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Michael Zilvetti

11/15/2018

Government Regulation on the Tobacco Industry 

Abstract

The purpose of this paper is to gain an understanding of the history of government regulations on electronic cigarette and tobacco advertising. The paper will answer the research question and will determine if regulations on cigarette and electronic cigarette advertising go against advertisers first amendment right to freedom of speech. The paper analyzes important court cases, reports, advertisements videos and articles related to media regulation of tobacco products as well as smokeless tobacco and electronic cigarettes.

Research Question

Does government regulation on tobacco and electronic cigarette advertising violate advertisers rights to freedom of speech under the First Amendment?

Methodology

The first step in researching this topic was finding primary sources. The researcher utilized the large collection of primary sources and databased provided by the Ithaca College Library. These primary sources include transcripts from the most important cases relevant to media regulation and the tobacco industry. Also included in primary sources are several advertisements dating between now and the 1920's. The main databases that the researcher used were Caselaw.findlaw, Lexis Nexus, and Oyez. The researcher used search terms: “Tobacco Advertising Court Cases,” “Tobacco advertising first amendment,” and “Tobacco advertising Regulation.”

After searching through these databases, the researcher used the advanced search features of the Ithaca College Library's website to find additional sources, both primary and secondary. These sources ranged from peer-reviewed journals on the history of tobacco advertising and regulation to news publications and books about various relevant court cases. After using the library's search functionality, the researcher used google scholar to find more primary sources as well as secondary sources to supplement the research. The researcher also used several videos and clips from YouTube related to tobacco advertising and promotion as well as videos regarding the regulation of these advertisements and regulations on tobacco products. YouTube search terms include: “Electronic Cigarette Advertising”, “Advertising regulation tobacco industry” and “First Amendment Cigarette Advertising.”

Research

Cigarettes, electronic cigarettes (e-cigarettes), smokeless and other tobacco products are some of the most heavily marketed products in the world, and make up one of the United States largest and most profitable industries. According to the Economic Times, “In 2016 alone, tobacco use caused over 7.1 million deaths worldwide”   and “the tobacco industry profits $9,000 from every smokers death.”   Because of the controversial nature of tobacco products, it is no surprise how many regulations there are on the production, marketing, sale and distribution of cigarettes and related products. But with regulations, especially with regards to media, promotion and advertising, comes a question of the constitutional rights of the advertisers who promote these products. Have regulations on tobacco advertising and promotion infringed on the first amendment rights to free speech of advertisers and marketers? Are there any regulations that continue to infringe on these rights, now in 2018? In order to answer these questions we must first understand a few things. First, we must be able to grasp the details on what rights the first amendment includes, what it doesn't include and whether advertising is even protected under the first amendment. Next, by discussing the history of the tobacco industry and how it has been regulated over the years, we can understand how these regulations came to be and how they were fought against, in many cases by the biggest tobacco companies and stakeholders. Finally, by looking at the current state of the tobacco industry and the marketing practices used today we will be able to answer the question of whether or not advertisers rights have been infringed and if they still are being infringed today.

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.”   This is the entirety of the first amendment of the constitution. This does not state anything in regards to advertising and freedoms associated with it. So, is advertising protected under the first amendment? The short answer: yes.   Advertising is protected under the first amendment, but not in the same way as all forms of speech or expression.   There are times where the government can legally regulate expression; it all depends on the type of expression in each case.   The three types of expression are high-value expression, intermediate expression and low-value expression. High-value expression is the hardest form of expression for the government to regulate as it relates to political, social, cultural, artistic, religious and similar types of speech. The second type of expression is intermediate expression which includes commercial advertising. With intermediate expression “the relaxed scrutiny or intermediate scrutiny standard is used to determine if expression will be restricted or protected.” This means that in order for the US government to legally regulate expression on commercial advertising, they must show a “substantial or significant government interest.”   But not all of the regulations and restrictions to tobacco advertising were regulations on intermediate expression. The third type of expression is low-value expression. Low-value expression is the easiest form of expression for the government to restrict; it includes obscenity, threats and false advertising. Low-value expression does not receive any first amendment protection.  

Cigarette and tobacco advertising before the 1960's often had claims of health benefits and endorsements from doctors and medical professionals.   In the 1930's, Lucky Strike advertised their cigarettes by saying, “your throat protection” claiming that their cigarettes could help prevent throat irritation and coughs.   Data from numerous sources states that these claims are in fact false.   Does this mean that the government legally regulated these advertisements? At the time of these ads the claims made may have been thought true. However, according to Merriam Webster, the legal definition of “false advertising” is, “the crime or tort of publishing, broadcasting, or otherwise publicly distributing an advertisement that contains an untrue, misleading, or deceptive representation or statement which was made knowingly or recklessly and with the intent to promote the sale of property, goods, or services to the public.”   This means that even if the cigarette companies believed their messaging to be true initially, the reckless nature of the factually inaccurate messaging makes it false advertising by definition.

While it is easy to see false advertising in examples from the 1920's and 30's, there also have been more recent cases. In march of 2010, the attorney general for the state of Vermont brought a lawsuit against R.J. Reynolds Tobacco Company.   This lawsuit accused the tobacco giant of violating consumer protection laws with it's deceptive advertising practices.   The tobacco giant had run advertisements that sold Eclipse cigarettes with “risk reduction” claims. The Judge also found that Reynolds had “continued making its illegal statements for more than two years after receiving a letter from 40 Attorneys General demanding that Reynolds stop.   The Vermont Superior Court judge in the case demanded that Reynolds pay the State of Vermont $8.3 million due to the violation of these state laws.  

Every year the Federal Trade Commission publishes a report that presents detailed statistics and information about the sale, advertising and promotional activities for the cigarette industry.   Because the federal trade commission legally requires cigarette manufacturers to publish where they allocate advertising budgets, these reports include actual dollar amounts that are spent on marketing and promotion of tobacco products in the United States. The most recent report, published in 2018 shows how advertising spending from major cigarette manufacturers increased from $8.3 to $8.7 billion.   It then goes into detail about how that $8.7 billion is distributed into different forms of advertising. While the mediums that these companies are advertising on have changed a lot since the “prime” of the tobacco industry, neither government restrictions, requirements, taxes or regulations have put a damper on the amount the industry spends on marketing and promotion.

Another important question is how the tobacco industry spends their marketing dollars, and what tactics and strategies did they use in their advertising? This is an important question in understanding the state of tobacco marketing in the context of different regulations in time. It is important to know some of the tactics that cigarette advertisers used as those tactics shed light on why some government regulations were put into place. From the 1920's to the 1960's, cigarette manufacturers built brand loyalties worth billions of dollars in sales.   Many of these companies started marketing with messages of the benefits of smoking but transitioned into lifestyle advertising. Cigarette companies would add collectibles to cigarette packs and give bulk discounts, bringing in thousands and thousands of new customers.   At the end of World War II, cigarette advertising on Television and Radio grew drastically. Camel cigarettes even started their own TV program, a news show called “Camel News Caravan” that ran for seven years until 1956.   The show featured Camel branding on everything from the ash trays to the logo on the wall. The opening line of the show also included the phrase, “sit back and light up a camel.”   But tobacco advertising on Television would not last very long.  

In 1966 the Federal Communications Commission passed the Federal Cigarette labeling and Advertising Act.   In chapter 36 of the Title 15 Code book, this act provides detailed explanations on cigarette advertising and labeling laws and regulations.   The code shows that it is unlawful to advertise tobacco products in the United States without including one of the four available Surgeon General's Warnings. The chapter also states a rule regarding State's rights in the advertising regulation process. No regulations to advertising or promotions based on health are allowed under State law as long as the advertisements follow all the necessary rules and regulations within the code.   The code also made it illegal to advertise cigarettes on any form of electronic communication. This chapter also establishes the authority of the Federal Trade Commission with regards to tobacco advertising. It established that violation of these regulations would result in a misdemeanor and a fine of $10,000 at the most.   Also, the FTC established a new program run by the Secretary of Health and Human Services to inform the public of the dangers of tobacco use and combat the effects of cigarette advertising in the Untied States.   These regulations were about to play a major role in court cases that will be discussed throughout this paper.

In 1967, another government regulation was put forward, fighting against big tobacco companies and their advertising practices. This regulation was the Federal Communications Commission adapting the Fairness Doctrine, a set of laws that, according to the Center for Disease Control, are “an attempt to ensure that all coverage of controversial issues by a broadcast station be balanced and fair.”   The adaptation was to include cigarette and tobacco advertising under it the doctrine, allowing the FCC to make attempts at reducing cigarette and tobacco use in the United States.   This regulation required TV broadcasters to play anti-smoking ads if they also were broadcasting tobacco advertisements of any kind.   The fairness doctrine did not put limits onto cigarette advertising other than making sure that broadcasted messages were not all advocating for cigarette companies or smoking in general. But these laws would soon have no effect as TV and Radio advertising for cigarette manufacturers was about to end.  

On April 1st, 1970, President Richard Nixon signed legislation that banned all cigarette advertising on tv and radio.   This was the first major regulation in the advertising of tobacco products and started an on-going war between tobacco manufacturers, the FCC, the CDC, the FTC, the FDA and the rest of the world. The legislation signed by President Nixon was soon adopted by the FTC in the Comprehensive Smokeless Tobacco Health Education Act of 1986. This act added “other media” that would be included in regulations of cigarette advertising.  

The first major battle between the federal government and big tobacco companies was when Pinkerton Tobacco Co. was accused of running illegal advertisements during televised trucking events.   Pinkerton manufactured Red Man Chewing Tobacco at the time and was adding their branding to sponsored trucks in the televised competition. While they were not running separate TV ads, the fact that the event was televised brought the case forward. Pinkerton was found to be under violation of two statutes and was required to remove all logos and branding from trucks and drivers in the competition.   This case was very important because it was the first time that the government had enforced its regulations on tobacco advertising. This also opened up the larger question of whether other large televised events could bear the names of tobacco sponsors such as the Virginia Slims tennis tournament or the Marlboro Grand Prix. In an article for the LA Times in 1991, John F. Banzhaf III, executive director of an anti-smoking said, “This certainly opens the door for us to file similar complaints [against tobacco companies]” and said “if we can we will.”   This enforcement of federal law started making it possible for the government to regulate the advertising of tobacco products more.

In 1996, big tobacco giant Philip Morris was threatened by the Justice Department, accusing the company of knowingly violating laws against cigarette advertising on television.   Cigarette advertising had been banned from television, yet advertising of cigarette products was still seen in broadcasts of various sporting events. The case against Philip Morris started when the Marlboro logo could be seen on the score-table in sports broadcast from Madison Square Garden. Philip Morris agreed to settle the case instead of going to a trial. In the settlement, Philip Morris agreed to agreed to remove all cigarette signs “on or immediately adjacent to the playing field,” as well as near the walkways leading from the playing field to the locker room.   The agreement allows the company to have advertisements in sections where there is only a slight chance they will be televised.” A spokesperson for Philip Morris argued that the signs existed long before the television advertising ban was put into place, and that it had not been seen as illegal before this case.  

Soon after, in 1999 the city of Chicago created an ordinance that would practically ban all cigarette and tobacco advertising in the city.   The ordinance placed hash restrictions that prevented cigarette advertising in the city besides very specific exceptions such as commercial vehicles, some highways and inside stores with licenses to sell tobacco products.   This ordinance resulted in a case that went all the way to the Supreme Court of Illinois when the Federation of Advertising Industry Representatives sued the City of Chicago for violating the Federal Cigarette Labeling and Advertising Act (FCLAA) which included that States are unable to create regulations based on smoking and health for the advertising of tobacco products as long as the advertisements comply with the packaging and regulations already listed in the FCLAA. The Supreme Court of Illinois found that the provision of the Ordinance that regulated the content of advertisements was problematic and would be severable from the Ordinance. They, however, found that the majority of the ordinance did not go against the FCLAA and would remain intact.  Therefor the court partially affirmed and partially reversed and remanded the judgement of the district court.   This meant that, aside from limiting content of cigarette advertisements, all States seemed to have the power to halt a majority of tobacco advertising in their cities.

In 1996, more regulations were introduced by the United States government regarding the sale, and advertising of cigarettes and other tobacco products.   President Clinton announced these regulations that were aimed to protect children and adolescents from sale and distribution tactics used by the tobacco industry. This was a massive push in tobacco regulation. Included in these regulations was the prohibition of cigarette sales to persons under the age of 18 years old. It also included a restriction on cigarette advertising content that would now, by law, need to be black and white and in text only format. It also prohibited the sale and distribution of branded promotional items such as hats and t-shirts. The regulations also banned cigarette companies from sponsoring sporting events, teams, or athletes. It also required additional labeling on tobacco products. In these regulations the Federal Drug Administration also started a program that would educate minors about the harmful health consequences and the dangers of using tobacco products.   However these regulations were fought by major tobacco companies and eventually wound up in the Supreme Court. Here, in a five to four vote, In the 5 to 4 ruling, “the judges said that the FDA overreached its authority when it reversed a decades old policyin 1996 and sought to crack down on cigarette sales to minors.”  

In 1998, major cigarette manufacturers Philip Morris, R.J. Reynold, Brown and Williamson and Lorillard entered into the Master Settlement Agreement (MSA), the largest civil litigation settlement in United States history.   This was after Philip Morris and these other manufacturers were sued by several states to pay for healthcare of sick people who had previously used their products. The settlement required these tobacco companies to pay billions of dollars as well as annual payments to be made in perpetuity. But in addition to the monetary aspect of the settlement, the Master Settlement Agreement also pioneered new regulations for the advertising and promotion of tobacco products. The MSA prohibits the targeting of youth in advertising, the use of cartoon characters, free tobacco sampling, and banned outdoor advertising that is not in immediate proximity of a retailer or licensed shop that sells tobacco products. The MSA also prohibits a lot of tobacco lobbying and banned material misrepresentations of heath consequences associated with tobacco use.   This settlement also created the American Legacy foundation that focuses its efforts on preventing underage use of tobacco products. This foundation started the now well know ad campaign “The Truth”, a movement that has seen success in reducing underage smoking and tobacco use.  

One year later in 1999, the Massachusetts Attorney General imposed regulations on advertising and sales of cigarettes, tobacco, and alternate nicotine products. However tobacco companies and retailers petitioned these new state regulations and sued in Federal District Court. This court case would be know as Lorillard Tobacco Company and Altadis U.S.A inc. v. Thomas F. Reilly, Attorney General of Massachusetts, or just Lorillard Tobacco Co vs. Reilly.   The plaintiffs in the case argued that these newly imposed regulations were not legal on the grounds that the Federal Cigarette Labeling and Advertising act prohibited state regulation in regards to health and wellbeing of cigarette smokers. In addition, they argued that these new advertising and sales practice regulations imposed on their First Amendment rights. The case made it to the Supreme Court after the US Court of Appeals decided that the advertising regulations and sales regulations were valid under the First Amendment.  

The transcript of the Supreme Court starts with the first oral argument, presented on behalf of the petitioners (Lorillard and Altadis). It starts by stating that the regulations imposed on tobacco advertising abridges free speech in violation of the First and Fourteenth Amendments. After a long series of questions and answers on behalf of the protesters, William Porter spoke with the court on behalf of the Respondents. His main argument was that if the protesters view were to be correct, there would be nothing stopping tobacco advertisers from targeting children by placing advertisements outside schools and little league baseball fields (an example he used). After the initial statements and answers from the two attorneys, each was given a chance at a rebuttal. The Supreme Court reversed and upheld portions of the original verdict. They found that the outdoor and indoor regulations on tobacco advertising do not pass first amendment scrutiny because the regulation was too broad. However, the regulation on sales practices that would require retailers to keep cigarettes behind the counter to be valid under the First Amendment. The supreme court allowed the regulation of commercial speech, even if the speech could be proven truthful, as long as there were government interests in the matter such as the health and wellbeing of US citizens.  

The cigarette companies argued that the state regulations practically banned advertising any tobacco product while they are still legal for adults to purchase and use. They also argued that federal law prevented the state of Massachusetts from imposing these regulations. This decision created precedent for new rules and regulations big tobacco companies would need to follow. In her official opinion, Justice Sandra Day O'Connor said, “We conclude that the Attorney General has failed to show that the outdoor advertising regulations for smokeless tobacco and cigars are not more extensive than necessary to advance the State's substantial interest in preventing underage tobacco use.”  

The Lorillard Tobacco Co vs. Reilly case also had an enormous effect on how cigarette advertising would eventually appear back on television in the future. Recently, after years of back and fourth arguments on the legality of the order, major cigarette companies were forced to produce and air anti-smoking advertisements as a way of combatting the negative effects these companies have had on the health and well-being of the United States.   This court order was a direct result of the court case as well as the deceptive and potentially false advertising that has been present in the tobacco advertising industry since the 1920's. These advertisements had messaging such as “Smoking kills, on average, 1200 Americans. Every day” and “smoking is highly addictive”. The court order for these “corrective statements” was issued in 2006. In a report on CBS Evening News regarding this court order, Sherry Emery, a research scientist, raised questions on the potential effectiveness of these ads. She mentions that the “next generation of smokers” isn't generally watching broadcast television or reading the newspaper.  

With a massive focus on regulating tobacco advertising, has the government forgot about social media and influencer marketing? According to The new age of tobacco marketing: Imagery on social media by James Lesley, “While many areas of tobacco marketing have been restricted, the rise of digital and social media has presented an opportunity for new marketing avenues.”   This means that Tobacco advertisers were able to use social media to get around some of the regulations that were specific to television, radio and print advertising. Lesley, in his report on the matter, used qualitative and quantitative research methods to find that the marketing of the Tobacco industry has largely transitioned into the social media world and into influencer marketing through celebrities. In the report he states, “Many of the top 10 followed celebrities had portrayals of tobacco embedded within their profile and/or posts. Young females are overtly targeted and traditional themes such as fashion, glamour, fun, sex appeal and free-will continue to be used as marketing frames.”   In order to express messages away from television, these tobacco advertisers have not only found a medium that is less regulated, but also provides a younger demographic that could be the next generation of cigarette or electronic cigarette smokers. But can the government regulate these social media influencer campaigns the same way that they regulate television, print and radio advertising? They actually can. According to the advertising trade magazine, AdAge, “The FTC has made it clear that it is watching activity in social media channels, and that it is prepared to take action against both advertisers and influencers if ‘material connections' between an influencer and any promoted product or service are not clearly and conspicuously disclosed.”   With the FTC watching influencers like this, tobacco advertisers face a situation where they can either continue working with these influencers and not disclosing their advertising relationship or they can report their advertising spend and content through social media and influencer programs as they are legally required to do.   However, according to the FTC's annual report on tobacco ad spending, tobacco companies “reported no spending in 2016 on ‘social media marketing on Web sites or other online services or communities, including but not limited to social networking sites, microblogging sites, content-sharing sites, and blogs,' just as they have each year since the Commission started requesting these data in 2009.”   This means that either there are still deceptive advertising practices in the tobacco industry or social media influencers are not being paid by tobacco companies to promote their products. Unfortunately, in my research, I was unable to find more data or primary sources regarding this matter, likely due to influencer marketing being relatively new.

Analysis

It is hard to not be biased when writing about a controversial topic such as the tobacco industry's marketing and regulation. It is also hard to focus research on media regulation while any academic research about the tobacco industry should speak about the negative health effects related to smoking. Because of these health effects and the bias that I have being a former cigarette smoker, one difficulty I had when writing this paper was trying to answer my research question only using the facts from my research. In order for government regulations to be imposed on first amendment rights of advertisers, the government only needs to show substantial or significant government interest. One example of a government interest is in protecting the health, safety and wellbeing of its citizens. Cigarettes have been proven to contain carcinogens and also have been proven to dramatically increase the risk of getting cancer. Nicotine inside tobacco products is also highly addictive, making it difficult for people to stop smoking, and makes it difficult for people to stop buying cigarettes. This dependence on nicotine that these products create, while great for brand loyalties and sales for the big tobacco manufacturers, is harmful to the health of US citizens. Because of this I do not think that creating regulations on the advertising and sale of tobacco products goes against the first amendment rights of advertisers. However I also believe in the United States Economy, the free market and industries in the United States. It worries me that the government only needs to show “government interest” in order to use Government Agencies and laws to regulate. While for tobacco companies I think this does more good than harm, I worry that regulating in this way could translate to other industries where regulations aren't needed. This entire topic opens up a question of what “government interest” means and when it can be used to legally restrict first amendment rights of advertisers. Also, what does this mean about other protections under the first amendment? Do we really have the rights that are outlined in the United States Constitution? I think we do, for now. But in my opinion there is a fine line between government interest and infringements on our rights as citizens of this country.

I also have strong opinions about the ethics associated with tobacco marketing and advertising since writing this research paper. Being a former cigarette and electronic cigarette smoker, I have actually been personally exposed to the more modern cigarette advertising practices that are still legal such as messaging on e-cigarette websites and email lists that I voluntarily joined before deciding to quit using tobacco products. I started smoking cigarettes when I was 13 years old. When I was using these products, I had strong brand loyalty to Marlboro, and after switching to electronic cigarette alternatives I developed strong brand loyalty to JUUL. Having strong brand loyalty, in my personal experience, made it a lot easier to ignore reports and commercials about the negative health effects associated with tobacco products. Being a smoker also showed me how strong peer recommendations and influencers played a role in making me a smoker at a young age. I idolized characters in movies that I would watch as a kid who were smoking and supported influencers on social media that used tobacco products. Because of this history I have with tobacco, I was extremely surprised when I found that no money was reported to be spent on social media or influencer marketing by big tobacco companies. I have personally seen celebrities endorsing tobacco products and have a hard time believing they were not paid to promote these products. I also have seen social media culture accelerate brand recognition of brands like JUUL. While this is a harder media to regulate, I think it is important that the FTC continues to monitor influencers and halt these practices that are encouraging younger audiences to start smoking or vaping.

While I agree with the majority of regulations that the government has imposed on tobacco companies, I also am not sure all of these regulations are completely ethical. After all, there is still television advertising for alcohol, fast food, and other products that aren't healthy for consumers. Alcohol advertising is the most striking as alcohol, like tobacco, is addictive and has been known to cause liver damage and other negative health effects. Knowing this, why does the government not regulate alcohol advertising the same way that they regulate tobacco advertising? Why are addictive substances treated differently? Also, if tobacco advertising can be banned from television, radio and print, then why is it okay for advertisers to target children with fast food commercials that are arguably making America one of the fattest countries in the world. I suppose the real question is where will these regulations stop, have they not gone far enough, or have they already gone too far.

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