Tobacco names smoked on U.S. plans to cut cigarette nicotine levels By Investing.com

By Samuel Indyk

Investing.com – Shares in tobacco companies were falling on Tuesday morning after a report that said the Biden administration is considering a rule to cut nicotine levels in cigarettes.

The Wall Street Journal first reported the plans, saying the proposal could also be paired with a ban on menthol cigarettes.

Nicotine levels

Sources told the WSJ that the US government is considering requiring tobacco companies to lower nicotine in all cigarettes to levels where they are no longer addictive.

The policy would aim to cajole millions of smokers into either quitting or switching to products such as e-cigarettes, nicotine gum or lozenges.

A ban on menthol cigarettes would target younger smokers. Last year, the UK government introduced a ban, making it illegal to buy menthol cigarettes in the UK.

The US Food and Drug Administration (FDA) has until 29th April to respond to a citizens’ petition to ban menthol cigarettes by disclosing whether they intend to pursue the policy.

Tobacco Companies

UK tobacco companies British American Tobacco (LON:BATS) and Imperial Brands (LON:IMB) both saw shares decline by over 5% in early trade following reports of the ban.

In its 2020 annual report, British American Tobacco said it made £11.5bln revenue in the US, with £9.9bln from combustibles. That accounts for a round 45% of total revenue.

Stockholm-listed Swedish Match (ST:SWMA) saw its shares fall 2.2% in early trade.

Following the news yesterday evening, shares in Altria Group (NYSE:MO) declined 6.2% and Philip Morris (NYSE:PM) was down 1.3%.