Category: News This Week

The South Korean government has ordered a recall of some electronic cigarettes and issued a warning over others, according to a Yonhap News Agency story.

It ordered the recall of 10 electronic cigarettes over concerns expressed by the Ministry of Trade, Industry and Energy that their power cord plugs could cause fires or electric shocks if they were exposed to an alternating current of more than 3,000 volts.

The 10 products in question were said to have been manufactured in China.

At the same time, the government has warned of the dangers posed by some e-liquid containers.

In a joint study with the Korea Consumer Agency, the government had apparently found that four e-liquids out of 25 reviewed contained at least 11 percent more nicotine than they were supposed to contain.

The Yonhap report said this meant that those who used them might ‘unknowingly intake more nicotine than they wish to or can’.

The study found also that most e-liquid containers lacked warnings, while 15 of them did not have childproof bottle caps.

The government said it would move to require the use of childproof bottle caps on all products, and intensify its management of products ‘containing nicotine and other harmful substances’.

Imperial Tobacco is taking a different path to its multinational competitors as the industry searches for the vaping technology with the potential to replace tobacco smoking, according to a story by Martinne Geller.

Imperial is said to have no taste for the heat-not-burn tobacco products that others are embracing along with electronic cigarettes.

“It’s not something we’re interested in,” Matthew Phillips, Imperial’s corporate affairs director, was reported to have told journalists on Wednesday, when his company announced its first half results.

Philip Morris International, British American Tobacco and Japan Tobacco International, have or are due to include heat-not-burn products in their portfolios.

Because they are made from tobacco, Phillips predicts that these products will be viewed and taxed in the same way that cigarettes are.

And marketing them as offering a reduced risk benefit would be “a very, very big ask,” he said.

“There’s no difference really between those products and traditional tobacco products,” Phillips said. “It’s probably better described generically as ‘heat and burn’ rather than ‘heat not burn’.”

The provincial government of Manitoba, Canada, is not going to increase taxes on electronic cigarettes even though smokers switching to these products is said to comprise the major reason why a C$1-per-carton excise increase on regular cigarettes is predicted to result in a 12 percent drop in tobacco revenue, according to a story by The Canadian Press.

The government raised tobacco excise in last week’s budget.

Barry Draward, an assistant deputy minister of finance, said the main reason for the drop was people switching from tobacco to electronic cigarettes, which attracted only eight percent provincial sales tax.

Draward said the jury was still out as to whether electronic cigarettes were an alternative form of tobacco cigarettes or stop-smoking aids, and that there could be tax implications.

“It would be a health [department] decision, regardless,” Draward said. “If they’re saying it’s a cigarette replacement, then, in my opinion, we’ve got to tax it, but we don’t know that yet.”

However, Jodee Mason, a spokeswoman for Finance Minister Greg Dewar, said the province was not going to raise taxes on electronic cigarettes.

In a commentary in the Signal Tribune, California, a health expert has hit out against US tobacco policy that insists on smokers quitting tobacco and nicotine altogether.

Dr. Brad Rodu is a professor of medicine and holds an endowed chair in tobacco harm reduction research at the University of Louisville James Graham Brown Cancer Center.

Rodu argues that switching to snus or electronic cigarettes yields almost all of the health benefits of quitting smoking altogether.

Read his piece here.

Five electronic cigarette companies operating in Hong Kong have formed the Asian Vape Association to oppose the government’s plan to ban electronic-cigarette sales, according to a story in the South China Morning Post relayed by the TMA.

Nav Lalji, one of the founders of the association, was quoted as saying the government should regulate rather than ban these products if it is concerned about product ingredients.

He questioned why the government was not banning combustible tobacco products firstly if it was worried about public health.

Lalji, who is the founder and manufacturer of the electronic cigarette brand Mist, said the association included major players in the electronic cigarette industry that accounted for about 70 percent of the local market.

He rejected claims made by some health officials that the companies were targeting young people and selling the devices as ‘trendy products’.

Electronic cigarettes were sold to adults at hotels, restaurants and bars, he said; and while the devices contained nicotine, they complied with the international safety standards set by the US Food and Drug Administration.

Currently, there are no age restrictions on the sale in Hong Kong of electronic cigarettes that don’t contain nicotine.

Electronic cigarettes with more than 0.1 percent of nicotine need to be registered as a pharmacy product with the health department.

The undersecretary for Food and Health, Professor Sophia Chan Siu-chee, said many vaporizers contained substances that were “addictive and hazardous to health.”

But Chan said the association could negotiate with the government over the proposed city-wide ban on electronic cigarette sales, which is expected to be presented to the Legislative Council later this year.

Japan Tobacco Inc. said today that it had entered into an agreement to acquire Logic Technology Development, one of the leading US electronic cigarette ‘brands’.

JT described Logic, which was founded in 2010, as selling a full range of high-quality rechargeable, ready-to-use and disposable electronic cigarettes, including the Logic Pro tank system, newly launched this month.

“With the Logic brand and its strong portfolio of products, the JT group has a sizeable participation in the largest and fast-growing US e-cigarette market,” said Masamichi Terabatake, Japan Tobacco International’s executive vice president and deputy CEO. “Logic’s well established presence in the US, in addition to our acquisition of E-Lites in the UK, further underpins our global ambitions to become the leader in emerging products.”

JT said that the executive management team of Logic would remain with the JT group post-acquisition in order that the group could benefit from the team’s extensive knowledge and experience of the US electronic cigarette market.

“With the backing of JT group’s global resources, we believe Logic is uniquely positioned to accelerate its growth in the US market and further enhance its product offering.” said Eli Alelov, Logic’s co-founder and CEO.

“We are excited about the transaction and look forward to the next phase of Logic`s development with the JT group,” added Howard Panes, Logic`s co-founder.

The transaction will be funded by the group’s existing cash and loan facilities, with an expected minor effect on the group’s consolidated performance for the fiscal year 2015.

JT expects to complete the acquisition in the third quarter of fiscal year 2015 following regulatory clearance.

The law firm Keller and Heckman LLP, through its Shanghai office, is inviting stakeholders to join a new working group dedicated to the development of appropriate e-cigarette product standards and regulations in China.

In China, there are currently no laws or regulations targeting e-cigarettes. However, this may soon change. Recently, during the 16^th World Conference on Tobacco or Health in Abu Dhabi, UAE, a representative of the Chinese National Health and Family Planning Commission made it clear that Chinese authorities are planning to develop e-cigarette regulations, given the huge potential of the Chinese e-cigarette market and the various public-health and safety issues related to the use of e-cigarettes.

When authorities start to consider the regulation of e-cigarettes, they will likely solicit input from industry stakeholders. Thus, Keller and Heckman believes now is the best time to create a working group of e-cigarette and e-liquid companies and other interested stakeholders who want to engage in the regulatory process.

Those interested in learning more and joining the working group can do so on the Keller and Heckman website.  If you have any questions, please contact David Ettinger (ettinger@khlaw.com) or Azim Chowdhury (chowdhury@khlaw.com).

The government of South Korea plans to push for tougher legal restrictions on the sale of e-cigarettes, the finance ministry announced April 22. Finance Minister Choi Kyung-hwan, who also serves as deputy prime minister, told lawmakers in the National Assembly that he would soon “come up with a comprehensive proposal” on e-cigarettes that would ban explicit advertisement of the products, according to a story in The Korea Herald.

According to the country’s health and welfare laws, tobacco product advertising is only allowed inside authorized stores, however, many local e-cigarette dealers explicitly display advertisements and fliers for the products—which are officially classified as cigarette products—on the streets.

“We will see to a comprehensive measure in cooperation with other related ministries,” Choi said.

Vapor Corp.—a leading U.S.-based distributor and retailer of vaporizers, e-liquids, e-cigarettes and e-hookahs—has announced that it is undergoing an organizational restructuring to maintain its competitiveness and establish its branded products and retail stores in the evolving vapor market.

Following a recent merger with Vaporin, Vapor Corp. added several new members to its management team, including president and director Gregory Brauser, chief financial officer James Martin and new board member Robert Swayman.

To further establish its national distribution network, Vapor Corp. has developed new supply deals with key retailers and reorganized inventory in an effort to meet an increasing demand for vapor products. Vapor Corp. also recently opened three new “The Vape Store” locations in Orlando, Florida, and one in Port Charlotte, Florida. The company plans to open an addition 20-30 branded retail “The Vape Stores” before the end of FY 2015.

“With new management, new stores, new deals and new products, Vapor Corp. is well positioned to rise above the competition and take a leadership role in what is currently a highly fragmented e-cig and vaporizer market,” said Brauser. “Vapor Corp.’s merger with Vaporin served as a catalyst for the company’s future success and has helped to pave the way for us to cast a wider net in the industry. Our goal is to reach new and veteran vaping consumers and continue to spread the word about our stores and our products.”

Vapor Corp.—a leading U.S.-based distributor and retailer of vaporizers, e-liquids, e-cigarettes and e-hookahs—has opened three additional locations of the company’s “The Vape Store” chain in Orlando, Florida, and acquired an existing store in Port Charlotte, Florida, which has been converted to a “The Vape Store.”

The addition of these four new stores is part of the company’s planned expansion strategy for “The Vape Store” retail chain, which was recently acquired through a merger with Vaporin, Inc.

“The opening of these four new stores under ‘The Vape Store’ brand is just the beginning of our expansion strategy to establish a national retail footprint, making us one of the largest operators in the rapidly developing vape shop retail market. We are poised to open another 20 to 30 of our branded retail Vape Stores before the end of fiscal [year] 2015,” said Vapor Corp. CEO Jeff Holman. “The vape shop retail market is highly fragmented, providing our ‘The Vape Store’ brand with an opportunity to serve customers as the retailer that they can trust, with the convenience of multiple locations to buy their favorite brands of vaporizers, e-liquids and accessories.”