1. The “Family Smoking Prevention and Tobacco Control Act” Darryl Jayson Vice President Tobacco Merchants Association 2010 U.S. Tobacco Forum June 10, 2010 Raleigh, North Carolina

2. The Family Smoking Prevention and Tobacco Control Act (HR 1256) HR 1256 was signed by President Obama on June 22, 2009. HR 1256 was signed by President Obama on June 22, 2009. HR 1256 grants the US Food & Drug Administration (FDA) the authorization to regulate the manufacture, sale and distribution of tobacco products. HR 1256 grants the US Food & Drug Administration (FDA) the authorization to regulate the manufacture, sale and distribution of tobacco products.

3. SectionDescription 4bAgricultural Activities 4bAgricultural Activities “The provisions of this division (or an amendment made by this division) which authorize the Secretary to take certain actions with regard to tobacco and tobacco products shall not be construed to affect any authority of the Secretary of Agriculture under existing law regarding the growing, cultivation, or curing of raw tobacco.” The Family Smoking Prevention and Tobacco Control Act

4. SectionDescription 901FDA Authority Over Tobacco Products 901FDA Authority Over Tobacco Products While the FDA does have the authority to regulate all tobacco products, this Act does not apply to tobacco leaf: (1) that is not in the possession of a manufacturer of tobacco products; or (2) of the producers of tobacco leaf, including tobacco growers, tobacco warehouses, and tobacco grower cooperatives. Nor shall any FDA employee have any authority to enter onto a farm owned by a producer of tobacco leaf without the written consent of such producer. Nor shall any FDA employee have any authority to enter onto a farm owned by a producer of tobacco leaf without the written consent of such producer. The Family Smoking Prevention and Tobacco Control Act

5. FSPTCA – Implication for Tobacco Growers The FDA cannot directly affect tobacco growing or its practices. The FDA cannot directly affect tobacco growing or its practices. Indirectly, it is not as clear as manufacturer leaf requirements could change over time. Indirectly, it is not as clear as manufacturer leaf requirements could change over time.

6. SectionDescription 901FDA Authority Over Tobacco Products 901FDA Authority Over Tobacco Products By September 22, 2009, the FDA must create the “Center for Tobacco Products” By September 22, 2009, the FDA must  create the “Center for Tobacco Products” By an as-of-yet undetermined date, create an office to assist small manufacturers (those that employ less than 350 employees in total for all entities) 902Adulterated Tobacco Products 902Adulterated Tobacco Products Defined as a tobacco product that consists of “any filthy, putrid or decomposed substance” or a “contaminated” product or one “prepared, packed or held under insanitary [sic] conditions” The Family Smoking Prevention and Tobacco Control Act

7. SectionDescription 903Misbranded Tobacco Products Defines as those tobacco products with labeling that is “false or misleading in any particular;” those failing to provide an “accurate statement of the quantity”. 903Misbranded Tobacco Products Defines as those tobacco products with labeling that is “false or misleading in any particular;” those failing to provide an “accurate statement of the quantity”. 904Submission of Health Information 904Submission of Health Information Cigarette manufacturers are required to provide to the FDA: Ingredient Disclosure Smoke Constituents All health-related and marketing- related internal studies Information concerning additives The Family Smoking Prevention and Tobacco Control Act

8. SectionDescription 905Annual Registration On or before December 31st each year, tobacco products manufacturers must register their facilities & tobacco products. 905Annual Registration On or before December 31st each year, tobacco products manufacturers must register their facilities & tobacco products. 906General Provisions 906General Provisions Sets out general requirements with regard to notices of proposed rulemakings, public comment, and other aspects of rulemakings. Requires that all aspects of manufacturing, including “preproduction design validation” meet “good manufacturing practices”. The Family Smoking Prevention and Tobacco Control Act

9. SectionDescription 907Tobacco Product Standards 907Tobacco Product Standards Tobacco products will need to meet a standard based on (1) nicotine yields; (2) “construction, components, ingredients, additives, constituents, including smoke constituents, and properties”; and (3) as determined by regulations related to as-of-yet undefined testing on a sample. The sale of flavored cigarettes is prohibited (except for menthol), effective September 22, 2009. The sale of flavored cigarettes is  prohibited (except for menthol), effective September 22, 2009. The Family Smoking Prevention and Tobacco Control Act

10. FSPTCA – Implication for Tobacco Growers Over time, tobacco growers may be asked by manufacturers to: Further restrict nitrosamines Remove other, as of-yet-unknown, constituents in tobacco leaf (possibly created during the curing process) Use, restrict or limit certain pesticides, herbicides or other chemicals currently used in tobacco growing

11. SectionDescription 907Tobacco Product Standards 907Tobacco Product Standards Not later than one year after the establishment of the TPSAC, this committee will submit a report and recommendations on “the impact on the use of menthol in cigarettes on the public health… among children, African Americans, Hispanics and other racial and ethnic minorities.” The Secretary is not, however, limited in his/her “authority to take action.” The Family Smoking Prevention and Tobacco Control Act

12. SectionDescription 907Tobacco Product Standards 907Tobacco Product Standards Not later than 2 years after its establishment, the TPSAC will issue a report and recommendations on the impact on the public health of dissolvable tobacco products. Again, the Secretary’s authority is not limited. Beginning June 22, 2011, manufacturers are prohibited from using either domestic or foreign tobacco with pesticide residue levels above a given tolerance. The Family Smoking Prevention and Tobacco Control Act

13. SectionDescription 907Tobacco Product Standards Section 3: LIMITATION ON POWER GRANTED TO THE FDA 907Tobacco Product Standards Section 3: LIMITATION ON POWER GRANTED TO THE FDA “Because of the importance of a decision of the Secretary to issue a regulation -- (A) banning all cigarettes, all smokeless tobacco products, all little cigars, all [large] cigars, all pipe tobacco, or all roll-your-own tobacco products; or (B) requiring the reduction of nicotine yields of a tobacco product to zero, the Secretary is prohibited from taking such actions under this Act.” The Family Smoking Prevention and Tobacco Control Act

14. SectionDescription 908Notification & Other Remedies Grants the FDA the authority to first issue a notification order, if the Secretary determines that a tobacco product “presents an unreasonable risk of substantial harm,” and second to issue a recall notice. 908Notification & Other Remedies Grants the FDA the authority to first issue a notification order, if the Secretary determines that a tobacco product “presents an unreasonable risk of substantial harm,” and second to issue a recall notice. 909Records & Reports on Tobacco Products 909Records & Reports on Tobacco Products All manufacturers and importers are required to maintain records and make whatever reports are mandated under regulation to ensure that the products are neither misbranded nor adulterated. The Family Smoking Prevention and Tobacco Control Act

15. SectionDescription 910Application for Review of Tobacco Products All tobacco products (including those in test markets) that were not commercially marketed in the U.S. as of February 15, 2007 or those that have undergone any modification after February 15, 2007 are considered “new tobacco products,” and are subject to premarket reviews. 910Application for Review of Tobacco Products All tobacco products (including those in test markets) that were not commercially marketed in the U.S. as of February 15, 2007 or those that have undergone any modification after February 15, 2007 are considered “new tobacco products,” and are subject to premarket reviews. 911Modified Risk Tobacco Products 911Modified Risk Tobacco Products Pre-market approval is required though for claims to be made with regard to relative risk additional barriers need to be cleared using as its basis the scientific evidence presented by the applicant. The Family Smoking Prevention and Tobacco Control Act

16. SectionDescription 912Judicial Review Any person adversely affected by the regulation implementing the “tobacco standard” or has his/her application for review denied has 30 days to file a petition for judicial review with the U.S. Court of Appeals District of Columbia. 912Judicial Review Any person adversely affected by the regulation implementing the “tobacco standard” or has his/her application for review denied has 30 days to file a petition for judicial review with the U.S. Court of Appeals District of Columbia. 913Equal Treatment of Retail Outlets 913Equal Treatment of Retail Outlets The FDA is required to issue regulations bearing on advertising restrictions for “retail establishments for which the predominant business is the sale of tobacco products” “accessible to individuals under the age of 18.” The Family Smoking Prevention and Tobacco Control Act

17. SectionDescription 914Jurisdiction & Coordination with FTC 914Jurisdiction & Coordination with FTC 915Regulation Requirement 915Regulation Requirement By June 22, 2012 the FDA will issue regulations that require the testing and reporting of all tobacco product constituents, ingredients and additives, including smoke constituents. Small manufacturers have two years from the date the above regulations are promulgated. Furthermore, a minimum four year period is provided before test results are required. The Family Smoking Prevention and Tobacco Control Act

18. SectionDescription 916Preservation of State & Local Authority 916Preservation of State & Local Authority 917Tobacco Product Scientific Advisory Committee 917Tobacco Product Scientific Advisory Committee To be composed of 12 diverse members all of whom are required to have knowledge in at least one of “medicine, medical ethics, science, or technology involving the manufacturer, evaluation or use of tobacco products”: 7 from the medical field 1 from government 1 from the general public 1 from tobacco manufacturing (non-voting) 1 from small tobacco manufacturing (non-voting) 1 from tobacco growers (non-voting) The Family Smoking Prevention and Tobacco Control Act

19. FSPTCA – Implication for Tobacco Growers Tobacco growers will attend and participate at TPSAC meetings, although will not have an official vote when important decisions are being made. Tobacco growers will attend and participate at TPSAC meetings, although will not have an official vote when important decisions are being made. The issue of “evidence-based science” to draw conclusions and eventually regulations Menthol cigarettes Dissolvable tobacco products The issue of “evidence-based science” to draw conclusions and eventually regulations Menthol cigarettes Dissolvable tobacco products

20. SectionDescription 918Drug Products Used to Treat Tobacco Dependence By June 22, 2012, the FDA is required to submit to Congress “a report that examines how best to regulate, promote and encourage the development of innovative products and treatments” that result in total abstinence, reduced consumption, and harm reduction from continued use. 918Drug Products Used to Treat Tobacco Dependence By June 22, 2012, the FDA is required to submit to Congress “a report that examines how best to regulate, promote and encourage the development of innovative products and treatments” that result in total abstinence, reduced consumption, and harm reduction from continued use. 919User Fees 919User Fees To be paid by tobacco manufacturers on a quarterly basis, beginning October 1, 2009. To be paid by tobacco manufacturers on a  quarterly basis, beginning October 1, 2009. The Family Smoking Prevention and Tobacco Control Act

21. FSPTCA – Implication for Tobacco Growers Although user fees are direct costs for manufacturers, the average cost for these fees will amount to less than 5¢ per pack. Although user fees are direct costs for manufacturers, the average cost for these fees will amount to less than 5¢ per pack. The true cost increases for manufacturers will come when they modify their manufacturing processes to conform to specifications listed in the new FDA regulations. The true cost increases for manufacturers will come when they modify their manufacturing processes to conform to specifications listed in the new FDA regulations.

22. SectionDescription 201Cigarette Label and Advertising Warnings By September 22, 2010, nine new cigarette package warning labels are required to be displayed on manufactured packages on a random basis. 201Cigarette Label and Advertising Warnings By September 22, 2010, nine new cigarette package warning labels are required to be displayed on manufactured packages on a random basis. The new warnings need to occupy 50% of the upper portion of the front and rear of the pack, under transparent clear wrapping. By June 22, 2011, the FDA will issue regulations requiring color graphic warning labels showing the health consequences of smoking with whatever size and format requirements the FDA “determines appropriate.” The Family Smoking Prevention and Tobacco Control Act

23. SectionDescription 202Authority to Revise Cigarette Warning Label Statements 202Authority to Revise Cigarette Warning Label Statements 203State Regulation of Cigarette Advertising and Promotion 203State Regulation of Cigarette Advertising and Promotion 204Smokeless Tobacco Labels and Advertising Warnings 204Smokeless Tobacco Labels and Advertising Warnings 205Authority to Revise Smokeless Tobacco Warning Label Statements 205Authority to Revise Smokeless Tobacco Warning Label Statements 206Tar, Nicotine and Other Smoke Constituent Disclosure to the Public 206Tar, Nicotine and Other Smoke Constituent Disclosure to the Public The Family Smoking Prevention and Tobacco Control Act

24. SectionDescription 301Labeling, Recordkeeping, Record Inspection By June 22, 2010, the “label, packaging, and shipping containers of tobacco products other than cigarettes” manufactured for interstate commerce in the U.S. need to display “Sale Only Allowed in the United States” and for cigarette manufacturing the same display is required by September 22, 2010. 301Labeling, Recordkeeping, Record Inspection By June 22, 2010, the “label, packaging, and shipping containers of tobacco products other than cigarettes” manufactured for interstate commerce in the U.S. need to display “Sale Only Allowed in the United States” and for cigarette manufacturing the same display is required by September 22, 2010. The Family Smoking Prevention and Tobacco Control Act

25. SectionDescription 302Study and Report 302Study and Report By December 22, 2010, the Comptroller General is required to deliver a report to the Senate Health, Education, Labor and Pensions Committee and the House Energy and Commerce Committee on cross-border trade in tobacco products, including illicit trade and trade of counterfeit tobacco products, as well as cross-border advertising, disseminated from the U.S. to other countries and to make recommendations “on the monitoring of such trade” and the prevention or elimination of such advertising. The Family Smoking Prevention and Tobacco Control Act

26. FSPTCA Timeline June 22, 2009 The Secretary of Health and Human Services began assessing fees on tobacco manufacturers and importers – fees collected quarterly – October 1, 2009. September 22, 2009 Ban on flavored cigarettes (not menthol) took effect. March 19, 2010 The CTP issued final rule regarding advertising and marketing restrictions. March 22, 2010 The 12-member Tobacco Products Scientific Advisory Committee was appointed.

27. FSPTCA Timeline - DELAYS December 22, 2009 (1) Cigarette manufacturers to submit list of all additives by brand/subbrand/quantity. (2) Cigarette manufacturers to submit documents relating to health effects of tobacco products. January 1, 2010 (1) Companies to register tobacco product establishments. (2) Cigarette manufacturers to submit product lists and report any changes.

28. FSPTCA Timeline By June 22, 2010 (1) Cigarette manufacturers to comply with advertising and marketing restrictions in Final Rule. (2) Descriptor (“light”, “mild”, “low”) ban [Color?] (3) Smokeless tobacco products: “Sale only allowed in United States” label Information, including domestic/foreign content on label New warning statements on advertisements and warning label changes FDA Draft Guidances for these measures were released by the Center for Tobacco Products on June 3-4, 2010.

29. FSPTCA Timeline By October 1, 2010 (1) The CTP to develop and publish an action plan to enforce restrictions on cigarette promotion and advertising to youth. By December 22, 2010 (1) The Comptroller General (GAO) to issue report on cross-border tobacco trade.

30. FSPTCA Timeline By June 22, 2011 (1) The CTP to issue regulations regarding color graphic warning labels/regulations. (2) Pesticide limitations for tobacco. By October 1, 2011 (1) The CTP to issue regulations regarding the remote sale/distribution of tobacco products. (2) The TPSAC to issue its report on menthol cigarettes.

31. FSPTCA – Implication for Tobacco Growers Many elements of the current leaf requirements by domestic cigarette makers will remain unchanged. Many elements of the current leaf requirements by domestic cigarette makers will remain unchanged. The U.S. cigarette industry will continue to decline but not disappear over time, thereby reducing leaf quantity needs. The U.S. cigarette industry will continue to decline but not disappear over time, thereby reducing leaf quantity needs.

32. FSPTCA – Implication for Tobacco Growers An opinion: The regulations created and enforced by the Center for Tobacco Products must not contribute to increases in illicit trade. An opinion: The regulations created and enforced by the Center for Tobacco Products must not contribute to increases in illicit trade. For example, a sales prohibition of menthol cigarettes would create a 27% gap in the U.S. domestic cigarette market, which potentially could be filled by illegal imported, untaxed and unregulated product. For example, a sales prohibition of menthol cigarettes would create a 27% gap in the U.S. domestic cigarette market, which potentially could be filled by illegal imported, untaxed and unregulated product.

33. The “PACT” Act (SB.1147) The “Prevent All Cigarette Trafficking Act of 2009” or “PACT Act” was signed by President Obama on March 31, 2010 and goes into effect on June 30, 2010. The “Prevent All Cigarette Trafficking Act of 2009” or “PACT Act” was signed by President Obama on March 31, 2010 and goes into effect on June 30, 2010. Among other things, the PACT Act amends the Jenkins Act to include smokeless tobacco and prohibits the mailing of cigarettes and smokeless tobacco through the U.S. Postal Service. Among other things, the PACT Act amends the Jenkins Act to include smokeless tobacco and prohibits the mailing of cigarettes and smokeless tobacco through the U.S. Postal Service.

34. C-32 A Canadian bill officially titled: “The Cracking Down on Tobacco Marketing Aimed at Youth Act” A Canadian bill officially titled: “The Cracking Down on Tobacco Marketing Aimed at Youth Act” Received Royal Assent on October 8, 2009 Received Royal Assent on October 8, 2009 Scheduled to go into effect on July 5, 2010 Scheduled to go into effect on July 5, 2010 C-32 to ban the sale of flavored cigarettes, cigarillos and blunt wraps, with the exception of menthol. C-32 to ban the sale of flavored cigarettes, cigarillos and blunt wraps, with the exception of menthol.

35. C-32 Would ban all flavors in cigarettes, cigarillos and blunt wraps, regardless of whether the flavor was “characterizing” or not Would ban all flavors in cigarettes, cigarillos and blunt wraps, regardless of whether the flavor was “characterizing” or not Would ban non-characterizing flavors such as licorice and cocoa Would ban non-characterizing flavors such as licorice and cocoa Would effectively ban the import of U.S. cigarettes and burley leaf into Canada Would effectively ban the import of U.S. cigarettes and burley leaf into Canada

36. C-32: Future Implications Since Canada is a Virginia flue-cured cigarette market, C-32 can be interpreted as protectionist in that it would restrict trade in regular tobacco products to the benefit of the domestic industry. Since Canada is a Virginia flue-cured cigarette market, C-32 can be interpreted as protectionist in that it would restrict trade in regular tobacco products to the benefit of the domestic industry. The TobReg working group of the Framework Convention on Tobacco Control (FCTC) is examining C-32 as it may apply to Article 9 (Regulation of the contents of tobacco products ). The TobReg working group of the Framework Convention on Tobacco Control (FCTC) is examining C-32 as it may apply to Article 9 (Regulation of the contents of tobacco products ).

37. U.S. Burley Leaf & Cigarette Exports to Canada (MT, Million of Pieces) Source: TMA’s Tobacco Trade Barometer (2002-09)

38. C-32: Future Implications Does the FDA have the authority to extend its current flavor cigarette ban to “non- characterizing” flavors? Does the FDA have the authority to extend its current flavor cigarette ban to “non- characterizing” flavors? Will EU nations follow Canada’s lead and implement a similar flavor ban? Will EU nations follow Canada’s lead and implement a similar flavor ban? How does competition get affected around the world as a “total” flavor ban affects some multinational cigarette makers over others? How does competition get affected around the world as a “total” flavor ban affects some multinational cigarette makers over others?

39. 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 Awareness [Health Care]  (Article 13)Tobacco Advertising, Promotion & Sponsorship [FDA]  (Article 15)Illicit Trade in Tobacco Products [CCTA, PACT Act, FDA/GAO…STOP?]  (Article 16)Sales to and By Minors [FDA, State]  (Article 19)Liability [MSA, Progeny Engle, History]

40. THANK YOU darryl@tma.org 609-275-4900, Ext. 216