Plans by Germany’s governing coalition to tax vapor products are a disaster for public health and the economy, according to the country’s e-cigarette trade association, VdeH. The move will make vapor products more expensive than combustible cigarettes, which are widely acknowledged to be considerably more harmful to health.
Under the plans, e-liquids will attract a tax of €4 per 10 mL bottle from July 1, 2022. On Jan. 1, 2024, the tax will increase to €8 plus VAT, i.e. €9.52 per 10 mL bottle. Based on an average sales price of about €5 per bottle, this amounts to a tripling of the retail price, says VdeH.
“These tax plans leave you stunned, and one initially suspects a calculation error,” said Michal Dobrajc, executive chairman of the VdeH, in a statement. Such a price increase, he added, could only have been passed with the intention to kill off vaping.
While not opposing e-cigarette taxation as such, the VdeH said fiscal measures should weigh the risks of vaping against those of smoking. Based on what is known about those relative risks, the tax on vapor products should not exceed 5 percent of that on tobacco products, according to the association. The governing coalition’s plans amount to 75 percent of the tobacco tax in Germany.
The VdeH urged the German government to heed the experience of other countries.
A similar tax policy in Italy caused the vapor market to collapse even as tobacco sales increased. Tax collections shriveled and the black market thrived. The Italian government was eventually forced to reduce the tax burden on vapor products by 90 percent. Estonia and Hungary had comparable experiences.
The biggest losers of the governing coalition’s plans, according to the VdeH, are former smokers who successfully quit their habit with the help of e-cigarettes and current smokers who will not attempt to switch under the new tax regime. A police union has already described the tax plans as a “startup for smugglers,” the association noted.
The Covid-19 pandemic slowed the regulatory process in 2020, creating an expected uptick in 2021.
By Chris Howard, special to VV
After CBD’s explosive growth in 2019 following the passage of the 2018 Farm Bill that legalized hemp, 2020 began navigation of a regulatory environment in flux. Burgeoning federal and state regulation, as well as increased research into consumer trends and tastes, begins outlining the future of CBD.
The Covid-19 pandemic slowed progress in the U.S. Food and Drug Administration’s (FDA) decision making around CBD, setting up 2021 as a crucial year for the industry, although it is unlikely that any FDA regulations will be finalized this year. Vapor industry veterans, who witnessed the regulatory battles with the FDA, are rightfully wary of the government’s efforts to oversee CBD, but the initial steps seem promising. It is still early days for the CBD industry, and the FDA appears willing to collaborate with the industry on many issues that are important to manufacturers and retailers alike.
As we look ahead, I offer some thoughts on the current CBD market, where regulatory efforts are and finally, what to expect as the CBD space matures.
State of the market
After CBD’s rise to prominence in 2019, last year represented more incremental growth. According to the Brightfield Group, a leading cannabis and CBD market research provider, the United States CBD market grew from $627 million in 2018 to over $4 billion in 2019, an increase of over 650 percent. In 2020, market growth slowed to 14 percent as CBD could be found in more stores and additional uncertainty caused retailers to tread carefully. Despite this recent modest growth, the Brightfield Group projects the CBD market will continue to grow from $4.7 billion in 2020 to nearly $15 billion by 2024.
Driving this growth is a mixture of increased consumer awareness and interest as well as improved access. Sales continue to increase in key market areas, especially e-commerce, creating more competition for CBD specialty stores and vape shops selling these products. C-stores were previously well positioned to capitalize on the market, but research from Technomic, a management consulting company, shows that consumers are being selective where they shop to better hand-pick CBD products.
Chris Howard
Consumer form factor preference (the types of products available containing CBD) has been another important area of analysis. Tinctures remain popular, especially with new CBD users. Lotions have become a huge source of interest for consumers with many over-the-counter topical, beauty and skin care companies investing heavily in these products. Refining offerings will be a key part of crafting common sense regulation and helping CBD companies make more confident investments in their product lines.
Regulations in 2021
It is no surprise that the FDA took significant interest in CBD as it quickly grew from an industry valued in the hundreds of millions to one worth billions. Yet, the agency has been slow to definitively rule on any regulations apart from taking a firm stance against companies making therapeutic or health claims, especially during the pandemic.
Where does that leave us now? The FDA’s studies into CBD are ongoing, both analyzing the effects of the compound as well as auditing the contents of current products, although progress has slowed due to Covid-19. Meanwhile, there remains some pressure from congress to create policy around CBD to act as a stopgap while the FDA creates long-term guidance.
I remain optimistic that the FDA will introduce a framework for the specific purpose of regulating products containing CBD that permits the marketing and sale of all form factors in the U.S. This includes food and dietary supplements, a source of much back and forth between CBD advocates and regulators. That said, it is unlikely that a rule will be finalized in 2021. I expect this to be subject to a lot of discussion this year. We will find out more based on how the Biden administration addresses CBD in the year ahead.
In the meantime, CBD companies are forced to navigate a labyrinth of state-by-state regulations. CSP and Grocery Business research indicates 46 states have created CBD laws. State laws can run directly counter to existing federal guidelines, such as those concerning food and beverage products—which are prohibited federally but which are permissible for sale within some states. The patchwork created by these various regulations continues to make national distribution of CBD products a challenge and in some cases even threatens the supply chain of hemp growers and manufacturers.
Looking ahead
While we await final FDA guidance on CBD, I see companies in this industry dealing with many of the same issues we’ve seen over the years in the vapor industry.
The cost of entry for many in the space will become increasingly burdensome once the FDA begins setting regulations, forcing many smaller CBD companies to exit the market. This is similar to what we have seen with PMTAs in vapor, where the larger companies have been far more well equipped to maintain a compliant product selection.
Although it has not been a concern yet, CBD companies should remain mindful and vigilant to ensure that they are taking the necessary steps to prevent youth use of CBD products. Taking a proactive stance now and preventing youth use will help avoid many of the issues faced by the vapor category over the past two years.
Although there are many complex considerations with CBD, it is hard not to get excited about this industry’s future. With continued strong market growth and an apparent pathway to sensible regulation from the FDA for sellers and consumers alike, the future remains bright. In 2021, I hope to see more progress from regulators as we continue to create a strong framework that will work to the benefit this industry and consumers for years to come.
Chris Howard is vice president, general counsel and chief compliance officer for E-Alternative Solutions.
Cannabis vaping needed a full-service hardware manufacturer with products designed for CBD and THC oils.
By Timothy S. Donahue
When the cannabis industry began to take off in the U.S., vaping became a popular way to consume cannabinoids. However, many of the devices used to vape nicotine products did not work as well with the more viscous cannabinoid oils, especially THC and cannabidiol (CBD). There was a massive need for high quality vaping products that were specific to the fast-growing cannabis industry.
The Blinc Group started in 2017 to provide industry-specific vaping hardware to cannabis companies in Canada, the U.S. and Europe, according to co-founder and CEO Arnaud Dumas de Rauly. The company offers off-the-shelf products that can be fully customized and creates bespoke products. Dumas de Rauly says Blinc Group isn’t a cannabis company; it’s a technology company that serves the cannabis industry. Blinc Group provides every level of service from product design and customization to compliance testing, manufacturing, shipping and logistics.
When the legal cannabis industry began to grow and more states legalized marijuana in some form, it wanted to separate itself from the nicotine vaping industry. There was little crossover between products. To Dumas de Rauly, who honed his skills in nicotine vaping hardware, it was baffling that no one was applying the knowledge gained in nicotine vaping to cannabinoids. He says that the cannabis industry today is in the same situation the nicotine vaping industry was in two or three years ago.
Arnaud Dumas de Rauly / Credit: The Blinc Group
“It’s becoming more accepted by regulators, by the general public. However, I can see the cannabis industry making some of the same mistakes that nicotine vaping had made … such as marketing to kids. That is going to bite our industry in the ass over the next couple of years, especially when all of this becomes federally legal,” said Dumas de Rauly. “We’re going to be really frowned upon if we are using cartoons on our packaging, if we don’t use proper standards.”
In regulatory matters, the cannabis industry was trying to reinvent the wheel. Instead of using manufacturing standards and regulation that had been developed in electronic nicotine-delivery systems (ENDS), the cannabis industry wanted to create its own standards. When the industry started developing its own way of analyzing product emissions, Dumas de Rauly said he had had enough.
“We already have these standards in nicotine vaping. We can already use that basis and then just add some components we’ll be testing for that are specific to the terpenes that are specific to more viscous extracts, that are specific to cannabinoids. We already have a base,” he explains. “Radioactive components, for example. It’s something that seems logical. It’s in the nicotine vaping standards. We’ve got to make sure that there are no radioactive materials in there. That’s very easy. You just translate over to cannabis. Why the heck won’t we do it? Testing for aldehydes, heavy metals is stuff we’ve already been doing in nicotine vaping for years.”
Be on the Blinc
The same couldn’t be said for the hardware. While standards and regulation could be carried over from the nicotine vaping industry, hardware needed to be specific to cannabis. Eric Newman, director of sales for Blinc Group, says the THC industry in the beginning used hardware designed for nicotine but soon shifted to specific cannabis vaping products. Newman said to get the cannabis industry comfortable developing its own hardware was an educational experience.
Credit: The Blinc Group
“Different clouds work well with different types of products. Customer experience is something that we take seriously. For us, it was coming from a product perspective and a knowledge and educational perspective as well. We needed to teach the end user that one device or one product is better than the other and why they should use one product over another.”
Newman says that more companies are moving toward open systems and that is expected to continue moving forward. He said that Blinc Group is dedicated to passing along its knowledge across all stakeholders and getting more people talking about best practices and standard operating procedures [SOPs]. “I think it’s education first then proving that what you’re educating actually works,” says Newman. “Then you open up the network to the masses.”
A good example of a hardware change to accommodate cannabis products is the move away from poly-type or plastic cartridges, according to Newman. He says Blinc Group now uses strictly glass cartridges.
“The whole market hasn’t switched to that model, and we’re pushing the market into, from a quality and safety perspective, going to all-glass type cartridges,” he says. “The next step to that process is actually happening already. We’re making full ceramic cartridges, making full glass cartridges. Except for the inner components that still have to have some metal and ceramic cores—but it’s happening in front of us where we’re seeing those type of products. Unfortunately, Blinc Group hasn’t found any that fit our model, but there’s certainly a revolution happening already, and I think Blinc Group’s ahead of the curve on it.”
Dumas de Rauly attributes much of the Blinc Group’s success to the emphasis it placed on safety and compliance throughout the EVALI crisis of 2019 and the Covid-19 pandemic. Even outside investors are starting to notice. In early January, Blinc Group successfully raised $1.5 million in bridge funding.
“Our team navigated 2019’s vape crisis helping set standards and advise regulators on testing and compliance, and last year, the company saw our best quarter yet amid the Covid-19 pandemic as the industry learned the benefits of safety and traceability,” said Dumas de Rauly. “We have shown that we are a resilient company that puts consumers first, which has made all the difference.”
In just over a year, Dumas de Rauly and his two partners managed to turn their company into a business generating approximately $1 million in revenue, adding an additional five team members in the process. By 2019, the company was grossing over $4 million in revenue and had 15 employees. In 2020, Blinc Group more than tripled its orders with more than 330 percent year-over-year growth.
The technology company seemed to have a knack for expanding in an increasingly difficult regulatory landscape. “I don’t have the exact numbers yet, but I know in terms of sales orders, we hit $14.2 million in 2020,” said Dumas de Rauly. “We have increased our team to 21 members, and we are really excited about our future in this unique and exciting industry.”
Blinc of an eye
The Blinc Group specializes in standards and quality. The company was created to help the cannabis industry comply with Canada’s robust regulatory requirements through the highest quality testing and supply chain standards. Canada legalized recreational marijuana in 2017.
Dumas de Rauly and his two Blinc Group co-founders, Givi Topchishvili and Alexander “Sasha” Aksenov, who also serves as chief innovation officer, had the collective experience needed to change nearly every aspect of how the cannabis industry was operating, from standards and other regulatory needs to lobbying, manufacturing and even sales. Topchishvili is an entrepreneur, investor and author with 30 years of market entry experience in Europe, Asia and the U.S. Aksenov has been in the cannabis vaping industry for more than seven years. He has created several ventures ranging from branding studios, record labels and media management companies to marketing agencies.
Dumas de Rauly is the scientist. He currently chairs the ISO (International) Standards Committee TC126/SC3 on Vaping Products and the CEN (European) Standards Committee TC437 on Vapor Products. He is also a member of the informal Marijuana Science and Policy Work Group managed by the Colorado Department of Revenue’s Marijuana Enforcement Division and Colorado Department of Public Health and Environment. Dumas de Rauly is also the former president of FIVAPE, the French vaping trade federation, and now serves as the organization’s secretary-general for international relations.
“As chairman of ISO standards on vaping products, I was getting a lot of friends that were coming up to me and asking me what I thought of their vaping products. And when I looked at them, I quickly saw that the products they were using were not adapted to the format of the [cannabis] extract, which is very, very viscous, oily, in some cases, really like molasses,” explains Dumas de Rauly. “I got concerned about the safety issues, started looking into it and … my partners and I decided to create the Blinc Group to bring the wealth of experience we had in nicotine vaping over to the cannabis industry.”
What sets Blinc Group apart from other cannabis industry hardware manufacturers is its involvement in every aspect of the process, from design to sales—what Dumas de Rauly calls “enterprise solutions” or consultative sales. The company doesn’t do sales on a traditional transactional basis. Every Blinc team member gets involved. “We can move along the entire vaping value chain. We have done product formulations for clients; we go through automation with filling and capping SOPs all the way down to point of sale and training,” says Dumas de Rauly. “We train our clients’ salespeople on specific hardware. We really insert ourselves throughout the entire value chain of vaping products in cannabis.”
Eric Newman
The Blinc Group may be the only cannabis industry vaping hardware manufacturer that controls its entire supply chain. This is important because when a manufacturer orders from a factory in Shenzhen, China, where most vapor hardware is produced, that company has no clue where the raw material is sourced. The factory knows but not the client. Blinc Group sources the raw material suppliers. It then tells the subcontracted factory that those factories need to use the Blinc-sourced suppliers.
“We have an entire audit trail of every single material that comes into the device. That is one very important [differentiator] and one of our biggest differentiators. It also allows us more resiliency and redundancy within our supply chain because we’re not buying just from one factory,” Dumas de Rauly says. “We have four different manufacturers we work with—or assemblers, as we call them because they don’t really manufacture. They assemble products. And when one of them is not available, we can have the same product manufactured by another one because we own all of that supply chain.”
Blinc and you’ll miss it
There is one fundamental reason for controlling the supply chain: safety. Alongside innovation, quality and integrity, Dumas de Rauly says safety is part of Blinc Group’s foundation. It’s the company’s main focus in advocacy as well. For example, recently, the company worked with the U.S. state of Colorado to implement emissions testing in vapor products.
“[Colorado is] the first state in the U.S. that is requiring emissions testing, but that just goes to show that we’re even willing to put barriers in front of our business to make sure the consumer is safe. We have pioneered the use of medical-grade stainless steel in the products instead of using the regular H59 material to avoid any leaching of lead,” Dumas de Rauly explains. “We push our analysis and the control of the supply chain specifically for these reasons. Another example: In a typical 510-threaded cartridge, you have all of the materials that come into contact with the oil inside. Each one of those materials is sent off from each supplier—and we have four suppliers for each material—to undergo testing in an international lab. And given what we find, we adjust that material to make sure that individually, every single piece one of our cartridges will not leach, for example, heavy metals.”
Blinc Group has a large presence in Canada specifically because of the company’s compliance and regulatory stance, according to Dumas de Rauly. He expects the U.S. to adopt a similar type of regulatory framework soon. “People have already started understanding the need for regulations since the EVALI vaping crisis,” he said. “I’m very confident that this year, we’re going to be focusing a lot of our attention on the U.S. market and growing our U.S. presence.”
After Canada legalized recreational marijuana, the country passed the Cannabis Act. It includes some of the most stringent rules for cannabis on compliance and regulation in the world. Batteries, for example, need to be UL 8139 certified. In the U.S., it’s only a recommendation. The certification costs a little more, and the UL process could take anywhere from three-month to six-months, says Dumas de Rauly, but it’s necessary to protect the end user.
“We were the only ones attacking that market with UL-certified products in terms of batteries. We were the only one attacking that market with FDA, CFR21 or CPG21 certifications for our raw material. That was our edge, and that’s why we made such a big impact in Canada in 2020,” says Dumas de Rauly. “As regulation is becoming a little more stringent in the U.S. and after the EVALI scare, those consumers are starting to understand that they need to be paying attention to what’s in the vaping hardware.”
Blinc Group virtual meeting
As EVALI soared in the U.S., many believed the vaping industry was dead and the disposable option was a fad. Dumas de Rauly says that, in reality, cannabis accounts for more than 30 percent of the market in some states. Some states with legal medical marijuana allow only the sale of THC vaporizers. This is because contents and strength can be easily regulated in a vaping product. The same is not true for cannabis flower products. He sees the industry growing even more rapidly in the U.S., especially if marijuana is legalized on a federal level.
“The road is going to be bumpy. There is going to be more regulation. We are pushing for more regulation because we want to make sure that our business is sustainable over the next five to 10 years,” he says. “We don’t want to see what happened to nicotine vaping happen to cannabis vaping. We’re really pushing for good stewardship for the industry. We are thought leaders in the space, and we want to be at the forefront of education and making sure that consumers get safe products.”
As the legal cannabis market grows in the U.S., Dumas de Rauly says that the Blinc Group will be growing and continuing to grab more market share as well. He says that the Blinc process is highly developed. It runs like a well-oiled machine. “We have a very strong team,” says Dumas de Rauly. “We have a strong presence. Our processes are well refined. I believe we’re going to be doing very, very good this year.”
Solari Hemp is a Colorado-based fully integrated farm-to-shelf supplier of THC-free CBD products.
By Timothy S. Donahue
Cannabidiol (CBD) is one of the fastest-growing industries on the planet. It’s motivated by the ever-growing popularity of the supplements on the global market. However, according to a Consumer Brands Association (CBA) survey, nearly four in 10 Americans incorrectly assume CBD is just another name for marijuana. The survey also found that consumers said that the quality and safety of the product were extremely important when making a CBD purchasing decision.
Solari Hemp, founded in 2018 in Longmont, Colorado, USA, is a fully integrated farm-to-shelf hemp company with on-premises growing, extracting, shipping and sales/marketing capabilities. The company sells only 100 percent THC-free CBD products. Solari Hemp maintains full control over the production/development process of its products from start to finish, according to Colin Gallagher, co-founder and CEO of Solari Hemp.
“For us, it’s about being a company that has roots in the C-store industry and understands the needs and complexities of operating with products that are in a regulatory gray area,” he says. “We want our partners to trust the team behind Solari and the people behind it; trust the brand and the quality of the product you’re getting. We test all the way through seed to shelf. We offer transparency in the testing. We are doing things the right way. It’s about being good retail partners. Our success is their success.”
Colin Gallagher / Credit: Solari Hemp
Solari means “land exposed to the sun” in Italian. As a child’s name, it can be translated to “beauty greater than the sun.” Gallagher says he and his team wanted to create a packaging design that didn’t have the in-your-face marijuana branding often associated with such products or that could be misconstrued as a pharmaceutical product. The sun became the logo. It even has a little hidden “S” in the middle.
Gallagher says he was working at Smoker Friendly International, and the CBD market was just starting to grow. The company decided it wanted to start carrying a CBD brand in its stores. Gallagher soon discovered that there was little transparency throughout the CBD supply chain, and many manufacturers could not guarantee consistent quality in their products. No product could meet the quality standards and quantities he needed. Gallagher wanted to do it better. He soon started talking with two industry colleagues and discovered they had similar ideas about what a CBD brand needs to be successful.
“We decided that we could all work together and create a new company … use our experience, our trust and established relationships within the C-store industry to create a brand and a product that had a full chain of custody from seed to shelf,” he says. “We decided to just get out there and do it ourselves.”
There is a lot of talent on the Solari team. Myorr Janha, co-founder and chief marketing officer, was previously responsible for global marketing, corporate communications and business development initiatives for Rush Communications and Simmons Design Group. With over 25 years of marketing experience managing a variety of brands spanning diverse sectors in entertainment, lifestyle and philanthropy, Janhaeads Solari’s marketing, advertising and PR strategy.
Jake Salazar, co-founder and Solari’s chief development officer, is a fifth-generation Colorado native. He was named one of the 100 most influential people in the cannabis industry by High Times magazine in 2018 and 2019 for his accomplishments over the past 12 years in cannabis genetics and the hemp business. Salazar heads genetics R&D and business development for Solari. He also helped craft the original legislation to legalize marijuana in Colorado.
Gallagher oversees the daily operations of the company. He grew up around consumer product goods and convenience retail operations and previously served as the director of operations and business development for Smoker Friendly.
Back to the farm
While many things stand out about Solari, its farming operation is the foundation of the company. In 2017 and 2018, the CBD market was experiencing shortages of wholesale CBD. Gallagher didn’t want to go through the process of creating a product and launching a product only to have a supply shortage and not be able to support sales. That’s when the company started looking for its own farms.
“We found some farmers who had farmed hemp from early 2014 and then got out of it. They’re traditional, fourth-generation Colorado farmers. We brought them in as equity partners. We really wanted to learn about the product and be leaders in the industry,” explained Gallagher. “There’s still a lot of education that needs to happen in terms of just understanding hemp [compared to marijuana]. We are trying to be a leader in the market and do things the right way, our way, and have full transparency.”
The Solari team began its first farm on just three acres to test its product. In 2018, Solari farmed 150 acres (about 6,000 plants) and continues to have the ability to expand. Like many hemp farmers, Solari did not farm in 2020 because there was an excess of hemp biomass in the market due to the Covid-19 pandemic. The company needed to step back. It was about survival.
“The pandemic put a damper on sales. We know a lot of farmers and extractors who went out of business. There are high capital costs in the extraction process, and you have to have high-yielding crops. The higher your CBD potency, the better your yields. It’s all about efficiencies and that effectively impacts your cost of goods sold,” says Gallagher, adding that farming is also expensive. “Farming is challenging. The harvesting technology, drying technology—especially when you have a large crop. You need to get it out of the ground and get it dried and ready for extraction so it doesn’t go bad.”
Hemp is like a vacuum cleaner, absorbing all that a soil has to offer, both good and bad. Gallagher says that heavy metals and pesticides on the plant or in the soil may be present in the resulting oil after the hemp is refined. The only way to avoid exposure to these contaminants is to know exactly where the hemp is grown. Solari’s seed-to-shelf process ensures its hemp adheres to the company’s high-quality standards. “Our crops are grown on our farms in Colorado without the use of any pesticides and our soil is consistently tested for heavy metals,” says Gallagher. “A reputable brand should always disclose the location [in which] the hemp was grown so a consumer has full disclosure prior to purchasing the product.”
To isolate the CBD-rich oil from the hemp plant, a multistep extraction process is used to remove fats, lipids, cannabinoids and terpenes. Different extraction methods can provide a variety of advantages; however, testing after extraction for pesticides, heavy metals and residual solvents that can be present during the extraction process is vital. “Extraction is just dialing in the equipment to get the highest yields from the crude. We consistently test all of our final products to ensure there are no harmful chemicals or contaminants present within its extracts before it is sent to a third party to be tested again,” says Gallagher. “We control the entire process. Our retail partners, and consumers too, like having that transparency. It gives us an advantage in the market because it’s a product you can trust and there’s traceability. We do third-party testing to ensure consistency and quality. We also use a CBD isolate that guarantees we have absolutely no THC in our products.”
Empire of the sun
Today, the Solari line of products is sold in 2,000 stores to 3,000 stores, including Smoker Friendly, Rutter’s Farms, Town Pump, Food Lion and numerous independent C-stores. The company offers 23 SKUs, including gummies, tinctures, soft gels and topicals (balms, roll-ons and creams).
Credit: Solari Hemp
Gallagher says that launching a brand at the end of 2019 going into 2020 was greatly impacted by the Covid-19 pandemic. In the C-store channel, it’s about face-to-face meetings, building trust in each other and building trust in the product, according to Gallagher. He says that not being able to fully develop those relationships and not being able to go to trade shows and sample the products was a nightmare.
“It was a challenge, for sure. But we adapted. For us, it is more about just being able to be fully transparent and able to deliver a high-quality but affordable product. That’s another one of our big things: affordability. In the C-stores, we don’t [expect people] to come in and pay $50, $60 for a tincture,” explains Gallagher. “It’s something that’s kind of a grab-and-go item, so our lowest-priced item is $6.99. Then it’s supporting the brand, supporting the retailer and understanding their business, and working with them to make the product successful. I think this dedication to the retailer separates us from the pack. It’s about those relationships and doing things the right way and not creating more work for our partners.”
Moving forward, Gallagher says Solari must remain innovative, whether it’s a function of product or delivery. He says the company is currently working on some new products that are expected to come on the market this year. There is so much competition in the CBD industry that Gallagher says you have to think outside the box to survive. He says that CBD beverages, for example, are a fast-growing CBD segment, and that could potentially be part of Solari’s portfolio.
“We see a huge future for the beverage industry, and that’s on our radar. If you’re going to release a new product, it’s got to be something that grabs people’s attention. I mean, at the end of the day, your product has to work, right?” Gallagher asks. “People have to believe in the product itself and then it needs to be different. If you take something that’s like a pull on the cap of a beverage and you push it down and shake it up, that’s different, right? We are trying to be innovative and thinking about things that aren’t currently on the market.”
Regulations are also coming soon for the CBD market in the U.S. The FDA has already announced proposals for the industry. Today, most CBD products are manufactured by smaller companies, and, absent consistent regulation, it is up to the individual businesses to invest in the research that protects consumers. Gallagher says he wants to see responsible regulation, and the industry needs to help decide what those regulations may entail.
“I don’t think it’ll be like the PMTAs [premarket tobacco product applications] the FDA uses with tobacco and vapor. We need input from the industry to get things done the right way. Part of that is keeping the bad actors out,” says Gallagher. “I think this administration will certainly be more friendly to cannabis in general [than it was toward tobacco and e-cigarettes]. I think there will be more regulation on the smokable side, meaning it’s something that you inhale. Anything that is like a tobacco product and used in a similar fashion and is not currently taxed … will be regulated.”
For Solari, the company remains focused on continuing to being an innovator in the industry, focused on becoming a household name. “We want to be a recognizable label,” says Gallagher. “We want Solari to be the brand that people associate with quality and trust. That’s something that will never change.”
Pandemic-related anxiety, boredom, and irregular routines were cited as major drivers of increased nicotine and combustible tobacco use during the initial Covid-19 “lockdown,” according to research released by Columbia University’s Mailman School of Public Health.
Credit: Columbia University
“Pandemic response policies that intentionally or inadvertently restrict access to lower risk products – through availability, supply chains, or even postal service slowdowns – while leaving more harmful products widely accessible may have unintended consequences that should be considered during policy development,” said Daniel Giovenco, PhD, assistant professor of sociomedical sciences at Columbia Mailman School, and the study’s lead author.
The study highlights ways that public health interventions and policies can better support quit attempts and harm reduction, both during the Covid-19 pandemic and beyond. The findings are published in the International Journal of Drug Policy.
Nearly all participants reported increased stress related to Covid-19 – namely, fears about the virus, job uncertainty, and the psychological effects of isolation – and described this as the primary driver of increased nicotine and combustible tobacco use. Decreased use, while less common, was prevalent among “social” tobacco users, who cited fewer interpersonal interactions during lockdown and a fear of sharing products.
Between April-May 2020, the researchers conducted telephone interviews with adults across the US who use traditional cigarettes and/or electronic nicotine delivery systems (ENDS), such as e-cigarettes. Participants in the study were recruited using an advertisement campaign on Facebook and Instagram.
During this window, nearly 90 percent of the U.S. population experienced some form of state lockdown, with 40 states ordering non-essential businesses to close and 32 states enacting mandatory stay-at-home orders. At the time of their interviews, all participants were voluntarily isolating at home unless required to leave the house.
At the community level, retail access impacted cigarette and ENDS use differently. While cigarettes were universally accessible in essential businesses, such as convenience stores and gas stations, access to preferred ENDS products was more limited, since “vape shops” and other specialty ENDS retailers were typically deemed non-essential and required to close or limit hours, according to a press release.
This drove some ENDS users to order their products online, which often resulted in long wait times due to shipping delays, or product backorder as a result of high demand. As a result, some dual users of cigarettes and ENDS increased their use of readily-available cigarettes.
Millions of vapers could feel forced to return to smoking if national governments adopt a proposal from the World Health Organization (WHO) on e-cigarettes, warns the Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA)
A new report published by WHO’s tobacco regulatory committee recommends nearly all vapes—especially “open systems”—be banned. It also demands existing restrictions on cigarettes be applied to emerging products, presumably so smokers won’t learn about them.
In the open system, which is the preferred way of vaping for many people across Asia, the consumer manually refills the liquid to be vaporized. According to the WHO, this system allows for the addition of substances which could make the product more harmful.
“The latest recommendation from WHO defies all logic,” said Nancy Loucas, the executive coordinator of CAPHRA, in a statement. “If countries adopt the recommendation to ban open-system vapes, years of hard work by ex-smokers as well as good public policy will be rendered meaningless.”
“Let there be no doubt: vapers will then go back to cigarettes, which is the worst possible outcome.”
“Banning any product is not the answer, nor is applying blanket cigarette rules to all emerging products. Bans encourage the black market. Bans do not allow for proper consumer protection,” Loucas said.
CAPHRA is calling on governments to adopt evidence-based, common sense regulations for all vaping products.
“Just last week, the U.K.’s leading health agency, Public Health England (PHE), concluded that nicotine vaping products were the most popular aid used by smokers trying to quit,” Loucas said.
“On the one hand, you have a local public health agency looking into the evidence and ways in which smokers can be encouraged to quit smoking and vape, and on the other you have a global agency stuck in their old ways of believing prohibition is the answer to everything.”
“WHO’s attitude to e-cigarettes has been devastating for millions and millions of smokers and vapers alike all around the world,” Loucas said.
CAPHRA said it’s only through regulating products can vapers remain protected, encouraged to stop smoking, and as a result, achieve good public health outcomes.
Many small vapor manufacturers are attempting to overcome the FDA’s rigorous PMTA requirements.
By Maria Verven
A process that was built for billion-dollar tobacco manufacturers has posed onerous challenges for small e-liquid manufacturers. With the enormous work of pulling together premarket tobacco product applications (PMTAs) for the U.S. Food and Drug Administration behind them, vapor manufacturers are now gearing up for the formal substantive review phase when the regulatory agency will conduct in-depth evaluations of the applications’ requisite scientific studies.
Many relied on help from the PMTA Sharing Group on Facebook to meet the challenge of submitting a separate application for every flavor in every nicotine level in every size bottle, sending literally millions of pages to the FDA. In addition, every PMTA had to contain a plethora of research into the product’s relative health risks for current users and nonusers as well as whether marketing the new product would be appropriate for the protection of public health (APPH).
A full assessment of how users consume their products over time as well as the potential for addictiveness, abuse and misuse was also required. And for those who missed the Sept. 9 deadline and/or failed to meet these requirements? In January 2021, the FDA issued warning letters to 10 e-liquid manufacturers that failed to submit PMTAs by the deadline, advising them that it is now illegal for them to sell their products in the U.S.
Vapor Voice took on the task of asking several vapor industry experts and business owners for their perspectives on the current situation.
A daunting process
Lindsey Stroud, policy analyst with the Taxpayers Protection Alliance, a Washington, D.C.-based nonprofit think tank dedicated to educating the public on the government’s effects on the economy, said many of her clients are still in the thick of the testing process.
Lindsey Stroud
“The process was daunting—among my clients and the folks I assisted, I probably worked on 100,000 to 200,000 individual products. Several of my clients made it past the first step, but there are many more to come,” she said. “AVM (the newly formed American Vapor Manufacturers) is really a genius idea when it comes to these small e-liquid companies. In getting more small businesses involved, the price of testing can slowly come down.
“In the aftermath of the vaping-related lung illnesses (EVALI) in late 2019, it’s imperative that regulatory agencies know what’s in the products and their effects on the U.S. population. The FDA is bound by law to apply the PMTA equally to all manufacturers, regardless of size. Still, the testing requirements for each and every liquid is unduly burdensome for small e-liquid manufacturers that offer hundreds of flavors, often with many flavor components found in numerous companies’ flavorings.
“Currently, if a manufacturer sells a strawberry e-liquid in 20 different nicotine strengths and three different bottle sizes, the FDA requires them to test all those products (20 products times three bottle sizes would mean 60 tests for just one flavor), which is inefficient, daunting and expensive. The FDA has shifted and made the PMTA requirements less burdensome; for example, [the] FDA now allows companies to submit a single PMTA instead of individual applications for each of their products
“Ideally, I would prefer the FDA to allow a flavor manufacturer to have only three tests per flavor—their zero nicotine option, their lowest nicotine option and their highest nicotine option.”
Phase 3: Substantive review
The team at North Carolina-based Bantam Vape worked with highly qualified labs to conduct the in-depth, product-specific and non-product-specific testing needed for their PMTAs, according to Bantam Vape spokesperson Anthony Dillon.
Anthony Dillon
Offering 21 “uniquely crafted flavors” created by chemists and flavorists in different nicotine levels and sizes, Bantam conducted storage and stability testing, toxicity testing and pharmacokinetic and topography studies as well as submitting an extensive review of available literature on its products. After hearing that the PMTAs for Bantam’s products were initially accepted and filed by the FDA last fall (indicating that the FDA had finished its preliminary review) the Bantam team is now waiting for the formal substantive review phase to commence.
“We invested significant resources into the foundation of our PMTA submissions, and we continue to invest resources in the PMTA process and post-market surveillance,” Dillon said. “We worked with reputable, like-minded industry players to share key costs to significantly improve efficiencies, which can help us continue selling our high-quality vape at an attractive price point.
“The PMTA process has certainly impacted the entire e-liquid industry—from manufacturers to retailers to consumers. We believe the PMTA process, though complex and resource-intensive, provides a benchmark for all e-liquid manufacturers, something that the industry, up until now, was lacking. E-liquid companies undergoing the PMTA process must evolve to remain on the market long term. Bantam is, and has always been, committed to developing and manufacturing high-quality, adult-use e-liquid products consistent with FDA guidance and applicable laws. That goal has not changed.
“With any new process, there are kinks to be ironed out. The PMTA is no different. Wherever possible, we are committed to working with the FDA to streamline and improve the process, and we will also work with our retailers and consumers to help them better understand this complex but necessary process. Currently, our biggest challenges are not due to the regulations but the need for transparency in the process and for enforcement against those that are not in compliance with FDA guidance and applicable laws.
“The PMTA process provides a benchmark for all e-liquid manufacturers—something that the industry was lacking. We are proud of and confident in the e-liquid products that are going through the PMTA process, and we look forward to Bantam’s products being enjoyed by adult consumers for years to come.”
Exceptions for artisan cigars
Established in February 2014, 906 Vapor is located in a small community in Michigan. While at one time, they had about $250,000 in annual revenues, sales plummeted to about $180,000 last year due to a state flavor ban and the EVALI scare. One of 906 Vapor’s first customers, Mark Slis bought the store in October 2015. They currently carry over 100 e-liquid flavors using freebase and salt nicotine, along with kits, tanks and mods, a line of disposables and miscellaneous batteries and accessories.
Mark Slis
Since 906 Vapor does not manufacture e-liquids, Slis didn’t have to submit any PMTAs; however, he helped the small Michigan juice manufacturers whose e-liquids he carries submit their PMTAs. Slis lobbied in Michigan, suing the state, health and human services and Governor Whitmer to stop last year’s flavor ban. He also organized a state trade organization and lobbied against flavor bans and other anti-vaping bills in the state’s house and senate, assisting various national organizations in their efforts.
“The required testing places a massive and completely unnecessary burden on all manufacturers,” Slis said. “The proper regulatory response is to set standards, since all e-liquids utilize the exact same four ingredients with variation only in the specific flavoring(s) used. The ingredients have already been thoroughly studied and tested and found to be safe for human consumption. Only product standards should now be required.
“Requiring duplicate testing for each of the 419 million flavors registered with the FDA and duplicate testing for each and every nicotine level for the same flavor is a transparent attempt by the FDA to eliminate the electronic cigarette industry—not regulate it. The FDA has already made it abundantly clear where they stand on independent, small vapor manufacturers. They refused to talk to vapor manufacturers and denied them any relief. Yet when artisan cigar manufacturers lobbied the FDA for a realistic approval pathway and assistance, the FDA not only granted them an indefinite exemption from the PMTA; they offered to spend taxpayers’ money to conduct the prohibitively expensive testing on their cigars.
“In effect, [the FDA] will bend over backward to ensure deadly combustible products remain on the market while regulating smoking cessation out of existence.”
Concerning job losses
A member and vice president of the American Vaping Manufacturers (AVM) Association, a member of the Smoke-Free Alternatives Trade Association (SFATA) and the U.S. Vaping Association (USVA), Char Owen owns a small line of wholesale e-liquids called Unchained as well as two brick-and-mortar stores in Texas called Cloud 9 Vapor Shop that opened in December 2013.
Char Owen
“Absolutely no consideration has been given to small business owners except a short PMTA extension during this pandemic,” Owen said, adding that although she contracted Covid-19 in December, she continued to help small businesses while combatting the illness. “There’s no process for notifying the FDA to request an extension when your family has been affected by Covid[-19]. A large company doesn’t need this, but most small companies are one-person shops or only have a few employees.”
With over 800 e-liquid recipes, Owen ended up submitting PMTAs for over 332,000 SKUs to the FDA. As of this writing, all her PMTAs had been received but had not yet been accepted. They held a listening session with the FDA to obtain feedback on a testing protocol that Owen said could significantly cut the cost of testing.
“The FDA said they will not be creating a simplified pathway for small business,” Owen said. “Testing requirements will put an unnecessary burden on them. These businesses have been selling the same product for many years. I’ve been selling the same product for eight years with zero complaints that our products have caused harm.
“Using standard testing methods and one of the handfuls of testing labs, the testing requirements would cost me over $9 billion dollars. The market, however, will narrow to only those owned by large tobacco, which sells closed pod systems extremely high in nicotine sold in grocery stores and convenience stores. They are the only ones that can afford the PMTA process.
“The problem is SKU inflation. In the FDA’s definition, my 800 products equal 332,000 products, or a 41,400 percent inflation of product SKUs. Something as simple as offering a different bottle size—common in our industry—is a major factor in testing costs, even though the original recipe is still the same. In vitro and in vivo studies could be withdrawn since these products have been on the market for almost 10 years. Just the high range of nicotine could be tested, and if those tests are acceptable, then obviously any lower nicotine levels would be acceptable.
“Vapor shops cater to an over-21 clientele and mainly offer open system e-liquids. They employ a more hands-on approach to helping adults off-ramp from combustibles. We support, educate and help smokers convert to noncombustibles. Because of this support, we see a much higher rate of success than is reported by the FDA, which includes consumers who purchase at convenience stores and big chains. Mainly, we are just trying to help people stay off combustible cigarettes in our local communities.
“It’s important to realize that this industry was founded by small business. The FDA’s requirements, together with a lack of a streamlined process, could cost over 100,000 people their jobs. We already have a huge job loss in the U.S. It’s the last thing we need.”
The original “Vaping Vamp,” Maria Verven owns Verve Communications, a P.R. and marketing firm specializing in the vapor industry.
The Altria Group Inc. asked the U.S. Food and Drug Administration (FDA) for its help in convincing Americans that nicotine isn’t linked to cancer. In a letter to the regulatory agency, the maker of IQOS and Juul products asked for the FDA to assist in combatting misperceptions about nicotine as part of a proposed $100 million advertising campaign to reduce the harm caused by tobacco.
According to a letter seen by Bloomberg, Altria states that nearly three-fourths of U.S. adults incorrectly believe nicotine causes cancer, citing government research. Clearing up the drug’s health risks will be key to the agency reducing smoking combustible cigarettes because it will help convince cigarette users to switch to noncombustible options for nicotine, the company said.
While there are at least 60 well-established carcinogens in cigarette smoke, it’s been known for years that nicotine isn’t the direct cause of many of smoking’s ills. The drug has even been touted as a way to ease tension and sharpen the mind. But nicotine is the ingredient that addicts people to tobacco products, and it has risks, according to the National Institute on Drug Abuse, a government agency.
The FDA “should commit resources and expertise to correct the deeply entrenched public misperceptions regarding the health risks of nicotine,” Paige Magness, Altria’s senior vice president of regulatory affairs, said in the letter dated Feb. 25. Such a campaign would help the agency by getting more smokers to use noncombustible offerings that “may present lower health risk,” according to the letter.
The FDA declined to comment, according to Bloomberg.
Logic brand e-cigarettes will end the online sales of its products, according to an email to customers. “Unfortunately, as of March 16, 2021, we will discontinue online sales of Logic products. Due to recent regulations, Logic will be unable to ship online orders after this date,” the email states. “Logic has worked tirelessly to make sure we provide you with the best possible vaping and shopping experience. Always have, always will.”
Credit: Logic
The company states that the recent amendment to the 2009 All Cigarette Trafficking (PACT) Act prevents the company from being able to mail its products to consumers. In late December, former President Trump voted into law a $2.3 trillion coronavirus relief bill that contained a provision banning the USPS from delivering vapor products.
The USPS was already prohibited from delivering cigarettes and smokeless tobacco products to consumers under the PACT Act. The law passed in December extends the act’s original definition of “cigarette” to include electronic nicotine-delivery systems (ENDS).
Tobacco and vapor companies may use private services to ship their products to consumers, but the PACT Act requires them to register with the Bureau of Alcohol, Tobacco, Firearms and Explosives and the tobacco tax administrators of the states into which a shipment is made. Delivery sellers are further required to verify the age and identity of the customer at purchase and maintain records of delivery sales for a period of four years after the date of sale, creating substantial administrative burdens.
Critically for the vapor industry, the most popular carriers, Federal Express (FedEx) and United Parcel Service (UPS), have recently announced that they would cease all deliveries of vapor products.
Age-verified adult consumers can order Logic products at logicvapes.us until March 16 at 11 a.m. Eastern Standard Time. In order to help consumers locate Logic products, the company has updated and improved its online store locator.
“We believe that all age-verified adult vapers and smokers should have the choice to purchase vapor products online to be delivered to their home. However, as a responsible company, we always remain committed to regulatory compliance,” the email states. “We’re dedicated to doing whatever it takes to deliver pleasurable vaping moments you can truly enjoy.
Acquired by Japan Tobacco in 2015, Logic is not the first vapor company to cease online sales in the wake of the shipping ban. In February, Securience, which manufactures Durasmoke, Forge and other brands, announced it would be closing its doors in March due to the restrictions. Lizard Juice e-liquids also said it would stop mailing products to consumers.
A new study shows that teens who vape pot are more likely to wheeze and cough than those who smoke cigarettes or vape nicotine. Appearing in the March 3 Journal of Adolescent Health, the study found that U.S. youth aged 12 to 17 show they have a higher risk of wheezing, suffering from a dry cough and having their sleep, speech or exercise impeded by wheezing if they vape marijuana products.
Credit: Clear Cannabis
The results are from the U.S. federally funded Population Assessment of Tobacco and Health Study. It states that all symptoms are strongly related to lung injury, and it’s unclear how long they will last, said lead researcher Carol Boyd, co-director of the University of Michigan’s Center for the Study of Drugs, Alcohol, Smoking and Health.
“We found, and it was something that surprised us a bit, that it was the lifetime vaping cannabis that was associated with a far greater number of symptoms and a higher likelihood of having each of these symptoms than using either e-cigarettes or cigarettes,” Boyd said. “Lifetime” referred to any past use.
Survey responses from nearly 15,000 teens showed that vaping pot increased their risk of wheezing or whistling in the chest by 81 percent compared with a 15 percent increased risk from cigarettes and a 9 percent increased risk from nicotine e-cigarettes.
Vaping pot also increased teens’ risk of:
Sleep disturbed by wheezing by 71 percent;
Speech limited due to wheezing by 96 percent;
Wheezing during or after exercise by 33 percent; and
Dry coughing at night by 26 percent.
Smoking and nicotine e-cigarette use also increased risks for these indications of lung injury, just not by as much, Boyd said, according to an article on usnews.com.
“I think that industry would probably like to show that vaping e-cigarettes is healthier, that it’s the cannabis vaping causing these respiratory symptoms not the e-cigarettes. This is not true. E-cigarette vaping also causes symptoms among youth,” Boyd said. “However, in our study, and when we took into account their e-cigarette use, we found higher odds of having these respiratory symptoms among youth who had vaped cannabis.”
The survey was taken between December 2016 and January 2018—prior to the wave of lung injuries among young people that occurred in 2019. It was given the name EVALI, or e-cigarette or vaping use-associated lung injury.
Boyd thinks some of these lung problems reported in the survey were probably due to EVALI, which has been linked to pot-laced e-liquids and particularly those containing vitamin E acetate. According to the U.S. Centers for Disease Control and Prevention (CDC), four out of five patients with EVALI had vaped cannabis versus only about 16 percent who said they only vaped nicotine.
The CDC has stated that vitamin E acetate was found in the lung fluid of all patients with EVALI.
