Fifty-one years ago, President Richard Nixon signed legislation banning television and radio advertisements for cigarettes. That was just the beginning of the tobacco industry’s regulatory fights. After years of unsuccessful attempts, thirty-nine years later Congress gave the U.S. Food and Drug Administration (FDA) the authority to oversee the tobacco industry, beginning with smokeless tobacco and cigarettes. The FDA subsequently added cigars, e-cigarettes, and all other tobacco products.
Today, an industry that remained relatively unimpacted by federal regulations for 200 years must receive government approval before introducing or marketing any product. Federal scrutiny is compounded by requirements tobacco companies maintain multi-billion-dollar campaigns discouraging consumer use. The tobacco industry has come a long way since early colonist John Rolfe’s cultivation helped turn Virginia into a profitable outpost.
From many years of litigation and legislative tumult, a significant number of lessons have emerged for the burgeoning and adjacent cannabis industry. Despite more than 140 million Americans now living in states with an adult-use marketplace and discussions heating up about a federal framework for a legal nationwide market, the federal government has not yet addressed cannabis. However, now is the time to get out in front of potential actions against the industry by drawing on the lessons from regulators’ stated objectives, industry opponents’ strategies, and the regulatory landscape as it exists today in the tobacco industry.
For example, more than 6 million nicotine vapor products currently are under regulatory review by the FDA’s Center for Tobacco Products, the agency that must approve every vaping product including e-cigarettes, e-liquids, and devices (including their marketing plans). This monumental task comes at the same time the agency must review all other new tobacco products and has announced plans to move forward on rulemaking to impose a menthol cigarette ban.
Between the need to obtain government approval to introduce new products and the ongoing threat of removing some products from store shelves, to say the tobacco industry is highly regulated would be an understatement.
Cannabis industry participants can position themselves today for the inevitable scenario wherein the federal government creates a national regulatory framework. Doing this will require recognizing the need for immediate self-regulation to avoid the long-term risks of unnecessary restrictions on a national market.
For starters, effective marketing matters. Not only is it crucial for professionalizing the industry and creating adult consumer brand loyalty, but today’s advertising and marketing practices are also important in terms of how they may shape the regulatory landscape in the future.
One of the longest-lasting and most consequential attacks against the tobacco and vapor industry is the claim products have been marketed to minors. In recent years—particularly in vaping—cartoons, intellectual-property-violating logos, and questionable product names have raised the profile of small companies to the detriment of perceptions about the responsible majority of the industry. Going back further, marketing attempts to make tobacco use more mainstream also may have resulted in decades of future attacks against tobacco companies’ intentions and motivations. The tobacco industry fought many regulations and lost the opportunity to shape them before societal momentum took control.
Product standards are important. The industry needs to monitor the construction of its products and perhaps create “no-fly lists” of components. A repetition of the events surrounding the “vapegate” incident in August 2019, where a flavoring component used in cannabis vaping products had tragic consequences, would invite significant regulatory scrutiny and incite anti-cannabis activists.
Cannabis is not a new industry. As public perception changes in favor of market liberalization and cannabis gains acceptance as a medical product, the industry should act now to avoid the self-inflicted wounds suffered by the tobacco industry. To avoid onerous restrictions on marketing and advertising, current market participants should self-police their marketing strategies and investigate the constituents of their products consistent with the responsible standards utilized by other heavily regulated industries in the twenty-first century, including beverage alcohol and tobacco. This includes avoiding advertising where youth viewership or readership may be above average, being selective with the placement of visual advertisements, staying cognizant of the audience for event sponsorships, and avoiding events with significant youth attendance.
Unsubstantiated health claims
Another lesson to bear in mind is the importance of avoiding health claims, especially given the market segmentation of recreational- and medical-use from a regulator and legal perspective. While regulatory oversight for the current medical market varies by state, within a national framework there likely would be uniformity for claims that are not supported by science and therefore are not permitted. Given the current requirement that nearly all products subject to FDA oversight obtain pre-authorization before making consumer-oriented claims about benefits, it’s not difficult to imagine a process coming together for cannabis, as well. These claims, once authorized for the medical market, may attract regulatory attention in the recreational market.
We already are experiencing marketing restriction efforts at the state level. Efforts are underway to limit where cannabis brands may be advertised—along highways, outside retail establishments, digitally, and through other mediums. Usually protected commercial speech has encountered opposition from regulators and industry opponents that often mirrors the sort of limits imposed on tobacco companies. The industry may avoid future issues by embracing these limitations today.
Black market threat
The final significant lesson learned from the tobacco industry may seem ironic. That is, there must be a collective effort to curb illicit production, distribution, and sale.
Just look at tobacco: States lose between $3 billion and $7 billion annually in tax revenues to the illicit cigarette market, with more than half of every cigarette consumed in states like New York being counterfeit, illegally sold, or smuggled. Excise taxes play a significant role in these black markets, and one of the consequences is the creation of criminal enterprises that operate outside licensed state and federal channels.
Both public entities and private firms have a vested interest in curbing black market sales to avoid counterfeit goods, protect consumers, and reward businesses operating within the confines of the law. Establishing partnerships with state and federal law enforcement will go a long to both protect the investments companies make in their own brands and change the minds of those who long have been on the front lines of the war on drugs.
While the timeline for a national regulatory framework for adult use remains unclear, states already are filling the void by establishing their own rules for product manufacturing, distribution, and sale. Recognizing the lessons learned from other industries in recent years, it is clear the opportunities to engage lawmakers and regulators today should not be missed.
Paul Blair is vice president of government affairs at Turning Point Brands, a manufacturer, marketer, and distributor of consumer products including the iconic brands Zig-Zag and Stoker’s. He is responsible for all state and federal lobbying and public affairs for the company. Prior to joining TBP, he oversaw tobacco tax and regulatory issue engagement for a public policy organization in Washington, D.C.