On Monday, President Obama signed the Family Smoking and Tobacco Prevention Act into law, giving the FDA unprecedented power to regulate the tobacco industry. This was an issue we discussed way back in 2008. We pointed to a statement by Dan Clifton that indicated a Democratic administration would be more likely to support the regulation we have just seen passed, and that this would actually be good for tobacco. According to our February 28, 2008 article:

The regulations are beneficial to the industry because if the companies were under FDA guidelines they would not be subject to any sort of lawsuit that they could normally face for what is generally perceived as a harmful product.

After we published this statement, however, Jeff received a message from one of his colleagues at TheStreet.com that strongly disagreed with Clifton’s position.

Philip Morris is supporting the FDA regulation of tobacco because they believe it will freeze their market share at the current levels. RJ Reynolds is adamantly against it for practical reasons. I was at a recent RJ Reynolds customer event and they gave a very illuminating presentation on this issue and ramifications. Remember in the event the FDA does get control of tobacco they can oestensibly declare the product off the market any time they want. Or in the case of Lorillard they can declare menthol not an allowed product.That ability to decree an industry and company out of business is a real problem and that is why I would strongly disagree with the Strategas research position.

With the new tobacco regulation bill now officially signed into law, now is the time to make a decision on where you will put your money. It all depends on which argument you find more convincing…