The California Crusade Against Tobacco Flavors: From Foolish to Dangerous

Today the California Globe published my oped on the foolish and dangerous legislative effort to ban flavored tobacco products.  Read it here or on the Globe website.

“Crusades typically start out by being admirable, proceed to being foolish, and end by being dangerous.” Russell Baker used these words in a 1994 New York Times column describing the anti-tobacco crusade, noting that the holy war was entering the last stage. Now, 25 years later, California legislators are fighting their own crusade—against the so-called teen vaping “epidemic”—with a proposed ban on flavored tobacco products.

First, let’s examine the “epidemic.” Authorities generously define “current use” of any drug by children as at least once in the past month. The FDA, using this definition in a national survey, reported that vaping among American high school students increased substantially in 2018. The FDA was only telling part of the story; about half of those kids had vaped five or fewer days, the equivalent of trying products at a party. And most frequent e-cigarette users are not virgins with respect to cigarette smoking; most of them have smoked in the past.

Drug use by underage children is a serious matter. That makes it entirely baffling that California legislators ignore higher rates of alcohol and marijuana use among high schoolers, facts that have been known for decades. These behaviors have nothing to do with flavors, but instead demonstrate that kids are attracted to adult behaviors and products.

The FDA promotes the myth that a teen vaping epidemic is caused by unscrupulous manufacturers and retailers. This isn’t true, especially in California, where the violation rate in FDA inspections was only 4% in 2018, one of the lowest in the country (here and here).

Since retailers aren’t the problem in California, a ban on flavored tobacco products isn’t the solution. This is harassment without reason. Even advocates of alcohol prohibition 100 years ago didn’t try to ban flavors.

A flavor ban is supposed to stop kids from using nicotine, but is that a worthwhile objective? Nicotine, while addictive, is not the cause of any diseases associated with smoking. It is as safe to consume as caffeine, another addictive drug used daily by millions of adults and teens.

Because nicotine is so safe, prohibitionists fabricate hazards. One frequent claim is that nicotine can harm teenage brains. That may be a legitimate argument – for laboratory mice. If it was true for humans, then 40 million current smokers – and even more former smokers – who started as teens and smoked for decades would have demonstrable brain damage. There is no scientific evidence of such injury, nor to support the claim of youth brain risk. If California legislators want to protect children’s brains, they should ban football, as there is unequivocal evidence linking concussion-producing sports activities to chronic traumatic encephalopathy (here, for example).

A flavor ban will not affect vapers who make their own vaping liquids. This segment of the market is already large and growing; a few examples can be found here, here and here. A ban might cause the current retail market to fracture in two: one segment selling concentrated, unflavored nicotine liquids, and another selling flavors. A high-tax jurisdiction like Chicago, where a prohibitively high per-milliliter tax is imposed on nicotine liquids, demonstrates what happens when the market is bifurcated.  Vape shops there sell 30 ml bottles of zero-nicotine e-liquids (no tax) and small concentrated bottles of high-strength nicotine that are taxed.  Flavor bans will simply encourage consumers to purchase flavorless e-liquids, and then buy flavoring that is widely available in grocery stores and online, such as here and here.

Unintended Consequences

A flavor ban would create unintended consequences. Flavors would no longer be supplied by legitimate companies. Instead, do-it-yourselfers would be adding flavors with unknown chemistry to concentrated nicotine solutions. It is worth noting that the only known death attributable to vapor products in the U.S. resulted from a young child accidentally ingesting pure nicotine.

Politicians routinely ignore another basic economic fact: bans drive black markets. Economists and legal scholars use the terms “bootleggers” (black market retailers) and “Baptists” (legislators and other misguided do-gooders), calling them “unlikely allies from the tobacco wars [who] try to fight off a game-changer [e-cigarettes].”

Two years ago, California was already the sixth biggest cigarette black-market state. Legislators should not create a bootlegger paradise for flavored tobacco, when they haven’t even solved the bootleg marijuana problem. The legislature legalized cannabis in 2016, but retained high taxes; the black market is now worth $3.7 billion, four times the legal market. The same rush to stigmatize vaping will doubtlessly create a black market in this category, as well.

The California crusade to ban flavors isn’t just foolish, it’s dangerous. With the exception of menthol, the ban will have the least impact on sales of cigarettes, the deadliest tobacco products. But it will remove from retail shelves many more smoke-free products – including e-cigarette liquids, dip, chew and snus. These products are vastly less hazardous than cigarettes. Imagine if alcohol opponents had only banned flavors during Prohibition. Beer, wine and other flavored spirits would have been eliminated, leaving only pure alcohol on retail shelves. That policy would have been an abject failure, as would any similar ban on flavored tobacco products.

“Bootleggers, Baptists and E-Cigarettes”

E-cigarette users should be concerned about proposed FDA regulations that may eliminate most brands of these potentially life-saving cigarette alternatives, leaving only those products marketed by large tobacco companies with the resources to complete expensive FDA applications.  

Who is responsible for the pending e-cigarette regulatory nightmare?

A brilliant analysis of e-cigarette regulation titled “Bootleggers, Baptists and E-Cigarettes” has been published online (here) by economists and legal scholars from Clemson University (Bruce Yandle), the University of Texas at Arlington (Roger Meiners), Case Western Reserve University (Jonathan Adler) and George Mason University (Andrew Morriss, now at Texas A&M).  A shorter version with Adler as lead author appeared last year in Cato’s flagship publication, Regulation (here).  I’ll use quotes from both in this column.

According to Yandle and colleagues, “Durable regulation emerges most often when there are two distinctly different special interest groups that seek the same policy outcome. One group takes the moral high ground by pursuing a public-interested goal [Baptists] and gives the cooperative politician the ability to justify his actions on normative grounds. The other [Bootleggers], seeking the same policy outcome, is motivated by pecuniary interests, hopes to feather its nest, is often willing to share some of the gains with the politicians who deliver the goods, and does not generally conspire with its publicly interested counterpart that seeks the same regulatory goal.”

Yandle developed this concept in 1983, and he recently authored a comprehensive book on the subject (here).  He labeled the two groups “in homage to the political pairing of unlikely interests that was successful in championing laws that shuttered liquor stores on Sunday…the two interest groups would never form a visible coalition in the strict sense of the word. They merely sought the same outcome and were willing to struggle mightily to succeed.  At the height of its success, this powerful pairing entirely shut down the legal sale of alcoholic beverages in counties, states, and—during Prohibition (1920-1933)—the nation as a whole.” 

Yandle and colleagues identify the Baptists and the Bootleggers undermining the nascent e-cigarette market.  “Private and public health officials…are the Baptists in this story…  Based on what is known about the health effects of e-cig use, it would seem e-cigs might be hailed as an advance in public health insofar as they offer cigarette smokers a safer product.  Even small reductions in the number of smokers or the amount of tobacco products smokers consume would likely produce substantial gains for public health. Yet e-cigs have been greeted with scorn by health researchers who focus on what is not known about e-cig health effects rather than what is known.”

The Bootleggers are a more diverse group.  They consist of cigarette manufacturers, which “have

an incentive to either enter the e-cig market themselves, suppress competition from upstart e-cig manufacturers, or both.”  They are joined by “Pharmaceutical companies that make NRT products…They have benefitted from government encouragement that smokers use their products to aid in smoking cessation and government limitations on information on tobacco harm reduction through the use of e-cigs or smokeless tobacco products. [emphasis mine]  Insofar as e-cigs are an alternative for smokers to satisfy their nicotine cravings, they are a threat to the profitability of NRT products.  This is particularly so given recent research suggesting that NRT products do not help many smokers quit.”

Perhaps more surprising, state governments are also Bootleggers, as “Tobacco sellers have become, in effect, tax collectors.”  The booty includes excise taxes that have skyrocketed over the past ten years, and payments made from smokers to cigarette manufacturers to the states courtesy of the 1998 Master Settlement Agreement.  Yandle et al. note that “Some states securitized all or part of the MSA cash flow by selling tobacco revenue bonds so they could immediately spend the present value of the future revenue.  The sale of tobacco bonds created a new group of Bootleggers—the bondholders and the state agencies that issued the bonds—with intense interest in the future fortunes of the tobacco companies, their sales, and any competitor that might reduce those revenues.”

This is a powerful coalition arrayed against e-cigarettes.  “There is an obvious irony here.  To the extent that e-cigs provide a less hazardous alternative to consumers who seek to break their smoking habit, Bootlegger/Baptist induced regulations that limit e-cig competition and evolution bring with them a social cost measured in lost opportunities to improve human health.  Going further, regulatory actions that limit e-cig marketability introduce uncertainty for yet-to-be-discovered smoking alternatives that might also threaten the market share of traditional tobacco and smoking cessation products. For the sake of human health and freedom of choice, such innovation should be welcomed, not chilled.”

The Campaign for Tobacco Free Kids, the American Cancer Society, the Centers for Disease Control, the National Institutes of Health and the Food and Drug Administration (Baptists) are aligned in a powerful coalition with tobacco and pharmaceutical manufacturers and state governments (Bootleggers) against e-cigarettes.  There is more than just irony here.  The e-cigarette is a “disruptive innovation” that not only “threatens the established order”, but holds the potential to help millions of smokers quit.  If this unholy alliance triumphs, public health is doomed.