cigarettes
(Based on TPSAC report & Public Comments)(Based on TPSAC report & Public Comments)
“Substantial equivalence” report decisions
(A i l 4 500 SE ill di )(Approximately 4,500 SE reports still pending)
A list of HPHC’s in tobacco products including smokeA list of HPHC s in tobacco products, including smoke
constituents, by brand and sub-brand is to be
published in a format that is “understandable and not
misleading to the public ”
misleading to the public.

Tobacco Control
S di 1998 2010Spending, 1998-2010
Per Capita Tobacco Control Expenditure
$10 00
$12.00
Per Capita Tobacco Control Expenditure
$8.00
$10.00
$4 00
$6.00
$2.00
$4.00
$0.00
AL
AK
AZ
AR
CA
CO
CT
DE
DC
FL
GA
HI
ID
IL
IN
IA
KS
KY
LA
ME
MD
MA
MI
MN
MS
MO
MT
NE
NV
NH
NJ
NM
NY
NC
ND
OH
OK
OR
PA
RI
SC
SD
TN
TX
UT
VT
VA
WA
WV
WI
WY

Smoking Prevalence
B R iBy Region
●0‐11% ●11‐13% ●13‐15% ●15‐17% ●17‐19% ●19‐21% ●21+%
1998

Smoking Prevalence
B R iBy Region
●0‐11% ●11‐13% ●13‐15% ●15‐17% ●17‐19% ●19‐21% ●21+%
2005

Smoking Prevalence
B R iBy Region
●0‐11% ●11‐13% ●13‐15% ●15‐17% ●17‐19% ●19‐21% ●21+%
2012

U.S. Smoking Prevalence (%)
41.9
37.0
40
37.4
33.2
29 9
30
29.9
25.3
24.6
23.1
20 8 20 6
20
20.8 20.6 19.7
1010
1965 1970 1974 1980 1985 1990 1995 2000 2005 2009 2013
Source: U.S. Division of Health Interview Statistics

U.S. Smoking Prevalence (%)
vs. Cigarette Consumption (Bn. pc.)g p ( p )
600
700
40
400
500
600
30
200
300
400
20
0
100
200
10 010
1965 1970 1974 1980 1985 1990 1995 2000 2005 2009 2013
U.S. Smoking Prevalence Rate Trend Line Cigarette Consumption
Source: U.S. Division of Health Interview Statistics

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