Author: Timothy Donahue

  • Thailand: Police Seize $300,000 in Illegal Vapes

    Thailand: Police Seize $300,000 in Illegal Vapes

    Credit: Natanaelginting.

    Police conducted a raid on a warehouse owned by a major online e-cigarette dealer in northern Thailand, YAI VAPE, confiscating 30,000 items valued at 10 million baht ($291,000).

    The police discovered e-cigarettes disguised as toys to evade detection. The Ministry of Public Health is advocating for legislative changes to close legal loopholes, according to media reports.

    Pol. Lt. Gen. Nirundorn disclosed that the inquiry commenced with the discovery of the website yaivapeth.com, which promoted e-cigarettes and related items and offered nationwide delivery services.

    Earlier this week, child health and rights experts in the country began calling for more awareness of the dangers of vaping around children, claiming exposure to secondhand vapor from vaping at home could be seen as a violation of Thailand’s child protection laws.

  • Czech Health Ministry Wants Ban on Flavored Vapes

    Czech Health Ministry Wants Ban on Flavored Vapes

    Credit: Piotr

    The Czech Health Ministry is drafting an amendment to a decree that could significantly impact the e-cigarette industry. The proposed changes would prohibit all flavors except tobacco, as well as sweeteners and other additives commonly used in e-liquids.

    These regulations would apply solely to vaping products, leaving traditional cigarettes and other nicotine alternatives unaffected. Industry representatives have responded with alarm, warning that this move could lead to the collapse of the entire sector.

    “We are stunned. Without any prior consultation, the ministry is essentially planning to ban e-cigarettes in the Czech Republic,” said Robert Hrdlička, chairman of the Chamber of Electronic Vaping (KEVAP).

    He argued that without the now-banned ingredients, tobacco-flavored e-liquids would be unsellable. “The ministry is imposing an amateurish and uninformed view on what tobacco should taste like,” Hrdlička added.

    In addition, a new excise tax on e-cigarettes is set to take effect in September, with further increases planned in the coming years, according to media reports. “The government’s approach is entirely illogical. First, they encourage e-cigarettes as a tool to reduce smoking, and now they’re essentially banning them,” Hrdlička criticized.

    Experts in the e-cigarette field warn that such a ban could push users back to conventional cigarettes or encourage smuggling of e-liquids from abroad.

  • Burbidge Joins Global Action to End Smoking

    Burbidge Joins Global Action to End Smoking

    Global Action to End Smoking appointed Cole Burbidge as a new director of programs. With a distinguished career in advancing public health in underserved communities, Burbidge brings a wealth of experience that will support the organization’s grantmaking work, according to the organization.

    Burbidge is a physician by training and a strong advocate for patient-centered care, understanding firsthand the gaps between idealized healthcare models and the reality faced by patients. His career has been dedicated to improving health outcomes for recreational substance users and high-risk patients.

    At Global Action, Burbidge’s main roles will be developing requests for grant proposals and evaluating prospective research projects. He will also be supporting the communications team as it disseminates relevant information to people who smoke. He will report to Erik Augustson, vice president of programs.

    “I’m excited to continue my work in improving public health through my new role at Global Action,” said Burbidge in a statement. “I am deeply passionate about meeting individuals where they are to make sure that a healthier lifestyle is effective and accessible.”

    Burbidge’s experience spans consulting roles with healthcare organizations, pharmaceutical companies and risk-reduction advocacy groups as well as leadership positions in industry, where he oversaw teams in scientific and regulatory affairs.

    “Dr. Cole Burbidge is a strong addition to our team at Global Action,” said Augustson. “His expertise and passion for patient-centered care will be invaluable as we continue our mission to end smoking. Dr. Burbidge’s focus on innovative, data-driven solutions aligns perfectly with our goals, and we look forward to the impact he will have on our programs.”

  • Registry Rules in Kentucky Decimating Vape Shops

    Registry Rules in Kentucky Decimating Vape Shops

    Credit: Zoran Milic

    A leading figure in the retail vaping industry in Kentucky has stated that businesses statewide are experiencing a decline. A new law that affects most vaping product outlets will come into effect this January.

    Tony Florence owns six vape stores in Kentucky and a manufacturing facility. He said his father died from lung cancer and his interest in the business has been to provide an avenue to help people quit smoking cigarettes. Florence said open-system vaping devices can work to that end.

    “If it got to the point where 20 years from now, I went out of business because there were no more people smoking and no more people vaping, mission accomplished. I’m good with that,” said Florence, according to media reports.

    But Florence predicts a vast majority of vape shops in Kentucky will be closing in the months ahead. He said HB 11, passed earlier this year, limits legal sales to relatively few products. Florence said disposable vape devices often do have higher nicotine levels, which can foster continued use.

    Florence said he’s seen a trend since April when lawmakers passed the legislation.

    “More and more stores just going out of business. They are not renewing leases. I mean, from a manufacturing-distribution standpoint, I’m down 80 percent since April. Because stores are just … they’re either not buying new product because they’re selling off the old or they’re going out of business,” said Florence.

  • VooPoo Launches Doric 60 Pro System in France

    VooPoo Launches Doric 60 Pro System in France

    VooPoo launches its latest vaping system, the DORIC 60 Pro, in the French market. The innovative round-rod pod mod promises to “:reshape the vaping experience” with its state-of-the-art features and improved design, according to a release.

    “Central to DORIC 60 Pro is the PnP X atomization technology, which offers remarkable enhancements in flavor, durability, and protection against leaks. This advanced technology signifies a major leap forward, ensuring a superior experience for our meticulous customers,” the release states. “Moreover, the addition of a replaceable 510 thread drip tip permits more customization and adaptability, accommodating both DTL (direct-to-lung) and MTL (mouth-to-lung) vaping needs.”

    DORIC 60 Pro has been substantially upgraded to boost its performance and user satisfaction. The introduction of PnP X enhances atomization technology, providing better flavor, prolonged longevity, and improved 4-layer leak-proof technology, according to VooPoo.

    Additionally, the device’s aesthetics have been sharpened with a smaller size and broader color selection, amplifying its visual charm and user appeal. Different vape modes, adjustable via the 510 thread tip, enable easy switching between DTL and MTL modes, tailoring to individual preferences.

    “Adding to these developments, Doric 60 Pro has a practical rotary lock switch at its base. The inventive feature ensures effortless and secure locking, providing users with a prompt, safe, and smooth experience,” the release states.

  • Illinois  Bans ‘Highlighter’ Looking Vaping Devices

    Illinois Bans ‘Highlighter’ Looking Vaping Devices

    Credit: High Light Vape

    Illinois lawmakers have decisively passed a law that forbids vaping companies from targeting teens with their advertising, particularly by promoting electronic cigarettes that resemble school supplies such as highlighters, markers, or erasers.

    The changes come at a time when lawmakers from both sides of the aisle in Springfield have been bombarded with complaints about students bringing vapes into schools that could easily be mistaken for such common items, according to media.

    Seilback argues that none of the deception should come as a surprise.

    “The industry is always needing to replace those that quit using their products,” he adds. “They’re always looking for the next generation. They’re going to keep saying what they say and we need to make sure that our elected officials stand with the public health community.”

    The new law will be enforced by the Illinois Department of Revenue, the Attorney General’s office, and local law enforcement. At the same time, Senate Bill 3098, which will ban electronic cigarette companies from allowing anyone under 21 to order vaping products online or by mail, is also slated to soon take effect.

    Illinois Senate Bill 3098, signed into law Aug. 9, prohibits e-cigarettes purchased by mail, online or through other remote sale methods from being shipped to anyone in the state other than a distributor or retailer. Senate Bill 3098 goes into effect Jan. 1, 2025.

  • Smoore Reports Half-Year Revenue of $705.4 Million

    Smoore Reports Half-Year Revenue of $705.4 Million

    Photo:TacoTuinstra

    Smoore International Holdings reported revenue of RMB5.04 billion ($705,4 million) for the six months that ended June 30, down 1.7 percent from the comparable 2023 period. Gross profit rose 3.2 percent to RMB1.91 billion while pretax profit was up by 1.9 percent to RMB811.56 million.

    The group’s branded business grew by 71.9 percent to RMB1.12 billion in the first half of 2024, boosted by the company’s digital marketing operations, which enabled the company to respond rapidly to consumer preferences. The group’s Vaporesso brand continued to increase its market share in the open system product segment and has become the leading brand in this category.

    Smoore’s corporate client sales meanwhile, declined by 12.3 percent to RMB3.92 billion in the first six months of 2024, reflecting  different sales performances in different markets around the world.

    In the U.S., Smoore faced competition from noncompliant vaping products. However, the company said it was encouraged by clarifications of the regulatory framework and the strengthening of enforcement in that market, pointing to creation of a federal multi-agency task force to combat the illicit market, among other developments.

    Increasing regulation of the vaping market in Europe, meanwhile, has impacted demand for traditional disposable products, causing the group’s revenue from single-use vapes to decline by approximately 18.9 percent year-on-year to approximately RMB1.22 billion.

    Smoore said it has successfully launched a number of new closed system products in the international market in the first half of the year, and it is confident that this will translate into stronger orders in the second half of the year.

    In China, where the group’s corporate client oriented business centers on closed system electronic vaping products, Smoore reported sales revenue of RMB87.78 million, representing an increase of approximately 41.4 percent  as compared to the same period last year.

  • Supreme Decision

    Supreme Decision

    Credit: Sean Pavone Photo

    The U.S. vaping industry is anxiously awaiting a decision from the highest court in the land.

    By Timothy S. Donahue

    The Supreme Court of the United States (SCOTUS) is poised to address a crucial case for the vaping industry that challenges the U.S. Food and Drug Administration’s decision to block the marketing of flavored e-cigarette products. The FDA is contesting a lower court ruling that favored two vaping companies, which argue that the FDA unjustly rejected over a million premarket tobacco product applications (PMTAs) to sell flavors other than tobacco or menthol.

    Under the agency’s PMTA pathway, companies must demonstrate that the marketing of a product would be appropriate for the protection of public health (APPH). When the FDA makes decisions about vaping products, it must take into consideration the risks and benefits to the entire population, not just users of the products.

    The case, Wages and White Lion Investments v. U.S. FDA, is compelling because a major factor in predicting how SCOTUS will rule in the first vaping case to be heard by the high court, and potentially at least three others, is that in the wake of another SCOTUS ruling, courts no longer need to defer to agency interpretation of the law simply because a statute is ambiguous (see “Principle Response,” page 22).

    Gregory Conley, an experienced industry attorney and director of legislative and external affairs at the American Vapor Manufacturers Association, said that the overturning of the Chevron deference could have a profound impact on the vaping and broader nicotine industries by reducing the deference courts previously granted to regulatory agencies like the FDA.

    “Judges will now critically evaluate the FDA’s regulatory processes and interpretations of ambiguous statutes rather than assuming the agency knows best,” Conley said. “In simpler terms, for the first time since its creation, the FDA’s Center for Tobacco Products will have to follow the law as written.”

    Vape companies secured a legal victory when the 5th U.S. Circuit Court of Appeals sided with Wages and White Lion (doing business as Triton Distribution) and Vapetasia when it overturned the orders denying the marketing of the companies’ flavored products. In its decision, the 5th Circuit condemned the FDA’s imposed requisites as “unfair,” noting that the agency “unexpectedly demanded” that the companies present studies demonstrating that flavored products would contribute to smoking cessation.

    In January, the en banc panel of the 5th Circuit voted 9-5 to grant the petitions for review. The judges ruled that the FDA had been “arbitrary and capricious,” in violation of a federal law called the Administrative Procedure Act (APA), by denying the applications without considering the companies’ plans to prevent underage access and use.

    “Over several years, the [FDA] sent manufacturers of flavored e-cigarette products on a wild goose chase. First, the agency gave manufacturers detailed instructions for what information federal regulators needed to approve e-cigarette products. Just as importantly, FDA gave manufacturers specific instructions on what regulators did not need,” Circuit Judge Andrew S. Oldham wrote in the majority opinion. “The agency said manufacturers’ marketing plans would be ‘critical’ to the success of their applications.

    “And the agency promulgated hundreds of pages of guidance documents, hosted public meetings and posted formal presentations to its website—all with the (false) promise that a flavored-product manufacturer could, at least in theory, satisfy FDA’s instructions. The regulated manufacturers dutifully spent untold millions conforming their behavior and their applications to FDA’s say-so.

    “Then, months after receiving hundreds of thousands of applications predicated on its instructions, FDA turned around, pretended it never gave anyone any instructions about anything, imposed new testing requirements without any notice, and denied all 1 million flavored e-cigarette applications for failing to predict the agency’s volte-face. Worse, after telling manufacturers that their marketing plans were ‘critical’ to their applications, FDA candidly admitted that it did not read a single word of the 1 million plans.”

    The case began when the FDA rejected 55,000 applications to market flavored e-cigarettes in August 2021, including Triton’s, and said applicants would likely need to conduct long-term studies establishing their products’ benefits to win approval. The Office of the Solicitor General asked the Supreme Court to review whether the 5th Circuit’s decision relied upon “legal theories that have been rejected by other courts of appeals that have reviewed materially similar FDA denial orders.”

    The regulatory agency’s “legal theories” in Triton are based on administrative fairness and regulatory consistency, not Chevron deference. In most vaping industry lawsuits, appeals courts have supported the FDA, and manufacturers have sought appeals. In the Triton Distribution case, however, the FDA had to petition the court to review the 5th Circuit’s decision, which was based more on APA violations. SCOTUS is scheduled to hear the case sometime during its new session, which begins in October.

    Conley explained that, while the end of Chevron signals a new openness by the Supreme Court to scrutinize federal agencies, the 5th Circuit’s opinion focused on matters of statutory interpretation, including procedural conduct and the FDA’s sudden imposition of new standards without proper notification.

    “With or without Chevron deference, we believe that the ‘switcheroo’ pulled by the FDA was arbitrary, capricious and not in line with the Administrative Procedures Act,” said Conley. “This stance aligns with the court’s broader view that agencies should not have unchecked power to interpret and enforce ambiguous statutes without clear congressional authorization.”

    Much of the lower court’s opinion is based on APA violations. The APA process for creating federal regulations has (typically) three main phases: initiating rulemaking actions, developing proposed rules and developing final rules. In practice, however, this process is often complex, requiring regulatory analysis, internal and interagency reviews, and opportunities for public comments.

    At its most basic level, the APA requires that an agency create a draft proposed rule, review/approve it, publish a notice of proposed rulemaking in the Federal Register and open a public comment period of at least 30 days. In a footnote to the Triton decision, the court characterized the FDA’s denial of all PMTAs for nontobacco-flavored e-cigarettes as a “de facto flavor ban” that circumvented the APA’s required notice-and-comment rulemaking process:

    “(5) FDA’s categorical ban has other statutory problems. For example, the TCA states that FDA must follow notice-and-comment procedures before adopting a ‘tobacco product standard.’ See 21 U.S.C. § 387g(c)–(d). And Congress specifically called a ban on tobacco flavors a ‘tobacco product standard.’

    “See id. § 387g(a)(1)(A) (referring to tobacco flavors, ‘including strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry or coffee, that is a characterizing flavor of the tobacco product or tobacco smoke’); see also id. § 387g(a)(2) (cross-referencing notice-and-comment obligation to revise flavor standards). FDA unquestionably failed to follow § 387g’s notice-and-comment obligations before imposing its de facto ban on flavored e-cigarettes.”

    Attorneys from the U.S. Department of Justice told the justices that the 5th Circuit’s ruling “has far-reaching consequences for public health and threatens to undermine the TCA’s central objective of ‘ensuring that another generation of Americans does not become addicted’” to nicotine products.

    In court papers, Solicitor General Elizabeth Prelogar told SCOTUS justices that the FDA has never adopted a categorical ban on flavored e-cigarette products. “Rather, it has recognized that, because such products pose a ‘known and substantial risk to youth,’ applicants bear a particularly high burden of proving a potential for benefit to adult smokers that could justify the risk,” she wrote.

    Robert Burton, a longtime player in the U.S. vaping industry and current group scientific and regulatory director for the U.K.-based vaping company Plxsur, said that concerning the Triton case, decisions will now need to carry a significant weight of evidence on both sides.

     “Without the Chevron precedent, it may come down to a judgment based upon who knows the market and consumer best and who understands ‘best’ what is in the interest of public health, but based upon facts and data rather than a gray area deferral,” said Burton.

    Attorney Eric Heyer, who is representing Triton, expressed intense anticipation for the Supreme Court’s hearing of the case. He strongly criticized the FDA for imposing “surprise, after-the-fact … study requirements” and failing to adhere to the guidelines the agency itself had developed.

    It is unclear whether SCOTUS will hear the three other vaping-related cases, which are also before it (Magellan Technology Inc. v. Food and Drug Administration; Lotus Vaping Technologies LLC v. Food and Drug Administration; and Logic Technology Development LLC v. Food and Drug Administration). In these cases, vaping manufacturers seek a review of their losses in FDA-issued marketing denial order appeals handed down by various other circuit courts.

    Yolonda Richardson, president and CEO of the Campaign for Tobacco-Free Kids, has urged the high court to overturn the appeals court order, emphasizing that if allowed to stand, it could significantly harm public health, particularly that of children. Vaping companies have asserted that their products can mitigate the harm caused by smoking combustible cigarettes.

    When the Triton decision was announced, Tony Abboud, executive director of the Vapor Technology Association, welcomed the decision as a “blistering indictment” of the FDA’s Center for Tobacco Products for its “intentional misleading” of the U.S. e-cigarette industry.

    “The court was so stupefied by the FDA’s bad-faith efforts to reject all flavored e-cigarette products [that] it cited Shakespeare to illustrate the full extent of the FDA’s disingenuity, particularly after the court explained that the plaintiffs in that case provided scientific evidence that e-cigarettes ‘save lives,’” Abboud said. “The court also emphasized the dramatic and abrupt ‘FDA flip-flop,’ which led to the implementation of what the court called a ‘de facto ban’ on flavored e-cigarette products in the U.S.

    “This was in addition to the voluminous jurisprudence cited by the court laying bare just how egregious the behavior of the FDA administrative state has been toward e-cigarette products and the consumers that use them. As the court stated, ‘No principle is more important when considering how the unelected administrators of the fourth branch of government treat the American people.’”

    Triton Cited as Precedent by 5th Circuit

    The U.S. Food and Drug Administration is starting to see vapor on the horizon. The regulatory agency has been handed another brutal defeat by a federal court. The 5th Circuit Court of Appeals granted petitions for review to five vaping companies, citing its own decision in the Triton Distribution case as precedent.

    The court sent the company’s marketing denial orders (MDOs) back to the FDA for additional scientific evaluation. As a result, the manufacturers may keep selling their products until the agency completes new reviews of their premarket tobacco product applications (PMTAs) or until the Supreme Court takes action.

    “Specifically, the court determined that (1) FDA did not give e-cigarette manufacturers fair notice of the rule requiring long-term studies for PMTAs; (2) FDA did not acknowledge or adequately explain its change in position; and (3) FDA ignored reasonable and serious reliance interests that manufacturers had in the pre-MDO guidance,” the 5th Circuit wrote in its ruling.

    Five companies, Cloud House, Paradigm Distribution, SWT Global Supply, Vaporized and SV Packaging, first challenged their MDOs in court in October 2021. The court consolidated the five cases, and in November 2021, all petitioners were granted stays pending review.

    In January, the 5th Circuit found in favor of Wages and White Lion Investments (doing business as Triton Distribution) in the e-liquid manufacturer’s appeal of an MDO. The FDA later petitioned the Supreme Court to review the 5th Circuit’s ruling, and last month, the Supreme Court agreed to hear the agency’s appeal.

    The FDA challenged the Triton decision, and the U.S. Supreme Court agreed to hear that case. “But now, another panel of the 5th Circuit has applied the same rationale as in Triton to hold that these five, small-business manufacturers prevail for the same reason: FDA pulled a surprise switcheroo,” wrote the United States Vaping Association on X.

    “From 2018 to 2020, FDA provided a ‘dizzying’ array of detailed instructions explaining the requirements for PMTAs,” the opinion states. “But ‘[n]ever in this long, winding and byzantine regulatory process of meetings, PowerPoint decks, proposed rules, comment periods, guidance documents and enforcement priorities did FDA ever say that it was contemplating an across-the-board ban on flavored products. Nor did FDA ever give fair notice that flavored product manufacturers had to submit robust scientific studies on flavored e-cigarette products.’”

    The 5th Circuit found that the recent petitions posed the same issues as Triton’s. “Petitioners spent substantial time and resources preparing their PMTAs based on FDA guidance that they would not need to submit long-term clinical studies,” the court wrote. “Nevertheless, FDA rejected their PMTAs using the same boilerplate language it used for the Wages petitioners’ denials as well as those of thousands of other e-cigarette manufacturers.

    “Accordingly, for the reasons amply explained by the en banc court in Wages, we hold that FDA acted unlawfully here as well by denying petitioners’ PMTAs based on the absence of long-term clinical studies.”

    The FDA’s failure was not simply a failure to provide notice that a particular type of study was required (long-term studies) but a failure to provide notice of the substantive standard requiring comparison between the flavored products at issue and tobacco-flavored juices, according to the USVA.

    “USVA members have now won important legal precedent in the 11th and 5th Circuits,” the USVA posted. “Note that manufacturers who didn’t file a petition in a court of appeals to challenge their MDOs can still sue in district court, and if you’re in the 5th or 11th Circuit, you have binding precedent in place that should provide a solid prospect of securing a quick ruling vacating your MDO.”

  • Principled Response

    Principled Response

    VV Archives

    The end of Chevron deference could have ripple effects across the nicotine industry.

    By Timothy S. Donahue

    U.S. courts will no longer need to “humbly respect” how government agencies interpret the law. The end of Chevron deference means unelected officials will no longer have the leeway to subjectively decide what Congress intends when it passes regulatory legislation.

    The court’s ruling in Loper Bright Enterprises v. Raimondo and the related case Relentless v. Department of Commerce will likely have far-reaching impacts on nearly every action government agencies take. For the nicotine industry, it could change how courts view the U.S. Food and Drug Administration’s premarket tobacco product application (PMTA) process. It could also impact the agency’s efforts to regulate menthol and lower the levels of allowable nicotine in combustible cigarettes.

    “For far too long, unelected bureaucrats at the FDA have been making up the law to suit their ulterior agenda and … the Supreme Court has thankfully put a stop to it once and for all,” said Allison Boughner, vice president of the American Vapor Manufacturers Association, in a statement. “No longer will it be good enough for [prohibitionists] in Congress to write vague, Crayola language and then connive behind closed doors with FDA to impose arbitrary policies on the American public that could never withstand the light of day. [This] ruling is a stirring rebuke of FDA and, we hope, with more soon to follow in pending cases.”

    In declaring the doctrine’s demise, Chief Justice John Roberts wrote that agencies “have no special competence” in resolving statutory ambiguities—but courts do.

    “Chevron is overruled,” wrote Justice Roberts in the Loper Bright decision. “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA [Administrative Procedure Act] requires. Careful attention to the judgment of the Executive Branch may help inform that inquiry.

    “And when a particular statute delegates authority to an agency consistent with constitutional limits, courts must respect the delegation while ensuring that the agency acts within it. But courts need not and under the APA may not defer to an agency interpretation of the law simply because a statute is ambiguous.”

    Agustin E. Rodriguez, a partner with Troutman Pepper, explained that “under the doctrine of Chevron deference, courts would defer to a federal agency’s interpretation of an ambiguous statute if the agency was charged with administering the statute in question and its interpretation was reasonable. However, the end of Chevron deference may alter that traditional thinking.”

    Bryan Haynes, also a partner at Troutman Pepper, added, “The Supreme Court’s decision overruling Chevron in the Loper Bright Enterprises v. Raimondocase could affect federal courts’ overall outlook on agency interpretations, possibly making courts hesitant to defer to agencies as a general practice.”

    The decision could potentially result in alterations to the FDA’s methods of regulating vaping products. The Supreme Court of the United States (SCOTUS) has agreed to hear its first-ever vaping case, Wages and White Lion Investments v. U.S. FDA, which is compelling because deferring to Chevron has been the standard for lower courts when deciding regulatory cases brought by manufacturers of nicotine products (the end of Chevron deference isn’t likely to directly impact the White Lion case, according to its attorneys).

    Robert Burton, an expert with more than 11 years of experience in the U.S. vaping industry and current group scientific and regulatory director for the U.K.-based vaping company Plxsur, said another general concern is that now, federal agencies may have to put more resources into the additional legal challenges that they will likely face and divert staff away from review/approval processes.

    “Agencies, such as FDA, may also have to look to improve their primary knowledge in those ‘gray areas’ to be able to demonstrate they actually have the knowledge and expertise rather than it being ‘assumed’ or deferred by judges based upon Chevron,” Burton explained. “I also can’t see anything changing soon; if anything, this will create a further backlog of court cases and delays in regulatory decisions based upon the potential for an agency to be challenged legally.”

    How it started

    The Chevron doctrine, based on the 1984 decision in Chevron v. Natural Resources Defense Council, held that courts should defer to the interpretations of “expert” federal agencies regarding ambiguous laws they are required to implement, as long as the agency interpretations are reasonable.

    In many cases, what would be considered “reasonable” was also left to government agencies to decide because nonelected bureaucrats were often considered “experts” even though they had little to no experience in the industries they were regulating.

    For 40 years, unelected officials were given latitude to decide on their own what Congress had intended when it wrote unclear laws—even if there were other sufficient interpretations that the courts could have considered. According to the New York Times, Chevron deference was applied in 70 Supreme Court decisions and 17,000 lower-court rulings during those years.

    The plea to overturn the Chevron doctrine came to the court in two cases challenging a rule issued by the National Marine Fisheries Service (NMFS) that requires the herring industry to bear the costs of observers on fishing boats. Applying Chevron, both the U.S. Court of Appeals for the District of Columbia Circuit and the U.S. Court of Appeals for the 1st Circuit upheld the rule, finding it to be a reasonable interpretation of federal law.

    The fishing companies brought their case to the Supreme Court, seeking the justices’ input on both the rule in question and the overruling of the Chevron doctrine. Roman Martinez, speaking on behalf of a group of fishing vessels, informed the justices that the Chevron doctrine undermines the courts’ responsibility to interpret the law and violates the federal law that governs administrative agencies, which calls for courts to independently review legal questions.

    Under the Chevron doctrine, he observed, even if all nine Supreme Court justices agree that the fishing vessels’ interpretation of federal fishing law is better than the NMFS’ interpretation, they would still be required to defer to the agency’s interpretation as long as it was reasonable. Such a result, Martinez concluded, is “not consistent with the rule of law.”

    Chris Howard, executive vice president of external affairs and new product compliance for Swisher, parent to the vaping company E-Alternative Solutions, welcomed the ruling, saying that federal agencies have had too much power for decades.

    “That ended with the Supreme Court’s decision overturning the longstanding Chevron doctrine,” said Howard. “The decision marks a significant shift in the judicial landscape, correcting the balance of power between federal agencies and the judiciary. It fundamentally alters how courts rule on agency statutory interpretation. As the majority states, courts will no longer be restrained by the need to provide deference.

    “Instead, ‘Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.’ This transformation will likely lead to significantly less regulatory flexibility and increased judicial scrutiny. The implications of this decision will resonate across industries, including the tobacco industry, influencing regulatory practices and shaping the future of administrative law. Regulatory overreach will become the exception as opposed to the norm and enable courts to fulfill their duty to interpret the law.”

    Immediate uproar

    The end of Chevron deference is extremely far-reaching, with other industries, such as healthcare, likely to review previous decisions that have gone against them. Justice Elena Kagan, in her dissent, asserted that government regulators are best positioned to tackle highly technical subjects.

    “This court has long understood Chevron deference to reflect what Congress would want, and so to be rooted in a presumption of legislative intent,” Kagan wrote. “Congress knows that it does not—in fact cannot—write perfectly complete regulatory statutes. It knows that those statutes will inevitably contain ambiguities that some other actor will have to resolve and gaps that some other actor will have to fill.

    “Today, the court flips the script: It is now ‘the courts (rather than the agency)’ that will wield power when Congress has left an area of interpretive discretion. A rule of judicial humility gives way to a rule of judicial hubris. In recent years, this court has too often taken for itself decision-making authority Congress assigned to agencies. The court has substituted its own judgment on workplace health for that of the Occupational Safety and Health Administration, its own judgment on climate change for that of the Environmental Protection Agency and its own judgment on student loans for that of the Department of Education.

    “In one fell swoop, the majority today gives itself exclusive power over every open issue—no matter how expertise-driven or policy-laden—involving the meaning of regulatory law. As if it did not have enough on its plate, the majority turns itself into the country’s administrative czar. It defends that move as one (suddenly) required by the (nearly 80-year-old) Administrative Procedure Act. But the act makes no such demand. Today’s decision is not one Congress directed. It is entirely the majority’s choice. And the majority cannot destroy one doctrine of judicial humility without making a laughingstock of a second.”

    Several national healthcare groups made a joint statement expressing that Chevron deference protected the legal stability of public health programs such as Medicare and Medicaid. The groups claim that Chevron ensured that laws passed by Congress were interpreted and implemented by expert federal agencies such as the Centers for Medicare and Medicaid Services.

    “As our amicus brief noted, large health programs such as Medicaid and Medicare, as well as issues related to the Food, Drug and Cosmetic Act, are extremely complex, so it is key that decisions about how to interpret and implement relevant laws are made by experts at government agencies,” the statement reads. “Yet [this] majority opinion explicitly ends the use of this sensible doctrine.

    “As leading organizations that work on behalf of people across the country who face serious, acute and chronic illnesses and many people who lack access to quality and affordable healthcare, we will continue to work to ensure that healthcare laws are implemented in ways that benefit public health.”

    In its response to the Chevron ruling, the Public Health Law Center at the Mitchell Hamline School of Law stated that the Loper Bright ruling will “undoubtedly impact” the field of administrative law and implicate regulations that, in addition to promoting public health and safety, have served to protect consumers, workers, civil rights and the environment.

    “Legal experts differ on the degree to which Loper Bright may wreak havoc on the federal administrative state; however, the forceful dissent written by Justice Kagan in this case and its companion case, Relentless v. Department of Commerce, should not be ignored. The dissent expressed grave concern that these decisions ‘will … cause a massive shock to the legal system, cast doubt on many settled constructions of statutes and threaten the interests of many parties who have relied on them for years.’

    “In the absence of Chevron deference, the tobacco industry will doubtless feel emboldened to dispute any regulatory actions taken on its products. This includes e-cigarette manufacturers who will be eager for courts to undo FDA-issued premarket tobacco product application denial orders for many thousands of vape products.”

    The Biden administration called the Chevron decision “yet another deeply troubling decision that takes our country backward,” adding that President Biden’s legal team would work with federal agencies to do “everything we can to continue to deploy the extraordinary expertise of the federal workforce.”

    Reshma Ramachandran, a health policy expert and assistant professor at the Yale School of Medicine, said, “This term has been disastrous for public health in many ways.”

    In the vaping industry, however, Tony Abboud, executive director of the Vapor Technology Association (VTA), said that the decision clearly bolsters what the VTA has been saying for years: the FDA and, specifically, the Center for Tobacco Products overstepped their authority when they chose to implement a de facto ban on flavored e-cigarettes in their deeply flawed implementation of the PMTA process.

    “To be clear, it is [the] FDA’s responsibility under the law to create a regulation that clearly addresses the statutory standard of what is ‘appropriate for the protection of public health’ since the Tobacco Control Act is ambiguous on how that determination should be made. However, there is no question that the FDA violated the Administrative Procedure Act by implementing what the 5th Circuit Court of Appeals called ‘a de facto ban on flavored e-cigarettes’ through its shifty implementation of the PMTA regulation by imposing new requirements on products after applications were already filed, ultimately ensuring their application’s demise.

    “The Supreme Court’s decision elevates the importance of the Reagan-Udall Foundation’s findings after being convened at the request of the FDA commissioner, which specifically and clearly criticized the FDA’s Center for Tobacco Products for failing to inform companies what must be provided under the regulation to demonstrate APPH [appropriate for the protection of the public health] and, as importantly, for failing to inform the public on how FDA is applying this standard.”

    Beyond nicotine

    The cannabis industry also will likely be impacted by the Chevron ruling. Asheville, NC-based attorney Rod Kight, a global resource and expert in cannabis law, said that the recent ruling by the SCOTUS that Chevron deference is dead is welcome news to the cannabis industry. With respect to the hemp sector, the death of Chevron means that unofficial positions taken about various cannabinoids and processes to produce hemp products by both the U.S. Drug Enforcement Agency (DEA) and the FDA on their respective websites and in letters to stakeholders do not hold any weight, at least not with the courts.

    “In practical terms, this means that judges may not defer to federal agency positions and interpretations and, instead, must weigh their positions relative to the strength of the legal positions and interpretations put forth by the hemp industry,” explains Kight. “For instance, with respect to tetrahydrocannabinolic acid (THCA), the DEA has stated in two letters during the past year that ‘cannabis-derived THCA does not meet the definition of hemp under the CSA because upon conversion for identification purposes as required by Congress, it is equivalent to delta-9 THC.’

    “As I have discussed in several blog posts and interviews, this is partially incorrect and is not exactly what ‘Congress required.’ Rather, Congress requires a post-decarboxylation test for hemp production (i.e., cultivation) but not for harvested hemp or hemp products.”

    In the past, this type of unofficial guidance may have warranted a court’s deference to the DEA, even if an opposing position by a hemp industry participant was stronger and more well articulated. However, Kight said that, in the post-Chevron world, the DEA’s position will not hold any more weight with the court than a counter-position by an opposing litigant.

    “The same thing applies to any number of other issues, from vapes to synthetic cannabinoids,” said Kight. “Hopefully, this exciting legal development will curb the appetite for DEA and FDA to take strong positions that are often unwarranted while helping the hemp industry to carve out favorable judicial rulings based on the best and most well-articulated positions.”

    Abboud said the SCOTUS’ decision in Loperexposes the FDA’s improper regulation of flavored e-cigarettes. While the vaping cases that have gone before the SCOTUS were not explicitly decided on Chevron deference, it is hard to believe that the court will not look skeptically on the FDA’s prior “regulatory shenanigans and post-hoc justifications” laid bare by the 5th Circuit Court of Appeals in the White Lion case.

    “However, unlike the complete overturning of Chevron, it is likely that the court would issue a more limited ruling in the vape cases before it. That said, the real power of Loper is that it provides a template for new litigation against the FDA that is not limited to individual application decisions,” said Abboud. “This new regulatory challenge would reveal the full story of FDA’s tortured and disingenuous implementation of the ambiguous PMTA statutory provisions to ban flavored vaping products and possibly, as a result, spell the demise of the PMTA regulation.

    “VTA is once again calling for the FDA to immediately suspend any further denials based on its existing process and instead create a clear and streamlined tobacco product standard that will allow independent companies of all sizes to get less harmful nicotine alternatives on the market as it is required to do under the law.”

  • RLX Revenue Jumps 66 Percent to $86.3 Million

    RLX Revenue Jumps 66 Percent to $86.3 Million

    Photo: RLX Technology

    RLX Technology reported net revenues of RMB627.2 million ($86.3 million) in the second quarter of 2024, up 66 percent from the comparable 2023 quarter. U.S. GAAP net income was RMB134.9 million, down from RMB204.7 million in the same period of 2023. Non-GAAP soared to RMB213.1 million from RMB86.2 million. Gross profit was RMB157.9 million, compared with RMB98.5 million in the comparable 2023 period.

    “We delivered a strong second quarter performance as revenue continued to increase sequentially, driven by our international business expansion,” said RLX Chairperson and CEO Ying (Kate) Wang in a statement.  

    “Our deep exploration of overseas markets and regulations has provided us with valuable insights into the global e-vapor landscape, enabling us to create effective, targeted regional strategies. This year, global regulations are rapidly evolving, with more regulators recognizing e-vapor products as harm-reduction tools for adult smokers. Leveraging our broad expertise in regulatory compliance, we are well-prepared to navigate these changes and ensure a seamless transition for our users and partners.”

    Chief Financial Officer Chao Lu said the considerable year-on-year increase in net revenues reflected the company’s ability to capture growth opportunities in international markets. “While our gross margin declined slightly due to an unfavorable shift in our revenue mix, disciplined cost management bolstered our non-GAAP operating profit margins,” he said.

    “Looking ahead, we are confident of driving continued improvement in both our top and bottom lines, fueled by ongoing revenue growth from international markets and our relentless focus on operational efficiency. As always, our priority is to deliver sustainable and profitable returns to our shareholders.”