If the United States Food and Drug Administration (FDA) follows through on its plan to issue a ban on menthol-flavored cigarettes and cigars, the State of Texas could face a substantial shortfall.
“Menthol cigarettes make up, nationwide, about 34% of the cigarettes that are sold nationwide, so it takes away a huge chunk of the legal market,” said Ulrik Boesen, a senior policy analyst with the Tax Foundation. “All states tax the sale of cigarettes and the revenue that states raise from this are either allocated to spending priorities or are put into the general fund.”
The projected annual revenue loss for Texas alone is $327,792,926, according to Tax Foundation analysis.
“Menthol cigarettes are about a third of the Texas cigarette market,” Boesen told The Dallas Express. “They would see over half of the loss in excise tax revenue.”
Boesen estimates in his report that a federal menthol cigarette ban will cost federal and state governments nationwide $6.6 billion.
“The flip side of it is groups like the American Civil Liberties Union (ACLU) and Al Sharpton are against the ban because they’re worried about introducing another war-on-drugs-type program when it comes to enforcing this ban on menthol cigarettes, like a ban on cannabis has been enforced,” he said.
Sharpton, the founder of not-for-profit National Action Network, is a New York-based minister who advocates for the civil rights of Afro-Americans.
The ACLU estimates that marijuana use is largely the same between black and white people; however, black people are 3.73 times more likely to be criminally arrested for possession than white people.
“There’s an equity question because menthol cigarettes are particularly popular with African Americans,” Boesen said in an interview. “It’s somewhat north of 80% of African American smokers who use menthol cigarettes and the FDA is interested in health equity, which makes a lot of sense. They’re hoping that this course of action would have an outsized positive impact on African American smokers because they tend to smoke menthol cigarettes.”
The FDA confirmed in a news release that the ban is an attempt to achieve public health and health equity.
“For far too long, certain populations, including African Americans, have been targeted, and disproportionately impacted by tobacco use. Despite the tremendous progress we’ve made in getting people to stop smoking over the past 55 years, that progress hasn’t been experienced by everyone equally,” said Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products.
He continued, “These flavor standards would reduce cigarette and cigar initiation and use, reduce health disparities, and promote health equity by addressing a significant and disparate source of harm. Taken together, these policies will help save lives and improve the public health of our country as we confront the leading cause of preventable disease and death.”
The idea is that allowing tobacco to have a desirable flavor encourages smoking. Under the ban, menthol cigarettes could not be manufactured, purchased, or sold in the U.S.
“The FDA is worried that the menthol ingredient has contributed to many people smoking because the first cigarette you smoke in your life doesn’t necessarily taste good, but introducing menthol maybe makes that a more pleasant experience and causes people to be more likely to come back,” Boesen said. “That’s the concern from the FDA’s point of view.”
According to the FDA, banning flavored tobacco products will help eliminate smoking across the board.
“Banning menthol — the last allowable flavor — in cigarettes and banning all flavors in cigars will help save lives, particularly among those disproportionately affected by these deadly products. With these actions, the FDA will help significantly reduce youth initiation, increase the chances of smoking cessation among current smokers, and address health disparities experienced by communities of color, low-income populations, and LGBTQ+ individuals, all of whom are far more likely to use these tobacco products,” said Acting FDA Commissioner Janet Woodcock, M.D.
In Texas, menthol cigarettes make up 34% of the market share, and the excise tax rate per pack of 20 cigarettes is $1.41.
“Our concern is that a ban will have an adverse impact on revenue generation at federal and state levels, but if you then don’t get rid of the consumption, you’re left with all the costs associated with smoking without the ability to tax the sale, which is raising some revenue to offset the cost,” Boesen added.
He continued, “We’re also afraid that increased illicit trade might be the result of this. People might want to continue to access menthol products, and if they can’t get it on the market, a certain percentage of them are likely to seek it out illegally.”