During the final days of the Biden administration, the Food and Drug Administration (FDA) is expected to issue a mandate for Very Low-Nicotine (VLN) products. The proposed rule could come as soon as Monday.

As tobacco is such a large part of North Carolina’s agricultural industry, the ban would significantly impact one of the state’s top crops. VLN products would lower the nicotine content by 96% as compared to the majority of cigarette brands dominating the market, according to the FDA.

“The Biden administration’s proposed menthol cigarette ban is a direct attack on North Carolina’s hardworking families, farmers, and small businesses,” said freshman Congressman Pat Harrigan, NC-10. “This ban threatens over 27,000 jobs in our state, many of which have been the backbone of our communities for generations. By eliminating the menthol cigarette industry, the government risks devastating our local economies, pushing products into the black market, and undermining the livelihoods of thousands who rely on this industry to support their families.”

 According to Regulatory Smoke: The Economic Impacts of Proposed FDA Tobacco Regulations, a recent study commissioned by the John Locke Foundation (JLF), North Carolina has 822 tobacco farms, which generate $557 million in revenue and contribute $197 million to the state’s GDP.

“The total economic impact of the cigarette industry alone (farm to retail), after accounting for inter-industry effects, is $49 billion of output (revenue), $32 billion added to the GDP 101,900 jobs created, and labor earnings of $10 billion,” according to the report. “If the entire tobacco industry is included, not just cigarettes, the figures are about 20 percent larger.” 

For most North Carolina farmers, tobacco is part of a diversified portfolio of crops, and taking tobacco out of the equation will have economic impacts that go beyond the value of tobacco production, according to Ray Starling, general counsel of the NC Chamber and president of the NC Chamber Legal Institute. 

“I think there’s a monetary piece that needs more discussion,” Starling told the Carolina Journal in an interview. “I grew up on a tobacco farm in southeast North Carolina, and I think there’s a cultural piece that tobacco plays in our state that also can’t be overlooked. It’s an understanding of what this crop means not just in the sense of the economics that we’ve already talked about but in the work ethic and in the understanding of how to grow a difficult crop. If you think about our farming community, I mean, you have to be a really good farmer to grow tobacco, and if you can grow tobacco, you can probably grow a lot of other things, too.”

Professor James Prieger of Pepperdine University’s School of Public Policy, author of the John Locke study, expressed his concerns about the impact of VLN products on the economy. 

“The VLNC regulation would be even more disruptive, taking away over 100,000 jobs,” Prieger told the Carolina Journal last year. “These job losses are so large not only because there is a lot of tobacco farming, manufacturing, and sales in the state, but because of the ripple effects throughout other areas of the economy.”

According to the JLF report, no compliant products are currently sold at any scale in the US, and there is no demonstrated consumer demand for them. 

“In addition to the lack of consumer demand for VLNC products, cigarette manufacturers argue that no such products could conceivably be marketed at scale, given the technical infeasibility of product design,” according to the report. “In brief, the difficulties at both the agronomic level (on the farm, what grows in the field) and the processing level (how nicotine may be extracted from tobacco) are either practically or economically insuperable at the present time, and the FDA offers only laboratory evidence as proof-of-concept.”

North Carolina is the country’s leading tobacco state, particularly in counties on the eastern side: Wilson, Nash, Sampson, Johnston, and Harnett, the top five tobacco-producing counties. 

“The VLNC regulation would hit farming revenue and employment particularly hard in these five counties, with revenue falling between $11 million to $19 million per county under the pessimistic scenario and dropping between $7 million and $12 million under the optimistic scenario,” according to the Locke report. 

State lawmakers representing these counties offered perspectives on how these regulations would impact their constituents.

“Inflation and high-interest rates are bankrupting some of our farmers and we don’t need the federal government to pile-on to the farming community,” Sen. Benton Sawrey, R-Johnston, told the Carolina Journal. “Voters sent a clear message this past November that they’re disinterested in the Biden-administration and the administrative state.  The FDA needs to stand-down until President Trump takes office.”

One of the less vocal members of the General Assembly, Rep. William Brisson, R-Sampson, also offered comment.

“Tobacco remains an important crop on many farms across North Carolina,” Brisson told the Carolina Journal. “In 2023, there were over 113,000 acres planted contributing over $550 million on the farm level.  Tobacco is a legal crop, and both the menthol ban and low nicotine are examples of a federal agency using rule-making to go above and beyond the intention of the laws regulating the tobacco industry.”

Brisson went on to explain that reduction of nicotine levels could “drastically reduce the economic opportunity provided to both farmers and rural communities.”  He pointed out that people have talked about what crops could be the ‘next tobacco,’ for years now, but no other crops have provided the same economic opportunities.

State Sen. Lisa Barnes, R-Nash, also offered her expertise. She has significant experience in agriculture, having grown up on a farm and now sitting on the agriculture appropriations committee.

“Tobacco products should be made as safe as possible for adults who choose to use them,” Barnes told the Carolina Journal. “Protecting individual freedom of choice and fostering free markets are essential principles that should guide policymaking in this area.”

Rep. Allen Chesser, R-Nash, while acknowledging the FDA’s role in promoting public health, noted that this ban might border on government overreach, violating personal sovereignty. Chesser emphasized that the government’s role is not to dictate how we live but rather to interfere with our lives as little as possible.

 “Farmers in Nash County are already navigating a tough year, with fluctuating market prices, increases to input costs due to inflation, and shifts in consumer preferences adding fuel to the fire,” Chesser told the Carolina Journal. “This new regulation could exacerbate these difficulties, potentially leading to job losses, or, at the very least — force farmers to pivot to alternative crops, which involves considerable risk and large financial investment. The adjustment in nicotine levels might further complicate matters, potentially reducing the appeal of tobacco products and thus affecting the market even more.”

The proposed regulations would impact the agricultural sector and the tobacco industry and, as a result, have a trickle-down effect on the economy of North Carolina as a whole. 

“Those dollars don’t just go to the farm gate and stop; they get turned over in the economy, and that’s frankly how we get to that billion-dollar impact number for North Carolina,” said Starling.

Policy experts also offered perspectives on the FDA ban. 

“The Biden administration’s proposed low nicotine standard for cigarettes would have a profound impact on North Carolina’s agricultural industry,” Brian Balfour, VP of research at the John Locke Foundation, told the Carolina Journal. “All told, the tobacco industry contributes about $74 billion in output to North Carolina’s economy annually. These new standards, however, would cause a significant consumer shift away from tobacco cigarettes, and a recent study published by the John Locke Foundation estimates that the new rule would cost North Carolina up to 169,000 jobs and shrink that state’s economy by up to $48 billion. Being the nation’s leader in tobacco production, North Carolina would have a lot to lose from these new standards.”