By Donald S. Kenkel, Alan D. Mathios, Revathy Suryanarayana, Hua Wang, Sen Zeng, & Grace N. Phillips

 After more than a decade of public discussion, the US Food and Drug Administration (FDA) has proposed a prohibition on menthol cigarettes. Menthol cigarettes contain tobacco with natural menthol from mint or synthetic menthol added as a flavoring. Menthol and nonmenthol cigarettes contain similar amounts of nicotine and tar. A prohibition on menthol could have significant implications for public health policy. According to the FDA, almost 19 million people smoke menthol cigarettes, and if they continue to smoke, many of them will die from heart disease, lung cancer, or other smoking-related diseases. The FDA sees the prohibition of menthol cigarettes as a targeted step to prevent young people from smoking, help more current smokers quit, and address tobacco-related health disparities. However, there could be unintended consequences if illegal markets for menthol cigarettes emerge as a result of the prohibition. These illegal markets could not only undermine the intended goal of reducing smoking but also raise concerns about racial justice. Almost 85 percent of black smokers primarily use menthol cigarettes, compared with 30 percent of white smokers. The World Bank has cited a consensus estimate that 10 percent of global cigarette consumption comes from illegal trade, and a National Academy of Sciences study concludes that illicit sales make up between 8.5 percent and 21 percent of the total US cigarette market. In the United States, illicit cigarette sales reflect two significant forms of tax avoidance. First, smokers in states with high cigarette excise taxes purchase cigarettes in states with lower taxes or from Native American reservations that are exempt from state taxes. Second, smokers in some large cities purchase cigarettes from illegal retail or street markets, where most of the supply comes from jurisdictions with lower taxes. The existence of illegal cigarette markets has raised concerns that unequal enforcement will lead to racial injustice, especially after the death of Eric Garner, who was killed by police while being arrested for selling illegal single cigarettes. If a national prohibition of menthol is implemented, consumers will no longer be able to avoid the ban by purchasing cigarettes across state lines. The FDA, therefore, concluded in its preliminary regulatory impact analysis that the impact of menthol prohibition on the illicit   cigarette market would not be significant.  

Washington, DC: Cato Institute, 2024. 2p.