FDA Wants to Ban Menthol Cigarettes

Cigarettes

Image Shares in British American Tobacco fell sharply

The FDA has been targeting flavoured tobacco products as studies indicate that teens who smoke menthol cigarettes consumed close to twice as many weekly compared to non-menthol users.

Gottlieb is also expected to propose a ban on menthol in regular cigarettes.

Tobacco stocks are getting slammed on Monday following a report the Food and Drug Administration is going after menthol cigarettes, which the investment firm Jefferies says represents 34% of the total United States cigarette market.

Studies show teens who smoke menthol cigarettes consumed nearly twice as many in a week in comparison with regular tobacco product users.

Kaufman added: "The FDA has been evaluating the role of menthol in cigarettes since the passage of the Tobacco Control Act in 2009, and more recently increased its focus on flavors in e-cigs/menthol cigarettes as part of its Comprehensive Tobacco & Nicotine Regulatory plan announced previous year".

"BAT is the most exposed name to the potential risk", wrote Richard Taylor, an analyst at Morgan Stanley who estimates that USA menthol cigarettes account for 25 percent of total earnings.

The FDA is this week set to announce a ban on selling flavoured e-cigarettes in stores across the US.

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"It must be emphasised that at this stage these reports are still rumours and they make it clear that it would take some time to draw up the ban and then implement it", added Ian Forrest, investment research analyst at The Share Centre.

"While many menthol smokers would likely move over to non-menthol products, it would still be a major blow".

BAT shares have dropped 40 percent this year, the biggest drop in at least two decades. The proposal would also be delayed if large tobacco companies fight the FDA's authority to do restrict it.

Imperial Brands plc declined as much as 5%.

The smoking of traditional cigarettes has fallen to an all-time low, to 14 percent in 2017, according to federal data. The proportion is about 20 percent for Altria, according to the firm.

But it is thought the menthol ban could take up to two years to come into force, with a year for the rules to be finalised and another year for the ban to be enforced in the marketplace.

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