Tobacco: Policies, Laws, and Regulations

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Tobacco: Policies, Laws, and Regulations

Everyone has a big stake in tobacco. Smokers who become sick often wind up using tax money to help pay for their medical bills, while nonsmokers are put at risk when they breathe in the toxins from other people's cigarettes. Tobacco policies, laws, and regulations are intended to protect everyone—smokers and nonsmokers alike. Another main goal is to discourage young people from ever starting to smoke in the first place. Federal, state, and city governments have tried to achieve these goals by several means. Some of the most important are product labels, advertising restrictions, clean air rules, bans on sales to minors, special taxes, laws to prevent smuggling, and lawsuits against tobacco companies.

Labels and Advertising

In 1964 the U.S. surgeon general's first report on tobacco and health was issued. The next year, a federal law was passed requiring a warning label on cigarette packages: "Caution: Cigarette Smoking May Be Hazardous to Your Health." This warning has been strengthened and expanded over the years. Today, one of four different warning statements is required (on a revolving basis) on cigarette packages and advertisements. Somewhat different warning labels are required on smokeless tobacco and cigar packages and advertisements as well. Yet the labels are still smaller and the warnings weaker than those of many other countries. It is the job of the Federal Trade Commission (FTC) to make sure the U.S. warnings are displayed properly.

The FTC is also charged with monitoring tobacco advertising and marketing. In 1969 Congress passed a law that banned cigarette ads on television and radio. However, this law did not keep tobacco companies from heavily promoting their products. Tobacco ads and logos were seen everywhere, from newspaper and magazine ads, to billboards and signs on the sides of buses, to T-shirts and race cars. Then in 1998 the tobacco companies reached a massive settlement agreement with forty-six states. As part of this settlement, the companies agreed to remove all tobacco ads from billboards and public transportation. They also agreed to limits on sponsoring public events, handing out free samples, and giving away or selling clothes and other merchandise with their logos. In addition, they pledged to stop marketing to young people, even through methods that only indirectly appeal to teens.

The tobacco companies say they have lived up to this last promise, but critics disagree. A study published in the New England Journal of Medicine in 2001, for example, found that cigarette companies increased their advertising in magazines with young readers. The companies also increased their use of in-store marketing methods to attract young buyers, such as display racks, doormats with their logos, price discounts, and free gifts with the purchase of their products. So far, then, the limits on advertising have been less than a complete success. In fact, in the first year after the settlement, the FTC said the five biggest cigarette companies spent a staggering $8 billion on ads and promotion—up 22 percent more than the year before.

Another role of the FTC is to look into false or misleading sales practices. For years, the commission has investigated the claims that cigarette companies make about the amount of tar, nicotine, and carbon monoxide people get from their products. The concern is that a company may falsely imply its cigarettes are safer than they actually are. When a problem is found, the FTC can try to get the company to voluntarily stop making the claims in question. If that does not work, the commission can start a formal proceeding, much like a court trial, before an administrative law judge. If a violation of law is found, the judge can order the company to stop the practices. Some cases also are being decided in federal court.

Clean Air Laws

In 1972 another surgeon general's report first noted the health risks to nonsmokers from environmental tobacco smoke (ETS). Also known as secondhand smoke, this is a mixture of the smoke exhaled by others and the smoke that comes from the burning end of cigarettes. The following year, Arizona became the first state to restrict smoking in public places. Since then, many other states, cities, and large companies have taken similar action in an effort to keep indoor air cleaner and safer to breathe. As of 2001, forty-five states restricted smoking in state government buildings, and nearly half limited smoking in private work sites as well. In addition, thirty-one states had laws regulating smoking in restaurants.

Studies have shown that clean air laws are linked to less smoking and higher rates of quitting. One problem with such laws, however, is that they usually are not enforced unless someone calls to report a violation. Only then do officials investigate. If they find a problem, they typically can impose various warnings and penalties.

Work site smoking regulations not only protect nonsmokers; they also reduce the number of cigarettes that employees smoke during the day. This, in turn, can mean savings for employers, due to lower costs for lost work time, fire risk, damage to property, cleaning, health insurance, workers' compensation, disability, early retirement, and life insurance. The courts also have ruled that employers have a duty to provide a work site that is free of known hazards. As a result, many companies have taken steps to limit smoking, and 80 percent of workers are covered by some kind of workplace smoking policy. Yet fewer than half are protected by policies that ban smoking in both the work area and public or common areas.

The federal government has gotten involved as well. Smoking has been restricted in federal government buildings since 1979. In 1988 Congress banned smoking on many commercial airline flights within the United States. That ban later was extended to all such flights. In 1994 the Pro-Children Act was passed. It prohibited smoking in facilities where certain federally funded children's services are provided on a regular basis. The law applies to virtually all public schools and libraries. It also covers buildings that house Head Start programs and certain health and nutrition services for children. The U.S. Departments of Health and Human Services, Education, and Agriculture are jointly responsible for putting this law into action. Violators may be fined up to $1,000 per day. Nevertheless, many schools still lack a complete smoking ban on school property and at school-sponsored events.

Minors Access Laws

Regulating the sale of tobacco to young people is mainly the job of the states. Every state now has a law that makes it illegal to sell cigarettes to anyone under age 18. Yet, illegal or not, many minors still are able to buy them. To address this problem, Congress passed the Synar Amendment in 1992. It says that state governments must send teen inspectors on yearly, unannounced visits to stores to see if merchants will sell tobacco to minors. If the sales rate is not less than 20 percent, the Substance Abuse and Mental Health Services Administration can withhold some federal funds for substance abuse services. By 2001, the national average sales rate to minors was 17 percent, down from about 40 percent in 1997.

See Organizations of Interest at the back of Volume 3 for address, telephone, and URL.

That decrease in sales to minors is a big improvement, but it still is far from ideal. As a result, some states have taken further action. While all states ban giving away free samples to minors, a few prohibit such samples altogether, because it is so hard to control who gets them. For the same reason, more than two-thirds of states now restrict cigarette vending machines, although only two totally ban them. Several cities, including New York City, have their own vending machine laws as well. About two-thirds of states and many cities also require merchants to display signs stating the minimum age for buying tobacco products. In addition, some have laws that minors cannot sell cigarettes, since it can be hard for teens to refuse their friends.

Studies show these steps may be helping. For example, the Institute for Social Research oversees a large, long-term study of teen drug use and attitudes titled "Monitoring the Future." This study found that the percentage of 8th graders saying it would be "fairly easy" or "very easy" for them to get cigarettes if they wanted fell from 77 percent in 1996 to 68 percent in 2001. Of course, that means twothirds of 8th graders still say they have ready access to cigarettes.

One problem is that many laws only penalize the salesperson when cigarettes are sold to minors. A 2000 report by the surgeon general noted that penalties need to be applied against store owners as well. To do this, it would be helpful if merchants had to be licensed to sell tobacco products. Then their licenses could be taken away temporarily or permanently if they failed to follow the law. Fines also could be imposed, and the fees collected could be used to pay for enforcement and education programs for merchants. At present, though, only thirty-four states require licenses for over-the-counter tobacco sales.

Taxes and Permits

Another approach is raising the cigarette excise tax, which is a tax levied on the manufacture, sale, or use of a particular product. This is widely regarded as one of the best ways to discourage smoking. Studies have shown that, for every 10 percent rise in the price of cigarettes, overall smoking decreases by 3 to 5 percent, and smoking by young people goes down by about 7 percent. State excise taxes vary widely, though. As of 2001, only three states had cigarette taxes of $1 or more per pack, and thirty-three had taxes of 50 cents or less. The average price and tax rate on cigarettes in the United States is well below that of most other developed countries, such as Canada or Switzerland. The tax rate on smokeless tobacco products is even lower.

In addition to state excise taxes, there are federal taxes and permits required as well. The federal Bureau of Alcohol, Tobacco, and Firearms (ATF) is the agency charged with making sure these requirements are met. Among other things, anyone who wants to manufacture tobacco products in the United States or import them for sale from other countries must get approval from the ATF first. Those who import tobacco products may be required to pay customs duties as well. The bureau also enforces laws dealing with contraband, the legal term for smuggled goods. To show that the proper taxes have been paid, the law requires that a stamp or mark be placed on all legally sold packages of cigarettes. The ATF defines contraband cigarettes as more than 60,000 cigarettes without such stamps or marks. Contraband cigarettes may be seized and destroyed, and those who smuggle them may be required to pay large fines.

See Organizations of Interest at the back of Volume 3 for address, telephone, and URL.

Lawsuits Against Tobacco Companies

In recent years, many of the arguments about how tobacco products will be marketed and sold have occurred in the courts. Traditionally, the decision to smoke has been considered a personal choice. In the 1990s, though, people began to debate whether "choice" was the right word for such an addictive behavior. Smokers filed several class-action lawsuits, which means that large numbers of people sued the tobacco companies as a group, rather than individually. In 1996 the Liggett Group, the smallest of the nation's five big tobacco companies, offered to settle a class-action suit. It was the first time a tobacco company had taken financial responsibility for the health effects of its products.

In 1994 Mississippi became the first state to sue the tobacco industry. The state's main argument was that a vast sum of tax money was being spent to cover smoking-related health-care costs. Soon, the other states filed similar suits. In 1998, forty-six states and five U.S. territories signed an agreement with the tobacco industry, known as the Master Settlement Agreement (MSA). This agreement provided the states with funds to be used for tobacco prevention and control programs. It was the largest single legal settlement in history, totaling nearly $206 billion to be paid through the year 2025. As part of the MSA, the tobacco companies also agreed to limit their advertising and marketing practices. In addition, the companies were forced to open many of their private business documents to the public. Four other states—Mississippi, Florida, Texas, and Minnesota—settled their lawsuits separately for a total of $40 billion.

While the MSA was a giant step forward, it was not the final answer. For one thing, settlement funds go straight to the states, not to the federal government. Yet U.S. taxpayers also pay about $38 billion each year in federal taxes to treat tobacco-related illnesses. There are other costs, too. For example, the Social Security Administration pays nearly $2 billion per year in survivor's benefits to the children of parents who have died from smoking. In contrast, federal tobacco taxes bring in only about $5 billion per year. As a result, in 1999 the U.S. Department of Justice filed its own lawsuit against the tobacco industry.

Meanwhile, MSA funds began rolling into the states, and controversy brewed about how the money was used. As of early 2002, only five states were spending the minimum amount on tobacco prevention programs recommended by the Centers for Disease Control and Prevention (CDC), even though this was typically only 20 to 25 percent of a state's settlement money. Yet there were many bright spots as well. Maine, one of the states meeting the CDC's standard, cut the smoking rate by high-school students by 36 percent. Massachusetts, another standout state, actually started its prevention program in 1993. In less than a decade, the state was already saving more than $2 for every dollar spent on prevention.

See Organizations of Interest at the back of Volume 3 for address, telephone, and URL.

Clearly, tobacco policies, laws, and regulations make a difference. The surgeon general's 2000 report concluded that such approaches can play a key role in keeping many young people from becoming hooked on tobacco. They also can help increase the success rate of smokers trying to quit and decrease the health risks to nonsmokers. In the long run, they may help reduce tobacco's terrible toll of disease, disability, and death.

see also Advertising and the Tobacco Industry; Law and Policy: Drug Legalization Debate; Nicotine; Tobacco: Industry.


It is immoral for civilized societies to condone the promotion and advertising of products which when used as they are intended cause disability and death.

Louis W. Sullivan, former U.S. Secretary of Health and Human Services, 1991.


The same people who tell us that smoking doesn t cause cancer are now telling us that advertising cigarettes doesn t cause smoking.

Ellen Goodman, syndicated columnist, in an exposØ on the power of the tobacco industry. From The Boston Globe, 1989.

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Tobacco: Policies, Laws, and Regulations

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