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Supreme Court denies cert in cig labeling case, FDA plans new rules

| May 10, 2013

The U.S. Supreme Court denied a writ of certiorari filed by the tobacco companies challenging the advertising regulations promulgated pursuant to the Family Smoking Prevention and Tobacco Act.

While the Court’s cert denial allows a previous 6th Circuit decision to stand, the contested rules may never be enforced. The Solicitor General declined to file a writ of certiorari in the D.C. Circuit case and in a letter from U.S. Attorney General Eric H. Holder Jr. noted that the FDA plans to engage in “new rulemaking consistent with the Tobacco Control Act.”

Because the FDA has indicated that it plans to engage in new rulemaking, the tobacco companies have effectively avoided compliance with the stringent new rules.

The tobacco companies made two separate challenges to the rules. In the U.S. District Court for the District of Columbia, R.J. Reynolds, Lorillard, and Liggett Group, among others, sought an injunction against the enforcement of the new requirements. The U.S. District Court agreed that the “mandatory graphic images unconstitutionally compel speech” and that the tobacco companies would “suffer irreparable harm absent injunctive relief pending a judicial review of the constitutionality of the FDA’s rules.” The FDA appealed, but the D.C. Circuit Court of Appeals affirmed.

At the same time, another group of tobacco companies filed a facial First Amendment challenge to the rules in their entirety – and got an entirely different result. A federal court judge in Kentucky upheld the rules, and the U.S. Court of Appeals for the Sixth Circuit affirmed, holding that “the Act’s warnings are reasonably related to the government’s interest in preventing consumer deception and are therefore constitutional.”

The defendants then filed cert with the U.S. Supreme Court, which the justices denied in late April.


Smoking goes airside at Aberdeen airport

| May 10, 2013

The establishment of an airside smoking shelter at Aberdeen International Airport in Scotland is expected to help reduce the number of full terminal evacuations caused by people smoking in areas where smoking is banned, according to a story by The Scotsman.

The shelter, which is adjacent to the main departure lounge, will provide passengers who have been processed through security and are waiting for their flights with somewhere to have a cigarette before takeoff.

The smoking shelter was erected after more than 400 people who took part in a survey last year said they would like to see an airside facility installed at the airport.

“It is designed to reduce the number of full terminal evacuations,” an airport spokeswoman was quoted as saying.

Many such evacuations, which cost thousands of pounds, were caused by passengers lighting up in prohibited areas, activating smoke alarms and causing major disruption and delays, she said.

“Interestingly, even 61 percent of non-smokers who took part in the survey said they supported an airside smoking shelter,” the spokeswoman added.

Ousted retailers could be compensated

| May 10, 2013

The Hungarian government is considering what it should do to compensate tobacco-product retailers who missed out when tobacco retail licenses were recently put out to tender, according to an All Hungary Media Group story (AHMG).

Legislation passed in September last year provided for the establishment of a state monopoly of the retail sale of tobacco products from July 1, 2013. The process, overseen by the National Tobacco Trade Non-profit (NTTN) organization, has involved putting out for tender a limited number of tobacco retail concessions.

Prime Minister Viktor Orban apparently told public radio Kossuth the government was working to ensure that people whose livelihoods depended on selling tobacco products, but who had failed in their bids for licenses, stayed in business.

And ruling Fidesz party group leader Antal Rogan said he supported the idea of compensation.

But asked whether plans were afoot to ban family members of local council officials from getting licenses, Rogan said such a move would create more problems than it would solve.

Meanwhile, NTTN has refused a socialist MP’s request for access to documents containing bids submitted for the recent tenders.

The company rejected Csaba Toth’s request to view the bids, arguing that even though NTTN was publicly owned, it was not a state agency and so it did not have to disclose such information.

Toth said he would appeal to the National Development Ministry.

Opposition parties have sharply criticized the government for the tobacco tender, alleging that Fidesz party members had influenced the process.

Earlier this year, the NTTN was forced to announce a second tender in 1,417 communities from which no applications had been received during the initial tender.

RAI increases quarterly dividend

| May 10, 2013

Reynolds American Inc. said yesterday that its board of directors had approved a 6.8 percent increase in the quarterly cash dividend on the company’s common stock, taking it from $0.59 per share ($2.36 per share annualized) to $0.63 per share ($2.52 per share annualized).

The dividend will be payable on July 1 to shareholders of record on June 10.

“This increase is in line with the company’s policy of returning about 80 percent of net income to shareholders in the form of dividends, and underscores our commitment to returning value to shareholders,” said CFO Thomas R. Adams.

Tobacco the crop of choice in Zimbabwe

| May 9, 2013

Zimbabwe had sold 107 million kg of flue-cured tobacco for a total of $400 million by the end of the 55th day of sales, according to a story in the Zimbabwe Herald.

By the same stage of last season’s sales, 84 million kg of flue-cured had been sold for  $315 million.

The Tobacco Industry and Marketing Board was said to be confident that this season’s 170 million kg target would be surpassed.

And the Zimbabwe Commercial Farmers’ Union vice president, Johnson Mapira, was quoted as saying that tobacco production was expected to continue to increase because of favourable farm prices. Tobacco was the only crop where farmers were guaranteed good prices and instant cash.

Mapira said the good payment method used in respect of tobacco sales meant that tobacco farmers did not have problems paying their workers. And he said that farmers were now using some of the proceeds from tobacco to support other projects.

Tobacco industry has little to fear from EU TPD proposals

| May 9, 2013

The European Commission believes that its proposed revisions to the Tobacco Products Directive would, if adopted, have limited adverse impact on the tobacco industry – and some positive impacts.

“The adoption of the proposal for a revised Tobacco Products Directive was preceded by a thorough impact assessment, including an assessment of the economic impacts on the tobacco industry, their upstream suppliers (e.g. growers, ingredients suppliers, paper industry) and downstream distributors (wholesale, retail),” the commission stated in a written answer to questions posed by the Czech MEP, Ivo Strejček.

“It is estimated that the proposal will result in a reduction in the consumption of tobacco products of no more than 2 percent within a five year period following the transposition of the Directive. The adverse impact on the industry would therefore remain limited. Jobs lost in the production of cigarettes would be offset by the creation of jobs in other sectors, reflecting ex-smokers’ expenditure on such sectors.

“In addition, the proposal is expected to lead to some benefits for the industry through reduced production costs as a result of harmonization (one … production line instead of different production lines to comply with different national rules) and through the expected reduction in illicit trade (as a result of the proposed measures on tracking and tracing of products). Even the most specialized tobacco retailers do not generate more than 50 percent of their revenues from tobacco products, thus the impact is not expected to be disproportionate.”

The commission said that to avoid imposing an unnecessary burden on small- to medium-sized enterprises, pipe tobacco, cigars and cigarillos were exempted from the stricter labelling and ingredients rules that the revisions proposed for other tobacco products. The proposal, it added, was neutral in respect of the different types of tobacco, Virginia, Burley and oriental. This meant that smaller farms involved in Burley and oriental tobacco production would not be affected.