MISSOURI LEGISLATION FAVORS BIG TOBACCO, WOULD EXCLUDE SMALL BUSINESSES FROM TOBACCO HARM REDUCTION

May 5, 2020

By: Lindsey Stroud

KEY POINTS:

  • Senate Bill 1085 would require “new tobacco product manufacturers … submit to the Director of the Department of Revenue … a certification that a [PMTA] has been submitted to the FDA.”

    • The Department of Revenue will be required to maintain an online listing of all certifications and is permitted to “designate a fee of not more than $500 per new tobacco product … to cover the costs of processing the certifications and maintaining the directory.”

    • The legislation would also increase the state’s age to purchase tobacco and vapor products from 18 to 21 years old.

  • Currently, e-cigarettes and vapor products are regulated by the US Food and Drug Administration (FDA). FDA’s regulations require e-cigarette manufacturers to comply with regulations governing tobacco, including completing a lengthy and expensive study process called the “premarket tobacco application” (PMTA).

  • SB 1085 would disproportionately impact small businesses in Missouri.

    • Large vapor manufacturers, such as JUUL, would be subject to a very small fee. For example, JUUL offers two flavors, menthol and tobacco, in two different nicotine strengths. Their license burden would only be $2,000, should the Department of Revenue instate a $500 licensing fee per product.

    • A small manufacturer that sells 20 different flavors, available in three different nicotine strengths, would be subject to a $30,000 licensing fee.

  • SB 1085 is a redundant regulatory bill. The federal government already regulates vapor products and it is not necessary for the state to create a new online tobacco product listing catalog, as the FDA already does so.

  • The legislation requires new positions to be created within the Department of Revenue, yet there is no specific funding allocated to the program, outside of the proposed $500 licensing fee.

  • In 2018, the vapor industry created 2,253 direct vaping-related jobs in the Show-Me State, which generated $62 million in wages alone. In the same year, Missouri received more than $25 million in state taxes attributable to the vapor industry, bringing the total economic impact in 2018 to over $475 million.

  • Policymakers should note that many Missouri youth are not using vapor products. For example, in 2019, 79.3 percent of Missouri youth reported not using a vapor product.

  • Missouri spends very little on helping smokers quit.

  • Missouri received an estimated $258.9 million in revenue from tobacco settlement payments and tobacco taxes and dedicated only $48,500 in state funding, less than one percent of tobacco monies, on tobacco control programs, including education and prevention.

  • Missouri spends over $3 billion annually in health care costs related to smoking.

Recently introduced legislation in the Show-Me State aims to strike parity between federal and state law by imposing strict state regulations on vapor products, in addition to regulatory provisions already in place by the federal government.

Vapor products and e-cigarettes were first introduced to the US market in 2007. Since then, they have helped millions of American adults quit smoking combustible cigarettes, and according to a 2019 study in The New England Journal of Medicine, their use is twice as effective as nicotine replacement therapy in helping smokers quit cigarettes. Further, numerous public health groups have found e-cigarettes to be significantly less harmful than combustible cigarettes.

Currently, e-cigarettes and vapor products are regulated by the US Food and Drug Administration (FDA). In 2016, FDA issued deeming regulations that extended the agency’s regulatory authority to include electronic cigarettes and other tobacco harm reduction products. All companies “engaged in the preparation, manufacture, compounding, repackaging, relabeling or processing of finished tobacco products” now must register with FDA.

FDA’s regulations require e-cigarette manufacturers to comply with regulations governing tobacco, including completing a lengthy and expensive study process called the “premarket tobacco application” (PMTA). Beginning on August 8, 2016, no new e-cigarette product, including flavors and nicotine products, can be sold in the United States without first receiving premarket tobacco application approval from FDA. This one requirement alone will have a devastating effect on the industry. FDA estimates each PMTA will cost $330,000.

Legislation introduced in Missouri would require manufacturers to reregister their products with the state, after submitting a PMTA to the FDA. Senate Bill 1085 would require “new tobacco product manufacturers … submit to the Director of the Department of Revenue … a certification that a [PMTA] has been submitted to the FDA.” The Department of Revenue will be required to maintain an online listing of all certifications and is permitted to “designate a fee of not more than $500 per new tobacco product … to cover the costs of processing the certifications and maintaining the directory.” The legislation would also increase the state’s age to purchase tobacco and vapor products from 18 to 21 years old.

Although lawmakers intend to provide some regulations on vapor products to address youth use and recent vaping-related lung injuries, SB 1085 would disproportionately impact small businesses in Missouri. Under the legislation, large vapor manufacturers, such as JUUL, would be subject to a very small fee. For example, JUUL offers two flavors, menthol and tobacco, in two different nicotine strengths. Their license burden would only be $2,000 should the Department of Revenue instate a $500 licensing fee per product. Conversely, a small manufacturer that sells 20 different flavors, available in three different nicotine strengths, would be subject to a $30,000 licensing fee.

Moreover, SB 1085 is a redundant regulatory bill. The federal government already regulates vapor products and it is not necessary for the state to create a new online tobacco product listing catalog, as the FDA already does so. Further, the legislation requires new positions to be created within the Department of Revenue, yet there is no specific funding allocated to the program, outside of the proposed $500 licensing fee. Given that Missouri is required have a balanced budget, it is likely this program could backfire and the required funding for oversight will be missed as manufacturers are unable to afford the licensing fees.

In 2018, the vapor industry created 2,253 direct vaping-related jobs in the Show-Me State, which generated $62 million in wages alone. In the same year, Missouri received more than $25 million in state taxes attributable to the vapor industry, bringing the total economic impact in 2018 to over $475 million. These figures only include vapor products sold in vape shops, compared to products offered by tobacco manufacturers in convenience stores. Due to the high costs associated with the certification fees in SB 1085, it is highly probable that many manufacturers will be unable to meet the costs, and many small businesses would be forced to shut their doors.  

One aim of the legislation is to address youth e-cigarette use, but policymakers should note that many Missouri youth are not using vapor products. For example, in 2019, 79.3 percent of Missouri youth reported not using a vapor product. Only 6.9 percent of Missouri youth reported using an e-cigarette every day.

Further, SB 1085 will not address vaping-related lung illnesses as health departments and the Centers for Disease Control and Prevention (CDC) have overwhelmingly linked these to the use of illicit vaping devices containing tetrahydrocannabinol (THC). Indeed, as of January 14, 2020, the CDC has released data on 2,022 hospitalized vaping-related lung illnesses cases, noting that 82 percent of patients reported using vapor products containing THC, and 33 percent reported exclusive use of THC-containing vapor products. These findings are consistent with other state health department findings. The Missouri Department of Health and Senior Services (MDHSS) last updated the state’s case count on February 13, 2020, reporting 42 cases and two deaths. MDHSS does not provide information on substance vaped.

Deeply problematic is that the proposed legislation would significantly reduce tobacco harm reduction options for adults in Missouri, while the state spends a dismal amount of existing monies from combustible cigarettes on programs that can help Missourians quit smoking. For example, in 2019, Missouri received an estimated $258.9 million in revenue from tobacco settlement payments and tobacco taxes. In the same year, the Show-Me State dedicated only $48,500 in state funding, less than one percent of tobacco monies, on tobacco control programs, including education and prevention. Worse, Missouri spends over $3 billion annually in health care costs related to smoking.

Although addressing youth e-cigarette use and vaping-related lung illnesses is laudable, the proposed legislation favors Big Tobacco over small businesses and would eliminate many tobacco harm reduction options for Missourian adults. Lawmakers should look at utilizing existing tobacco monies to address vaping-related concerns and promote the use of tobacco harm reduction products for smokers in Missouri.

 

Nothing in this analysis is intended to is intended to influence the passage of legislation, and it does not necessarily represent the views of Tobacco Harm Reduction 101. For more information on vapor products in Missouri, please visit Tobacco Harm Reduction 101’s Missouri page at www.thr101.org/missouri.

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©2020 by Tobacco Harm Reduction 101.