Tobacco stocks are slumping on media reports that the administration of U.S. President Joe Biden plans to cap nicotine levels in cigarettes.
The Biden administration is also considering a ban on menthol cigarettes as it tries to determine if it should reduce nicotine levels in all cigarettes.
Nicotine doesn’t cause cancer, but it does make smoking more addictive. The goal of reducing nicotine levels would be to make cigarettes less addictive, hoping to prompt smokers to quit or switch to other products that are viewed as safer.
Altria (NYSE:MO) shares closed down more than 6% on the news, while British American Tobacco shares tumbled 2% and Philip Morris International shares fell more than 1%.
In a written statement, British American Tobacco (NYSE:BTI) said: "Many consumers wrongly believe that a cigarette very low in nicotine content is lower in risk than traditional cigarettes, a misconception that poses a major hurdle in determining proposed rulemaking for low nicotine cigarettes."
