Category: Print Edition

  • Heated Breakthrough

    Heated Breakthrough

    Greentank is at the forefront of innovation with the launch of its patented Heating Chip technology.

    By Timothy S. Donahue

    The vaping industry is in a constant state of innovation, primarily driven by advancements in hardware. A significant focus has been on enhancing battery quality as well as the electronics and circuitry within vaping systems. Notably, there have been substantial advancements in atomization technology. This includes the development from traditional wire coils and wicks to a more progressive adoption of ceramic materials.

    Atomization technology is crucial because the heating element functions as the core of a vaping system. The coil’s role in atomizing e-liquid is pivotal; the more efficient the element, the better the aerosol production, consistency and flavor. Recently, a leading technology company announced its breakthrough in heating technology, set to revolutionize the market.

    It has been seven years since a significant advance has been made in atomization technology. Enter Greentank: a company with a wholly new design representing a dramatic step-change from the conventional ceramic and wicked coil systems prevalent in many of today’s vaping products, promising enhanced safety, performance and experience.

    Greentank is a business-to-business technology company that specializes in the design, development and manufacturing of precision-made inhalation devices and atomization technology, according to CEO Dustin Koffler. Greentank’s latest innovation in atomization is called Quantum Vape. It replaces cotton wick and ceramic heating elements with a state-of-the-art patented Heating Chip.

    According to Koffler, the Heating Chip outperforms all other leading atomization products. For example, the Heating Chip performs better on key safety metrics such as harmful and potentially harmful constituents (HPHCs) and heavy metal testing than other leading technologies in the market. It also produces the “absolute greatest” release of flavor and the most consistent consumer experience from the first draw to the last, he says.

    “With this breakthrough in inhalation science, we’ve catapulted beyond the current generation of atomization technology,” said Koffler. “Our Heating Chip is set to disrupt the global market. It’s a distinct departure from anything currently available. While many companies focus merely on tweaking the substrates and print materials used in ceramic-based systems, they remain bound to the same ceramic foundation.

    “They’re refining ceramics—making components slightly smaller, slightly tighter, experimenting with new materials and formulations. Greentank, however, is pioneering an entirely novel approach that’s unlike anything witnessed in the industry before.”

    The Heating Chip is small. It comfortably fits on a fingertip and is one-fifth the size of today’s heating solutions. However, Koffler said its high-performance standards are due to advances that have never been achieved before with atomization. Typically, in a ceramic heating element, over time, flavor starts to dissipate naturally. This is because there is caking or buildup inside the pores of the ceramic, causing the temperature throughout the ceramic to vary after each use, leading to thermal cycling. With the Heating Chip, there is zero potential for thermal cycling, according to Greentank; every puff tastes the same as the first.

    “The Heating Chip employs a unique capillary action to draw the oil through the heating element, ensuring that each puff initiates a fresh cycle of material,” explained Koffler. “Many products boast consistent flavor throughout use, yet we’re all aware that the current market offerings fall short in maintaining this throughout the life of the product. In contrast, the Heating Chip integrates nanofabrication into its design.

    “The entire manufacturing process is proprietary, involving novel methods to assemble materials into the Heating Chip that emits no ceramic particle emissions and contains the lowest levels of harmful and potentially harmful constituents. While it’s not feasible to claim complete absence, third-party testing and rigorous chemical analysis have found these HPHCs to be at undetectable levels.”

    Additionally, Greentank only recently completed a longevity study using the Heating Chip in one of the company’s proprietary electronic nicotine-delivery system devices with a target of 15,000 puffs. “We easily achieved this target while demonstrating consistent vapor output from the first puff to the 15,000th puff,” explained Koffler. “Furthermore, we provided these same devices, along with new ones, to Labstat International to conduct aerosol analysis for both carbonyls and metals. The results showed that there was no difference in the safety efficacy from the first puff to the 15,000th puff.”

    Technically Speaking

    To a scientist, it’s a micro channel-based aerosol generator that delivers sub-micron particles according to its proprietary design. To the average consumer, it’s a smoother experience with maximum flavor intensity in a less-risky delivery than currently marketed e-cigarette and cannabis vape products. The Heating Chip isn’t anything like ceramics, said Koffler. Porosity isn’t inconsistent. It’s a chip with thousands of small holes and microchannels that allow for a superior level of precision and control in the atomizing process.

    One of the major challenges in designing the Heating Chip was finding the right talent to help develop the manufacturing process, said Koffler. The manufacturing of the Heating Chip requires specialized equipment, and bringing together a system that worked was incredibly complicated. The manufacturing of the Heating Chip can be compared to producing semiconductors.

    “By adapting pioneering techniques from other advanced industries and tailoring them to meet our specific requirements, we’ve enhanced our technology’s performance,” Koffler revealed. “The expertise of our global team, the precision of the equipment we utilize and our methodical focus on perfecting one aspect of the process at a time has been instrumental in overcoming the challenges we faced.”

    The next generation of atomization technology is moving away from ceramics, according to Koffler. The Heating Chip technology avoids all heavy metal leaching and ceramic particle emissions and ensures the lowest HPHCs all while permitting an unprecedented taste and consistency over a longer lifetime.

    It also offers a smoother experience and better mouth dispersion. Interestingly, the device is also able to create particulate matter small enough to reach lower lung absorption levels for nicotine, much like combustible cigarettes. This could be a giant innovation in getting smokers to adapt to less risky nicotine-delivery systems.

    “Utilizing microfluidic channel technology, we’ve engineered a system that precisely controls aerosol nucleation and optimizes particle size, enriching the sensory experience while maximizing intensity without any harshness,” Koffler detailed. “Our design includes independently arranged channels and a thin film interface that safeguards against chemical reactions and thermal decomposition. This architecture not only enhances flavor fidelity and ensures consistent temperature but also elevates safety standards and reduces potential harm significantly. From the outset, our goal was to achieve unparalleled performance and safety.”

    The size of the Heating Chip is incredible. It’s tiny. It’s one-fifth the size and 100 times the precision of any ceramic atomizer on the market today, according to Koffler. Its reduced size creates greater design flexibility and quicker response times. The Heating Chip is produced on sophisticated micro- electromechanical systems (MEMS) machinery. MEMS is a general term for forming a micron-level three-dimensional structure on a support substrate such as a silicon wafer and integrating functions such as electronic circuits, sensors and actuators.

    “Unlike the broad, imprecise methods typical of ceramic manufacturing, our approach from start to finish is meticulously controlled and exact,” explained Koffler. “This precision is why developing the right equipment for producing the Heating Chip was an extensive process. The level of control we achieve with the MEMS technology not only enhances consistency but also opens up revolutionary possibilities in precise dosing for pharmaceutical applications. This capability to finely tune dosages is a game changer in both vaping and medical fields.”

    Future Markets

    Based in Toronto, Canada, Greentank doesn’t produce nicotine. It doesn’t manufacture e-liquids or cannabis products. At its core, Greentank is a technology and product development company with a focus on safety, performance and reliability. The Heating Chip is not made from ceramics. While the material is proprietary, Koffler insists the technology is something new and its application in inhalation products is only scratching the surface of its potential. It is designed specifically for multiple verticals, predominantly electronic nicotine-delivery systems but also pharmaceuticals and wellness products.

    “We have expanded to over 100 employees across Canada, the U.S., the U.K., Singapore and China, with the majority focused on research and development,” Koffler detailed. “We’ve assembled a highly skilled manufacturing team to produce our innovative chip and have strengthened our engineering and material science capabilities. Last summer, we acquired Numerical Design, a company specializing in microfluidics and microfabrication, boasting an extensive portfolio of patents that further strengthen our intellectual property. This strategic expansion underscores our commitment to leading the edge in technology and manufacturing excellence.”

    Greentank spent over three years developing and testing the technology surrounding the Heating Chip and its manufacturing process. Additionally, it has been created with a robust intellectual property portfolio involving more than 50 patent families to bring forward a variety of advancements. The company’s technology is manufactured in ISO-certified labs, and all products undergo third-party testing.

    The technology is completely different from what exists in today’s inhalation devices. It gives Greentank the flexibility to be adopted into various inputs and varying viscosities. For example, it works well with both low-viscosity water-based e-liquids and high-viscosity resin oils from cannabis materials.

    In March of 2023, Greentank announced that it successfully closed a $16.5 million Series B financing round led by a strategic investor group with more than 15 years of manufacturing experience. The total investment in Greentank to date is now reported at $38.5 million.

    “Our Series B funding was a strategic move to elevate our operations from industrial prowess to global commercialization,” said Koffler. “We’ve established a 20,000-square-foot cutting-edge R&D and manufacturing facility, a project that spanned 18 months to build and equip with the most advanced technology needed to scale our Heating Chip.

    “This facility not only pushes the limits of what’s possible with specialized equipment and expertise but is also designed with flexibility in mind. Our vision was to create a model that can be replicated anywhere in the world, preparing us to expand into any other market as we continue to grow our business.”

    The expansion of the business is about phases, and Koffler said that during the next phase, whether that be the medical or wellness industry, Greentank needs to be able to produce chips to meet global demand with scale in mind. Koffler said this means that the company will look to leverage automation.

    Koffler emphasized that the real measure of Greentank’s success will be seen as the next generation of inhalation devices hits the market. He highlighted that numerous devices are on the cusp of being launched, with the Heating Chip poised to redefine industry benchmarks for safety and efficiency. Currently, Greentank is aiming to influence tobacco harm reduction significantly.

    “At Greentank, our commitment extends beyond mere compliance with regulatory standards; we are dedicated to establishing new paradigms of transparency and consumer safety,” said Koffler. “We are not just participating in the market—we are leading it toward a safer and better future.”

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • Not For The Birds

    Not For The Birds

    The impact of the 5th Circuit’s recent ruling against the FDA on tobacco harm reduction

    By Cheryl K. Olson

    Willie McKinney

    “Over several years, the Food and Drug Administration sent manufacturers of flavored e-cigarette products on a wild goose chase.” So reads the first line in this long-awaited Jan. 3 en banc decision by the U.S. Court of Appeals for the 5th Circuit. We can infer that the judges’ sympathies do not lie with the FDA.

    The entire decision makes for entertaining and informative reading. In exhaustive detail, the court covers the history of the 2009 Tobacco Control Act and the evolution of the FDA’s approach to premarket tobacco product applications (PMTAs). It then states: “Never 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.”

    In short, the court ruled against the FDA and its reasons for rejecting the flavored e-liquids of Wages and White Lion Investments (dba Triton Distribution).

    “These judges confirmed what so many nicotine product manufacturers have been saying: ‘We’re not being treated fairly,’” says Willie McKinney of McKinney Regulatory Science Advisors. “The FDA has been moving the target and putting people out of business.”

    For those of us driven to help people find lifesaving alternatives to cigarettes, what does this 10-6 legal decision mean? Does the FDA have to do anything different? 

    What happens next on the legal side? Might this go to the Supreme Court? Most importantly, what can we do during this period of ongoing uncertainty?

    Below, legal and regulatory experts share their impressions and best guesses.

    ‘Surprise Switcheroo’

    If you thought the 5th Circuit had ruled on this case already, you’re correct. That court has had three bites at this apple. Here’s a rapid refresher.

    As required, Triton submitted PMTAs for its existing products to the FDA before the September 2020 deadline. When the FDA issued marketing denial orders (MDOs), Triton petitioned the 5th Circuit for review. In October 2021, a three-judge panel unanimously granted a stay. This was the famous “surprise switcheroo” ruling.

    In July 2022, a separate panel, not unanimous, upheld the FDA’s rejection of Triton. In January 2023, to resolve differences in rulings by this and other courts, the en banc 5th Circuit (all the judges together) agreed to hear the case.

    Bryan Haynes

    What led up to this? “The FDA in 2021 came up with this new standard for flavored ENDS [electronic nicotine-delivery systems] that effectively had two components,” says Bryan M. Haynes, a partner at the Troutman Pepper law firm. For one, contrary to previous guidance, the FDA now required expensive studies: randomized controlled trials or longitudinal cohort studies.

    “Two, what was even more surprising: The outcome of those studies had to show that the flavored ENDS had reduced smoking at a greater rate than a tobacco[-flavored] variant,” adds Haynes. “There was nothing like that in any FDA guidance.”

    Unsurprisingly, multiple companies sued. All of the cases had effectively the same issue: Was it appropriate for the FDA to do this?

    Some courts of appeal had sided with the FDA, showing what Haynes called extreme deference to the FDA’s decision-making. “The 5th Circuit is the first one to substantively, quite emphatically, rule that FDA’s standard was unlawful for a variety of reasons.”

    A 2022 decision by the 11th Circuit Court of Appeals in favor of Bidi Vapor and five other companies ruled that the FDA’s behavior was arbitrary and capricious. However, Haynes notes, “This ruling focused on a fairly narrow issue: The FDA had suggested that companies show that their marketing plans would deter youth use, and then refused to consider those plans.”

    By contrast, “The en banc decision in Wages and White Lion was much broader. It attacked head-on FDA’s so-called ‘fatal flaw’ standard requiring comparative smoking cessation or reduction.”

    ‘Calvinball’

    Importantly, administrative agencies can’t make statements that people will rely on, then pull a surprise switcheroo. As this latest ruling says, “All that matters here is that the agency unquestionably changed its position and then pretended otherwise.”

    David Dobbins

    “This court’s not going to let the FDA play Calvinball,” says Dave Dobbins, an independent consultant working with Altria and former chief operating officer of the Legacy Foundation/Truth Initiative. As described in the classic comic strip “Calvin and Hobbes,” that sport’s only rule is that the rules always change.

    “You should have a priori rules that people can understand,” says Dobbins. He describes the FDA’s approach as, “We’ll authorize you if you have what we think is good science. And we’re not going to tell you what that is or which results would compel us to issue an authorization.”

    Dobbins notes how drastically the FDA Center for Tobacco Products’ (CTP) approach differs from that of other regulators, such as the Environmental Protection Agency. “EPA has real interaction with companies. They have standards you can understand,” he says. “If you’re building a power plant, the EPA doesn’t say, ‘We don’t want it to pollute that much.’ Then show up and say you can’t use it after you’ve spent a bajillion dollars.”

    In contrast to the PMTA process for new products, the CTP does have quantitative guidelines for its substantial equivalence approval pathway. Embarrassingly, the CTP does far better at approving sales of new cigarettes than of novel reduced-harm products. “Just 23 e-cigarettes have been authorized. And few are ones people actually use,” says Dobbins. “It’s nuts that it’s easier to authorize a cigarette.”

    Topping off this unpredictable process is the CTP’s repeated failure to meet deadlines for product review. U.S. Senator Richard Durbin’s frustration is clear from the heading of his Jan. 16 letter to FDA Commissioner Robert Califf: “Another Durbin vaping letter for you to ignore.” He castigates the agency for being 28 months past the court-ordered deadline “to complete reviews of e-cigarettes with the largest market share and youth appeal.”

    Where Next?

    Might the Supreme Court weigh in? Haynes notes that the clear split among circuits, with the 5th and 11th evaluating the FDA’s actions differently from others, gives this case a good shot.

    “That kind of situation is untenable for obvious reasons,” he says. “You shouldn’t have rules that fundamentally differ depending on where you are in the country.” He thinks the court might agree to hear the case this year, with a decision issued in 2025.

    In the meantime, what to do if the FDA issues an MDO? For manufacturers who previously submitted PMTAs and meet guidelines for enforcement discretion, the path is now marked. Based on court precedents, Haynes says, “If a denied applicant could join forces with a retailer in the 5th Circuit who sells their products, they could get venue to challenge an MDO.”

    Haynes sees no rapid end to the uncertainty. “I’m not so sure FDA is going to act on a lot of PMTAs, given the existing division between circuits.” He noted that the recent Smok decision did not involve a consumable product, only a device system. If the FDA continues to issue decisions based on the “fatal flaw” standard, “It’s highly likely the applicant goes to the 5th Circuit. If it’s on that narrow ground, the applicant is likely to find success.”

    McKinney feels guardedly optimistic about the potential effects of the 5th Circuit decision. For clues to change, he suggests watching what the FDA does with products still in the review queue: those at the low end of the risk continuum, such as pouches and gums, that are not currently appealing to youth. 

    “If a lot of those products get refused-to-file or marketing denial orders, then nothing has changed at the agency,” he says. “If they start making it through, it suggests there are opportunities.”

    To conserve resources, companies seeking to bring new reduced-risk nicotine products to the U.S. market might follow “a cautious, stepwise approach,” he advises. “Spend a little money to generate minimal data for an initial PMTA. But have plans and protocols on the shelf ready to execute” when greater clarity inevitably emerges and competition heats up.

    What About APPH?

    This frustration and confusion was not inevitable. The wording of the Tobacco Control Act provides a path for authorization of reduced-harm products that will be appropriate for the protection of public health (APPH). “It’s the agency’s obligation to give content to those words,” says Dobbins. “And they’ve never done it. And that is why this is off the rails. They’ve never given guidance on what APPH actually means to them.”

    “If you look at the FDA’s recently issued five-year plan, there’s almost nothing said about encouraging innovation toward reduced-harm products,” says Agustin E. Rodriguez, a partner at Troutman Pepper. “There seems to be much more focus on outright quitting of products. I worry that this is unrealistic in terms of historical consumer approach to the tobacco and nicotine space.”

    “There are a billion smokers worldwide,” Dobbins reminds us. “People want nicotine. Someone is going to deliver it.” Public health benefits from a regulated industry that works within the law to deliver the least harmful products possible.

    “If FDA believes that what they’re doing will be upheld by the Supreme Court, they should be anxious to get its imprimatur. If they are wrong, they should be anxious to fix their processes, so they can administer the law in a way that will survive court review,” Dobbins concludes.

    Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors via McKinney Regulatory Science Advisors. She spent 15 years on the faculty of Harvard Medical School.
  • Eye of the Tiger

    Eye of the Tiger

    Photo: byrdyak

    Turning Point Brands is embracing next-generation tobacco and alternative products by taking calculated risks.

    By Timothy S. Donahue

    It’s hard to argue the success of Turning Point Brands (TPB). In business since 1988, during the past decade, the company has been turning the typical tobacco business model on its head. It is involved in almost all aspects of the industry, generating nearly $450 million in sales every year. From its iconic brands like Zig-Zag to its more recent investments in the growing legal cannabis industry, TPB is turning heads.

    Headquartered in Louisville, Kentucky, USA, TPB’s business includes three operating segments. Its main line of revenue comes from its “smoking” segment, which includes the rights to the Zig-Zag brand in the U.S. and Canada, according to Scott R. Grossman, TPB’s vice president of corporate development. Zig-Zag is one of the oldest, most recognized “other tobacco products” (OTP) and cannabis accessory brands. “Founded over 150 years ago, Zig-Zag holds the No. 1 share of both rolling papers and wraps in North America, and its products can be found in more than 200,000 retail outlets,” says Grossman. “Given that Zig-Zag generates roughly 40 percent of TPB’s revenue and a majority of our operating income, the brand and its growth initiatives are a major focus for us.”

    TPB’s second segment is “smokeless,” which is predominantly the Stoker’s brand, a leading player in the moist snuff tobacco and chewing tobacco markets. The company also owns the Beech-Nut brand and a diverse collection of other chewing tobacco products. Another compelling segment of the TPB operation is its new generation of products (NewGen), which covers the company’s electronic nicotine-delivery system (ENDS) and cannabis brands.

    NewGen includes an assortment of brands serving multiple industry segments, such as TPB’s business-to-business (Vapor Beast) and business-to-consumer (International Vapor Group) distribution platforms and its new product engine, Nu-X Ventures. The company has online platforms under brand names such as VaporFi, South Beach Smoke and DirectVapor. TPB also owns the e-liquid brand Solace and within its NewGen segment includes recent minority investments in the emerging cannabinoid space, including brands such as Old Pal, Dosist, Docklight and Wild Hemp.

    TPB was one of the first traditional tobacco companies to publicly announce its foray into the legal cannabis market. That decision came under the leadership of TPB’s former president and CEO, Larry Wexler, who retired from the company and was succeeded by Yavor Efremov on Jan. 11. “Larry took the company public in 2016 as an OTP business, and over the next five years, he successfully drove significant initiatives to drive value, including the investment in new talent to drive TPB forward,” says Grossman. “We’ve been strategically focused on introducing new products to serve both B2B and B2C customers across on-premise retail and online channels.”

    Yavor Efremov

    Bump in the Road

    Being a business with major assets in ENDS comes with challenges. TPB was one of the first major companies to receive a marketing denial order (MDO) from the U.S. Food and Drug Administration after the agency’s Sept. 9, 2021, deadline to decide on premarket tobacco product applications (PMTAs). Convinced that the FDA’s decision was unjustified, TPB immediately filed a legal challenge. Before the lawsuit made its way through the courts, the FDA rescinded the MDO it issued to TPB. The term “Fatal Flaw” was used by the FDA for PMTA submissions that lacked certain studies. The term has been at the center of nearly all lawsuits filed against the FDA for its handling of the PMTA process.

    “The Fatal Flaw standard is obviously one that departs from the pre-September 2020 guidance. In fact, it’s in direct conflict with that guidance. It’s helpful that [our MDO] was rescinded and that the agency admitted it had not reviewed certain [TPB] studies,” explains Paul Blair, TPB’s vice president of government affairs, adding that TPB made the decision to file suit because there was information that the regulatory agency overlooked in its review process. TPB wasn’t unique in that respect; however, the agency didn’t look at specific study data for several businesses.

    “[The rescission] is an important recognition that our denial was not related to nitpicking over data. The science we submitted about transitioning combustible cigarette consumers to our products in particular … It was an oversight. And that’s helpful not only as we try to navigate the process moving forward but also because it doesn’t seem it was an attack on the body of our application generally,” explains Blair. “We maintain that we provided data that is sufficient for the agency to authorize the marketing of our PMTAs. It’s fair to say, though, there’s not a publicly announced standard for the approval process, whether it’s for open system products, closed system products, flavors and, honestly, even tobacco and traditional flavored products.”

    That’s what Blair believes the FDA is doing now; the agency is probably reviewing its communications plan on how to reassess the PMTA process and come to some conclusions on deciding on a standard for authorizing products. Traditionally, the FDA would engage in good faith conversations with businesses trying to get products approved and offer some clarity on what information the agency needs. According to critics, the FDA’s Fatal Flaw analysis for ENDS products proved this isn’t the case anymore.

    Paul Blair

    Embracing Change

    Unlike most traditional tobacco companies, TPB isn’t shy about its cannabis investments. The company’s management team and its board have embraced legalization, according to Grossman. Currently, 37 U.S. states have legalized medical cannabis and 18 have approved it for recreational use. During the past few years, the company has invested in several cannabis operations. In 2021, TPB completed an $8 million strategic investment in Old Pal Holding Co., a cannabis lifestyle brand, and an $8.7 million strategic investment in Docklight Brands, a consumer products company led by its anchor brands Marley Natural and Marley CBD. In 2020, TPB entered into a long-term distribution and profit-sharing arrangement with Wild Hempettes, the Texas-based manufacturer of Wild Hemp Hempettes brand smokable CBD, and made a $15 million strategic investment in the global cannabinoid company Dosist.

    Grossman says that while every investment needs to be able to stand on its own, TPB’s strategy is focused on finding highly synergistic companies that strengthen the current TPB platform. Old Pal is a good example of how its strategy is being deployed—Old Pal sells roll-your-own (RYO) cannabis products with rolling papers inside the packaging. “Zig-Zag has historically been mainly focused on the convenience store channel, so this investment enables TPB to further accelerate growth in under-indexed stores such as dispensaries and head shops while supporting the growth of Old Pal,” says Grossman.

    In August, TPB made its first move into the international market by increasing its stake in ReCreation Marketing, a Canadian distribution company with ties to Canada’s recreational cannabis culture. In December, ReCreation Marketing rebranded as Turning Point Brands Canada. “TPB Canada has a number of proprietary branded products in its portfolio, and we are exploring strategies to leverage that proven model and its portfolio to increase distribution within the U.S.,” says Grossman. “We are one of a select group of established companies—especially public companies—that are actively looking to deploy capital in the cannabinoid space. Historically, we’ve been predominately focused on brands given our expertise, but we’re exploring many verticals within the cannabinoid sector. Our pipeline is very healthy, but at the same time, we have to remain highly disciplined with how we spend our time and capital.”

    It’s not just vaping and cannabis products in TPB’s future. In July, the company acquired certain cigar assets of Unitabac. The acquisition was for a portfolio of cigarillo products and all related intellectual property, including cigarillo non-tip, homogenized tobacco leaf, rolled leaf and natural leaf cigarillo products. “The cigar business is a $2.5 billion wholesale business in the United States. We’ve historically participated in that market, but we didn’t have the scale necessary to be really competitive. The Unitabac acquisition allows us to further extend into the cigar market,” says Grossman. “You’ll see a number of initiatives with that asset rolling out natural leaf products and other cigar assets, both under the Unitabac portfolio of brands as well as extending it to Zig-Zag.”

    Scott Grossman

    Facing Uncertainty

    The FDA will soon have a new leader (Biden’s appointee, Robert Califf, had yet to be confirmed at press time). The FDA’s Center for Tobacco Products (CTP) will also have a new leader; its current director, Mitch Zeller, plans to retire in April. Blair says that the individuals in those positions will have a significant role to play in determining how the agency and CTP will work with stakeholders and communicate policies about how those regulations will go into effect. The FDA, he says, doesn’t have any previous experience regulating vaping products, so there is going to be a lot of action, reaction and learning along the way.

    “It’s not as if Congress explicitly wrote how the approval or denial process might look. In fact, they didn’t write the details,” says Blair. “At least [the FDA is] thinking about the process, and they’re thinking about the consequences. But there is this opportunity beyond vapor product PMTAs in 2022 for a future generation of products to have some certainty because at the end of this, whether it’s because of litigation, because it’s further issued guidance, because it’s approvals or denials, there will be a pathway for companies and a better understanding of how the process works.”

    Blair says that overcoming the challenges of getting a PMTA approved will be stepping stones toward determining how the company approaches the future regulation of other products, such as cannabis. He says there is a real opportunity for TPB to play a critical role in the future of cannabis regulation and policy. “I think our action is going to be guided by our business’ experience as a regulated tobacco business. There are other tobacco businesses that have cannabis interests or investments, but there aren’t many that are willing to publicly engage in the way that ours is as an advocate for legalization, as an advocate for appropriate regulations. There needs to be a balance of consumer protection with entrepreneurship and opportunities in the investment space.”

    Grossman says the future of TPB is to align itself with the growth of the cannabinoid industry and possibly make more direct cannabis investments outside its current portfolio. “We are concentrated on trying to learn and execute on a variety of cannabinoid initiatives,” he says. “Although we’ve historically focused on brands, we are deeply embedded in the sector and are actively studying many verticals across value-added products and services, brands and distribution. We believe the U.S. cannabis market will exceed $50 billion over the next five to 10 years, which we clearly think will benefit TPB over the long term.”

    Timothy Donahue is the managing editor of Vapor Voice. Since helping start the magazine in 2014, he has become an expert and well-respected voice in the rapidly evolving vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to the industry’s diverse audience.
  • Nipped in The Bud

    Nipped in The Bud

    Photo: Milkos | Dreamstime.com

    India’s ban on vaping comes with unintended consequences.

    By Stefanie Rossel

    A small but burgeoning product category was blighted when India prohibited the import, production, advertising and sale of vapor products in late 2019. The nationwide ban came after several states and union territories had implemented similar restrictions on electronic nicotine-delivery systems (ENDS) in previous years.

    “This was the culmination of a five-year effort to ban e-cigarettes, which began in 2014 when the central government set up three panels to advise on the way forward,” explains Samrat Chowdhery, founder and director of the Association of Vapers India (AVI). “The way these committees were constituted—staffed with anti-tobacco harm reduction [THR] tobacco control experts and government officials—the outcomes were pre-decided and all three recommended a ban.”

    Since then, the government had been turning on the screws. Opposition by consumers and later the vapor industry delayed the process but failed to prevent Parliamentary action. “Because of this uncertainty from the start, the e-cigarette market in India grew haphazardly without the involvement of major industry players and much below its potential,” laments Chowdhery.

    Reliable data on India’s fragmented vapor market at the time of the ban are hard to obtain. Euromonitor reckons that around 0.06 percent of Indians used ENDS in 2018—a figure Chowdhery calls “conservative”—up from the 0.02 percent the World Health Organization (WHO) estimated for 2016–2017.

    With online platforms being the key purchasing channels, according to Euromonitor, the Indian vapor industry comprised mainly small businesses—retailers, wholesalers, e-liquid manufacturers and a few vape shops, according to Chowdhery. “Devices were not made in India, relying solely on imports from China,” he says. “Still, the outlook for the market was good, slated to grow at 60 percent per year until 2022, following Euromonitor’s India report.”

    The devices available catered to middle-class and upper-class segments of the population, who are predominantly cigarette smokers in their 20s to 50s. “This is, however, not to say that vaping technology cannot work for the lower, i.e., bidi-smoking segment,” says Chowdhery. “Devices like the CE6, despite not being manufactured in India—which would bring their cost further down—were available at price points bidi smokers could afford. India is among the largest producers of liquid nicotine, which would allow e-liquids to be made quite cheap. If the industry was encouraged to innovate in this space, more price-friendly solutions could be developed. We did not see a lot of conversion from smokeless tobacco to vaping, though there are some instances. One reason could also be affordability as smokeless products are even cheaper than bidis.”

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    Lost opportunity

    Samrat Chowdhery

    In its argument for a ban, India’s government took its cue from the WHO, which supports the prohibition of vapor products and neglects their potential for THR. According to government officials, the ban was enacted amid concerns of youth uptake of vaping—a theory refuted by leading health experts and not fully supported by population data.

    India’s approach is hard to comprehend from a public health perspective, given the number of tobacco users in the country. According to the WHO, India is home to 120 million smokers, representing about 12 percent of the world’s smokers. Only China has more smokers. Most cigarettes consumed in India are bidis, hand-rolled, inexpensive cigarettes that contain more nicotine, carbon monoxide and tar and present a greater risk of oral cancers than conventional cigarettes. An estimated 1 million Indians die from smoking-related diseases each year, the WHO says.

    In addition, India has about 200 million users of smokeless tobacco, including various forms of chewing tobacco snuff and tobaccos that are applied to the teeth and gums. The most popular forms are khaini, zarda, naswar and gutka. While generally perceived as being less hazardous than combustible cigarettes, these products present several health issues. According to a Business Wire report, India’s oral cancer rate is the highest in the world.

    Tobacco, however, is an important economic sector in India, which is the world’s second largest producer and third largest exporter of leaf tobacco. The industry employs roughly 46 million people. According to the Tobacco Board of India, tobacco products contribute more than inr430 billion ($5.65 billion) annually to the government’s tax revenue.

    Contrary to the situation in most countries where combustible cigarettes dominate tobacco consumption, cigarettes and bidis together accounted for only 8 percent of India’s tobacco market in 2018, according to Research and Markets. Nonetheless, cigarette smokers bear an overwhelming share of the tobacco tax burden in India. In the smoked tobacco segment, legal cigarettes accounted for around 10 percent of consumption but approximately 86 percent of tax revenues. Cigarette taxes in India are among the highest in the world. Statista estimates that revenues in the cigarette segment will amount to $13.78 billion in 2020.

    According to Research and Markets, the cigarette market is dominated by ITC with a market share of 84.27 percent (2018). The Indian government has a 28 percent stake in the company. The situation in India is complex, according to Chowdhery. “The Indian government is a major shareholder in the country’s largest cigarette maker, ITC, which likely sees vaping as a threat to its established core business,” he says.

    “Then there are influential tobacco control groups funded by Bloomberg Philanthropies and backed by [the] WHO, which hold a highly prohibitionist mindset. Smoking, primarily cigarettes, which are also the primary market for vaping products, generates a significant amount of tax, which the government relies heavily on. Further, awareness about THR is quite low, starting from the top as was evident from the low-quality debate in Parliament when the vape ban bill was discussed. These factors combine to make a powerful force against vaping, which will take some serious effort to counter,” says Chowdhery.

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    Into a black market

    In recent years, the AVI has been pushing back against restricting access to reduced-risk tobacco alternatives, Chowdhery says. “Our efforts are mainly in three categories: legal, lobbying and awareness. In 2016, we moved court against the vape ban in the state of Karnataka and over the next three years filed similar challenges in other states, which had the cumulative effect of delaying the ban for almost two years as the state machinery was forced to reverse positions and find new ways to implement a ban. More recently, we filed another challenge against an ad hoc order of the civil aviation ministry that has led to confiscation of vape devices from air travelers, despite consumption not being banned. We have also reached out to lawmakers to sensitize them to THR as an intervention strategy and have also launched public-facing awareness programs. A small study was done to evaluate the effectiveness and affordability of vaping for bidi smokers with encouraging results.”

    He observes that morale among vapers is low in the wake of the ban, but resilience is building. While some vapers have left advocacy groups, others have become more dedicated to fight the ban. “There are some, especially those who had recently switched and were still on the journey to completely transition to vaping or those who do not have access, that have gone back to smoking,” says Chowdhery. “This is an extremely negative outcome. But there are also many who are trying to figure out alternative means. These are bleak times. The state machinery is in full swing to further demonize vaping and turn public opinion against it while the devices themselves are hard to find.”

    The ban is likely to fuel an illicit e-cigarette market. When states prohibited vapor devices, some started importing vapor products under the “electronic products” category. Enforcement of regulations in India is weak—witness the difficulty authorities have had enforcing state bans on gutka, which is used by more than 25 percent of India’s population.

    Yet there are key differences between the gutka and vapor business, according to Chowdhery. “The gutka industry is primarily run or backed by politicians or those with deep connections, he explains. “It was widely used before the ban so there was a large consumer base; it was not competing with another product, as vaping competes with cigarettes; and the gutka ban left loopholes that were easy to exploit: Gutka makers now sell the areca nut mix and tobacco separately, both of [which] are not individually prohibited. None of these hold for e-cigarettes. It is true, however, that enforcement is lax in India, and as long as there is demand, there will be suppliers to fulfill it.”

    While the ban is recent, Chowdhery is already witnessing a change in market dynamics as established businesses exit and newer, smaller ones adapted to a prohibitionist environment take their place. “This is likely to continue for some time until a new structure emerges, which will also be influenced by enforcement actions and the willingness of the authorities to take them,” he says. “But if the experience of other low-[income] and middle-income countries [LMICs]—Brazil, Mexico, Thailand, etc.—is any indicator, it won’t be long before there is a thriving black market in India. Consumer interests, however, are not best served through this means as there is little control on quality, standards and prices.”

    Missing the target

    In 2017, India set itself the target of “relative reduction in prevalence of current tobacco use by 15 percent by 2020 and 30 percent by 2025.” With tobacco control focusing almost entirely on cigarettes, which account for only a small share of tobacco consumption in India, Chowdhery says it is unlikely that India will achieve its goal.

    “It is evident that a vape ban is both a lost economic and health opportunity,” he says. “After the government ban on e-cigarettes, vapers have been forced to either go back to smoking or resort to a black market, both of which are detrimental to the nation’s health policies and the ban itself. One the one hand, 120 million smokers are deprived of an effective means to quit or reduce harm. On the other [hand], with no quality control over the black market, chances of vapers consuming tainted products and untoward fatalities in the process is a real concern.” 

    Chowdhery does not expect the situation to improve soon unless the courts intervene. The AVI is hoping regulators will allow for some “carve outs” from the ban.  

    “In the meantime, the gap between nations that allow or promote vaping and those like India that have banned it will grow in terms of smoking decline rates and tobacco-related mortality and morbidity,” says Chowdhery. “THR awareness, too, is likely to increase, and demonstration of vaping working for the poorer sections, the bidi smokers, could help convince policymakers of its benefit. Acceptance of THR in smokeless tobacco use, for instance snus replacement for gutka and khaini users, could help expand its application to smoking.

    “The vaping ban is in place; it is a reality we have to accept, and overturning it will be a slow, determined process, though we do have encouraging examples from Canada and the United Arab Emirates, which revised their positions,” concludes Chowdhery. “But it is more likely that things will get worse before they become better as there is now a trend in LMICs, pushed by [the] WHO and Bloomberg Philanthropies, to opt for bans [rather] than regulations.”

    Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.