Regulating Tobacco Product Advertising and Promotions in the Retail Environment: A Roadmap for States and Localities

Introduction

The evidence linking tobacco product advertising to adolescent smoking initiation and resulting long-term addiction, premature death, and disability is well established. Each link in the causal chain has been substantiated: children and adolescents are especially vulnerable to advertising;¹ point-of-sale advertising comprises 92.1% of cigarette advertising and marketing expenditures by manufacturers and 71.3% of smokeless tobacco advertising;² tobacco companies have targeted youth through advertising;³ advertising exposure causes adolescents to start and to continue smoking;⁴ among adults who become daily smokers, nearly all first use of cigarettes occurs by 18 years of age;⁵ adolescents who smoke are at high risk for long-term addiction because their brains are still developing;⁶ and long-term addiction results in the tremendous personal, social and financial costs of tobacco-related illnesses.⁷

Over the past several decades, leading cities, counties, and states across the country have implemented a broad array of programs aimed at preventing youth⁸ tobacco use.⁹ Nevertheless, in 2014, 7.7% of middle school and 24.6% of high school students were current users of tobacco products, such as cigarettes, cigars, e-cigarettes, and smokeless tobacco.¹⁰ The vast majority (88%) of smokers started smoking before they were 18 years of age. If current smoking rates continue unchanged, 5.6 million American youth under age 18 are projected to die prematurely of a smoking-related illness.¹¹ Recognizing that current prevention and cessation programs are insufficient to prevent initiation and addiction in youth, state and local governments and tobacco control advocates have long been interested in regulating point-of-sale advertising and promotion of tobacco products, which are particularly effective in recruiting minors to tobacco use.¹²

Despite their critical importance, however, restrictions on youth exposure to point-of-sale advertising and promotion of tobacco products face two significant legal obstacles in the United States.¹³ The first is the Supreme Court’s stringent use of the First Amendment to protect commercial speech against government regulation. The current First Amendment test requires an increasingly substantial demonstration of proof of efficacy to justify a restriction of truthful and non-misleading advertising for lawful products, including dangerous but legal products like tobacco.¹⁴ Moreover, recent Supreme Court decisions suggest, though they have not yet held, that “content-based” regulation of commercial speech may be subjected to some form of heightened scrutiny.¹⁵ For First Amendment purposes, a regulation that focuses on tobacco advertising generally will be content-based because one must consider the topic of the speech at issue to determine whether the regulation applies.¹⁶

The second legal impediment is preemption. The Federal Cigarette Labeling and Advertising Act of 1965 (FCLAA) has long contained a general preemption provision that bars state and local regulation with respect to cigarette advertising and promotion based on smoking and health.¹⁷ That provision still exists, but Congress amended FCLAA in the 2009 Family Smoking Prevention and Tobacco Control Act (FSPTCA) and exempted from the general rule of federal preemption all state and local restrictions on the time, place, and manner of cigarette advertising and promotion (but not content) based on smoking and health.¹⁸ In addition, a preemption provision in the 1986 Comprehensive Smokeless Tobacco Health Education Act (CSTHEA) prohibits state and local laws that require statements in smokeless tobacco product advertisements (except for outdoor billboard advertisements) that are related to the use of smokeless tobacco products and health.¹⁹ Conflict preemption, a general rule of federal law that restricts the application of state or local laws to the extent they conflict with federal law, also should be considered when regulating tobacco advertising.²⁰ When regulating both cigarettes and smokeless tobacco products, a jurisdiction must consider all three forms of federal preemption – FCLAA, CSTHEA, and conflict preemption.²¹ In addition, local jurisdictions must steer clear of any state-level preemption.

Despite the serious challenge of overcoming a First Amendment challenge to point-of-sale regulation, the expansion of regulatory authority under the FCLAA preemption exemption and the ever-increasing body of evidence linking exposure to advertising and smoking initiation have led to renewed interest in state and local regulation of tobacco advertising. This article explains the current state of First Amendment commercial speech doctrine and federal preemption law and provides a roadmap for state and local advocates and officials who want to address problems in their communities that result from youth exposure to tobacco advertising and promotional activity.

The First Amendment and the Point-of-Sale

Upon entering a tobacco retail outlet, a shopper is immediately exposed to a barrage of products, advertising, and marketing strategies designed to influence tobacco purchase behaviors and use. Tobacco advertising is featured on gas pump toppers and sandwich board signs and on store exteriors. Behind the checkout counter, “powerwalls” – large tobacco industry shelving units – typically occupy the majority of the visible space on the back wall. Countertops often feature tobacco product displays for e-cigarettes and other non-cigarette tobacco products such as grape- and strawberry-flavored little cigars.²²

Exposure to such tobacco-saturated retail settings is associated with higher rates of tobacco initiation among youth.²³ Because the public health consequences of youth initiation are borne by entire communities, local and state governments have sought to influence the point-of-sale environment in a variety of ways, including restricting the locations where tobacco products may be stored, regulating the retail price of tobacco products, adding government health warnings to the information environment, compelling factual disclosures about the health risks of tobacco products, and imposing direct restrictions on the time, place, or manner of tobacco advertising.

Each one of these strategies is subject to a different legal test, but the tests share a common purpose: to ensure that regulation is consistent with the First Amendment commitment to freedom of speech. See Table 1.

Table 1.

Legal Standards Applicable to Varying Types of Government Regulation

Type of Government Regulation	Applicable First Amendment test	Standard
Content-neutral regulation of sales practices that constitute expressive conduct (e.g., banning ‘self-service’ tobacco products displays in retail outlets)	O’Brien	Regulation of expressive conduct under O’Brien must be supported by an important government interest unrelated to curbing free expression, and any incidental impact on expression must be no more than is “essential” to serve the asserted interest in regulating the conduct.24
Regulation of sales practices such as retail tobacco pricing (e.g., minimum price law or a restriction on redemption of coupons or using multi-pack discounts)	N/A	To date, courts have held that direct restrictions on tobacco product pricing strategies, such as the adoption of minimum retail price laws and bans on redemption of coupons and using multi-pack discounts to drop the retail sales price below the statutory minimum price, are not regulations of speech or expressive conduct and therefore do not trigger First Amendment scrutiny.25
Government health warning campaign	Government Speech	Government speech – where the message is promulgated by the government or is part of a government program in which the government is clearly the speaker – is generally exempt from First Amendment scrutiny.26
Compelled commercial speech (e.g., mandating the disclosure of factual information relating to tobacco products)	Zauderer	Compelled commercial speech is constitutional if the mandated disclosure is “purely factual and uncontroversial” and “reasonably related” to the government’s interest in preventing consumer deception.27 Lower federal courts have applied this test when disclosures were related to other government interests, including public health-related goals.28
Direct restriction on commercial speech (e.g., limits on where tobacco advertising may be placed or restricting its content such as color and imagery)	Central Hudson	Government restrictions on commercial speech (where the speech is not about illegal conduct and is not misleading) are constitutional where: (1) the asserted government interest for the regulation is “substantial;” (2) the regulation “directly advances the government interest,” and (3) the regulation is “not more extensive than is necessary to serve that interest.”29 If regulations are based on the content and viewpoint of a speaker’s message, as may be the case when restricting tobacco advertising, application of this test is likely to be stringent.

Sales Practices with Expressive Value

Some sales practices involve expressive conduct and trigger First Amendment review. Others have no expressive component at all. In either case, however, a jurisdiction should consider the possibility that regulation of sales practices may be challenged under the First Amendment. One of the earliest approaches to tobacco regulation at the point-of-sale was a ban on self-service displays, which required that tobacco products be displayed in such a manner that youth cannot reach them. In 2001, the Supreme Court decided Lorillard Tobacco Co. v. Reilly, where it upheld a restriction on display location as a “sales practice” but recognized that how and where a product is displayed may have communicative value.³⁰ The Lorillard Court applied the O’Brien test, a form of “intermediate scrutiny” that permits regulation of some expressive conduct under the First Amendment.³¹ The Court held the display restrictions complied with the First Amendment because they were narrowly tailored to serve a substantial government interest that was unrelated to regulating expression (preventing access to tobacco products by minors), still allowed retailers to convey product information, and permitted consumer inspection of the products prior to purchase.³² Notably, the Lorillard Court analyzed a regulation that left open the possibility of using empty boxes in displays, a strategy the Court said would address “any cognizable speech interest” associated with product displays.³³ Consequently, when regulating display size or location, one of the policy strategies discussed below, a jurisdiction should evaluate the likely impact of empty-package displays and decide whether there is sufficient evidence to support a decision to prohibit them or to restrict displays to one package per product.

Sales Practices without Expressive Value

More recently, local governments have successfully defended regulation of tobacco sales practices concerning pricing. In 2012 and 2013, respectively, Providence, Rhode Island, and New York City enacted tobacco pricing ordinances prohibiting licensed tobacco retailers from using means such as coupon redemptions and multi-pack discounts to sell tobacco products for less than the non-discounted listed price of the products.³⁴ The federal First Circuit Court of Appeals and the District Court for the Southern District of New York both rejected First Amendment challenges to these ordinances without finding any restriction of expressive conduct or speech.³⁵ Importantly, the challenged ordinances did not restrict advertising of lawful pricing.³⁶ Jurisdictions outside the First Circuit and the Southern District of New York may face litigation along the same lines when regulating tobacco pricing, but the Providence and New York City ordinances provide proven examples to follow to mitigate or avoid First Amendment issues.

Banning tobacco sales or creating a licensing program that limits the number of authorized tobacco retailers within a certain distance of schools and playgrounds is another example of regulation of a sales practice that involves neither expressive conduct nor speech.³⁷ This strategy requires a careful assessment of the impact of the restriction on tobacco sales in the region and of federal law that authorizes such restrictions.³⁸ It is a promising avenue, however, particularly as a means of addressing youth exposure. In fact, the federal District Court for the Northern District of Illinois recently upheld a Chicago ordinance that bans the sale of flavored tobacco products within 500 feet of a public, private, or parochial school, rejecting an argument that it was preempted.³⁹

Government Speech

Government also can influence the point-of-sale environment by introducing its own messaging. When government speech is at issue, the First Amendment generally is not implicated because the government is speaking independently on behalf of itself.⁴⁰ When state or local governments require retailers to convey a government message about tobacco, however, they are likely to face a First Amendment challenge. Very few cases have addressed the viability of such a claim. For example, in 2009, New York City adopted a local law requiring tobacco retailers to post graphic tobacco health warnings with smoking cessation information at the point-of-sale.⁴¹ Although the law required private retailers to post them, the mandatory signs bore the insignia of the City of New York as well as the Health Department logo. They were clearly messages that were both crafted by and attributable to the government. As such, the City argued they constituted government speech.⁴² In a federal lawsuit challenging the New York City law, plaintiff tobacco retailers and manufacturers took a different view, characterizing the signage requirement as an example of compelled opinion speech, which is reviewed under the most stringent standard of First Amendment review – “strict scrutiny.”⁴³ Without determining whether the signs violated the First Amendment, the federal court held that the ordinance, as drafted and implemented, was preempted by FCLAA, as discussed below.⁴⁴

More recently, a federal district court in California held a Berkeley city ordinance that requires cell phone retailers to post or provide customers with a city-sponsored notice concerning potential health risks of radio frequency exposure from cell phones was likely constitutional both under an enhanced version of rational basis review that the court said ought to apply to government speech and under the Zauderer test for compelled commercial disclosures, discussed below.⁴⁵ While Zauderer clearly applies when the government requires a commercial disclosure that is both delivered by and attributed to a private speaker, if the message is plainly attributed to the government, the First Amendment interest is quite weak, so the even more lenient version rational basis review should be appropriate. It should be noted, however, that the Supreme Court suggested in dicta earlier this year—in a case involving a state’s refusal to issue specialty license plates bearing a confederate flag—that the First Amendment “may constrain the government’s speech if, for example, the government seeks to compel private persons to convey the government’s speech. But, as a general matter, when the government speaks it is entitled to promote a program, to espouse a policy, or to take a position.”⁴⁶ In light of this statement, although either approach should be permissible, it may be that a law that requires public health warnings as a condition of participation in a retail licensing program is better positioned to survive a First Amendment challenge than one that imposes a direct warning requirement on private businesses. In either case, to pass muster required messages concerning tobacco products must be clearly attributed to the government rather than to the individual retailers, wholesalers, or manufacturers.

Required Disclosures

Another permissible way of influencing the information environment is for government to require private actors to communicate information that is relevant to a consumer in making a commercial transaction. As the prior discussion reflects, there may be significant overlap from a legal perspective between the doctrinal line allowing the government to require certain commercial disclosures and the line of authority exempting government speech from First Amendment review. For example, through the enactment of the FSPTCA, Congress has required tobacco companies to communicate information about the health risks of smoking by including graphic warning labels for cigarette packages and advertisements. Although this sort of warning requirement might also be analyzed as a form of government speech, the Supreme Court has typically has upheld government-mandated commercial speech disclosures under the First Amendment using the Zauderer test, which often is referred to as a form of “rational basis” review and which is less stringent than either strict or intermediate scrutiny.

Under Zauderer, government may constitutionally require a business to communicate commercial information that is “purely factual and uncontroversial” and “reasonably related” to the government interest of preventing consumer deception.⁴⁷ Otherwise, disclosures that are “unjustified or unduly burdensome” may violate the First Amendment.⁴⁸ Lower federal courts have extended the Zauderer test, applying it when other government interests are asserted, including goals related to public health. For example, the federal Sixth Circuit Court of Appeals in Discount Tobacco City & Lottery, Inc. v. United States, upheld the Congressional mandate in the FSPTCA requiring that cigarette packages contain color graphic warning labels that depict the health harms of smoking.⁴⁹ This deferential standard reflects the well-established First Amendment value in enhancing – as opposed to restricting – the stream of commercial information for consumers.⁵⁰ Although the Supreme Court has not addressed the issue, federal courts have said that commercial speech disclosure requirements that do not qualify for review under Zauderer are subject to more stringent review.⁵¹

Commercial Speech

While government speech and compelled factual commercial disclosures speech may not be viewed by courts as treading unduly on the rights of commercial advertisers, courts are far more wary of government efforts that directly restrict advertising. The current test used to ensure that such restrictions are consistent with the First Amendment is known as Central Hudson, after the case in which it was first articulated.⁵² Under the Central Hudson test, a court reviewing a restriction on commercial speech must determine: (1) whether the expression is protected by the First Amendment, which is to say that the regulated speech concerns lawful activity and is not misleading; (2) whether the asserted governmental interest is substantial; (3) whether the regulation directly advances the governmental interest asserted; and (4) whether the regulation is “not more extensive than is necessary to serve that interest.”⁵³

The first prong reflects two important limits on the scope of First Amendment protection: commercial speech is not protected if it proposes an unlawful transaction or if it is false or misleading.⁵⁴ An example of commercial speech proposing an unlawful transaction is provided by the Providence and New York City minimum pricing cases discussed earlier. In both cases, federal courts agreed that, because it was illegal to sell discounted tobacco products in violation of the minimum price ordinances, offers to do so were not protected commercial speech under the First Amendment.⁵⁵ More generally, when a jurisdiction lawfully prohibits tobacco sales practices that lack expressive value, it typically will be free to restrict advertising and promotion of the activities outlawed without violating the First Amendment. Courts also have recognized that when tobacco product advertising does not disclose the associated health risks of using the product, it gives a false impression or is misleading.⁵⁶ Although a full exploration of the false or misleading nature of tobacco advertising is beyond the scope of this article, it is important to consider the extent to which any expressive conduct or advertising to be regulated may be false or misleading, as some jurisdictions may elect to treat this as a separate basis for defending against a First Amendment challenge.⁵⁷

As to the second prong, there will rarely be any dispute that the public health concerns at stake in tobacco control work involve substantial, even compelling, governmental interests – especially protecting youth from the harms of tobacco.⁵⁸ Nevertheless, framing those interests precisely is important because they are the benchmark against which evidence of direct advancement and fit – the third and fourth prongs – are measured. In R.J. Reynolds Tobacco Co. v. FDA, decided in 2012, the federal D.C. Circuit Court of Appeals applied Central Hudson and struck down the FDA’s rule requiring nine specifically designed and mandated color graphic warning labels for cigarette packaging and advertising.⁵⁹ In doing so, that court rejected the FDA’s asserted interest in effectively conveying information about the negative health consequences of smoking as “too vague to stand on its own” under the Central Hudson test, perhaps reflecting a lack of confidence in the evidentiary showing.⁶⁰ However, the R.J. Reynolds court did recognize the FDA’s interest in reducing smoking rates and assumed that interest was substantial.⁶¹ Other courts may be willing to recognize both of these interests. They will be more likely to do so if the jurisdiction describes each interest it asserts as precisely as possible.

Central Hudson’s third and fourth prongs require the most attention. The Supreme Court has applied them more rigorously over time, making it far more difficult to pass than other forms of intermediate scrutiny such as the O’Brien test for regulation of expressive conduct. The third prong – direct advancement – requires proof that “the harms [the government] recites are real and that its restriction will in fact alleviate them to a material degree.”⁶² This prong cannot be satisfied with “speculation or conjecture” and requires a sufficient evidentiary record.⁶³ Notably, the R.J. Reynolds court, applying Central Hudson, held that the FDA’s graphic warnings rule did not directly advance the asserted regulatory goal of reducing smoking rates, in part because the FDA’s own analysis estimated the new warnings would reduce U.S. smoking rates by a mere 0.088%.⁶⁴ Central Hudson, the court explained, “requires FDA to find and present data supporting its claims prior to imposing a burden on commercial speech.”⁶⁵

The lesson from R.J. Reynolds is that courts may require a fairly substantial evidentiary showing to support the causal link that is the sine qua none of direct advancement. Where there is little evidence regarding the anticipated impact of a restrictive measure because it has not yet been tried, a particularly careful exposition of the logic tying the restriction to the government’s interests is essential. For example, in Lorillard, the Supreme Court applied Central Hudson and accepted the argument that evidence of a causal relationship between exposure to advertising and underage tobacco use logically supports a determination that reducing such exposure would reduce underage use of tobacco products.⁶⁶

The fourth prong generally requires narrow tailoring, meaning a “fit” between the regulation and its objective that is “reasonable” but not the least restrictive means.⁶⁷ At the same time, the Supreme Court has said it is “clear that if the Government could achieve its interests in a manner that does not restrict speech, or that restricts less speech, the Government must do so” and that “[i]f the First Amendment means anything, it means that regulating speech must be a last–not first–resort.”⁶⁸ A fit problem is serious because it suggests that the law could have an impermissible aim: suppression of a disfavored message.⁶⁹ Thus, while the government need not craft a perfect fit between the quantum and type of speech restricted and the law’s purpose, the restriction must not be “more extensive than necessary to serve the interests that support it.”⁷⁰

Lorillard provides a paradigmatic example of how courts have applied Central Hudson. Within a defined zone—1,000 feet of such locations as schools, parks and playgrounds—the challenged state regulations at issue in that case generally banned outdoor cigarette, smokeless tobacco, and cigar advertising, including ads in retail outlets visible from outside or directed outside the establishment, and required retailers located in these zones to post point-of-sale cigarette advertisements at least five feet from the floor if minors were allowed inside.⁷¹ As will be discussed, the Supreme Court found the cigarette regulations preempted under FCLAA but proceeded with a First Amendment analysis of the regulations for the non-preempted tobacco products using Central Hudson. Under the first prong, the state assumed for summary judgment purposes that the regulations applied to protected commercial speech, and, under the second prong, “the importance of the State’s interest in preventing the use of tobacco by minors” was undisputed.⁷² Under the third prong, the Court concluded that the state had provided a sufficient record, based in large part on studies cited by the FDA in a 1995 rulemaking, along with more recent studies, that allowed the Court to conclude that the 1,000-foot rule for smokeless tobacco and cigar advertising to curb tobacco product use by minors was not “based on mere ‘speculation [and] conjecture.’”⁷³ The Court found, however, the five-foot rule insufficiently effective under the third prong because children, whether under or over five feet tall, could look at signs placed higher than five feet.⁷⁴ Moreover, for a number of reasons, the Court held the 1,000-foot rule failed the fourth prong including because the state had failed to demonstrate how much speech would be restricted in major metropolitan areas and also how the rule might apply in rural and suburban areas.⁷⁵ In addition, the Court concluded the regulations seemed to restrict speech too broadly and, for example, could have targeted “highly visible billboards, as opposed to smaller signs,” and “particular advertising and promotion practices that appeal to youth” if demonstrated by studies.⁷⁶ Similarly, the Court found the five-foot rule failed the tailoring requirement of the fourth prong and could have been more narrowly targeted, for example, by focusing on “tobacco advertisements and displays that entice children” for example.⁷⁷

Recent court decisions and commentary affirm Central Hudson’s continuing vitality despite indications from the Supreme Court that more stringent review will be required in at least some circumstances.⁷⁸ In Sorrell v. IMS Health, Inc., the Supreme Court applied Central Hudson to strike down a Vermont statute that restricted the sale and use of records that identified physicians, and the drugs they prescribed, for pharmaceutical marketing purposes.⁷⁹ The Court stated that “heightened scrutiny” – a standard more rigorous than Central Hudson – should apply because the statute restricted speech based on (1) its content (the restriction applied only to pharmaceutical marketing), (2) the identity of the speaker (the restriction applied specifically to pharmaceutical manufacturers), and (3) the viewpoint of the message (the restriction was designed to reduce the effectiveness of marketing for brand-name prescription drugs, thereby favoring generic alternatives).⁸⁰ However, the Court stopped short of applying or defining “heightened scrutiny” and held only that the statute could not satisfy even the “intermediate scrutiny” traditionally required under the Central Hudson test.⁸¹ At least two federal district courts have upheld regulations based on application of Central Hudson after Sorrell.⁸²

Other courts have struck down regulations under Central Hudson post-Sorrell. In one case, the Second Circuit stated that restrictions on off-label prescription drug promotion were subject to heightened scrutiny but held simply that they were unconstitutional even under the established Central Hudson analysis.⁸³ In another case, the D.C. Circuit applied Central Hudson when it ruled that the FDA’s proposed graphic warnings rule was unconstitutional, citing Sorrell only for the proposition “‘[t]hat the [government] finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.’”⁸⁴ In a third case, the Sixth Circuit struck down provisions in the federal FSPTCA that restricted color and imagery in cigarette and smokeless tobacco advertising, including point-of-sale video advertising, concluding under Central Hudson that the restriction was an unconstitutional means of serving the asserted government interest in curbing underage tobacco use.⁸⁵ Notably, however, that court also applied Central Hudson—rather than heightened scrutiny—when it upheld other provisions in the FSPTCA, including bans on free tobacco samples, the use of tobacco-branded non-tobacco items, and tobacco-branded sponsorship of athletic, music and similar events.⁸⁶ Like Sorrell itself, none of these decisions reflect application of heightened scrutiny.

In the same vein, although the Supreme Court’s recent decision in Reed v. Town of Gilbert, Arizona highlights the importance of adequately justifying content-based restrictions, it did not directly alter the Central Hudson test or the fact that commercial speech regulation is subject to intermediate scrutiny.⁸⁷ In Reed, the Court struck down a sign ordinance that gave “[i]deological messages … more favorable treatment than messages concerning a political candidate.”⁸⁸ The Court explained that “[c]ontent-based laws—those that target speech based on its communicative content—are presumptively unconstitutional and may be justified only if the government proves that they are narrowly tailored to serve compelling state interests.”⁸⁹ Lower courts have rejected the contention that Reed requires strict scrutiny in other contexts however, concluding, for example, that the recent decision “does not disturb the framework which holds that commercial speech is subject only to intermediate scrutiny as defined by the Central Hudson test.”⁹⁰

Nevertheless, in a pointed statement of particular relevance to tobacco control advocates, the Supreme Court explained in Sorrell that laws “may not seek to remove a popular but disfavored product from the marketplace by prohibiting truthful, nonmisleading advertisements … [and] [t]hat the State finds expression too persuasive does not permit it to quiet the speech or to burden its messengers.”⁹¹ This concern indicates the vital importance of considering the availability and relative efficacy of regulatory alternatives that either do not restrict speech or that are less restrictive than the measures under consideration. Failing to consider other approaches while focusing on restricting speech is a red flag indicating that the purpose is not to advance the government’s asserted goal but to suppress lawful speech.

Because research literature supports the contention that a goal and effect of tobacco advertising and marketing practices is recruiting minors to smoking, restrictions that focus on reducing youth exposure may have a better chance of success when challenged in court.⁹² If a jurisdiction has not implemented less restrictive or speech-neutral alternatives, however, it will be prudent either to try those alternatives first or to adopt a comprehensive tobacco control program. When assessing a comprehensive program that includes speech-restrictive measures, courts are likely to require evidence that non-speech or speech-neutral measures have been insufficient when used elsewhere and that there is a clear basis for extrapolating from the experience of other jurisdictions. Moreover, courts are likely to require a meticulous explanation of the evidence and reasoning that support the regulation, as content-, speaker-, and viewpoint-based regulations that would satisfy Central Hudson may be subject to more rigorous scrutiny in light of Sorrell.

Preemption of State and Local Laws Restricting Cigarette Advertising

Federal preemption is based on the constitutional principle that federal law is supreme over any conflicting state or local laws.⁹³ All state and local laws that encroach on territory carved out by Congress for exclusive federal control or that otherwise conflict with federal law are preempted.⁹⁴ Likewise, some state laws preempt local laws that conflict with them. For example, several states preempt localities from adopting laws that go above and beyond state regulation of smoking, advertising, and access to tobacco products.⁹⁵

As noted above, FCLAA has long contained a general preemption provision that prohibits any “requirement or prohibition based on smoking and health” under state law “with respect to the advertising or promotion of … cigarettes.”⁹⁶ Similarly, CSTHEA preempts state and local laws requiring any “statement relating to the use of smokeless tobacco,” except on outdoor billboards, “in any advertisement … of a smokeless tobacco product,” other than the federally-mandated warnings for smokeless tobacco products.⁹⁷ To be very clear, when advertising is at issue, FCLAA preemption applies only with respect to cigarette advertising and promotion, and the CSTHEA preemption provision is limited to regulation of the statements in smokeless tobacco product advertisements themselves.

Congress has amended FCLAA several times since 1965, when it was first adopted. In Lorillard, the Supreme Court concluded that 1969 amendments to FCLAA reflected Congressional intent to reserve to the federal government the right to enact cigarette advertising regulations motivated by concerns about smoking and health.⁹⁸ As a result, state and local governments were precluded from doing so, whether or not the federal government took action. Massachusetts argued in Lorillard that its cigarette-related regulations were not preempted because they governed only the location of cigarette advertising – including within 1,000 feet of schools, parks, and playgrounds—and not its content. The Supreme Court rejected the state’s argument, holding that FCLAA’s preemptive scope encompassed both content- and location-based restrictions and left no room for a distinction between the two.⁹⁹ However, because FCLAA did not preempt similar regulations for smokeless tobacco, cigars and little cigars, the Lorillard Court applied Central Hudson and invalidated the regulations to the extent they applied to these non-cigarette products.¹⁰⁰

The FCLAA preemption provision still exists, and the Lorillard Court’s interpretation of it still governs. But in 2009, when Congress enacted the FSPTCA,¹⁰¹ it carved out a new exception. FCLAA now expressly permits state and local governments to impose “specific bans or restrictions on the time, place, and manner, but not content, of the advertising or promotion of any cigarettes” that are “based on smoking and health.”¹⁰² In other words, Congress amended FCLAA to permit expansive local regulation of cigarette advertising, expressly adopting the very distinction between location and content regulation that the Supreme Court had rejected in Lorillard, as discussed.¹⁰³

Since the enactment of the FSPTCA, a few courts have probed the contours of the revised preemption provision. For example, the Second Circuit held that a New York City law requiring retailers to post signs containing graphic cigarette health warnings and cessation information adjacent to cigarette product displays – a form of “promotion” – was preempted because the proximity requirement made the warnings supplementary to those required by Congress.¹⁰⁴ Notably, the court also said that cigarette health warnings might not be preempted under other circumstances.¹⁰⁵ And, in the Providence and New York City cases discussed above, the courts found that the cigarette price ordinances at issue were not preempted by the amended FCLAA because they did not regulate the content of cigarette advertising or promotion based on smoking and health and fell within the category of permissible regulation of the “manner” of cigarette advertising or promotion.¹⁰⁶

FCLAA’s new preemption exception removes the barrier of federal preemption for those state and local laws that regulate the time, place and manner—the when, where and how—of cigarette advertising and promotion based on smoking and health. At the same time, it confirms that regulation of cigarette advertising and promotional content based on smoking and health remains off limits as stated in the FCLAA preemption provision. Reading FCLAA, Lorillard, and the FSPTCA together, state and local advertising regulations should not be federally preempted unless they impact cigarette advertising and promotional content, based on smoking and health, in a way that creates “diverse, nonuniform, and confusing” requirements for manufacturers designing their cigarette advertising and promotional content.¹⁰⁷ In other words, preemption should be limited to ensuring that state and local governments do not create the sort of laws that require tobacco companies to create new cigarette advertisements and promotions for each jurisdiction. The preemption exception is designed to advance that goal while ensuring the maximum latitude for protection of youth, one of the central purposes of the FSPTCA, which created the FCLAA preemption exception.¹⁰⁸ If there is any dispute about what Congress intended, the new exception should be read broadly because courts typically will select the reading that disfavors preemption.¹⁰⁹

State Preemption of Local Laws

State preemption of local laws is another obstacle in many jurisdictions and may govern local attempts to curtail youth exposure to advertising. Examining potential preemption issues in the 50 states is beyond the scope of this article, but that analysis is essential for any municipality seeking to regulate tobacco advertising.¹¹⁰

The Roadmap

Significant regulatory opportunities remain despite these legal obstacles. Building upon the detailed analysis above, we offer here a roadmap for assessing the likely legality and efficacy of some of the leading approaches being considered to reduce tobacco initiation and use among youth by restricting their exposure to point-of-sale advertising and marketing practices.

Navigating the First Amendment

For interventions that directly limit point-of-sale advertising in order to reduce youth exposure, satisfying the First Amendment requires a thorough assessment of how well the proposed regulation advances the government’s interest and how severely it curtails freedom of speech. Any regulation must be a “reasonable fit” with a substantial regulatory goal and not be “more extensive than necessary,” particularly in light of the more stringent review threatened by recent commercial speech cases.¹¹¹ Applying the detailed step-by-step analysis required by Central Hudson, key considerations include whether there is evidence that the regulation will be effective in advancing the interests asserted, whether less- or non-speech-restrictive means of advancing the government’s interests are insufficient, and whether it appears the government has taken care to minimize the impact on protected commercial speech. In conducting that analysis, a jurisdiction should begin by recognizing that selling tobacco is a lawful transaction and should take steps to preserve the adult consumer’s opportunity to “obtain information about products.”¹¹² In practice, a regulation is more likely to survive a First Amendment challenge if the jurisdiction already has implemented other means of reducing youth smoking. It will be important to detail how and why other means, standing alone, have been insufficient to address the interest in eliminating underage tobacco use and why restricting advertising is an essential next step.

In the same vein, a jurisdiction must demonstrate that it has considered the availability of alternatives that would reduce youth tobacco use to a comparable degree without restricting lawful tobacco advertising to adults. This process of considering alternatives should be robust. The range of options considered should be broad, including such diverse approaches as implementing or increasing a tobacco tax, increasing funding for state or local tobacco control programs, banning tobacco sales near schools or in certain retail environments like pharmacies,¹¹³ adopting or expanding smoke free air laws, and increasing the minimum legal sale-age for sale of tobacco products to 21 years old.¹¹⁴

Similarly, before considering interventions that limit tobacco advertising or marketing, jurisdictions should make a special effort to consider the likely efficacy and financial feasibility of approaches that inject more information into the information environment, such as government-sponsored health warnings that advise consumers about the adverse health impacts of tobacco products. Evidence that this sort of counter-speech program would not be prohibitively expensive and ultimately ineffective¹¹⁵ should be collected.

It may well be that other interventions will not remediate the specific problem the jurisdiction seeks to address, or that they are infeasible as a matter of law or cost. Nevertheless, serious consideration of the anticipated impact of these bedrock tobacco control interventions should be a jurisdiction’s first step. Thoughtful analysis, public health research, data on local needs, and information about the experiences of other jurisdictions all should be captured in the legislative record.

Avoiding Federal Preemption (Relevant Only to Regulation of Cigarette or Smokeless Tobacco Advertising)

Government regulations that restrict the advertising and promotion of non-cigarette products (also known as non-cigarette tobacco products or NCTPs) do not implicate FCLAA, which applies only to cigarette advertising and promotion. Likewise, regulations that restrict advertising of products other than smokeless tobacco do not trigger CSTHEA preemption. Consequently, jurisdictions should consider whether restrictions on the promotion of NCTPs might be an effective public health intervention in the absence of parallel restrictions on cigarette and smokeless tobacco advertising. For example, constitutionally drafted limits on the advertising and promotion of flavored cigars might be an effective strategy in locations where there are high rates of youth consumption of cigars, and limiting regulation to cigars would avoid federal preemption.

Jurisdictions that wish to limit cigarette advertising will need to avoid imposing a “ban or restriction” on the content of the advertising or promotion, based on smoking or health. The regulation of content is clearly reserved to the federal government under FCLAA. A state or local ban on cigarette advertising featuring images of young adults smoking, for example, would constitute a regulation of the content of that advertising, clearly implicating federal preemption.

Consistent with the relatively new exception to preemption under FCLAA, a regulation that restricts only the time, place, or manner of cigarette advertising and promotion avoids preemption. It need not do all three. But crafting a hybrid rule – one that limits the time and place, or the place and manner, or even the time, place, and manner of cigarette advertising – will always result in a more narrowly tailored regulation, making it more palatable for purposes of the First Amendment inquiry. Regulations that focus on overlapping areas (e.g. time and place, or time and manner) restrict less speech and therefore are more narrowly tailored, an important consideration under the First Amendment in light of increasingly stringent application of Central Hudson’s fourth prong.

Policies for Consideration

In light of the legal tests described above, we outline below a variety of interventions that localities and states may wish to consider when seeking tobacco regulations at the point of sale.

Restrictions on the redemption of coupons, and other price reduction strategies

Restrictions on the pricing of tobacco products, like minimum price laws and limiting redemption of coupons and multi-pack discounts to sell tobacco products below the legal minimum price, are likely to be more common now that the Providence and New York City ordinances discussed above have withstood First Amendment and preemption challenges in court. Localities will be wise to follow these cities’ lead by clearly regulating pricing strategies directly rather than focusing on restricting dissemination of lawful and non-misleading price information about tobacco products that would implicate the First Amendment.

Jurisdictions seeking to introduce legislation regulating pricing strategies should prepare findings relating to the impact of price promotions on youth initiation and use of cigarettes, provide evidence of youth price sensitivity with respect to tobacco purchases, and focus regulations of price promotions on the retailer redemption of price discounts rather than the manufacturer distribution of coupons and other promotional materials.

Required point–of- sale warnings or cessation information

Health warnings and smoking cessation information at the point-of-sale can be powerful deterrents to impulse purchasing.¹¹⁶ State and local government sponsored and disseminated tobacco health warnings should be free from First Amendment scrutiny because they are government speech rather than regulated commercial speech. However, as discussed previously, compelling private retailers to display even clearly identified government-sponsored public health warnings related to tobacco products may lead to a First Amendment challenge. Any such requirement ought to be designed carefully to ensure that messages are controlled by and clearly attributed to the government and, at the same time, that they contain “purely factual and uncontroversial” messages about tobacco products that are reasonably related to such goals as preventing consumer deception regarding the harms of tobacco use, informing consumers about the negative health effects of tobacco use, and reducing the harms of tobacco use, especially among minors.¹¹⁷

As mentioned, FCLAA preemption applies only to requirements imposed “with respect to the advertising or promotion of any cigarettes” and CSTHEA preemption applies only to a statement in advertising “relating to the use of a smokeless tobacco product.” Consequently, so long as warning requirements do not restrict or mandate statement in or with respect to advertising, there should be no preemption problem for warnings about cigarettes or smokeless tobacco products.

Moreover, state and local regulators should be able to avoid preemption arguments entirely by limiting tobacco health warning requirements to “non-cigarette-tobacco-products” (NCTPs), excluding cigarettes. Because warnings are not “in advertising,” there should be no CSTHEA preemption with respect to smokeless tobacco products. For example, a jurisdiction could require retailers who sell NCTPs to post health warnings communicating information about the adverse health effects of the use of cigars, cigarillos, and smokeless tobacco products. Because FCLAA preemption applies only to requirements imposed “with respect to the advertising or promotion of any cigarettes,” there would be no basis for arguing that the regulation was preempted under FCLAA. Of course, satisfying the First Amendment also would be required. In addition to excluding cigarettes from its coverage, such a regulation should explain that health warnings are required anywhere NCTPs are sold and should specify that they are not intended to interfere with or to counteract advertising but to ensure that full and accurate information is available to consumers at the point-of-sale. A jurisdiction undertaking this effort also should prepare findings showing the factual basis for requiring the specific warnings or information selected.

As mentioned above, the Second Circuit left open the possibility for state and local governments to use this strategy when it explained that warnings might not be preempted under FCLAA in other circumstances despite its holding that the New York City law requiring graphic supplemental cigarette warnings adjacent to retail cigarette displays was preempted.¹¹⁸ It may be that a proximity requirement would pass muster before another court or that another jurisdiction might forego that requirement and simply require proximity to the cash register. In either case, whether to limit required point-of-sale tobacco health warnings to NCTPs or to include cigarettes (or to have separate ordinances for NCTP and cigarette warnings) is a complicated legal decision.¹¹⁹

No tobacco advertising or promotions near youth-concentrated places such as schools, playgrounds and youth centers

In light of research showing that youth tobacco use rates are higher in areas with more point-of-sale promotions in tobacco outlets near schools,¹²⁰ jurisdictions may consider adopting regulations that restrict tobacco advertising near youth-concentrated places, such as schools, parks and afterschool centers.

Jurisdictions that want to advance this strategy should show in findings that restricting retail advertising near schools and other such locations where children are “will in fact alleviate [youth smoking] to a material degree;”¹²¹ collect empirical and anecdotal evidence that confirms the problem in the location to be regulated; if feasible, use mapping software to assign advertising boundaries; collect evidence about the types of stores frequented by youth and amount of marketing,¹²² and consider exempting those that are patronized primarily by adults; consider sizing of banned advertising signage;¹²³ and create a clear record that the specific advertising practices targeted are particularly appealing to youth.¹²⁴ If such a restriction is imposed in a vacuum, however, it will be difficult to argue successfully that the restriction is essential. Given the burden of collecting findings and shaping a policy to ensure that it is sufficiently narrowly tailored, many jurisdictions may find it easier to pursue other approaches discussed here, or they may consider simply banning the sales of tobacco products near schools.

A jurisdiction that wants to proceed to reduce youth tobacco use by restricting both advertising and sales can link these strategies in at least two ways. First, it can restrict sale of tobacco products near schools and/or at specified times in outlets frequented by youth, such as convenience stores. To the extent sale of specified tobacco products in a particular time, place, or manner is banned, advertising about that product then concerns an activity that is not legal. The first prong of Central Hudson should permit regulation because the advertising concerns unlawful conduct (an offer for sale at a place and/or time where the sale is banned). Another potential approach to linking advertising and sales restrictions is to use severable provisions. An initial provision could restrict tobacco advertising near schools, supported by a strong evidentiary record in anticipation of a First Amendment challenge. The second provision would take effect only if the advertising restriction became unenforceable and would restrict tobacco sales instead of advertising. A court decision enjoining enforcement of the advertising restriction would automatically trigger the sales restriction.

No tobacco advertising or promotional activity visible before school, after school, or during school lunch and vacation periods

Because of the impact of tobacco advertising on youth, jurisdictions may wish to take steps to ensure that such advertising is not visible during times when youth are most likely to be in retail outlets. Jurisdictions contemplating this approach should consider the actual times of day when most youth are exposed to retail cigarette advertising; and consider applying time-based restrictions only in specified locations, such as near schools or other child-centered areas. This is a classic “time, place, or manner” restriction and therefore may apply to cigarettes without triggering FCLAA preemption. Nevertheless, for First Amendment purposes, a jurisdiction would need a detailed record of the scientific support for restricting youth exposure to advertising and should give serious thought to the feasibility of a time-based restriction for retailers. If it is impractical or unduly burdensome for retailers to adjust the visibility of tobacco advertising, time-based approaches may face a significant legal hurdle.

Tobacco product displays limited to stores with no youth access or portions of stores where access is limited to adults

Limiting tobacco product displays to stores that prohibit entry to youth or to those portions of stores that are accessible to adults only would permit uninterrupted commercial communication with lawful consumers, while protecting youth against dangerous exposure.¹²⁵ Jurisdictions considering this approach should: identify and address logistical challenges in consultation with experts in convenience store construction and safety; collaborate with store owners to identify and address design challenges, including consideration of low partitions or curtains and placement of wide-angle mirrors to allow staff to see the full store while preventing youth from seeing cigarette products; consider feasibility of installing a partition or curtain perpendicular to the counter to enable staff to serve customers from within the adult-only area and to keep cigarettes behind the counter without making them visible from the rest of the store; assess whether an access requirement is best adopted as part of an existing or new licensing scheme; analyze data on adolescent use of stores in the area and consider allowing the partition to be open during times when adolescents are unlikely to be present; prepare findings that show how segregation of product and/or advertising will reduce youth initiation of cigarette use; and specify that the regulation permits and encourages forms of communication that invite adults to enter the restricted area.

Restrict size of brand displays

In a 2011 study of retail tobacco advertising in New York state, researchers found that 82.2% of retailers dedicated 50% or more of the merchandising space behind the checkout counter to openly visible tobacco products, and the amount of space dedicated to the display of tobacco products averaged 32 square feet, equivalent to about 204 cigarette pack faces.¹²⁶ Restricting the size of brand displays means regulating expressive conduct, but the Supreme Court upheld the regulation of package displays in Lorillard under O’Brien, permitting a requirement that all packages be out of reach for customers. The same reasoning applicable to caps on brand display size applies to single pack display limits. Permitting the display of only one package of each tobacco product would dramatically reduce the total volume of tobacco product display yet would permit manufacturers to communicate information about their products to their adult customers. Comparative evidence regarding the impact of brand display size on adult consumers and youth would help to show that this sort of regulation directly advances the goal of reducing youth initiation of tobacco use and is narrowly tailored to minimize the impact on communication with lawful adult purchasers.

Cap total amount of display space

Many stores feature “power walls” of tobacco products, which are large and highly visible shelving units featuring cigarettes, cigars, e-cigarettes, smokeless tobacco and other tobacco products. Many displays are six or seven feet tall, and they feature not only the product, but ”danglers” and “bursts” which are small signs designed to draw attention to product pricing and promotions. Jurisdictions may wish to reduce the size of tobacco displays, while at the same time ensuring that tobacco retailers can make clear to purchasers the variety of tobacco products that are for sale. Jurisdictions contemplating this approach should: demonstrate how size of displays increase youth tobacco initiation and use and specify that manufacturers and retailers are free to put up posters equivalent to their display visual, thereby protecting the expressive interest, but must put most product out of sight, thereby regulating the use of product displays to recruit new youth to smoking.

Conclusion

New research and changes in the law warrant reconsideration of the feasibility of several types of restrictions on point-of-sale tobacco advertising and promotion. These point-of-sale interventions, if successful, are likely to result in significant reductions in youth initiation into the use of tobacco products and in the prevalence of tobacco use among youth. In light of the significant legal challenges discussed above, however, officials who are considering regulations that restrict tobacco advertising will be wise to adopt the following best practices:

1. Separately analyze the implications of potential First Amendment and preemption issues, including preemption under FCLAA or CSTHEA, conflict preemption under federal law, and state law preemption of local regulations.

2. In keeping with the proof required under Central Hudson, carefully document (a) evidence demonstrating the likely effectiveness of the proposed regulation, and (b) consideration of alternative regulatory interventions that do not restrict speech (or expressive conduct) or that are less restrictive of speech. Non-speech interventions may include tobacco retailer licensing schemes, reducing the number and density of tobacco outlets, raising the minimum legal sale-age for tobacco products to 21 years old, and banning tobacco sales at pharmacies or other retail outlets. The more robust the showing, the more likely it is that a regulation will both satisfy the current test and survive any heightened scrutiny.

3. Consider inserting more speech through carefully crafted government health warning campaigns or compelled commercial disclosures rather than restricting advertising or explain why such alternatives would be cost prohibitive and/or would be insufficiently effective.

4. Clearly identify the government interests that are at stake and outline in detail both evidence and logical inferences that show the proposed restriction will directly and materially advance those interests and is not more extensive than necessary to serve them. Consider whether there are ways to structure restrictions that avoid discriminating based on the content, speaker, and/or viewpoint of the speech without restricting even more speech.