Author: Staff Writer

  • Eighth Circuit Upholds Minnesota City Flavor Ban

    Eighth Circuit Upholds Minnesota City Flavor Ban

    Credit: Victor Moussa

    Federal law doesn’t block a ban on sales of flavored vaping products, menthol cigarettes and other flavored tobacco products in Edina, Minn., the Eighth Circuit ruled Monday in a case brought by R.J. Reynolds Tobacco Co. and related companies, according to Bloomberg Law News.

    The appeals court affirmed a lower-court ruling that kept the ban in place, on the same day that the U.S. Supreme Court declined to hear a tobacco company challenge to a similar law in Los Angeles.

    The unanimous panel of the U.S. Court of Appeals for the Eighth Circuit joined other federal appeals courts in holding that a local ban on tobacco products is constitutional.

  • Atria in Talks to Purchase NJOY for $2.75 Billion

    Atria in Talks to Purchase NJOY for $2.75 Billion

    In a long suspected move, Altria Group Inc. is in advanced talks to buy e-cigarette manufacturer NJOY Holdings Inc for at least $2.75 billion, the Wall Street Journal reported on Monday, citing people familiar with the matter.

    The deal for NJOY, one of the few non-tobacco-company-affiliated vapor makers whose products have received a marketing order from the U.S. Food and Drug Administration, could be announced as soon as this week, the report said, adding that the talks could still fall apart.

    It’s reported that the proposed deal includes an additional $500 million earnout if regulatory milestones are met.

    In October Juul was readying to file for Chapter 11 bankruptcy, while searching for an alternative – such as a sale, investment or loan,

    In July, NJOY reportedly hired bankers for a possible sale of the company, adding that the privately held firm is likely to be valued at up to $5 billion.

  • Head in the Clouds

    Head in the Clouds

    Credit: James Thew

    A vaping industry veteran uses some time-tested adages to reflect on his 11 years in the space.

    By Chris Howard

    In the new year, as I reflect on my past 11 years of experiences in the vapor space, I think it is better late than never to share some thoughts on where we have been and where we should be headed. Because we are never too old to learn, I thought I would strike while the iron is hot (hopefully you can see the theme here). 

    From 2018 to 2021, the industry suffered incalculable upheaval and uncertainty as we went through a shortened premarket tobacco product application (PMTA) period and a seemingly never-ending series of marketing denial orders (MDOs). While 2022 wasn’t necessarily any better for industry, it sure got a lot worse for the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP).

    To recap, we saw multiple challenges to MDOs that shed some inconvenient light on the CTP review processes. We also witnessed significant delays in the CTP’s ability to meet the Maryland Court-imposed deadlines. Congress regularly attacked the CTP (and the greater FDA) for perceived shortcomings. And, finally, we saw the results of the Reagan-Udall Foundation review that, even with the soft touch given to the CTP, did not paint a flattering picture of the workings of our regulator. In all, it was a rough year for a new center director and the staff.

    With the above in mind, a few time-tested adages can aptly describe my reflection on the vapor industry—which I offer here for your consideration:

    Make a Long Story Short. After nearly seven years since the finalization of the Deeming Rule, the CTP and industry have collectively learned that some of the standards/requirements making up the PMTA process could be streamlined to say the least. By way of example, does the CTP really need for each company to spend thousands of dollars on the same literature review? Are behavioral surveys to show youth aren’t attracted to tobacco-flavored products necessary at this point?

    Are there other commonalities across numerous applications that could now be updated or otherwise removed from consideration given consistent findings? As suggested by the Reagan-Udall Foundation, the CTP should consider providing more detailed summaries of applications that have made it through the process—so that industry can place emphasis on areas that the agency deems to be a higher priority and eliminate superfluous activities that ultimately add little value. Doing this and taking steps to simplify the requirements would ultimately enable both the industry and the CTP to employ a more focused approach, resulting in greater efficiency for all involved.

    You Get Out What You Put In. Applicants who skimped and filed weak applications without regard to the requirements set forth by the CTP have nearly universally learned a valuable lesson. The PMTA process is expensive, and extremely rigorous science is required to show that your products are appropriate for the protection of public health (APPH). While many sought shortcuts and/or complain that the CTP’s guidance is unclear and/or vague, several companies have demonstrated that vapor products can indeed meet the FDA’s high standards.

    Which companies are these? These are the companies who expended significant time and resources to develop robust applications covering each scientific discipline and other requirements set forth in the June 2019 “Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems, Guidance for Industry” and in the November 2021 Final Rule regarding “Premarket Tobacco Applications and Recordkeeping Requirements.”

    Don’t Hold Your Breath. It’s hard to believe it now, but there was a time when both applicants and the CTP shared an optimism that reviews of applications could be accomplished in accordance with the prescribed timeline. This “certainty” provided an objective framework enabling industry to develop various business plans for all deemed products in the pipeline.

    Unfortunately, the ultimate glut of applications proved to be an insurmountable burden for the FDA—resulting in nearly all timelines falling by the wayside. For anyone with pending PMTAs and for those manufacturers contemplating filing new PMTAs, don’t expect to obtain results quickly. Hopefully, the CTP will adopt some of the recommendations contained in the Reagan-Udall Foundation report to increase its overall efficiency and enable the industry to plan more effectively.

    When Life Gives You Lemons, Make Lemonade. For innovators in the vapor space, initially life was very good. They had a great product that was considered profitable and a key to moving harm reduction forward. Unfortunately, things didn’t go exactly as expected, and life gave everyone in the vapor space lemons—and a huge basket of lemons at that. We had youth vaping; e-cigarette or vaping product use-associated lung injury (EVALI); near constant, questionable scientific studies demonizing electronic nicotine-delivery systems (ENDS); state and federal legislation to tax, limit and ban; a regulatory agency that swept the market nearly clean of flavored products—the list goes on.

    It’s quite easy to despair, but now is the time to make lemonade. As an industry, we need to innovate within the narrow confines provided. We need to continue to ensure that the FDA makes its decisions based on science while we develop improved nonflavored options and better marketing schemes to prevent youth exposure. Smokers deserve our efforts to offer satisfying, reduced-harm products—I’m confident this innovative and adaptable industry can do just that.

    It’s Not Over Until It’s Over. Over the past 11 years, I have seen so many industry advocates walk away from the vapor category due to a variety of circumstances. Unfortunately, with each powerful voice that leaves, the ultimate goal of ensuring that vapor products are an important part of an FDA-sponsored harm reduction platform becomes even more difficult to reach. In my opinion, the story isn’t over. Several vapor products have received market granted orders, and I expect that we will see more in the near future.

    Moreover, additional studies continue to show the obvious health benefits of vapor products as compared to combustible cigarettes and that they are a valuable tool for adult smokers seeking to quit. Maybe owning a vape store and selling thousands of flavors isn’t on the horizon, but helping smokers seeking alternatives can still be a meaningful priority. I encourage past and current members of the vapor community to revisit their priorities with a new focus on educating the public—even if the journey hasn’t been as fulfilling as you hoped it might be.

    Two Wrongs Don’t Make a Right. In case anyone missed it, several young people decided to experiment with vapor products a few years ago. Fortunately, that trend is unquestionably subsiding thanks to the introduction of T21 and the gradual decrease in the “fad” of vaping. It certainly isn’t right to (and no responsible manufacturer should) sell ENDS products to or in a manner attractive to kids. Unfortunately, the handling of the regulation of ENDS and, more particularly, flavored ENDS by both public health commentators and regulators is also wrong.

    In 2016–2017, ENDS were the next best thing. They held the promise and potential to restructure the tobacco use market in the United States from combustible cigarette death and disease to an inhalable nicotine product that reduces risk and disease burden. The “second wrong” in response to Juul, EVALI, the abandonment of harm reduction and an avalanche of inaccurate reporting, propaganda and sensationalism resulted in the gutting of the flavored ENDS space (most of which did not have a youth vaping issue) in the form of refuse-to-file letters and MDOs based on a seemingly arbitrary solution.

    These two wrongs, when coupled, don’t make a right—what these two wrongs make is a missed public health opportunity. Unlike the United Kingdom, which has embraced ENDS and driven down smoking rates, the U.S. has moved in the opposite direction—vilifying, banning and restricting. In this case, the two wrongs will result in increased smoking and increased disease.

    The Perfect is the Enemy of the Good. As the PMTA review picture gains incremental clarity, we often see policy of pursuit of perfection (e.g., ill-defined demands for long-term cessation trials for flavored products). Whether this pursuit is expedient to remove disfavored products or flavors from the market or we are seeing the level of evidence required to gain a market order rise to a standard only found in the drug center is for you to consider.

    However, the net effect is an increasingly complex (and expensive) set of criteria to satisfy the APPH standard. The public health standard, however, should not be a pursuit of perfection—it should be a pursuit of decreasing cigarette smoking mortality and morbidity. While there may be risks associated with some of the reduced-harm products, those risks are dramatically fewer than those posed by cigarettes. Accepting reasonable evidence to support reduction of harm to enact lifesaving and life-extending regulatory policy just makes good sense.

    Don’t Miss the Forest for the Trees. Throughout the public health community, harm reduction principles are embraced and promoted to reduce the harms related with drugs, sex and other potentially harmful activities. For some reason, though, with rare exception, nicotine and combustible cigarette smokers don’t seem to merit a harm reduction strategy.

    In the face of 460,000 smoker deaths each year, prudent regulatory policy would embrace products down the spectrum of risks—not ban them. European regulators have seen the forest—they promote reduced-harm products while discouraging combustible cigarette smoking. In the U.S., unfortunately, we ran into the first sapling off the trail and haven’t really progressed from there. 

    While the past 11 years have provided many ups and downs in the vapor space (a lot of downs), I’m hopeful that we can turn a corner in 2023 and beyond. In the past, it seemed like it was the vapor industry versus the world. Today, however, it is possible that we are at the dawn of a new era of tobacco regulation.

    My hope is that when I look back on the next 11 years, the CTP has learned from the missteps of the past. I hope the center uses the valuable insights it has been provided, like the findings in the Reagan-Udall Foundation report, to reorient the center on not just prohibiting products but rather crafting policy and standards that assist combustible cigarette smokers in moving away from those harmful products. I hope to look back on tobacco control policy that doesn’t just involve saying “no” to every option but rather embraces harm reduction and doesn’t leave smokers behind. Maybe we can have our cake and eat it too.

    Chris Howard is executive vice president of new product compliance and external affairs for Swisher and former senior vice president, general counsel and chief compliance officer for E-Alternative Solutions.

  • Behind Schedule

    Behind Schedule

    Credit: Burdun

    Two branches of federal government have the power to change marijuana’s Schedule I status.

    By Willie McKinney and Emily Burns

    The primary obstacle for the U.S. cannabis industry is that possession and use is still illegal according to federal law. And there could be severe penalties if you’re convicted under those federal laws. This is because the removal of state criminal penalties (decriminalization) doesn’t “undo” or “negate” federal laws criminalizing such conduct, even though they both can coexist due to something called the anti-commandeering doctrine. In short, cannabis users in legalized states still face the reality that their conduct remains federally illegal and punishable by federal authorities under the federal Controlled Substances Act (CSA).

    The current Schedule I status of marijuana means that it’s strictly prohibited for sale or use under federal authority. Yet, over the last several decades, most states and territories have deviated from across-the-board prohibition of cannabis and now have laws and policies allowing for some cultivation, distribution and possession of cannabis. It is difficult to predict when cannabis will be federally legal. It’s even harder to predict how cannabis will be regulated and the impact.

    The CSA classifies drugs and their chemical analogs in five schedules—Schedules I–V:

    • Schedule I means a drug has a high potential for abuse, with no currently accepted medical use in treatment in the United States, and there is a lack of accepted safety for use of the drug under medical supervision.
    • Schedule II drugs have a high potential for abuse but have an accepted medical use, though abuse of the drug may lead to chemical or physical dependence.
    • Schedule III drugs have a lower potential for abuse and are currently accepted for medical use in the United States, and abuse of the drug may lead to lower physical dependence but high psychological dependence.
    • Schedule IV drugs have a low potential for abuse, a low risk of dependence compared to Schedule III and have a currently accepted medical use.
    • Schedule V drugs have a low potential for abuse and a currently accepted medical use.

    Who controls marijuana’s status?

    The legislative and executive branches of the federal government have the ability to change marijuana’s Schedule I status. The executive branch can take action to change marijuana’s status; however, it is bound by the CSA to consider factors such as a substance’s risk of abuse and medical utility prior to altering its scheduling.

    Under the CSA, the Drug Enforcement Administration (DEA), Department of Health and Human Services (HHS) and the U.S. Food and Drug Administration make a decision to reschedule or de-schedule a drug based on the relative abuse potential of the drug. The HHS’ recommendations are binding on the DEA as to scientific and medical matters. The HHS must consider the eight following factors in making its recommendation:

    • the drug’s actual or relative potential for abuse;
    • the drug’s scientific evidence of its pharmacologic effect, if known;
    • the state of current scientific knowledge regarding the drug;
    • the drug’s history and current pattern of abuse;
    • the drug’s scope, duration and significance of abuse;
    • the risk, if any, to public health; and
    • the drug’s psychic or physiological dependence liability.

    Is the drug is an immediate precursor of a controlled substance?

    Over the years, several entities have submitted petitions to the DEA to reschedule marijuana. In August 2016, after a five-year evaluation process done in conjunction with the FDA, the DEA rejected two petitions—one submitted by two state governors and the other submitted by a New Mexico health provider—to move marijuana to a less restrictive schedule under the CSA.

    Consistent with past practice, the rejections were based on a conclusion by both the FDA and the DEA that marijuana continues to meet the criteria for inclusion on Schedule I—namely, that it has a high potential for abuse, has no currently accepted medical use and lacks an acceptable level of safety for use under medical supervision. Some drugs, like Marinol and Epidiolex, are excluded from Schedule I because they have obtained FDA authorization via the drug approval process.

    The federal government could choose to maintain the federal prohibition on marijuana. Given the current political environment, however, this scenario seems unlikely.

    Reschedule, new schedule or de-schedule?

    President Biden recently signed the “Medical Marijuana and Cannabidiol Research Expansion Act,”1 which will ease federal government research restrictions on marijuana and encourage research institutions to produce marijuana strains for research purposes. The bill also calls upon the attorney general to consider the issue of rescheduling (or de-scheduling) marijuana by engaging with officials from the Department of Health and Human Services, which houses the FDA. Once the attorney general finds sufficient evidence that a change in scheduling is warranted, he then initiates the first stages of a standard rulemaking process.

    There are at least three obvious approaches that the federal government could take to address marijuana classification conflict: creating a new schedule, rescheduling under a less restrictive schedule or de-scheduling altogether.

    Creating a new schedule, similar to the recent announcement made by the FDA addressing a new regulatory pathway for CBD outside of the traditional FDA pathways, could be a possibility; however, it is unlikely.

    If marijuana remains a controlled substance under the CSA, under any schedule, it would still maintain the existing conflict between the federal government and states that have legalized recreational marijuana. However, moving marijuana to a less restrictive schedule could help mitigate conflicts between federal law and state medical marijuana laws. If Congress chooses to remove marijuana from the CSA entirely, it could seek to regulate and tax commercial marijuana activities.

    De-scheduling cannabis appears to be the most effective option for the federal government to eliminate the existing conflict between federal and state law as it would allow cannabis to remain on the market as a medical and recreational product. Additionally, changing social attitudes toward marijuana will likely support de-scheduling. 

    Jennifer Guild, vice president of regulatory and quality at Abstrax Technologies, is hopeful that as states learn more from legalization programs across the country, they will “start to reward the responsible suppliers that are taking the initiative to self-regulate and develop their own toxicological programs to address the gap in knowledge that exists regarding the inhalation safety of various flavor ingredients.”

    However, a move to de-schedule cannabis would create new controversies. As Guild points out, testing standards created for flavors and other chemicals may prove impractically stringent, depending on the state. “There are over 678 unique chemical contaminants regulated in cannabis products among 30 state regulations (not including outside of the USA) … and flavors are not typically derived from cannabis nor do they contain any cannabinoids or other cannabis-derived extracts. Therefore, it is not feasible or appropriate for non-cannabis-derived flavors to be routinely tested for these 678 potential contaminants.”

    Regardless, Guild encourages manufacturers to “establish and implement a written quality plan to control potential safety risks [of] the products they manufacture. This risk assessment includes an evaluation of the potential chemical, biological and physical hazards that could be introduced to a party at each stage in the manufacturing operations.”

    Legalized marijuana operates in uncharted territory. There is no track record on the impact of these new laws. While outcomes might be positive, there is simply not enough information available to confidently project national success. For this reason, the federal government should work with states to learn from best practices and then develop a comprehensive program to address marijuana classification. 

    Willie McKinney is CEO at McKinney Regulatory Scientific Advisors.
    Emily Burns is senior regulatory strategy manager at McKinney Regulatory Scientific Advisors.

    1 www.congress.gov/bill/117th-congress/house-bill/8454

  • Net Sales Down 6.8% at Turning Point Brands

    Net Sales Down 6.8% at Turning Point Brands

    Turning Point Brands reported consolidated net sales of $103.4 billion the fourth quarter of 2022, down 1.8 percent from the comparable 2021 quarter. Gross profit decreased 1.5 percent to $49.6 million. Net sales for the Zig-Zag and Stoker products increased 0.9 percent and 2.6 percent, respectively, while sales of new-generation products declined by 11.1 percent.

    For the full year, consolidated net sales decreased by 6.8 percent to $415 million. Gross profit was down 5.6 percent to $205 million. Net sales for Zig-Zag and Stoker’s products increased 7.9 percent and 5.3 percent, respectively, while sales of new generation declined by 35.2 percent

    “The fourth quarter operating results finished in-line with our expectations with solid execution across our segments,” said TPB President and CEO Graham Purdy in a statement.

    “The Zig-Zag segment grew during the quarter despite the impact of a previously disclosed pull-forward in the prior quarter, benefitting from continued market share gains and the contribution from a full quarter of CLIPPER lighters. We are pleased with the ongoing roll-out and strong channel receptivity to the world’s No. 1 reusable lighter. Stoker’s MST experienced strong share gains as consumer trade-downs to value accelerated, consistent with the current inflationary and economic backdrop.

    “The challenging regulatory environment continues to negatively affect the NewGen segment which was down materially vs. 2021, but with declines moderating in the back half of the year. In addition to returning capital to our shareholders through share repurchases, we opportunistically purchased $10 million notional of our convertible notes during the fourth quarter while maintaining a strong cash balance.

    ”Over the last few months since taking on the CEO role, my primary objective has been to re-direct our focus and energy towards driving organic long-term growth. This starts with allocating resources to products, initiatives, and channels best positioned towards this goal. Our organization is now better aligned towards capitalizing on the opportunities in front of us and we look forward to delivering against our long-term plans going forward.”

  • So Soul Debuts 3 New Disposable Vapes in Las Vegas

    So Soul Debuts 3 New Disposable Vapes in Las Vegas

    Peter Zhang and Luna Wang, co-founders of So Soul vaping products

    Global vaping manufacturer So Soul launched three new disposable products during the Total Products Expo (TPE) 2023 in Las Vegas, held from February 22 to 24 at the Las Vegas Convention Center.

    China-based So Soul debuted its NOLA Bar, Y6000 and SLIMZ disposable vaping products, company founder and CEO Luna Wang told Vapor Voice during the show.

    • The SLIMZ is billed as “the world’s thinnest 5000-puff pod” and holds 11mL of 5% nicotine salt e-liquid, a mesh coil, and a 550mAh rechargeable battery. The SLIMZ offers 10 flavor profiles.
    • The new Y6000 is So Soul’s latest 6000-puff vaping device. The Y6000 holds 14mL of 5% nicotine salt e-liquid and a mesh coil that is powered by a 650mAh rechargeable battery. The Y6000 also offers 10 flavor profiles.
    • So Soul’s NOLA Bar is a 10,000-puff disposable device that offers 5% nicotine salt in 10 flavor profiles. The NOLA Bar holds 22mL of e-liquid with a 650mAh rechargeable battery.

    In mid-2021, Luna Wang joined forces with another experienced vapor industry entrepreneur, Peter Zhang. Both also had previous experience working with Fortune 500 companies. Together, they started the So Soul brand in Shenzhen, China, the global capital of e-cigarette manufacturing, said Wang.

    So Soul began because its creators believed something was missing in the market. Aside from a device’s appearance, aroma and flavor were two areas that Wang and Zhang felt were lacking in the Chinese vaping industry. The company founded its own research and development laboratory, staffed by the world’s top experts in the field, to develop products that could meet Wang’s high standards.

    The company devotes 60 percent of its profits to R&D in an effort to always be improving. It wants its products to stand out for their “combination of style, substance and soul,” explains Wang. “We are dedicated to providing our customers with products that are not only stylish and cutting-edge but also made with the highest quality ingredients and backed by extensive research and development.”

  • Vaporesso Launches Luxe XR Max During TPE 2023

    Vaporesso Launches Luxe XR Max During TPE 2023

    Vaporesso, one of the largest open-system vaping hardware manufacturers in the world, launched its new 80W Pod Mod, the Luxe XR Max during this year’s Total Product Expo (TPE) 2023 in Las Vegas, held from February 22 to 24 at the Las Vegas Convention Center.

    The China-based subsidiary of Smoore International, the largest vaping company in the world, said that the XR Max is the latest member of Luxe X family and is fully compatible with other LUXE X products.

    The Luxe products combine the core features SSS leak-resistant technology, and COREX, an innovative heating and flavor-boosting technique developed by Vaporesso, and is powered by the company’s signature Axon Chip,

    The Luxe XR MAX offers an easier-than-ever user interface to help vapers get the best possible performance out of their vaping devices. The chip also equips Vaporesso’s products with a smart use mode.

    As part of the new design, the Luxe XR MAX adopts the classic clear, futuristic shape of the Luxe X series, and offers users a heightened vaping. Its SSS leak-resistant design, coupled with the brand’s COREX heating technology effectively increases the flavor and the lifespan of GTX coil.

    The new model also has a longer battery life, making it an ideal fit for direct-to-lung (DTL) users, according to Vaporesso.

  • Saligupta: ‘Thailand to Legalize Vaping After Elections’

    Saligupta: ‘Thailand to Legalize Vaping After Elections’

    Asa Saligupta

    Activists are confident that Thailand will legalize vaping after the likely general elections in May. Vaping is currently prohibited in the kingdom, but discussions are ongoing to end the ban, according to ENDS Cigarette Smoke Thailand (ECST).

    “This work has been several years in the making. It hasn’t stopped. In fact, draft vaping legislation awaits Thailand’s parliament to debate and ratify,” said ECST Director Asa Saligupta.

    Saligupta notes that while anti-vaping campaigners appear to have the ear of the public health minister, most politicians and the public remain supportive of lifting the country’s vaping ban.

    “I remain fully confident that safer nicotine products will be regulated in Thailand. Regulation will give consumers better protection, encourage more smokers to quit deadly cigarettes, and ensure we have much better control over youth vaping with a strict purchase age,” he said.

    ECST says smoking kills about 50,000 Thai people every year.

    “If we want to substantially reduce smoking-related illnesses and premature deaths, we must lift Thailand’s harsh ban and penalties on vape products,” said Saligupta.

    According to ECST, nearly 70 countries have adopted regulatory frameworks on safer nicotine products, leading to dramatic declines in their overall smoking rates.

  • U.S. FDA Files First Civil Money Penalties for Illicit Sales

    U.S. FDA Files First Civil Money Penalties for Illicit Sales

    Credit: VetKit

    Some manufacturers of e-liquids could soon be paying nearly $20,000 per violation for selling vaping products without approval. Today, the U.S. Food and Drug Administration announced it has filed civil money penalty (CMP) complaints against four tobacco product manufacturers for manufacturing and selling e-liquids without marketing authorization.

    This marks the first time the regulatory agency has filed CMP complaints against tobacco product manufacturers to enforce the Federal Food, Drug, and Cosmetic (FD&C) Act’s premarket tobacco product application (PMTA) process.

    The FDA previously warned each of the companies that, by making and selling their e-liquids without marketing authorization from the FDA, they were in violation of the FDA’s PMTA requirements and that failure to correct these violations could lead to enforcement action, such as a CMP, according to a press release.

    Despite the agency’s warning, the companies continue to make and sell their unauthorized e-liquids to consumers.

    “Holding manufacturers accountable for making or selling illegal tobacco products is a top priority for the FDA,” said Brian King, Ph.D., M.P.H., director of the FDA’s Center for Tobacco Products. “We are prepared to use the full scope of our authorities to enforce the law—especially against those who have continued to violate the law after being warned by the agency.”

    As of Feb. 21, the FDA has filed CMP complaints against the following four manufacturers:

    • BAM Group LLC doing business as VapEscape
    • Great American Vapes LLC doing business as Great American Vapes
    • The Vapor Corner Inc. doing business as Vapor Corner Inc., The Vapor Corner, and Vapor Corner
    • 13 Vapor Co. LLC doing business as 13 Vapor

    Currently, under the FD&C Act, the maximum CMP amount is $19,192 for a single violation relating to tobacco products. The FDA typically seeks the statutory maximum allowed by law and is doing so in these four cases.

    The companies the FDA has filed CMP complaints against can pay the penalty, enter into a settlement agreement, request an extension of time to file an answer to the complaint, or file an answer and request a hearing. Companies that do not take action within 30 days after receiving the complaint risk a default order imposing the full penalty amount.

    “These latest enforcement activities are part of a comprehensive approach to actively identify violations and to deter illegal conduct,” said King. “These actions should be a wakeup call that all tobacco product manufacturers—big or small—are required to obey the law.”    

    Manufacturers that continue to violate the law risk subsequent enforcement, according to the FDA. In addition to CMPs, the agency also has the authority to take other enforcement action, as appropriate, including seizures, injunctions, and criminal prosecutions.

  • Research: Vaping Flavor Bans Boost Black Markets

    Research: Vaping Flavor Bans Boost Black Markets

    Credit: Luxor Photo

    Flavor bans are creating black markets that cost U.S. states a massive amount of money in lost taxes, according to the latest research.

    Just go to any online consumer-to-consumer website and flavored vaping and other tobacco products are for sale in states with flavored tobacco bans. A quick search for menthol on sites such as Craigslist and OfferUp in California or Massachusetts, where flavored products are banned, will yield results for every flavor of vaping product from apple to vanilla for sale. You can also find nearly every brand of menthol cigarettes for purchase on the online black market.

    New York, New Jersey and Rhode Island also have barred the sale of flavored vaping products. Massachusetts and California banned all flavored tobacco items, including flavored cigars, cigarettes and vaping goods. Since California’s flavored tobacco ban went into effect on Dec. 21, one week after the U.S. Supreme Court blocked R.J. Reynolds Tobacco Co.’s contention that the new state law conflicted with federal law, the state’s black market for flavored tobacco products has grown exponentially.

    Stat News reported that in January it visited 24 California vape shops throughout Oxnard, Ventura, Pasadena, El Monte, Carson and West Hollywood—all of which have had bans on flavored vapes on the books for at least a year and most for two or more years. Seventeen of the shops, or 70 percent, were selling the products anyway. In Oxnard, where the news group visited five shops, none of the stores sold flavored vapes.

    States in the proximity of states that have enacted flavor bans have some of the highest tobacco smuggling rates in the country. A report by the nonpartisan Tax Foundation found that New York has the highest inbound smuggling activity, with an estimated 53.5 percent of cigarettes consumed in the state deriving from smuggled sources in 2020. New York is followed by California (44.8 percent).

    New Hampshire has the highest level of net outbound smuggling at 52.4 percent of consumption. This is likely due to the state’s relatively low tax rates and proximity to states with strict tobacco regulations and high taxes. The report said the move by other Northeast states to raise cigarette taxes and ban certain tobacco products have made cigarette smuggling a lucrative criminal initiative.

    “People respond to incentives,” said Adam Hoffer, the Tax Foundation’s director of excise tax policy. “As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.”

    Last year, JAMA Internal Medicine published a study about the impact of banning flavored tobacco products in Massachusetts. The study found that the sale of flavored tobacco decreased following the ban. However, when comparing sales in Massachusetts with sales across 27 other states, the authors found that sales had decreased more in Massachusetts than in the control states.

    “Such a result would indicate that the flavor ban has been a success. Unfortunately, the study left out a very important piece of information: cross-border trade,” Ulrik Boesen, also with the Tax Foundation, stated at the time. “The end result of the ban, in fact, is that Massachusetts is stuck with the societal costs associated with consumption while the revenue from taxing flavored tobacco products is being raised in neighboring states.”

    A 2022 report from the Massachusetts Multi-Agency Illegal Tobacco Taskforce found that in 2021, state police and the Department of Revenue seized more than 5,000 packs of cigarettes and more than 100,000 vapor products. It also details multiple investigations and prosecutions, including ones leading to sentences of six months to a year. Some of these were for smuggling that predate the flavor ban, but others clearly involve it.

    For example, the report notes an ongoing investigation into a February 2022 seizure of more than 5,000 flavored e-cigarettes as well as a motor vehicle stop that netted “a large quantity of untaxed flavored ENDS [electronic nicotine-delivery system] products, cigars, smokeless tobacco and cigarettes” representing $21,000 in unpaid taxes. “As it happens, looking at the New England region as a whole confirms that the flavor ban did not work as intended. Sales moved around rather than disappeared, and the ban evidently did not impact consumption,” stated Boesen. “Total sales for the region decreased by slightly more than 1 percent comparing the 12 months preceding the ban to the 12 months following the ban—largely comparable to the national sales trends.”