For too long, the Center for Tobacco Products (CTP) has been allowed to step on the toes of its regulatory peers to the detriment of good governance and sound policy. Thankfully, the Small Business Administration’s (SBA) Office of Advocacy demands recognition of its stake. In an official comment to the U.S. Food and Drug Administration (FDA) regarding the proposed rule on Tobacco Product Manufacturing Practice, SBA states:
“FDA must provide an adequate description of the affected small entities and a detailed analysis of the impact of the proposed rule to those small entities before proceeding to a final rule. FDA must also provide detailed analysis of specific regulatory alternatives that might reduce the significant economic impact to small entities.”
The SBA is responsible for promoting and protecting the interests of small businesses, and for good reason. Small businesses form the backbone of the United States economy. The federal government invests hundreds of millions of dollars annually to promote entrepreneurship and make possible the growth of companies invested in the success of their local communities. These small businesses form a rigorous network of suppliers, distributors, importers, and service providers. That is why the Regulatory Flexibility Act (RFA) requires every major rulemaking to include an Initial Regulatory Flexibility Analysis (IRFA) including:
- A description of the reasons why the regulatory action is being taken.
- The objectives and legal basis for the proposed regulation.
- A description and estimated number of regulated small entities.
- A description and estimate of compliance requirements, including any differential for different categories of small entities.
- Identification of duplication, overlap, and conflict with other rules and regulations.
- A description of significant alternatives to the rule.
Released in March 2023, the proposed Tobacco Product Manufacturing Practice rule reflects CTP’s continued emphasis on political interests even in the face of its own research. Modeled after standards used to regulate the processed foods and pharmaceutical industries, the proposed rule for tobacco manufacturing would affect every aspect of manufacture–preproduction design validation, packing, and storage of all types of finished and bulk tobacco products. In essence, it will require infrastructure and compliance systems investments and limit artisanal practices. In the proposed rule, CTP clearly understands where the full weight of federal authority will be brought to bear:
“Statistics of U.S. Businesses data from 2017 indicate that 96 percent of ‘tobacco manufacturing’ businesses with employees are small…[and]…96 percent of ‘tobacco and tobacco product merchant wholesalers’ qualify as small.”
As categorically exposed in SBA’s recent comment, CTP glosses over the impacts on specific industry sub-sectors, treating all products as equal. SBA also points out that CTP amortizes the compliance costs over multiple years when first-year compliance is the mandatory and significant burden. CTP also elects to forgo studying impacts on the supply chain and adjacent industries that would also be significantly affected by the proposed rule. With regard to premium cigars, SBA specifically notes:
“Despite the unique manufacturing processes associated with premium cigars, FDA has not analyzed specific industry impacts or discussed the industry’s capacity to comply with the proposed regulations.”
Given CTP’s historic relationship with tobacco-free society advocates, it’s hard to imagine this was simply an oversight. Slowly eliminating tobacco through regulation is politically expedient and perpetuates a billion-dollar advocacy machine. Targeting small businesses satisfies both by creating an illusion of health promotion while allowing the largest producers and those products that can be inexpensively mass-produced to stay on the market. But the result is that harm reduction and occasional use products, like premium cigars, are pushed to the periphery in favor of those presenting the highest risk factors. CTP leadership should be asking its staff whether that is irony or by design.
More federal agencies should follow SBA’s lead in challenging CTP’s disregard for the federal apparatus. Tobacco remains significantly important to agriculture, commerce, and international trade relations. As CTP accelerates its regulatory reach, the agencies overseeing these areas should take an interest.
Click here to read the SBA’s full Comment.