A bipartisan group of legislators yesterday reintroduced a bill designed to bolster the power of the FDA to regulate big tobacco. Sen. Ted Kennedy (D-Mass.) said, on introducing the Family Smoking Prevention and Tobacco Control Act, that "Congress cannot in good conscience allow the federal agency most responsible for protecting the public health to remain powerless to deal with the enormous risks of tobacco." The FDA has long claimed it lacks the authority to regulate tobacco since the industry does not claim its products have health benefits. In 1996, the regulatory body produced evidence that the companies did in fact deliberately feed consumers' nicotine addictions. The industry sued, and in 2000, the Supreme Court ruled the FDA was not authorized by Congress to regulate tobacco. The backers of the new bill believe it will receive a warmer reception in a Democrat-controlled House and Senate. The Altria Group, manufacturer of Marlboro, favors the bill, calling it "a thoughtful legislative approach [that] offers the best way to advance real solutions to the many complex issues involving tobacco." A spokesman for R.J. Reynolds, the country's second-largest cigarette manufacturer, pointed out that restrictions on advertising will almost certainly benefit market leaders who already enjoy strong consumer loyalty.
Sources: Business Week, Reuters
Commentary: Nicotine Study Re-ignites Call for FDA Regulation of Cigarettes • Warning: Cigarettes May Be Good For Your Financial Health • The Tobacco Empire Strikes Back
Stocks/ETFs to watch: Reynolds American Inc. (NYSE:RAI), Altria Group Inc. (NYSE:MO), Loews Corp. Carolina Group (CG). ETFs: First Trust Morningstar Dividend Leaders Index (NYSEARCA:FDL), WisdomTree LargeCap Dividend (NYSEARCA:DLN), WisdomTree High-Yielding Equity (NYSEARCA:DHS)
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