30
TOBACCO BUSINESS INTERNATIONAL
SEPTEMBER/OCTOBER 2014
CATEGORY MANAGER
PIPE TOBACCO
same rate as RYO—a move that would singlehandedly cripple
both categories. The concern is valid. Sen. Richard Durbin
(D-Ill.), among other legislators, introduced legislation to do
just as feared, arguing that “[equalizing] tax rates on all tobacco
products, including pipe tobacco, cigars and smokeless
tobacco, is a necessary and welcome measure that will reduce
tobacco use, especially among youth, and stop rampant tax
avoidance.”
Thus far, the Food and Drug Administration (FDA) has
chosen to address the issue by sending warning letters to
retailers who they feel are promoting pipe tobacco product use
in cigarettes. However, anti-smoking activists are pushing hard
for further action. “While the FDA’s enforcement actions are
welcome steps, Congress can stop these tax evasion schemes
by increasing tax rates on all tobacco products to the same rate
as cigarettes,” reads a missive about the issue on the Tobacco-
Free Kids’ website.
To avoid that unhappy fate, manufacturers of “legitimate” pipe
tobacco suggest that stakeholders push for clear and distinct
definition of pipe tobacco. “The FDA has a great opportunity
to define pipe tobacco,” says McGee, who suggests criteria
around cut-width format, moisture content, flavoring and types
of tobacco (black burley) that would call out the distinction
between pipe tobacco and RYO.
TBI
Impact of SCHIP 2009/Proposed 2015 Budget
Source: Scandinavian Tobacco Group,
Alcohol and Tobacco Tax and Trade Bureau (TTB)
2008
2009
2010
2011
2012
2013
45
40
35
30
25
20
15
10
5
0
Pipe
RYO
Total
TTB pounds (million)
“What it comes down
to is that pipe tobacco
is not specifically defined;
it’s basically about what
label the manufacturer
puts on the bag, or the
manufacturer’s intent.”
