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California Lawmakers Approve Ban on Menthol Cigarettes -- Update

08/28/2020 | 08:02pm EDT

By Jennifer Maloney and Christine Mai-Duc

California has banned Newports and other menthol cigarettes, following a similar measure approved in Massachusetts last year.

Menthol cigarettes have long been on policy makers' radar. The Food and Drug Administration concluded in 2013 that menthols were harder to quit and likely posed a greater health risk than regular cigarette. In 2018, the agency said it was working on banning menthol-flavored cigarettes and cigars.

The California measure on Friday passed the Senate 34-0, with five of the chamber's Republicans crossing party lines to vote yes. Earlier in the week, it passed the Legislature's lower house 58-1, with 20 legislators abstaining.

Gov. Gavin Newsom signed the bill into law Friday. In a news conference just before taking the action, he said, "It will be a point of deep pride and personal privilege as a father of four and as someone who has had many, many family members die at the hands of the tobacco industry to sign that bill."

The ban takes effect Jan. 1, 2021.

The vote came after weeks of lobbying by tobacco giant Reynolds American Inc., which makes Newport, the second-largest cigarette brand in the country and the most popular menthol variety. Reynolds, the U.S. subsidiary of British American Tobacco PLC, said the bill was "singling out communities of color."

About 70% of Black smokers in California smoke menthol cigarettes, compared with 18% of white smokers, according to the California Department of Public Health.

The ban is part of a measure barring the sale of flavored tobacco products, including all e-cigarettes except those that taste like tobacco, and would exclude hookahs and some cigars.

Menthols represent about a third of the $94 billion annual U.S. cigarette market, according to Euromonitor. They account for 55% of Reynolds American's cigarette sales by volume and 19% for Marlboro maker Altria Group Inc., according to Morgan Stanley analyst Pamela Kaufman. Imperial Brands PLC makes the Kool and Salem brands.

California isn't a huge market for cigarettes -- it represents about 7% of cigarette unit sales in the U.S., according to Ms. Kaufman. But if other states followed suit, tighter federal restrictions -- such as a nationwide ban or higher excise taxes -- would become more likely, analysts said.

The U.S. House of Representatives in February passed a bill that would expand current restrictions on flavored tobacco products to include a ban on menthol-flavored cigarettes and e-cigarettes. Democratic Sen. Sherrod Brown of Ohio has introduced similar legislation in the GOP-controlled Senate.

"The more of the U.S. population already under a menthol ban, the more political cover for Congress to do the same -- which I think could happen in 2021 if the Senate flips," said Stefanie Miller, managing director at investment adviser FiscalNotes Markets.

The FDA in February implemented restrictions barring the sale of all e-cigarette cartridges except those tasting like tobacco and menthol.

A Reynolds spokeswoman said a California ban would lead to an illicit market for menthol cigarettes and racial profiling of Black smokers by police.

Write to Jennifer Maloney at jennifer.maloney@wsj.com and Christine Mai-Duc at christine.maiduc@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
ALTRIA GROUP, INC. -1.80% 46.02 Delayed Quote.14.32%
BRITISH AMERICAN TOBACCO PLC -1.91% 2792 Delayed Quote.5.11%
IMPERIAL BRANDS PLC -1.25% 1580 Delayed Quote.4.20%
MORGAN STANLEY -3.18% 85.135 Delayed Quote.28.28%
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