The new rule cutting nicotine levels in cigarettes and other tobacco products could lead to more than US$30 billion in losses to the US economy. Photo credit: Linday Fox, CC.2.0.
The Biden administration is preparing to introduce a rule to reduce nicotine levels in tobacco products, marking a last-minute attempt to implement a major tobacco regulation after delaying a previous pledge to ban menthol cigarettes.
Although the specifics of the new rule remain unclear, it is expected to mandate significant reductions in nicotine content in cigarettes and potentially other tobacco products.
The Food and Drug Administration (FDA) has been discussing plans to reduce nicotine levels since 2018. In 2022, under President Biden, the agency announced it was drafting a proposed rule, initially expected to be released in May 2023.
Now, over 18 months later, the proposal is nearing publication. However, no immediate changes to tobacco products are expected, as this marks only the first step in the regulatory process.
Finalizing and implementing the rule will fall to the next administration, raising concerns that it could be scaled back or altered. If the rule progresses beyond the proposal stage, it is likely to face industry lawsuits claiming government overreach.
According to The Hill, public health advocates are optimistic about the rule's future under the next administration, as reducing nicotine aligns with the “Make America Healthy Again” agenda promoted by Robert F. Kennedy Jr., the nominee for Health and Human Services secretary.
Conservative free-market advocates and law enforcement groups warn that the proposal could be seen as a de facto cigarette ban, potentially driving a significant increase in illicit tobacco trade.
According to The Center Square, the rule, if approved, could lead to an annual economic output loss exceeding US$30 billion.
A December 2024 report by Chmura Economics warns that limiting nicotine could have a US$30.6 billion annual impact on the national economy, resulting in the loss of over 154,000 jobs.
The report projects a decline of US$8 billion in federal excise tax revenue from tobacco, with state and local tax revenue potentially falling by up to US$16 billion each year. Additionally, the rule could reduce payments from the Tobacco Master Settlement and other agreements by US$5.6 billion.
Richard Marianos, a former assistant director of the US Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), said the proposed rule could backfire, leading people to smoke more in an attempt to achieve the same effects as before. He also argued that the rule could create a new demand for higher-nicotine cigarettes, much like how tobacco taxes lead to increased demand for counterfeit products.