Trump’s Budget Calls for E-Cigarette User Fees, Likely Hikes for Cigars
President Trump unveiled his FY2020 budget and in it is a proposal that would likely affect the user fees paid by cigar companies to help fund the U.S. Food & Drug Administration (FDA).
The budget proposal, which is non-binding and serves more as insight to the president’s thinking and goals, also calls for the implementation of user fees on e-cigarettes and vaping products. Currently, companies which make or import six different types of tobacco products—cigarettes, cigars, pipe tobacco, snuff, chewing tobacco and roll-your-own tobacco—pay user fees to help fund FDA’s Center for Tobacco Products (CTP), the division that regulates those products.
CTP’s budget is a set number determined by the Family Smoking Prevention and Tobacco Control Act, a bill which was signed into law in 2009. For FY2019, that number is $712 million.
Because e-cigarettes and vaping products weren’t a well-known product in 2009, when the bill was passed, the Tobacco Control Act doesn’t have language that would allow the agency to collect user fees from those companies, despite the fact that CTP is regulating those products. Trump’s budget would call for $100 million in user fees per year. For context, cigars will pay $80.8 million in user fees and cigarette companies will pay $616 million in FY2019.
Trump’s budget also calls for increases on existing user fees based on inflation, which would mean that user fees for cigars would likely increase.
halfwheel estimates that the maximum user fee level for cigars in FY2019 is 5.15 cents. Because the cigar category includes all cigars, both premium cigars and less expensive machine made cigars, some cigars likely pay a fraction of that number.
While Trump’s budget has already been declared dead on arrival by Democratic leaders, certain provisions like user fees for e-cigarettes are likely to be included in actual legislation. The Tobacco Control Act will is set for renewal this year, if it is not total user fees for tobacco products will remain at $712 million annually.
The full paragraph regarding e-cigarette user fees from Trump’s budget is as follows:
Tackles the Epidemic of Youth E-Cigarette Use. The Budget includes a new user fee on e-cigarettes and other electronic nicotine delivery system products and proposes new FDA authority to collect user fees in support of its regulatory oversight of new tobacco and nicotine related products in the future as appropriate. The proposal would amend current law to add e-cigarette manufacturers and importers to a list of product categories subject to the user fee. The FDA’s annual user fee cap of $712 million would be increased by $100 million and future collections of all tobacco related products would be indexed to inflation. This proposal would ensure that FDA has the resources to address today’s alarming rise in youth e-cigarette use as well as new public health threats of tomorrow. New tobacco or nicotine products that are regulated by FDA should also pay a user fee, just as other to- bacco related products that are subject to FDA’s user fee.
In other e-cigarettes related news, a bill was introduced last week that would effectively ban on flavored e-cigarettes.
Charlie Minato
I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.
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