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Illustration: Sarah Grillo/Axios

Yesterday's announcement of President Trump's intentions to ban all flavored e-cigarette products from U.S. markets, even if sold online or in smoke shops, creates massive complications for the proposed merger between tobacco giants Altria and Philip Morris.

Why it matters: Both companies have made major moves into e-cigarettes, which they view as the best way to remain viable in a U.S. market that has moved away from combustible products. The ban could shake the merger.

By the numbers: Both Altria and Philip Morris shares were down at the open, but only slightly. Altria late last year paid $12.8 billion for a 35% stake in Juul, which also is under new fire from the FDA for its marketing practices.

  • This isn't necessarily a death blow for Juul, which didn't have advance warning of the White House event, but it's not a flesh wound either. At the very least, it puts Altria's deal in the same valuation league as SoftBank's last round for WeWork.

What they're saying: In a statement, Juul said: "We strongly agree with the need for aggressive category-wide action on flavored products. We will fully comply with the final FDA policy when effective."

  • Trump yesterday said that "people are dying with vaping," apparently referring to a number of lung disease cases, but that's not what's driving FDA action here. Namely because the CDC reports that no e-cigarette product or compound has been formally linked yet to the illnesses, and investigators have said that the culprit may be black-market THC oil pods.

Context: The key issue here is youth vaping, which has been shown to increase the likelihood of transitioning to traditional cigarettes (among kids who never before smoked). Remember that most vape pods contain tons of nicotine.

  • Last year the FDA cited a survey on youth tobacco use when deciding to ban fruit-flavored products from retail and convenience store shelves.
  • Health officials yesterday said that data from this year's survey showed that the move didn't slow vaping adoption, thus the proposal to ban all flavors (including mint and menthol) from all channels.

Yes, but: There continues to be a massive policy disconnect here in that combustible cigarettes (including menthol ones) continue to be sold in the same stores that the FDA says can't adequately police youth purchases of e-cigarettes. It's like closing the gateway but keeping open the side path.

The bottom line: Altria and Philip Morris shareholders will be hesitant to ratify a merger agreement with so much uncertainty over what both companies have said is their product path to modernization.

Go deeper: Fear and vaping in our schools

Go deeper

“You blew it”: GOP activist turns on corporations over vaccine mandates

The chairman of the American Conservative Union said on "Axios on HBO" he accepts "Joe Biden is my president, and I want him to succeed," but predicted Republicans retake the House and Senate in 2022 — with greater than 50% odds Donald Trump runs in 2024.

The big picture: In a joint interview with his wife, Mercedes, Matt Schlapp also refused to share their vaccination status. And he told corporate America "you blew it" by embracing vaccine mandates and liberal social stances that have alienated GOP voters and politicians.

45 mins ago - Politics & Policy

Pelosi expects “billionaire’s tax” to pay for Biden social spending

Photo: Yasin Ozturk/Anadolu Agency via Getty Images

House Speaker Nancy Pelosi (D-Calif.) said Sunday she expects the chamber to pass the bipartisan infrastructure plan by week’s end, and alternatives to corporate tax hikes and a “billionaires tax” will be used to finance President Biden’s promised expansion to the social safety net.

Why it matters: Pelosi’s comments come as House and Senate leaders try to wrap up a deal. What will get cut — and how the remainder will be paid — are linchpins to a final agreement.

Dan Primack, author of Pro Rata
46 mins ago - Axios on HBO

FTX CEO Sam Bankman-Fried mystified by value of NFTs

Crypto exchange FTX, valued last week at $25 billion, recently launched an NFT marketplace by selling an image of the word "Test" for $270,000.

  • FTX founder and CEO Sam Bankman-Fried tells "Axios on HBO" that he doesn't quite understand the appeal, but adds that he doesn't personally appreciate many visual arts.