This is just a quick thought on what’s happening with Lorillard (LO) recently and why the stock dropped so dramatically in last few days.

About a year ago and many times before FDA came out with an idea to ban menthol flavored cigarettes. Their reasoning was that such a ban would benefit to the public health. They claim that flavored cigarettes make it easier for beginners to start smoking and a lot more difficult to quit. I always thought that it was the nicotine which caused people being addicted to it and prevented them from quitting.

A few days ago Mitchell Zeller was elected a head of FDA. He is known as a great enemy of flavored cigarettes and he wants to go even further and ban any flavoring of cigarettes, so even strawberries flavor and other flavors.

Once again we see an example of a governmental agency telling us what’s good and what’s bad and in my opinion going the wrong direction – again.

I do not smoke and I have never smoked in my life. I hate smoking and whenever I enter a room or restaurant where people smoke, I can smell it right away and leave such place. Although I agree on having zones for smokers and non-smokers so we do not bother each other in public areas, I generally do not care and dare telling smokers what they can do. If they want to damage their body with flavored cigarettes as well as non-flavored ones and even pay for it, it’s their choice and they will deal with inevitable consequences later in their life or after life. It is their choice exactly the same one as I made when I was a lot younger than today. I also attended a college with almost-every-night parties, visited restaurants where everybody smoked, and so on. When I was young, there were no bans or restrictions and everybody smoked like a factory chimney. Even my parents smoked until one day my mom decided to quit and she did it. She didn’t need any ban on any sort of cigarettes.

Let’s take a look on another ban in history of the United States. In 30’s the US government imposed a prohibition on alcohol. Did it help? No. It didn’t. It created alcohol cartels smuggling alcohol into the US. It renewed the so called “wild west” in the streets of Chicago with a lot of blood on the streets.

I am not saying a new era menthol cigarette cartels will be recklessly riding their cars in the streets of major US cities and shooting machineguns killing their competition. I am saying that any sort of prohibition is a utopia and it will not work, but cause more damage than benefit.

If the menthol will be banned the government would probably lose 10 billion in tax revenue from this market. I have read an argument, that all menthol smokers won’t quit smoking the same day as the ban will be imposed, but they move into non-flavored cigarettes. They probably move into a different brand, but what about the whole chain of suppliers and manufacturers benefitting from this market? What about thousands of employees of Lorillard and its subcontractors, will they move too?

Will all the smokers move to non-flavored cigarettes? Those truly addicted to the menthol cigarettes will be buying from smugglers from Mexico and all that revenue will be lost. No prohibition ever in human history prevented or helped anyone. What is banned will be smuggled and the revenue will move elsewhere and it will be the government who would lose.

Last thing I want to add is that this should be a matter of education. First, education within families, second in schools and third in public. If you teach your kids from the very beginning that smoking is bad to their health and cause irreversible damage to their bodies, if you set your own example to them by not smoking (and if you smoke quitting), they will not smoke as adults.

[poll id=”16″]