Ampol, a major Australian convenience store retailer, says it wants to train employees to suggest e-cigarettes as an alternative to combustible cigarettes in a bid to help reduce the smoking rate.
Ampol, the parent Caltex and Foodary outlets across the country, urged the government to allow nicotine-based vaping products to be sold in the same way as cigarettes in its submission to a Senate inquiry, according to an article in The Sydney Morning Herald.
Ampol’s head of government affairs, Todd Loydell, wrote that the company was well positioned to help cigarette smokers transition to “less harmful products” and was willing to trial selling e-cigarette products through its large network of convenience stores. “For example, our retail staff could provide a verbal cue to customers who ask to purchase cigarettes, encouraging them to consider the alternative options available to them in store,” he wrote.
Australia’s Senate select committee on tobacco harm reduction will hold its first public hearing today into nicotine vaping products, which currently can be legally purchased only with a doctor’s prescription.
Committee chair Hollie Hughes said the more than 8000 submissions had been overwhelmingly supportive of vaping and “overwhelmingly not in favor of a script model”.
“I would like to see recommendations around very serious regulation,” she said. “I don’t think anyone is going to be a non-smoker and take it up. I think it’s an incredibly powerful cessation tool and part of [the] discussion of further reducing smoking rates in Australia.”
The National Retailers Association, which represents 28,000 retailers across the country, also advocated for a consumer model for vaping regulation.
This is the second recent inquiry into tobacco harm reduction and nicotine vaping. After a year-long inquiry, the standing committee on health, aged care and sport recommended in 2018 that the TGA should continue to have oversight of nicotine products.
The U.K. Vaping Industry Association (UKVIA) has asked the U.K. government to reclassify vape shops as essential outlets during the upcoming Covid-19 related national lockdown.
In a letter directed to Business Secretary Alok Sharma, Small Business Minister Paul Scully and Public Health Minister Jo Churchill, UKVIA Director General John Dunne urged the government to consider the role of the vapor sector in terms of health and the economy.
John Dunne
“With vape stores remaining closed for a length of time and without access to their vaping supplies, many vapers and ex-smokers will be at risk of relapse back to smoking at these stressful times,” Dunne wrote.
“Economically, as I am sure you will know, vaping has been a UK plc success story and has supported the high street through the challenging environment experienced in recent years,” Dunne added. “Ongoing closure of vape shops, which in our opinion are providing an essential service to current vapers and existing smokers, would be hugely detrimental to the sector’s contribution to the national economy and the health of the nation.”
According to the Office for National Statistics, the U.K. is home to around 7 million adult smokers. Data also shows that currently around 3.2 million people vape in Great Britain.
The U.K. Vaping Industry Association (UKVIA) expressed disappointment that the U.K. government failed to recognize the vapor sector as an essential business as it announced a new Covid-19 related lockdown.
John Dunne
“Whilst we recognize the predicament that the government faces, with data highlighting the worsening coronavirus situation across the country, as an industry we feel extremely disappointed that the vaping sector has once again been overlooked as one providing essential goods and services,” said John Dunne, director general at the UKVIA, in a statement.
“Only earlier this year Public Health England acknowledged the contribution played by vaping in helping smokers quit and recent research has again highlighted that vape products are much more effective than NRTs in helping smokers give up,” he said.
“The worse thing that we need to avoid happening is people being tempted back to smoking or not trying to quit as a result of the stress caused by this latest development.”
Dunne said it would be important for the vapor industry to reopen for business in early December—the target date for the end of the second lockdown—so it can maximize sales in the lead up to the Christmas holiday and and safeguard the thousands of people it employs in the manufacture, wholesale, quality control and retail of vapor products.
The regulatory wave is crashing down on internet ENDS retailers.
By Nicholas A. Ramos, Agustin E. Rodriguez and Bryan M. Haynes
Online businesses selling electronic nicotine delivery systems (ENDS) to consumers must contend with a “patchwork quilt” of state laws. This patchwork of laws creates significant regulatory uncertainty and risk for businesses selling online in this space. There are many legal issues facing online retailers, like bans or restrictions on “flavored” tobacco products, minimum age and age-verification requirements, and state and local licensing and tax requirements. This article discusses some of the key legal issues associated with selling ENDS to consumers online and highlights proposed state legislation that may impose more requirements on the industry.
State licensing
Online retailers looking to comply with the myriad of state laws should first look at the states in which consumers purchase their products and, for each state, identify potentially applicable licensing laws. States may require licensing or registration under tax laws, health and welfare laws, and/or general business laws before online retailers may sell to consumers in their states. Idaho, for example, requires licenses from its Department of Health and Welfare to prevent youth access to tobacco products and electronic smoking devices. Washington, D.C., however, requires a basic business license from its Department of Consumer and Regulatory Affairs.
In addition, online retailers of ENDS should determine whether state licensing law definitions actually cover their products. While states have required licenses for the sale of tobacco products for years, they have only recently added definitions of ENDS to their licensing statutes. ENDS may be covered under licensing laws either because the category is explicitly defined, or the definition of tobacco products is broad enough to cover ENDS products.
Nicholas A. Ramos
Online retailers should also determine whether state licensing laws actually cover remote sales. Some states only require licenses for retailers that have a “place of business” or “business location” in their states. Hawaii, for example, is unique in that it requires ENDS retailers to obtain a registration from the Hawaii Attorney General. At this time, however, the Attorney General only requires retailers to register if they are located in the State, which excludes out-of-state online retailers.
It is also important to keep in mind that most state laws regulating ENDS were only passed within the last 3-5 years. Many of those new laws simply amended existing tobacco product laws, and legislatures may not have carefully incorporated those changes in all of the critical statutory sections. Consequently, there are often situations in which the legal requirements are not clear. In those cases, it may be prudent to reach out to regulators to better understand how they interpret their statutes.
State taxes
When online retailers face ambiguous licensing laws, it may be helpful to look to the purpose of those laws. For example, if licenses are required by a tax department, the online retailer should look at the tax statute to determine who and what is subject to taxes. Many states require licenses to facilitate payment of sales or excise taxes.
Almost all states impose sales and use taxes on remote sales of products. For out-of-state online retailers, most states follow the analysis outlined in South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018), which generally permits a state to impose sales tax on an out-of-state seller where the seller has a “substantial nexus with the taxing State.” Some states require a business or tax registration to file returns and pay sales taxes.
Missouri, for example, does not tax or regulate ENDS as tobacco products, but it requires online retailers to obtain a retail sales tax license for sales tax purposes. Furthermore, states typically only require sales taxes from remote sellers when a certain sales volume or revenue threshold has been met. Virginia, for example, requires a remote seller to register for the collection of sales and use tax if it received more than $100,000 in gross revenue from sales in Virginia or engaged in 200 or more separate retail sales transactions during the previous or current calendar year.
In addition, like state licensing laws, the applicability of excise taxes to ENDS products sold online can depend on the specific product definitions in the relevant statutes. Some states’ excise tax statutes explicitly define and include ENDS products, while others attempt to fit those definitions into terms like “tobacco products” or “other tobacco products.” Utah, for example, explicitly taxes “electronic cigarette substances,” “prefilled electronic cigarettes,” “alternative nicotine products,” “nontherapeutic nicotine device substances,” and “prefilled nontherapeutic nicotine devices” in its Electronic Cigarette and Nicotine Product Licensing and Taxation Act.
Agustin E. Rodriguez
Some states explicitly exclude ENDS from definitions that would subject them to excise taxes. Texas, for example, provides defines taxable “tobacco products” to exclude e-cigarettes, or any other device that simulates smoking using a mechanical heating element, battery, or electronic circuit to deliver nicotine or other substances through inhalation.
It is also important to keep in mind that states tax various parts of ENDS products in different ways. Virginia, for example, imposes an excise tax on liquid nicotine products at the rate of $0.066 per milliliter of liquid nicotine, but the State does not impose taxes on other components of ENDS. Washington, D.C., on the other hand, taxes vapor products by making the tax rate equal to the cigarette tax, expressed as a percentage of the average wholesale price of a pack of 20 cigarettes.
Finally, if online retailers determine state excise tax laws apply to their ENDS products, they must still determine who is required to pay those taxes and when they are due. For example, some states, like Kentucky, require that excise taxes be paid by the licensed distributor that first possesses the ENDS products for sale to a retailer or unlicensed person in the State.
Potential penalties & enforcement climates
Online retailers facing ambiguous licensing statutes should consider two major factors in their risk analysis—statutory penalty provisions and enforcement climate.
Penalties for operating without a license can be steep. In Idaho, for example, it is a criminal offense to sell ENDS without a permit issued by the Department of Health and Welfare. In addition, a court may impose a fine of $1,000 per day beginning the day following the date of citation as long as the illegal ENDS sales continue. In other states, however, penalties are relatively low. In Montana, for example, failure to obtain a vapor product license is punishable by a civil penalty of $100.
Finally, online retailers should consider the enforcement climate surrounding regulation of ENDS products in certain states. For example, Attorneys General in various states have filed lawsuits against an ENDS manufacturers and online retailers. Although these cases do not directly implicate licensing or tax issues, enforcement actions by Attorneys General may suggest a more aggressive enforcement climate when it comes to licensing or tax violations.
Proposed state legislation
Online retailers should expect upcoming state legislative sessions to be fairly active with regard to regulation of ENDS products. In Colorado, for example, there is no current nicotine products or ENDS tax or licensing scheme. But Colorado HB20-1472 established a voter referendum on whether there should be a tax on “nicotine products,” which would include “products that contain nicotine and that are ingested into the body.”
Bryan M. Haynes
In Georgia, the legislature is considering a bill that will amend its tax and revenue laws “to provide for excise taxes to be levied on certain alternative nicotine products and vapor products” and to “require licensure of importers, manufacturers, distributors, and dealers of alternative nicotine products or vapor products.” HB 1229.
South Carolina is also considering a bill (H.4714) that will “provide for the levying, assessment, collection, and payment of certain taxes on vapor products.”
These are just a few examples of states that are considering ways to regulate and tax ENDS products. Therefore, it is important for online retailers to incorporate accurate state legislative tracking into their compliance strategies.
Conclusion
As with any other new technology, the law is often playing catch up with new business models and products, like the online sale of ENDS products. But given the issues discussed above, online retailers should prioritize compliance with varying state laws to reduce the risks of enforcement action.
Nicholas A. Ramos is an associate with Troutman Pepper. His practical advice enables clients to navigate regulatory compliance and licensing issues, complex investigations, and high stakes enforcement actions that arise under state and federal law.
Agustin E. Rodriguez serves as counsel for Troutman Pepper and has almost two decades of experience counseling tobacco companies in-house and in private practice on tobacco product regulation, taxation and multi-jurisdictional state and local enforcement issues.
Bryan M. Haynes is a partner with Troutman Pepper who specializes in tobacco industry regulatory compliance and enforcement matters. He efficiently assists clients in complying with regulatory obligations and managing risk, consistent with clients’ business objectives.
A new mouthpiece for vaping products is the first physician-backed germ-preventing accessory and filter designed to fit e-cigarettes for a safer vaping experience. The device also works with leaf marijuana rolls and THC vape pens.
Moose Labs, a product innovation company for the cannabis industry, launched the MouthPeace Mini, a smaller, slimmer version of the original MouthPeace, a patented personal-use silicone mouthpiece designed in 2014 to create a physical barrier between a cannabis users’ mouth and their pipe.
“Since the onset of Covid-19, we’ve seen a huge spike in demand for the MouthPeace and Filter, with a 9000 percent increase in orders over last year. Just as people wear masks to protect themselves and their friends, they’re seeking ways to enjoy joints and vapes safely,” said MouthPeace co-founder Jay Rush. “We created the MouthPeace Mini and Filter to provide medical and recreational users of cannabis and hemp with a personal, comfortable, and discreet way to share smaller smoking devices without sharing germs or inhaling unnecessary contaminants.”
The Mouthpiece Mini is constructed of high-quality platinum-cured silicone. The Filters, designed to fit snugly inside the MouthPeace, use activated carbon and triple layer filtration to remove resins, contaminants and tar from each inhale while allowing smaller molecules like THC and CBD to pass through, according to a press release.
Oregon Ballot Measure 108, a new tax on e-cigarette products and a tax increase on tobacco products is going to hurt local businesses because the products will affect what consumers can afford. It could also drive current vapers back to combustible cigarettes. E-cigarettes would be taxed at the rate of 65 percent of the wholesale sales price under the measure.
The new e-cigarette tax would not include products that have been approved by the U.S. Food and Drug Administration to help people quit smoking. It also does not include e-cigarettes sold for the purpose of vaporizing marijuana.
Oregon’s NewsChannel 21 stated Wednesday that it spoken with representatives of Smoke This, High Mountain Mist and Valley Vapors, three vape shops that say customers have expressed concern about the possible tax hikes.
Measure 108 would raise the state’s cigarette tax by $2 per pack and tax e-cigarettes for the first time in Oregon. Currently, Oregon’s cigarette tax is $1.33 cents per stamp for a pack of 20 cigarettes.
Supporters say such increases bring Oregon’s cigarette taxes in line with Washington and California. That means it would likely stop Washingtonians from driving across the state boundary to buy cheaper cigarettes.
Jamie Dunphy, Oregon government relations director with the American Cancer Society Cancer Action Network, says the measure is about public health.
“Evidence shows that e-cigarette use directly leads to tobacco use, and it directly leads to cancers, and it directly leads to a lot of health disparities that cause lifelong problems.” Several studies have shown all three claims to be false.
Jason Weber, CEO of Vape Crusader, is working with local businesses in the “No On 108” campaign. He said the new tax would cause some businesses to take a hit. “A 65 percent tax on every product in our vaping stores is detrimental to our businesses,” Weber said. “I would say somewhere around 90 or 95 percent of us would have to shut down.”
Weber explained that there are parameters in place to keep people safe and healthy. “All of our stores are 21 and older, so youth can’t come in our stores as is,” Weber said. “Again, these products have been proven 95 percent safer than smoking.
“And then for the argument (that) this leads to tobacco use — well if that was the case, we’d see tobacco use skyrocket right now,” he said. “We don’t — we see that the CDC says it’s a 34 percent drop in vaping in the last year.”
The American Cancer Society said the tax dollars will go toward intervention, public services, rehabilitation and tobacco education programs. The bill states that 90 percent of tax revenues would go to the Oregon Health Authority to pay for the treatment of sick people, especially those suffering from mental illnesses. The remaining 10 percent would go to tribal health providers and other culturally specific health programs for tobacco cessation efforts.
While the e-cigarette and vaping product industry overall is struggling everywhere from regulatory challenges to competition from nicotine replacement products to disruption amid Covid-19, the C-store market continues to grow.
C-store dollar sales of electronic cigarettes have risen a hefty 6.8 percent for the 52 weeks ending Aug. 9, according to IRI, and unit sales are surging, seeing a 15.6 percent rise for the same period. And that’s with an average price drop of $1.13 per unit, according to Convenience Store Decisions.
But the regulatory heat is rising. Most recently, California’s Gov. Gavin Newsom, D-Calif., signed into law Senate Bill 793, a flavored vaping ban, on Aug. 28. Chicago passed a flavored vape ban on Sept. 9, and backers of an Illinois state initiative that stalled last year said they plan to try again in 2021.
Municipal and state bans are nothing new to vape manufacturers and retailers. And until federal guidelines, in the form of policy and/or legislation, set a standard for all jurisdictions those local restrictions will continue to trouble more convenience operators.
The Marijuana Regulatory Agency (MRA) in Michigan has issued a recall for any vape cartridges containing Vitamin E Acetate. The US Centers for Disease Control and Prevention (CDC) has said vitamin E acetate is responsible for a rash of lung disease.
Many of these products were sold from Plan B Wellness, located on 20101 8 Mile Road in Detroit. Most of them were sold late 2019.
The substances has failed safety compliance testing in August. According to a news release, these cartridges were made before November 2019, when the rules for marijuana products were filed in the state.
The vape cartridges will all have a license number of the marijuana facility on it. They will also have a tag number that is followed by a statewide monitoring system.
MRA suggests customers and patients to return the affected products to Plan B Wellness, who will properly dispose them. The store will also contact customers who have bought these items.
Cigarette sales in Australia are plunging faster than any time in history as smokers turn to less-risky alternatives like vaping. There were 410 million fewer smokes sold in the country than two years ago.
Dr Murray Laugesen, a trustee of the End Smoking NZ charity, analysed tobacco company returns that are published by the Ministry of Health and found a remarkable drop in sales, according to an article on NZherald.com. About 2132 million cigarettes were sold last year – 193 million fewer than 2018, and following a 217 million drop the previous year.
The trend is driven by factors including cost and alternative products like vaping e-cigarettes – but needs to be accelerated if the December 2025 goal of less than 5 percent smoked tobacco prevalence is to be met. A 25-pack of cigarettes was Aus16.39 in 2011 and is now about Aus41.89 ($32).
“Continuation of a 9.5 percent annual per-capita decline in tobacco use, suggests the goal will still not be met until at least 2029, four years overdue,” said Dr George Laking, an oncologist and chair of End Smoking NZ. “Success in the goal would imply a further reduction of tobacco imports by 5 per cent per year from 2021 onwards.”
Laking said increasing the cost was one of the best ways to drop smoking rates, but prices had reached a point where doing so might create more harm than good. “Hardship experienced by disadvantaged people is so severe … if everyone in New Zealand enjoyed a middle class standard of living then we would not be in a grey area – we would say, ‘this is the most effective tool that we have,” he said.
Setting aside cost, Laking added that other effective measures would be to reduce to availability of tobacco, and offer hardcore smokers an acceptable alternative. The latter had advanced from nicotine patches and gums to e-cigarettes and “heat not burn” devices, which heat tobacco to lower temperatures than cigarettes.
“Although electronic cigarettes and heat not burn products are not perfect – the best thing is to not use any of these products at all – actually, if we were to convert our smoking epidemic into a situation of people using reduced-harm products, that would actually be a much better situation.”
This month, legislation banning advertising and restricting e-cigarette flavors was passed, 620 days after Associate Health Minister Jenny Salesa promised to regulate the industry in November 2018. The bill will come into effect in November, and will also allow the Ministry of Health to recall products, suspend them and issue warnings.
Laking noted the new legislation sought to strike a balance between helping people quit smoking, and avoiding uptake of vaping and new products by non-smokers including young people.
“You have to strike a balance between those two things, and the question is, where do you strike it and how do you strike it?,” he asks. “Those of us who support vaping-to-quit do often feel somewhat overwhelmed by the barrage of claims asserting the risks of vaping, that are, scientifically, very poorly constructed.”
Just three months after the state of New York banned flavored vaping products, vape shop owners say there has been a steep drop in customers. The ban, aimed at reducing youth vaping, came after several cases of lung disease caused by illicit marijuana products.
The number of those illnesses surged in August and September 2019 and had killed 68 people by Feb. 18, when the U.S. Centers for Disease Control and Prevention stopped collecting state health data on the illnesses because of the decline in cases, according to an article on Newsday.com.
The CDC concluded that vitamin E acetate, which was sometimes added to vape products containing THC was “the primary cause” of the illnesses, Brain King, a deputy director in the CDC’s Office on Smoking and Health, told Newsday in an email.
New York’s ban, which went into effect May 18, allows the sale only of vape liquids that are flavorless or taste like tobacco. A ban on all online vape sales started July 1. Some vape shops have shut down since the flavor ban, and others “are just barely hanging on,” said Cheryl Richter, executive director of the New York State Vapor Association.
Tammy Mink, owner of Shore Vapes in Glen Cove, said the ban, and a Nassau County ban on all flavors except menthol and mint that went into effect Jan. 1, “killed our business.” About 90% of pre-ban sales of vape liquids were of flavored products, she said.
Mink said most of her customers started vaping to stop smoking — as she did — and some have now returned to smoking. Mink said she would have welcomed a crackdown on sales of vape products to people under 21. Instead, the ban “opened up a black market,” she said. “It will not stop the kids from getting it.”
Several stores on the Shinnecock reservation — which asserts it is exempt from the ban because of its legal sovereignty — still sell flavored vape products, said Taobi Silva, a former tribal trustee who co-owns a vape store and manages a smoke shop that sells vape products and traditional cigarettes.
Silva saw increased sales after the ban went into effect “but not as significant as we were expecting.” That’s largely because gas stations and bodegas outside the reservation, as well as people operating from their car trunks, illegally sell the flavored products, he said.
The current ban was passed by the State Legislature and signed by Gov. Andrew M. Cuomo. A state health council approved a ban in September, but a state appeals court blocked enforcement after a lawsuit filed by the Washington, D.C.-based Vapor Technology Association. Association president Tony Abboud said in a statement Thursday that the group “does not have any plans to litigate” the new flavor ban.
