The U.S. Food and Drug Administration (FDA) on Friday announced a large-scale, multiyear plan to address the public health impact of tobacco.
Shares of the Dunhill and Lucky Strike maker slumped by nearly 7 per cent, losing 362p to £49.60, while Imperial Brands dropped 3.7 per cent to £33.98 after the FDA said it was pursuing a "comprehensive regulatory plan" to lower nicotine in cigarettes to non-addictive levels.
There are obstacles to the plan, however, including figuring out to deal with the people now addicted to nicotine and finding the best ways to prevent people from smoking far more cigarettes in order to get the psychoactive effects of nicotine that they crave.
Tobacco causes the deaths of almost a half million Americans every year, according to the FDA.
Stock market shares of tobacco plummeted after the plan was announced.
The move means FDA Commissioner Scott Gottlieb has sided at least partially with e-cigarettes in the debate over whether they potentially hold some public health benefits, though he signalled an intention to curtail kid-friendly flavoured products.
Gottlieb also said the FDA is giving e-cigarette makers four more years to comply with a review of products already on the market. The FDA has not said what level of nicotine it is aiming for.
US smoking rates have been falling for decades. This isn't the first time the FDA has discussed this idea, but moving forward with a plan to limit nicotine would be a major step towards that goal.
Campaign for Tobacco-Free Kids president Matthew Myers praised the overall approach as "a bold and comprehensive vision" but called the e-cigarettes delay "a serious error".
The policy will also apply to e-cigarettes, which are also known as tobacco vaporisers. Altria added that it will play an active role throughout this process.
"It's important to understand that any proposed rule such as a nicotine product standard must be based on science and evidence, must not lead to unintended consequences and must be technically achievable", the company said in a statement.