In early August, the U.S. District Court for the Northern District of Texas ruled that the civil money penalty (CMP) provision in the Food, Drug, and Cosmetic Act (FDCA) for tobacco products, 21 U.S.C. § 333(f)(9), is unconstitutional. Specifically, the court found that the FDCA improperly allows the U.S. Food and Drug Administration (FDA) to bring an administrative action to collect CMPs because the Seventh Amendment guarantees the right to a jury trial in such cases.
In June, the Appellate Court of Illinois upheld an assessment of over $314 million against Sam’s Club for unpaid county cigarette excise taxes, including a 10% late fee, a 25% penalty, and accrued interest. The assessment arose from Sam’s Club’s alleged failure to pay taxes on cigarettes that it sold to out-of-county retailers from 2009 to 2016. Following the June ruling, the company now appears poised to bring its arguments to the state’s highest court in a case illustrating the ambiguities of state and local excise taxation laws.
Published in Law360 on March 19, 2025. © Copyright 2025, Portfolio Media, Inc., publisher of Law360. Reprinted here with permission.
In mid-January, a bipartisan coalition of nine state attorneys general, as well as the Washington, D.C., attorney general, announced a coordinated effort to curb illicit electronic cigarette sales. The attorneys general of California,[1] Connecticut,[2] Illinois,[3] Hawaii,[4] Minnesota,[5] New York,[6] New Jersey,[7] Vermont, Ohio and Washington, D.C., are coordinating enforcement activity targeting dealers of these products — issuing warning letters, serving civil investigative demands and filing complaints.
In late January, the U.S. Food and Drug Administration (FDA) withdrew its proposed rules to prohibit menthol as a characterizing flavor in cigarettes and all characterizing flavors in cigars. Although either proposal could be revived under a future administration, the withdrawal ends both of the current rulemaking processes. The move also strongly indicates shifting FDA priorities under the second Trump administration. Amid these changes, industry may find the agency more receptive to its arguments — particularly those submitted in comments to proposed rulemaking.
On January 15, the U.S. Food and Drug Administration (FDA) issued a proposed rule that would set a maximum nicotine level in combusted cigarettes and certain other combusted tobacco products.
Hearings on the merits of the Drug Enforcement Agency’s (DEA) proposed cannabis rescheduling, initially set to begin this month, have been cancelled. The preliminary hearing period has been littered with accusations that the DEA improperly excluded certain parties from participating, that the DEA itself does not adequately support rescheduling, and that the DEA engaged in improper ex parte communications with anti-rescheduling parties.
Throughout 2024, the U.S. Food and Drug Administration (FDA) endeavored to curb sales of unauthorized electronic nicotine delivery systems (ENDS) in the U.S. In light of persistent demand for flavored ENDS — nearly all of which are unauthorized — there is little evidence that these enforcement efforts have reduced illicit sales. Indeed, some observers estimate that flavored ENDS account for more than 80% of all ENDS sales. With a new administration on the horizon, our team highlights two opportunities for FDA to step up its enforcement efforts: (1) focusing enforcement on imports and (2) authorizing premarket tobacco product applications (PMTAs) for flavored products.
State and federal excise taxes are a critical element of the business environment for major “vice” industries in the United States, such as tobacco. While no federal excise tax applies to marijuana, state excise taxes (SET) are a significant economic consideration for the recreational marijuana industry in a given state.
With power changing hands in Washington, D.C., what can marijuana industry members expect from the 119th Congress? Two GOP proposals from the 118th Congress may foreshadow the likely path for federal marijuana legalization. These bills — the “States Reform Act of 2023” and the “Strengthening the Tenth Amendment Through Entrusting States (STATES) 2.0 Act” —would explicitly support states’ legal marijuana regimes, while leaving states with the ultimate decision of whether to establish such regimes.
In October, the Oregon Court of Appeals ruled that a law restricting the packaging of e-cigarettes violates the state constitution’s free speech protections. The decision illustrates the utility of free speech arguments against packaging requirements and the importance of state constitutions in regulatory challenges generally.