The US Food and Drug Administration (FDA) is in the final stages of advancing a proposed rule that would ban the sale of menthol cigarettes. Such a draconian prohibitionist policy is not necessary, because smoking rates are among their lowest levels ever recorded in the Tar Heel State. More problematic is that the FDA is failing to consider the negative externalities that will be caused by such a ban and its cost on North Carolina taxpayers.
Simply put, there is no need for a menthol ban in North Carolina, as smoking rates among youth and adults are at some of the lowest rates recorded.
In 2021, according to data from the Centers for Disease Control and Prevention (CDC), only 3.9% of high school students were smoking. Comparatively, in 1995, nearly one-third (31.3%) of high schoolers were smoking. The CDC’s National Youth Tobacco Survey found that only 1.6% of US middle and high school students were currently smoking this year — one of the lowest levels recorded.
Smoking also continues to decline among adults. In 2022, only 14.5% of North Carolina adults aged 18 and over were currently smoking, amounting to more than 1.2 million adults. This is a 44% decline from 1995, when more than one quarter (25.9%) were smoking. Since 2014, yearly smoking rates have consistently remained lower than 20% of adults.
A ban on menthol cigarettes ignores these declines and would have negative externalities that would ultimately burden taxpayers in the Tar Heel State.
North Carolina would stand to lose thousands of jobs if menthol cigarettes are banned. Menthol cigarettes provide an estimated 27,000 jobs in the Tar Heel State, with 2,000 being manufacturing jobs. The loss of these jobs was lamented in a bipartisan letter from US Congressmen Don Davis, D-NC; and David Rouzer, R-NC, which urged the FDA to consider the impact on their state’s economy.
And ultimately, North Carolina taxpayers would lose the most, as the state would face increased costs for enforcement and declining tax revenue attributed to the state cigarette excise tax. In 2022, the state collected more than $231 million in cigarette excise taxes, which was $14.8 million less than what the state collected in 2021. Should menthol cigarettes be banned, North Carolina could expect to lose more than $76 million each year in cigarette excise taxes.
There will also be increased costs to enforce the ban as illicit markets will flourish, since it is the state’s responsibility to rid the market of menthol cigarettes. This is already happening in Massachusetts.
Massachusetts was the first US state to issue a ban on menthol cigarettes, which went into effect in 2020. The year the ban took place, the Bay State collected $477.4 million in cigarette tax revenue. In 2023, cigarette tax collections were down by 24% to $360.9 million — or $116.5 million less than what was collected in 2020. Amid dwindling cigarette tax revenue, Massachusetts has had to allocate additional funding for the ban. In 2020, Massachusetts allocated $589,911 to its Illegal Tobacco Task Force. Between 2020 and 2021, funding for the enforcement agency increased by 73% to more than $1 million each year for fiscal years 2021, 2022, and 2023.
Undoubtedly an illicit market will thrive under a federal menthol ban, and North Carolina is no stranger to illicit tobacco products. Due to its low cigarette excise tax, the Tar Heel State has dealt with numerous instances of persons smuggling cigarettes from its state to other states with high tax rates. In late 2021, the United States Attorney’s Office of the Eastern District of North Carolina charged 25 individuals in a massive cigarette smuggling ring with defrauding numerous state governments as well as the federal government “of millions of dollars in tax revenue from the sale of cigarettes.” This past June, a man was arrested entering Virginia from North Carolina with 1,050 cartons of cigarettes. Should a ban go into effect, it will be persons smuggling cigarettes into the state — not out of it.
If lawmakers truly do want to eradicate smoking rates, they should implore the FDA to authorize the hundreds of thousands of e-cigarettes and novel tobacco products which are significantly less harmful than combustible cigarettes. To date, the agency has issued authorization orders for only 23 products, manufactured by only three companies. Not only are thousands of small businesses already harmed by FDA’s failure to recognize tobacco harm-reduction options, but the millions of adults who continue to smoke are restricted from accessing a safer product.
North Carolina taxpayers and consumers should be alarmed by the proposed menthol ban and should urge their lawmakers to put more pressure on the FDA. The agency is supposed to be responsible for advancing technologies to improve public health — not acting like a regulator for the nanny state.