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January 19th, 2017:

Florida attorney general goes after 2 tobacco companies

CTA says:

Why has the insipid Hong Kong Govt not sued Big Tobacco for the massive costs of health care treatment caused by their tobacco consumer product which kills 2 in every 3 of its users ?

Yet again in Legco on 17th January 2016 the tobacco company representatives tried their bully-boy tactics, threat to sue all and sundry etc, the same tactics which have already failed miserably in high court and subsequent legal appeals overseas, regarding plain packaging and Health Graphic warnings, claimed loss of tobacco trademarks and intellectual property rights caused by Govts changing the packaging of their ‘Silent Salesman’ advertising carton packaging.


Florida Attorney General Pam Bondi on Wednesday sued two tobacco companies that she says are failing to pay millions owed to the state as part of a landmark settlement.

Bondi’s office, which filed the lawsuit in Palm Beach County, asserts that the state is already owed US$45 million and could lose $30 million a year going forward.

Nearly two decades ago, several of the nation’s largest tobacco companies negotiated a multibillion-dollar settlement with Florida to compensate the state for treating sick smokers. The state is projected to receive nearly US$356 million this current budget year in settlement payments.

The lawsuit contends that after R.J. Reynolds sold the cigarette brands of Winston, Kool and Salem to ITG Brands, both companies refused to make payments related to those brands. ITG Brands, the U.S. subsidiary of Imperial Tobacco, acquired the brands when Reynolds and Lorillard merged in 2015.

“The sale of major, pre-existing tobacco brands to another company for billions of dollars does not cause the payment obligations to vanish like a puff of smoke,” said Bondi in a statement. “I look forward to the state obtaining prompt relief.”

Florida filed its lawsuit a day after British American Tobacco announced that it is taking over Reynolds American in a US$49 billion deal.

Neither Reynolds nor ITG Brands responded to phone calls requesting comment.

Pushed by then-Gov. Lawton Chiles, Florida was one of the first states in the U.S. to seek damages from tobacco companies. The state’s lawsuit sought reimbursement for Medicaid costs in the past and future and contended that tobacco companies had engaged in unlawful actions and misleading advertising.

Up in Smoke: Finland on the Way to Completely Eradicating Tobacco Use

Finland has stepped up its efforts to completely ban tobacco smoking within its borders. A new law calling for tobacco smoking to be ended entirely by 2030, has introduced several new regulations on smokers and tobacco retailers.

The most recent regulations allow housing associations to ban smoking on lawns and balconies that they own. Cigarettes with flavor capsules embedded into their filters have been banned entirely. The fees that municipalities can charge on retailers selling tobacco has been drastically increased, as much as €500 per point of sale.

Some stores in Finland’s second largest city of Espoo have seen increases in fees in excess of 1,800 percent, and even 2,600 percent. Many retailers have claimed that the fee increases have made it unprofitable for them to sell cigarettes, and they would cease retailing the product entirely if smokers did not also buy food items alongside tobacco.

The Finnish smoking ban is so strict that it even extends to “imitation products” that do not contain tobacco or nicotine. Lakupiippu is a popular Finnish candy, a stick of liquorice shaped to look like a smoking pipe. The National Supervisory Authority for Welfare and Health (Valvira) has banned the pipes from being used in retailer loyalty programs as they “promote smoking.” Valvira’s opinion on candy cigarettes is unknown.

Finland has long led the world in banning and regulating smoking. The country banned advertisement of nicotine products in 1978, smoking in the workplace in 1995, and smoking in bars and restaurants in 2007.

The number of Finns who are smokers has steadily declined over the last 20 years, likely due to the costs and difficulties of the habit. A study with the Finnish Cancer Registry claims that “practically all Finnish men… born before the 1930’s practiced smoking.” Reports show that 18.6 percent of Finnish adults were smokers in 2009. That dropped to 17 percent in 2014 and 16 percent in 2015.

Finland is neck-and-neck with fellow Nordic country Denmark, who announced in 2016 their intention to create “the first smoke-free generation” by 2030 with a $334 million program to end smoking and other cancer risks to Danes.


Tobacco stocks have traditionally performed strongly as defensive equity assets, but some big investors are now starting to divest from the industry.

The French national pension reserve fund, Fonds de Réserve pour les Retraites (FRR), announced in December 2016 that it was going to exclude investments in the equities and bonds of tobacco-producing companies.

There is growing pressure on institutional investors and others to divest from tobacco, based on strong scientific evidence of the harm caused by smoking. In particular, the efforts of Tobacco Free Portfolios, a campaigning initiative set up by Dr. Bronwyn King, an Australian cancer specialist, have raised awareness of the issue. FRR executive director Olivier Rousseau admits it struck a chord with him: “Morally, it’s a very clear-cut situation; it is indefensible. This is only a harm-producing industry, so from a moral perspective, it was easy to say that we don’t want tobacco in the portfolio.”

But whereas there is a strong rationale for excluding tobacco stocks on moral grounds, applying hard-headed investment logic to it can be sobering for investors. “The returns for tobacco have been absolutely outstanding. Between June 2004 and September 2016, the MSCI World Tobacco index grew by a whopping 632 percent,” Rousseau says. “Whereas the MSCI World index went up 122 percent.” And according to the Credit Suisse Global Investment Returns Yearbook 2015, from the Credit Suisse Research Institute, the tobacco sector was, together with beverages, the star performer since 1900 with an annualized gain of 14.6 percent [see chart below]. We’ve all heard comments from CalPERS, which said that not having had tobacco in the portfolio over the last 15 years has cost it around $3 billion. Similarly the Norwegian GPFG [Government Pension Fund Global] says its tobacco exclusion, which started ten years ago, has cost it some $2 billion. The results may vary depending on the methodology used. If one compares total returns, the difference is bigger than if one assumes, as is the case in real-life portfolios, that the dividends of high-yielding sectors, such as tobacco, are actually pooled with all dividends and reinvested in all sectors pro rata to their index weightings. Anyhow, yes, it is a bad industry, but there is no denying that it has been a very profitable investment.”

However, tobacco may not be such a good investment in the future. One reason to expect lower future returns is tougher public health legislation on smoking. “Many countries have made a commitment to act against smoking, and France is party to a 2005 international agreement on this, which basically says that public institutions should not have tobacco investments,” Rousseau says. “You can argue about its enforceability, but it is clearly a commitment taken seriously by the countries that have signed it.”

“There is a significant probability that more developed countries will take more measures against tobacco in the future. France is the second country, after the U.K., to remove branding from packaging for tobacco since January 1 this year,” Rousseau says. “Taxes are always being increased on tobacco, and regulations are increasingly restricting smoking in public spaces. Just as we can see a shift away from using carbon-emitting energy sources, so there is a similar regulatory move away from tobacco consumption.”

As part of the food and beverage sector, tobacco has performed strongly as a lowvolatility, high-dividend and stable growth sector since the start of the global financial crisis in 2007. As such, tobacco stocks have been valued at high multiples, as one of the darlings of the low-volatility trend in portfolio management, but Rousseau says this is now changing. “There has been a formidable run for the low-volatility, stable-growth types of companies, but it is coming to an end. From last July, after the first few weeks of Brexit scares,” he says, “value stocks have come back with a vengeance. Since then the stablegrowth, ‘low vol’ companies, carrying high multiples, have done poorly relative to the overall market. This tendency has started, and we believe there is more to go, and this could be the case for some time to come.”

FRR’s executive board had to present the case for excluding tobacco to the supervisory board. “There was a good debate, because it was easy to see the moral argument against tobacco stocks,” Rousseau says. “And of course concerns about returns were expressed, so that argument was also discussed. We cannot promise the supervisory board that excluding tobacco companies will pay out in future, but we simply believe that the formidable returns of the past are not going to be repeated in the same fashion. In our view, that would be a very low probability scenario.”

Although many investors engage with companies in an effort to improve their ESG rating and see divestment as a last resort, Rousseau says that this approach is not possible with tobacco producers. “It is typically the only thing that they do, so you would be asking them to stop their activities altogether,” he says. “You either invest, or you divest. The middle-of-the-road approach would be to reduce your weighting, but that is ducking the issue, really. We understand that there is an element of risk to us, but the next decade will most probably not see the same performance as in the past.”

As a result of its decision to exclude tobacco stocks, FRR has joined CalPERS and CalSTRS, in addition to Norway’s GPFG, the Netherlands’ PGGM, a handful of Australian and New Zealand pension funds, AXA insurance group, and, most recently, Sweden’s AP4, in going tobacco-free. “As we understand it, there are still very few investors that have done this so far, and I think the return argument is something that has been very powerful,” Rousseau says.

At the same time as it announced its tobacco divestment, FRR said it will now also exclude companies in which thermal coal extraction, or coal-fired power generation, accounts for more than 20 percent of turnover. Rousseau added that FRR is shortly to reveal the three successful managers it has hired for a €5 billion ($5.34 billion) passive equity mandate with an ESG approach, expressed notably through a smart beta, low-carbon theme and, of course, tobacco exclusion. This mandate will make up 40 percent of FRR’s developed-market equities.

E-cigarettes less harmful than tobacco, UVic study says

E-cigarettes are a replacement for tobacco, not a gateway to it, according to a new study by the University of Victoria’s Centre for Addictions Research of B.C.

Researchers also found that vapour from e-cigarettes is less toxic than cigarette smoke, since it does not release tar.

The report, Clearing the Air, found that vapour emissions contain 18 of the 79 toxins found in cigarette smoke, including considerably lower levels of cancer-causing agents and volatile organic compounds. The vapour is airborne for less than 30 seconds compared to 18 to 20 minutes for tobacco smoke, which substantially reduces exposure to second-hand smoke.

“Fears of a gateway effect are unjustified and overblown,” said Marjorie MacDonald, the report’s lead investigator. “From a public-health perspective, it’s positive to see youth moving towards a less-harmful substitute to tobacco smoking.”

Evidence suggests that fewer young people are smoking tobacco, while use of vapour devices among youth has been increasing.

This is backed by data from the Canadian Tobacco, Alcohol and Drugs Survey, which showed that in 2015, 26 per cent of Canadians aged 15 to 19 reported having tried an e-cigarette, an increase from 20 per cent in 2013.

Tim Stockwell, the centre’s director and co-principal investigator, said the public has been misled about the risks of e-cigarettes.

“Many people think they are as dangerous as smoking tobacco, but the evidence shows this is completely false,” Stockwell said.

Researchers found evidence that e-cigarettes could be as effective as other nicotine replacements to help cigarette smokers quit.

MacDonald said e-cigarettes have polarized the public health community, with some medical studies supporting them as a harm reduction tool and others claiming e-cigarettes increase the chances young people will become addicted to nicotine and pick up smoking.

MacDonald said it’s important to recognize the implicit bias in e-cigarette research. Some studies have been funded by the tobacco industry, which has a large stake in e-cigarettes.

In November, the federal government introduced legislation called the Tobacco and Vaping Products Act, aimed at keeping e-cigarettes out of the hands of children while allowing smokers access to a device that is healthier than tobacco products. The proposed legislation would ban the sale and promotion of all vaping products to anyone under 18 and prohibit the promotion of candy flavours that appeal to youth.

The Canadian Medical Association has recommended that the legal age to buy e-cigarettes should be the same as the age for tobacco purchasing in the province or territory.

MacDonald cautioned that some studies in the U.S. showed youth who are banned from accessing e-cigarettes will turn to smoking instead.

“By banning the use of vaping devices by young people, you might actually be driving them to conventional smoking,” she said. “Let’s make sure that the devices are safe, that they’re regulated, that we have regulation on the liquids that go into them.”

The UVic report does not rule out all harmful effects of vaping.

Some devices could contain concerning levels of metals and particulate matter, and there’s still not enough research on the carcinogens that might be present.

The research, funded by the Canadian Institutes of Health Research, was based on a review of 170 articles identified as relevant out of 1,622 total articles on e-cigarettes.

Slovenia Must not Flinch in Battle with Big Tobacco

The tobacco industry is doing its utmost to deter Slovenia from introducing plain cigarette packaging – it must not succeed.

When it comes to protecting public health, countries around the world have recently generated true momentum to save lives by turning the tide on tobacco use.

Many countries have implemented policies requiring tobacco products to be covered with large graphic warning images and mandated “plain” or standardised packaging to reduce the attractiveness and appeal of tobacco products.

The Slovenian government’s recent bold decision to put an anti-tobacco law to parliament that includes plain packaging, larger health warnings and a ban on the display of tobacco at the point of sale poises Slovenia to lead the region by joining the ranks of those nations fighting against the tobacco companies, and winning.

If Slovenians are to realize the benefits of living a healthy, tobacco-free life it is critical that MPs pass the law when it heads to parliament.

Tobacco use, projected to kill 1 billion people worldwide this century, is the world’s leading cause of preventable death. The tobacco industry, however, has made it clear that it has no intention of voluntarily abandoning a sinister business model that depends on millions of new, largely youth consumers – cynically referred to by the industry as “replacement smokers” – to take up tobacco annually to replace those that die from tobacco-related illnesses.

Despite filing multiple legal and trade challenges against strong anti-tobacco laws, the tobacco industry has been repeatedly defeated and isolated in domestic and international courts, as well as by trade organisations.

A prominent Slovenian intellectual property expert, Bojan Pretnar, has appeared in the media, made submissions to parliament and written a legal analysis opposing plain packaging, suggesting that the tobacco industry will sue and expose the Slovenian government to the risk of paying large sums in damages.

The flawed legal arguments he puts forward are the same as those used by the tobacco industry elsewhere.

His suggested remedy – to carve plain packaging out into a separate bill – mirrors the delay tactics the tobacco industry has used in other countries.

Rather than being dissuaded by tobacco industry threats, Slovenia should look to the outcomes of numerous cases where these same issues have been litigated in other countries.

In Britain, a tobacco industry legal challenge and subsequent appeal brought by British American Tobacco, Imperial Brands, Japan Tobacco International and Philip Morris International was dismissed last May and most recently in November.

The High Court judge in the case criticized the tobacco companies’ arguments and experts. Those trying to argue against plain packaging in Slovenia, are now relying on and using these same discredited arguments and experts.

In Australia, where the High Court dismissed a constitutional challenge to plain packaging laws in August 2012, a Philip Morris International legal claim under the Hong Kong-Australia bilateral investment treaty was dismissed in December 2015.

In France, both the Constitutional Council and the Council of State upheld plain packaging legislation following legal challenges.

In Uruguay, a Philip Morris International legal claim regarding packaging restrictions made under the Switzerland-Uruguay bilateral investment treaty was dismissed in July 2016.

In the European Union, the Court of Justice in May 2016 dismissed legal challenges brought by British American Tobacco and Philip Morris International and supported by Japan Tobacco International and Imperial Brands to the provision in the new Tobacco Products Directive that explicitly provides 28 EU countries with the option of implementing plain packaging.

In fact, tobacco companies have lost every legal claim against plain packaging in national, regional and international courts. In the UK challenge, the judge wrote: “In my judgment the qualitative evidence relied upon by the [government] is cogent, substantial and overwhelmingly one-directional in its conclusion” that plain packaging will be effective in meeting its objectives.

He added that the tobacco companies’ body of evidence “does not accord with internationally recognised best practice.”

Research conclusively shows that effective warning labels increase public knowledge of smoking risks, and can motivate smokers to quit, discourage non-smokers from starting and keep ex-smokers from starting again.

Standardised or plain packaging reduces tobacco product attractiveness and appeal to consumers, especially the young, increases the noticeability and effectiveness of the picture health warnings, and reduces the likelihood that product packaging misleads consumers about the harms of smoking.

A recent study by the Cancer Institute in New South Wales found that young Australians, aged 12 to 24, believe plain packaging made them less likely to take up smoking.

The group included ex-smokers, non-smokers, and experimental smokers. All national data sets show that smoking rates declined significantly since Australia introduced plain packaging.

One of the main but flawed arguments used to oppose plain packaging is that it will cause an increase in illicit or counterfeit tobacco products. The tobacco industry tries to make this claim when it opposes other measures, such as larger health warnings or advertising bans. But even the tobacco industry cannot produce any evidence to support this claim. In Australia, the illicit market has remained at the same level and no counterfeit “plain packs” have been found in four years.

Mandating effective warning labels and plain packaging for tobacco products are among the most effective steps that Slovenia and other countries can take to communicate the dangers of tobacco products, lessen their attractiveness and appeal, and reduce tobacco consumption, thereby protecting citizens.

We are at a critical juncture. Bold action to protect public health is needed and now is the time for countries to join the global movement and stand up to the tobacco industry.

Robert Eckford is the Associate Director of Trade and Investment Law for Campaign for Tobacco-Free Kids, an international organisation leading the fight to reduce tobacco use.

The opinions expressed in the Comment section are those of the authors only and do not necessarily reflect the views of BIRN.