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US FDA ban on menthol in tobacco cigarettes: golden opportunity for TAAT?


The US Food and Drug Administration is proposing product standards which will radically affect the sale of tobacco cigarettes using menthol flavour. The regulator said earlier this month that the action has the potential to significantly reduce disease from combusted tobacco use, preventing children from becoming the next generation of smokers.

Menthol is a flavour additive with a minty taste and aroma that reduces the irritation and harshness of smoking. This increases appeal and makes menthol cigarettes easier to use, particularly for youth and young adults. Menthol also interacts with nicotine in the brain to enhance nicotine’s addictive effects.

The FDA is proposing a prohibition of menthol as a characterising flavour in cigarettes. It is also going after flavoured cigars – e.g. with strawberry, grape or cocoa flavours. Again, these have been identified as an early adopter route for younger smokers.

“The authority to adopt tobacco product standards is one of the most powerful tools Congress gave the FDA and the actions we are proposing can help significantly reduce youth initiation and increase the chances that current smokers quit,” said FDA Commissioner Robert N. Califf. “It is clear that these efforts will help save lives.”

In 2019, there were more than 18.5 million current menthol cigarette smokers ages 12 and older in the U.S., with particularly high rates of use by youth, young adults, and African American and other racial and ethnic groups. Published modelling studies have estimated a 15% reduction in smoking within 40 years if menthol cigarettes were no longer available in the United States.

The proposals have big implications for companies that have been working on alternatives to tobacco or nicotine-based vaping. There seems to be a high level of demand for solutions that provide a more successful path to giving up smoking entirely as well.

“This is a big deal for TAAT,” said Joe Deighan, founder of TAAT Global Alternatives, the US-based manufacturer of a zero nicotine tobacco alternative. “This proposed prohibition of menthol cigarettes by the FDA would launch TAAT into the only available pack of menthol cigarettes on the market at this time. The vacuum this creates for smokers which want to enjoy the ritual, taste, experience of their menthol cigarette habit would have only one option, TAAT.”

Even though the actual ban of menthol cigarettes may not happen for another two years, investors should pay attention to how many local governments will proactively get out ahead on banning menthol cigarettes, like San Francisco (see below), or Massachusetts. Even though this is only proposed legislation at this time, tobacco industry experts expect more local authorities to ban before it happens at the federal level. This opens the door to non-nicotine menthol products like TAAT’s.

TAAT’s Deighan added: “I would assume by the time this goes into law…there will likely be other companies trying to enter the beyond tobacco product category which we here at TAAT are pioneering. However, they will be so far behind our product quality, and first-mover distribution advantage; TAAT will capture the majority of the market share.”

There is some conflicting data in the US – for example, after San Francisco banned all flavoured tobacco products in 2018, including menthol cigarettes, there was a shift by young adults to smoking unflavoured tobacco cigarettes, rather than to vaping. Contrastingly, after the UK banned menthol cigarettes in 2020, there was a massive decline in their use from 12% of teenage smokers to 3%.

Other similar bans have been initiated in Canadian provinces since 2015, where national level surveys found that the lack of availability of menthol cigarettes led 22% of Canadian adult menthol smokers to quit (versus 15% of non-menthol smokers).

Currently, even before this proposal from FDA, retail and wholesale buyers in North America were turning to non-nicotine solutions because of the level of profitability, with no tobacco tax; this means more profit for retailers per pack sold, and there is also the anticipation of menthol being banned.

“They are already proactively introducing TAAT to more menthol smokers even now in 2022, explaining their tobacco versions will likely be banned in coming months,” said Deighan. “Especially in cities in California we are seeing this trend.”

What about the US synthetic nicotine ban?

A synthetic nicotine ban was passed in the most recent federal spending bill. This law considers synthetic nicotine to be derived from tobacco and regulated under the same PMTA legislation which requires burdensome paperwork, high expenses per application, and a low likelihood the FDA will actually permit the sale any any SKUs submitted by smaller companies selling vape products, or alternative nicotine delivery devices.

The big question is how the US chooses to enforce this. Will millions of disposable vape devices flow into USA monthly? Will the containers be stopped at customs? As of right now – essentially, all vape products in America are illegal.

“As far as I know, the FDA has already rejected millions of applications and shows no interest in accepting any applications submitted under their PMTA process,” said Deighan. “This means – if they enforce – there will no longer be any vapor nicotine delivery products for sale in USA….Technically it is illegal for any retail store in America to sell a non-compliant FDA approved nicotine delivery device, including nicotine e-liquids. The FDA forces companies to say on those product ‘this is a tobacco product””

This will force people addicted to nicotine to go back to traditional tobacco cigarettes to fulfil their addition urges, Deighan believes: “Depending on if it is enforced, this is bigger news than the proposed ban on menthol. This moves all people who have switched to vaping, back to no viable alternatives (like vaping) or to switch or quit their harmful tobacco cigarette habit. Now, lets see how they enforce. I have very close friends in the vaping space and am in contact with them daily or weekly. The question is about enforcement.”

It certainly looks like all nicotine vapes will soon be illegal in the US unless FDA approved. This could be potentially dangerous as it could move smokers back to cigarettes in coming years. This will create many more smokers, rather than millions of people continuing to move to vaping.

“I see these laws as intended to move vapers back to smoking,” concludes Deighan. “I am confident, especially in the V3 version of our product, and that TAAT can help millions of smokers finally go beyond nicotine, and have control of the ritual of smoking, not be controlled by it. These laws make it more difficult for smokers to enjoy the ritual of smoking, and TAAT fills that need with sincerely, a better smoking experience.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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