Reduces the cigarette tax imposed by 75% for any modified risk tobacco product as defined in § 21 U.S.C. 387 k as a tobacco product sold/distributed to reduce the harm/risk of tobacco-related disease associated with commercially marketed tobacco products.

Rhode Island Bill: Reduced Tax on Modified Risk Tobacco Products

This bill would significantly cut the cigarette tax in Rhode Island for a specific category of tobacco products known as "modified risk tobacco products." These are products that have received special authorization from the U.S. Food and Drug Administration (FDA) because they are designed and marketed to reduce the health risks associated with traditional tobacco use. Under this bill, qualifying products would receive a 75% reduction in the standard cigarette tax — meaning they would be taxed at only one-quarter of the normal rate.

To qualify for this tax break, a product must meet the federal legal definition of a "modified risk tobacco product," which requires the FDA to formally approve claims that the product reduces harm or the risk of tobacco-related disease compared to conventional cigarettes. This is a relatively small and regulated category of products, not simply any tobacco alternative that a company claims is safer.

The bill would primarily affect tobacco manufacturers and retailers who sell FDA-approved modified risk products, as well as consumers who purchase them. Supporters of similar policies generally argue that lower taxes on reduced-risk products encourage smokers to switch to less harmful alternatives. However, the bill would also reduce tax revenue that Rhode Island currently collects from tobacco sales. The bill has been referred to the House Finance Committee, where lawmakers will evaluate its potential financial impact on the state budget.