Romania is more progressive when it comes to vaping than many of its neighbors.
By Norm Bour
Romania, a country of just under 20 million people, is considered progressive when it comes to vaping. As a member of the European Union, it follows the Tobacco Products Directive, which has been in force for almost a decade now.
Romanian law prohibits the use of e-cigarettes on public transport and e-cigarette sponsorship and restricts much of the advertising of vaping products. A text-only health warning is required to cover 30 percent of the product package, according to tobaccocontrollaws.org.
The country has a high percentage of smokers, estimated to be about one-quarter of the population, which is dropping. Whether those former smokers have quit nicotine entirely or moved to vaping is hard to determine. As in many places, vaping is embraced primarily by the mid-20s to mid-30s age groups, with about 3 percent of the population being vapers.
Remarkably, at a time when the popularity of vaping is increasing throughout Europe, only 1.5 percent of Romanians under the age of 24 vape. Overall, it appears that about 2 percent of the Romanian population has taken up the habit. This creates many new opportunities for budding entrepreneurs.
With a growing number of shops in the capital city of Bucharest, I visited two of them to get a better feel for their perspectives. I also wanted to know if the shops were getting business from Turkey, just a few hundred miles away, where vape shops are illegal.
Florin Mincu is an early innovator in the vapor business. He opened Vaper’s Paradise in 2010.
“My taxi driver from the airport was smoking, and I saw him put what I thought was a lit cigarette in his shirt pocket. “‘Whoa,’ I said, ‘what did you just do?’ He explained that it was an e-cigarette, and he bought it from a black market guy selling them out of his trunk,” said Mincu. “I knew this was important, so within two hours, I had the taxi driver take me to meet this person. Remember, these were the days before true vape shops. I used the products he was selling and quit smoking in two months, and that is when I opened my first shop.”
When I hear stories like this, I wonder if I would have been so impulsive, but Mincu did not hesitate. Now, a dozen years later, he has two shops. In his main shop, with only 20 square meters (215 square feet) of space, he earns upward of $50,000 in revenue. In the Romanian context, this is a hugely successful shop.
We spoke about the government’s attitude and support of vaping, and he said they are “about 50 percent in,” which means they don’t support it, but they don’t outlaw it either. Fortunately, the country is pro-tobacco, so when he opened his shop, authorities assumed it was just another tobacco business.
After talking with Mincu, I spoke with another shop owner who requested anonymity, but both shops said the average age of their customers is about 30. As in many countries, no one under 18 is permitted inside the vape shop.
Vaper’s Paradise carries single-use and disposable kits, but the store is still pretty “old school,” with big mods and the heavy vapor products featuring prominently in its collection. Because of that, Vaper’s Paradise carries an impressive assortment of liquids, including American-made Five Pawns and Got Vape. Mincu prefers the U.K. brands, especially Nasty Juice, since it offers better pricing, great flavors and enjoys great popularity among his customers.
He also favors Nasty Juice because it burns cleanly and the cotton lasts much longer, and he’s a fan of U.K.-made Kilo but says this product is tougher to get now.
“About half our customers are getting into the disposables, but I have a large YouTube following, and they know I have a sophisticated taste for liquids, so they follow my advice,” he claimed. “Quality and flavors are what keep our customers happy, but even more important, any RDA [rebuildable dripping atomizer] hardware must be easy to use.”
Mincu does a lot of RDA builds and is always trying to improve the quality of the products. By trial and error, he developed his own technique, which he teaches to others. The coil has a very specific sound—and quality—when he gets it right.
They call it “polita,” which may not be a real word, but the sound it makes is very real.
He also said that many reviewers go into too much detail when evaluating hardware. “It’s not required to spend an hour on an atomizer,” he griped. “They are not that complicated! I try to keep my reviews short and tight and keep reader’s already short attention spans.”
Both shop owners agree that the Romanian vapor market is driven by flavors—a universal reality that makes the Food and Drug Administration policy so restrictive for their colleagues in the United States. When asked about the future potential for vaping in Romania, both entrepreneurs I spoke with were bullish and said they planned to open new shops in 2023.
Mincu has a big vision and is planning a shop about five times larger than his current outfit. He also has a robust online presence, and when asked about that bleed-over business from Turkey, where there are no legal shops, he said, “Absolutely. You cannot keep products out of people’s hands today. If someone wants something, they will find a way to get it, and we should know by now that telling someone that a product is illegal will only make them want it more.”
Mincu gets a lot of airline employees and pilots from different countries that are more restrictive about vaping products. And although Romania has vaping industry trade groups, Mincu has not joined any of them because “they don’t want to change, and they avoid new technology”—a common complaint shared by vapor industry representatives in many countries.
Mincu and I finished up our conversation by speaking about hemp, CBD and cannabis. Hemp and CBD still operate in a regulatory gray area in Romania, and even though Mincu has received offers to sell those products, he does not. It’s not worth the risk, he says, since CBD cannot contain THC, which remains illegal in Romania. However, Mincu expects this to change in the next few years.
Norm Bour is the founder of VapeMentors and works with vape businesses worldwide. He can be reached at norm@VapeMentors.com.
Innovations in technology and regulation could help ease the concerns surrounding youth access to vaping products.
By Timothy S. Donahue
Most tobacco control experts agree that vaping is safer than smoking combustible cigarettes. The primary concern for anti-vaping groups, legislators and regulatory officials isn’t where e-cigarettes fall on the continuum of risk, it’s about preventing youth access to nicotine products. The best way to prevent youth access is through innovation, according to vapor industry experts. Technology and regulatory policies will both be required for the vaping industry to satisfy its skeptics.
Technological innovations have been the vaping industry’s primary contribution to battling youth access. Several companies have developed devices that use biometrics, such as fingerprint and facial recognition. The OBS Cube FP Kit, for example, uses fingerprint recognition to prevent unauthorized use. However, a 2020 review by ecigclick.com found the fingerprinting function complicated to configure. “The instruction manual is total pants … it really is,” the reviewer wrote. “So far I haven’t worked out how to use the fingerprint stuff, there are diagrams in the book which relate to bugger all on the actual device.”
Juul Labs launched its C1 in Canada in 2019. The device paired with an Android smartphone to limit who could use it and to provide monitoring of what and how often the user vaped. Juul says the C1 could only be used if people got through age-verification and facial-recognition checks. The C1 also had a system that could be set to automatically lock when it was not being used or away from the phone to which it was linked.
Credit: Juul Labs
Juul Labs then launched the JUUL2, which had many of the same child safety features as the now discontinued C1. The JUUL2 also can recognize and authenticate proprietary JUUL2 pods when they’re attached, limiting the ability to use counterfeit pods or refill pods with other substances, such as THC.
Steven Yang, senior director of FEELM R&D, says that FEELM has incorporated designs into its products that prevent misuse by children, for example, by requiring the user to follow a specific sequence of procedures to activate the device.
“With a number of industry’s leading patents, FEELM is exploring ways to integrate Bluetooth, fingerprint, airflow switch, sensor and other electronic technologies to create a child lock on products,” he says, adding that many Chinese vaping industry leaders have already adopted ID verification and facial recognition technologies.
“FEELM’s strategic partner and China’s leading vape brand, RELX, has initiated Sunflower Systemin 2019. Based on AI and big data, the Sunflower System is integrated into different scenarios, such as RELX chain stores and the RELX app to prevent minors from purchasing vaping products,” explains Yang. “The Sunflower System has been extended to all RELX chain stores in China, to ensure each purchase order is traceable. Moreover, through big data and GPS, the Sunflower Systemcan automatically filter the addresses that do not meet the legal requirements of opening a vape store—for example, near schools.”
Project Sunflower consists of adopting ID and facial recognition technologies to ensure that only adults can purchase products in its China stores, according to RELX. Minors are not allowed to enter RELX stores, and in-store face-scanning cameras send alerts to RELX store staff if a suspected minor enters the store. Any suspected minor that is not able to present legal, valid ID proving his or her age is asked to leave the RELX store.
Upon purchasing a product, RELX customers also need to verify their age through a facial recognition process that matches the customer’s face with the photo on the customer’s Resident Identity Card,” says a RELX representative. “This process is to ensure that the person in the store is using their own valid identification and not attempting to impersonate an adult.”
While facial-recognition measures are widely used and accepted in China, they may encounter resistance elsewhere. Chris Howard, vice president, general counsel and chief compliance officer for E-Alternative Solutions, a U.S. based e-cigarette manufacturer, says that consumers have generally accepted biometric controls in phones, tablets and other devices that use fingerprints or faces to unlock the screens.
Those who are tech savvy would likely welcome such an alternative in their vaping products, he says. However, traditional cigarettes don’t have any electronic controls to prevent unlawful use, so if vaping regulations follow tobacco rules that would limit these types of innovations.
“The idea that such a requirement would be necessary for vapor products to receive marketing orders seems unlikely. It is important to remember that adult smokers may be unwilling to deal with an electronically locked tobacco product,” says Howard. “While some may enjoy the novelty, many may just use a tobacco product—likely higher risk—that is easier to use. Many questions surround the use of biometrics in products. There are legal privacy issues which would increase the cost of such devices.”
Manufacturers must also remain aware of regulatory restrictions in the markets they operate, according to Yang. FEELM has developed protocols to help retailers and distributors keep in compliance with local guidelines. Yang says the company attaches clear warning labels on its closed-system vaping devices and includes language in user manuals stating that the products are intended for use only by adults.
“We also focus to ensure that the retail stores in which our products are sold have mechanisms in place to verify the age of the consumers purchasing products manufactured by us so as to comply with local laws and regulations in relation to age restriction,” Yang says. “Moreover, our website and our major customers’ web stores require visitors to enter their age before entering the websites.”
Regulatory response
Taxation has long been the preferred deterrent to youth access by regulators. Studies suggest, however, that increasing taxes don’t always have the desired impact. Instead, these measures discourage combustible smokers from switching to a safer alternative, according to a study by Steve Pociask and Liam Sigaud for the American Consumer Institute, Center for Citizen Research. The researchers state, “overzealous or poorly designed restrictions [like tax increases] on vaping, combined with misleading information about e-cigarettes’ actual health risks, are deterring smokers from pursuing a potentially life-saving alternative.”
Tim Andrews, director of Consumer Issues for Americans for Tax Reform, says the evidence is clear that increasing taxes on reduced risk tobacco alternatives will do nothing to reduce youth access, but will punish adult vaping consumers, leading many back to deadly combustible cigarettes. He says one example is when the state of Minnesota imposed a tax on vaping products. It was determined that it prevented 32,400 additional adult smokers from quitting smoking, according to Andrews.
“Paradoxically, by creating a booming black market, which, by definition, possesses none of the rigorous age verification processes required by legal retailers, vapor taxes may increase not decrease youth access. This is similar to how evidence shows in states where cannabis is illegal, it is easier for high school students to purchase cannabis than beer. Increasing taxes on vaping will create a boon for smugglers—and will hurt everyone else,” he says. “Youth vaping has plummeted in recent years due to increased enforcement of existing law (according to the U.S. Centers for Disease Control and Prevention, only 3.1 percent of high school students vape daily). Adequate and appropriate enforcement of existing law—not increasing taxes—is what will continue to drive this number down.”
The recent Population Assessment of Tobacco and Health (PATH) study suggest Tobacco 21 laws are having the intended effect. Howard suggests that while limiting the minimum age of sale is seemingly effective, “it remains an open question as to whether any additional innovation is required, as additional time may show that youth access has been sufficiently curbed.”
Other innovative regulatory responses to youth vaping have had mixed results. Outside taxation and Tobacco 21 laws, any effectiveness seems hard to prove. Research suggests that there are few studies available that show what impact differing regulatory actions have on youth vaping. A study published in BMC Public Health, Policies that limit youth access and exposure to tobacco: a scientific neglect of the first stages of the policy process, examined 200 international peer-reviewed articles. The researchers found that scientific evidence on the policy process for youth-prevention initiatives were scarce.
“The processes influencing the adoption of youth access and exposure policies have been grossly understudied. A better understanding of the policy process is essential to understand country variations in tobacco control policy,” the researchers wrote. They then went on to suggest that “policymakers can adopt and implement various supply-side policies to limit youth access and exposure to tobacco, such as increasing the minimum age of sale, limiting the number or type of tobacco outlets, or banning the display of tobacco products.”
Credit: Balakley PB
Howard questions whether regulations limiting the number of tobacco outlets/vape shops or display bans would materially impact youth access. “Which companies should lose their business licenses? Should only major chains, with arguably more control over storefronts, be permitted to sell tobacco products?” Howard asks. “How will removal of businesses prevent youth from obtaining tobacco products? Yes, there will be less stores to find products, but that doesn’t mean youth vaping will decline. During the ‘youth vaping epidemic,’ Walmart, arguably the largest retail footprint in the U.S., removed vapor products from its stores—is there evidence of reduced youth vaping as a result? Finally, banning tobacco product displays may impact youth exposure to products, but would also reduce adult smokers’ exposure to different, potentially less harmful, products.”
Incentivizing success
There may be more innovative options to consider in controlling youth access. Another potential avenue to curb youth access may be to require manufacturers to offer incentives to retailers to maintain good practices. B2B sales discounts or incentives for meeting certain standards is likely to go a long way toward limiting youth access, according to Howard.
“Manufacturers can incentivize limiting the number of products in a transaction to prevent straw sales, passing compliance checks, tobacco sales training and participating in the We Card program to encourage retailers to ‘up their game’ in preventing youth access,” he says.
States are slowly becoming more innovative in their regulatory approach to youth vaping. Hawaii, for example, is considering the passage of a law that would require its Department of Health (DOH) to coordinate with its Department of Education (DOE) to establish a “take back” program for students to “voluntarily dispose of electronic smoking devices, flavored tobacco or synthetic nicotine products, and tobacco products in their possession.” If passed, the rules would also require DOH and DOE to coordinate quarterly meetings with students on addressing the youth vaping epidemic.
Many industry experts agree that the vaping industry, tobacco control community and regulators should be working together to solve the problem of youth uptake. However, that seems unlikely. It could be argued that the world’s most prominent regulator, the FDA’s Center for Tobacco Products (CTP), should be bringing stakeholders together to seek out common solutions to these problems. That hasn’t happened, according to Howard.
“It appears CTP felt compelled to use a club, as opposed to a scalpel, to excise youth vapor use. Banning flavored pods and blanket denials of millions of [premarket tobacco product applications] PMTAs for flavored products through sweeping [market denial orders] MDOs removed most industry stakeholders in just about a month,” says Howard. “While much of this was thrust upon CTP by outside forces, it is hard to imagine, when they can completely control the issue, why would CTP now resort to compromise solutions?
“CTP and the tobacco control lobby both detest those bad actors that market their products without regard to this important issue. Companies that actively follow the rules detest these bad actors, too. CTP, tobacco control and the ethical side of the industry should join forces to root these bad actors out.”
Mike Ligon, TMA board chair, and Matt Holman, director of the CTP’s Office of Science, discuss regulatory reaction.
By Timothy S. Donahue
The U.S. Food and Drug Administration has been busy. Before it had the chance to finish the first round of premarket tobacco product application (PMTA) reviews, the agency’s Center for Tobacco Products (CTP) was charged with also regulating all synthetic and other nontobacco-derived nicotine products (see “Unnatural Response,” page 28). Manufacturers must submit PMTAs for the newly regulated products by May 14, 2022.
During the 103rd annual meeting of Vapor Voice’s parent company, TMA, Mike Ligon, TMA board chair, and Matt Holman, director of the FDA CTP’s Office of Science (OS), discussed the regulatory agency’s challenges and lessons learned in regulating electronic nicotine-delivery systems (ENDS) and other novel tobacco products. It was the first time Holman had spoken publicly since Congress granted the FDA the authority to regulate synthetic products, and Ligon emphasized that the audience was eager to hear Holman answer questions.
Holman made clear from the beginning that he heard during the conference that the FDA needs to do a better job with consistency, transparency and predictability. “That’s something I’ve strived to make sure we do as office director, but I’m hearing we’re not doing as good a job as we need to,” said Holman. “That’s something I’m certainly taking back to my colleagues to figure out … I think the point I’ve heard the most along those lines was just the timing and not knowing what the timing would be [for] taking action on applications. We need to do a better job of that.”
Credit: Timothy S. Donahue
After a federal judge ordered the FDA to complete a majority of PMTA reviews by Sept. 9, 2021—one year after the deadline for PMTA submissions—Holman said the review process was still new and that it was a challenge to build the programs necessary to complete reviews on time. He said that staffing the agency, for example, was a giant undertaking.
“Something folks outside the agency don’t think about all that much is staffing levels. When I took over this position, we had something around 325 staff members that were in the office,” Holman explained. “And now, five years later, we have about 575-ish. Any of you who have not been in the federal government and tried to hire—it is a huge-level effort to hire that many people in that period of time; a huge-level effort … half my staff have come on board during the pandemic and have not met colleagues in person.”
Holman said that the big-picture goal for the OS and FDA alike is creating an offramp for smokers to transition to less-harmful products while minimizing any potential on-ramps for youth initiation, adding that youth use has been “decreasing the last couple of years, which is a really positive thing.” He also explained that the agency often hears a lot of criticism, some undeserved, surrounding the misinformation disseminated into the public by “stakeholders” (anti-nicotine organizations, health agencies, tobacco control groups, regulators and industry players).
“We take all the feedback seriously … And we certainly actively encourage all stakeholders to engage with one another. I would hope to be able to sit here and say that I’ve been more successful than I have in that. There’s still a lot of resistance. There’s still a lot of really emotional, heated exchanges and feelings toward stakeholders,” said Holman. “I’m even seeing a shift in some of the stakeholder groups that have been aligned [previously] and now aren’t necessarily aligning.
“I’ve just celebrated 20 years at the FDA in December. That entire 20 years, I’ve spent really actively engaging with all stakeholders, and I think it’s critical as regulators that we hear from and we talk with and we communicate—and we’re trying to be as transparent as possible—with all stakeholders. Unfortunately, I don’t control all the stakeholders. And I keep carrying this message forward. It doesn’t always get heard so well. And so, it’s still very much a work in progress.”
Ultimately, Holman said the FDA is trying its best to base its decisions on the “good” science and not a specific source of data. “I don’t even care who the author is. I mean, the science is science,” he said. “Unfortunately, we have a lot of stakeholders that don’t look [at] it that way, and a lot that think they know what the policies shouldn’t be, and they want to come up with the science to demonstrate that. But we’re very aware of that. We’re very much looking out for that type of thing.”
Being approachable
Holman said he understands the frustration of trying to combat misinformation. On the FDA’s side, he wanted to clarify at least some of the misunderstandings and misperceptions he commonly hears when stakeholders discuss the FDA. For example, he had recently heard a stakeholder saying that the FDA only had one economist on staff. “FDA has more than one economist,” he said. “The CTP has more than one economist. I want to be clear about that … You can agree or disagree with where economists land on their analysis. That’s fine. But just to say that we only have one economist—this concern is just a major misrepresentation of the situation.”
There are also the rumors that the regulatory agency doesn’t read all the docket submissions (everything submitted to the agency, whether a comment on rulemaking or a PMTA). Holman said the quality of the submissions vary greatly, but the agency is required by law to look at every single one. “To suggest that the FDA’s regulators don’t carefully consider the data when we’re weighing options … at the end of the day, we have a public health mission where we’re here to serve,” said Holman. “We’re not here to oppose anyone. I look at data from all sources. I don’t care who it comes from … to suggest anything otherwise, at least for the FDA, honestly, it’s a bit insulting … you can criticize all you want about where we come out on decisions and rulemaking, but at the end of the day, we are very much a science-based organization.”
Credit: Timothy S. Donahue
The agency also tries to consider the unintended consequences of regulatory action, according to Holman.
However, he explained that determining these factors, such as the growth of a black market, is complicated because there’s often not a lot of data.
“It’s very much [speculating] what’s going to happen to the black market or the gray market when we take an action. We don’t often have data on that. So it’s really modeling or predicting,” he said. “We absolutely consider that because, at the end of the day … as I like to say to my staff, we’re trying to tackle this with a scalpel not a machete. Because I think that’s how you sort of leave this fine line that we’re all trying to leave here.”
Ligon asked Holman whether the FDA’s approach to regulating next-generation tobacco products was a workable standard. Ligon wanted to know if the FDA still recognizes that tobacco products exist on a continuum of risk, with combustible cigarettes being the most harmful (the “continuum of risk” is the scientific concept that not all tobacco and nicotine-delivering products are equally harmful). Holman said that while the FDA doesn’t know precisely what the relative risks are of the different products on the spectrum, the agency still believes in the continuum of risk.
“The challenge is having strong, rigorous data that we can stand behind and say, ‘Yes, we know this product is lower in risk than that product.’ That’s one of the biggest challenges still, I think, figuring out how to collect that data, what are the right types of studies, what’s the sort of full body of data that we need to be comfortable saying, ‘Yes, this product is down the continuum from that product,’” he said. “I think the other big challenge in this is … communicating with the consumers because if they don’t understand—and we know there’s a lack of understanding—a lot of misperceptions and misunderstandings [begin to grow].”
Workable solution
Communication is key. Holman said that to better understand the process and the challenges that stakeholders are suffering, the agency needs to better communicate its thought processes and goals. Before the Covid-19 pandemic limited stakeholder interaction, the agency would hold workshops to hear directly from stakeholders about their concerns. Holman wants to bring back that level of communication.
“We need to do workshops. It’s been almost a year since we’ve done the last workshop, and a whole heck of a lot of things have happened in that time period. We’re definitely going to take that back with our staff and talk about how to put some workshops together because the feedback we’ve gotten to date on the workshops we have done [previously] have been very positive,” said Holman. “Folks really appreciate the discussion. Not only to hear what we have to say, but just talks among attendees and some shared ideas and thoughts.”
Matt Holman / FDA
When asked if there were any suggestions from TMA attendees for workshop concepts, several stakeholders offered ideas. One stakeholder wanted to discuss with the FDA how PMTA data is managed and submitted to the FDA. The participant said that his company had received a deficiency letter; however, the additional data requested was already included in the company’s PMTA. Holman said that type of seminar would be a “win-win” for both the agency and the stakeholders.
Another attendee suggested that the agency bring in consumers to allow the FDA to hear from them directly and to understand the consumers’ thoughts, behaviors and attitudes as well as the impact of potential regulations on possible future consumer behavior. “I just feel like there’s a gap,” the attendee said. “I really think that would do a lot in being able to bring all of us together to promote the science.”
Other attendees wanted to have a better understanding of how the FDA comes to its decisions and what some of the common errors were in PMTAs that had received marketing denial letters. “I’m suggesting a little bit [of a] deeper dive by product category into the top 10 reasons you’re finding that something succeeds and [the] top 10 reasons you’re finding that something fails,” the attendee said. “I’m talking more about … here are the reasons why these fail … here’s why this doesn’t work.”
Holman said the fundamental goal of the FDA is moving people down the continuum of risk. He said that the consumer is the most important part of the equation and that all stakeholders need to be better at getting less-harmful tobacco products into the hands of adult combustible smokers. He said that he would hope that five years from now the tobacco product marketplace looks very different. Holman suggested that manufacturers with the ENDS products that exist now, alongside the “products we’re not even talking about that I know are in the pipeline” at various companies, should also consider using the agency’s modified-risk tobacco product (MRTP) pipeline moving forward.
“I would hope that our MRTP program sees a lot more action and that we see a lot more modified-risk statements on products … And again, I think the lack of dialogue amongst stakeholders, and the lack of sort of any level of agreement, really thwarts communication because the information the consumers are receiving, it’s all over the place, right?” Holman suggested. “There’s a lot of misinformation out there that certain stakeholders convey that just doesn’t reflect the science. Just flat out doesn’t … if we could just get stakeholders to agree on some basic key communication points that we would all collectively share with consumers, I think we could really drive this forward. But right now, consumers are just confused.”
The number of crimes committed at specialty retail outlets has grown dramatically over the past few years.
By Timothy S. Donahue
Every year, hundreds if not thousands of cannabis dispensaries, vape shops and tobacco outlets are robbed or burglarized in the U.S. On July 10, in Lincoln, Nebraska, between 2 a.m. and 5 a.m., the police department responded to alarms at two vape shops where officers found shattered storefront glass at both locations. The thieves targeted CBD (cannabidiol) and Delta-8 THC (tetrahydrocannabinol) products. The pair of break-ins happened two days after another similar burglary, totaling three in as many days. The businesses lost tens of thousands of dollars in merchandise.
Timothy Goodman, a manager at the Lincoln Vapor location, said that break-in was just the latest in a string of six incidents in approximately the last two years, according to news reports. Goodman, who has worked at Lincoln Vapor for nearly four years, said it’s his understanding that every break-in can be linked back to the same group.
The burglars stole $2,000–$3,000 worth of merchandise in May 2021 and have lifted around $16,000 in products from the business through the last year and a half, according to Goodman. Most products were hardware and cannabis products, such as CBD and Delta-8 THC. “It’s frustrating beyond belief,” he said. “I wake up most nights in the middle of the night and check the cameras to make sure nobody got in.”
The rise in vape shop crimes may be an unintended consequence of recent regulatory actions, such as tax increases, flavor bans and raising the age to purchase vaping and tobacco products to 21, according to many industry experts. Richard Marianos, a senior law enforcement consultant who has served more than 27 years at the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and who is now a consultant and adjunct lecturer at Georgetown University, says crime is often an unintended and overlooked consequence of regulatory constraints on the marketplace that encourage the growth of black markets.
Credit: Lexington Police Dept.
Marianos said that taxes and flavor bans bring prohibition, and prohibition brings crime. “These regulatory actions mean a dramatic increase in street sales to kids, and that is what we have seen all over the United States,” said Marianos. “If you have any form of tobacco harm reduction in your state, just throw that completely out the window [if you are going to implement flavor bans and raise taxes exorbitantly] because it forces young adults and people who can’t afford these products into a growing black market. In terms of law enforcement, the issue is that there has been 150 percent increase in smash-and-grabs because of the difficulty of purchasing these products.”
Sam Salaymeh, president and CEO of AMV Holdings, parent to a chain of 113 Kure CBD & Vape shops across the U.S., said that his stores have seen a major increase in crime over the past two years. During Covid-19 lockdowns in 2020 through early 2021, AMV stores had over 20 burglaries combined. “There is a myriad of stories that come with these break-ins, but the main theme is criminals are trying to get to high-value items that are small in size—and that would be the CBD/cannabis products … etc.,” explains Salaymeh. “This is happening more and more across the country.”
Credit: Manatee County Sheriffs Office
During a one-hour period on Dec. 20, five separate retail locations—three vape shops and two tobacco/vape outlets—suffered a string of robberies by three men wearing masks that crossed the Southeast region of Los Angeles County. A shop owner said the criminals pretended to be customers when one pulled a gun and demanded money while two others snatched merchandise from the store’s shelves, according to news reports.
Credit: UK Vapers
“We now have organized crews that go out and hit multiple stores like convenience stores, gas stations, vape shops in a single night or a weekend … they don’t go for cash registers; they want the tobacco products because they can sell it on the street cheaper than what it’s being sold for with these high taxes and these prohibitions,” says Marianos. “They’re making a fortune in the black market the same way the dope dealers are selling cocaine and heroin because the taxes on vaping and tobacco products are going through the roof.”
Crimes of convenience
In 2020, there were 102,677 robbery incidents and 102,677 offenses reported in the U.S. by 9,991 law enforcement agencies that submitted National Incident-Based Reporting System (NIBRS) data. Nearly 25 percent of those incidents were committed at convenience stores (13,721), gas stations (7,006) and specialty stores, where vape shops are lumped into (5,372) combined. If criminals are looking for quick cash, then robbing convenience stores or small specialty retail shops is one of the best ways to do it, according to the FBI.
John Cavanaugh, owner of California-based Vaping Industries, says that thieves have broken into his stores numerous times. Typically, thieves try to take what’s immediately available. “They broke in after hours … broke the glass, popped open the register, grabbed the cash, broke into my office, got the petty cash and then rolled out,” he said. “I think we are starting to see more robberies than burglaries lately, and I think that it’s an easier target to hit a vape shop or a smoke shop with guns because the layout is small, there’s only typically one or two employees and—especially with cannabis dispensaries—there’s a lot of cash on hand.”
Burglary
Robbery
The terms “burglary” and “robbery” are not interchangeable.
They have meaningful differences.
Burglary involves a person illegally entering a building to commit a crime while inside.
Robbery is typically when someone takes something of value directly from another person using force or fear.
There is a far greater chance that someone committing a robbery will do so armed compared to burglaries, which typically occur after hours.
Convenience stores accounted for nearly 13 percent of all violent crimes suffered in 2020, and gas stations accounted for about 12 percent.
Across North America, crimes involving vapor, tobacco or cannabis shops are getting more violent. On Dec. 3, in Calgary, Canada, officials said a “number of people” entered Jerry’s Smoke and Vape just after 6:30 p.m. According to a police report, one of the suspects pointed a gun at the clerk, and the bandits made off with cash and merchandise.
On Sept. 12, in British Columbia, a suspect entered a vape shop alone armed with a shotgun. After threatening an employee, the suspect took an undisclosed amount of cash and product before escaping on foot. Over the weekend of May 29 to June 1, 2020, thieves burglarized several cannabis dispensaries, distribution centers and cultivation in Los Angeles, Oakland, San Francisco and other cities, stealing legal commercial cannabis products and cash. On Sept. 11, 2021, in Calgary, Canada, three masked men entered a dispensary armed, held off staff and got away with a quantity of cannabis products.
Cavanaugh said robberies are more common at cannabis dispensaries than vape shops because cannabis dispensaries have a lot of cash on hand, especially in the U.S. where very few banks will work with marijuana businesses. There are also numerous illegal cannabis dispensaries, which perpetrators know are less likely to notify law enforcement.
“Before all of this started happening over the last few years, I didn’t really believe in upping my security. Now, I have to make sure that there are panic buttons, that my staff are properly trained for when somebody comes in with guns blazing,” he says. “They need to know to just give it all up. Give them the cash and whatever they want. It’s OK. It isn’t worth your life. I’m also now spending extra money for high-end security cameras and security systems. It’s frustrating.”
Crime prevention
According to Marianos, there are several reasons why thieves target convenience stores and gas stations and now vape shops and dispensaries: operating hours and low numbers of staff on site, and these types of stores have smaller layouts, so it’s easier to find the expensive/high demand products and there is the potential for large amounts of cash on-site.
“You don’t want it to make product accessible where somebody can just take a trash can, throw it through the window and get into your shop and take all your stuff,” says Marianos. “More cameras, limiting the amount of people that are coming in like they do at jewelry stores—these businesses need a similar model that retailers with high-end products have. In some higher crime areas, you may even have to hire a security guard.”
Vandalism, from smash-and-grab types of crimes, has occurred so often at AMV stores in recent years that Salaymeh says he has a toolkit in his garage ready to go at a moment’s notice with everything needed to board up a store. He says he involuntarily became an expert at it. Salaymeh says that while it is rare for AMV stores to alter operating hours, it is a tactic they have used in the past. He says that having at least two staff members at all times in some locations, installing security cameras and other security measures are the primary tools store owners have in their arsenal to help deter crime.
“Security cameras help us at least get the story behind what happened and potentially pictures of the thieves. We also try to limit the access potential thieves have to valuable product … and we’ve tried to keep the lights on after hours so that people can actually see that these products aren’t lying around or in display cases,” he says. “We leave the register drawer open so that people, when they walk up, they see there’s no cash.”
Another unintended consequence of overzealous taxation and regulation is the impact it has on local law enforcement, according to Marianos. He says enacting some of these rules are, in effect, giving police more work to do in terms of harassment violations that have no teeth instead of fighting real crime.
“Instead of being able to work on what they should be working on—to serve and protect—are we going to be calling the police because someone is vaping a flavor?” he asks. “What is law enforcement going to do with all this nonsense? What are they going to charge the guy with? What is the crime? Do you know what I mean? It becomes an hour and a half just sitting around trying to figure out what we’re going to do here.”
During his interview with Vapor Voice, Salaymeh’s phone rang. It was the security firm ADT. One of the Kure stores had an alarm going off. He said it happens multiple times a week. There is insurance available for specialty shops, but both Cavanaugh and Salaymeh say it is expensive. The deductible is often higher than the amount of damage suffered during a crime. Both say they rarely, if ever, claim any damages with their insurance companies.
Credit: Tulsa Police
Another overlooked result of rising crimes in these specialty sectors is the impact on the economy and the lives of employees. Cavanaugh said that crime has forced him to shutter two stores, and he now struggles to keep the doors open in his remaining location. Increases in crime, overregulation and misinformation concerning the health and safety of vaping, and the causes (illegal THC vaping products) of e-cigarette or vaping use-associated lung injury have been too much to bear.
“We are doing our best to deal with the reality of today’s vaping industry,” Cavanaugh said. “I want to keep my doors open, and people depend on us; that’s important.”
Salaymeh says he had to close some stores during the Covid-19 pandemic, some of which were temporary. The closures weren’t all crime-related, he explains, but most of them were. There was a period when stores were not allowed to be open, so burglaries were happening, and stores couldn’t sell anything to try to recover losses. “We’re trying to keep people employed. The height of the pandemic was a very, very, very difficult time for our company and many companies like us. The primary victims of these senseless crimes are the people who don’t have a job to go back to because I shut down 18 stores during that time,” he says. “Think about that.”
Last year was a difficult one for vapor companies as regulation, taxation and flavor bans made their impact on the industry.
By VV staff
On Sept. 9, 2020, e-cigarette manufacturers needed to have submitted premarket tobacco product applications (PMTAs) to the U.S. Food and Drug Administration to keep their electronic nicotine-delivery system (ENDS) products on the market. Going into 2021, many applicants hoped to receive marketing approval orders. That didn’t work out. Instead, the FDA rejected the vast majority of applications—many of them for excluding studies that the agency didn’t appear to require at the start of the process.
By Dec. 31, 2021, the FDA had issued marketing denial orders (MDOs) for most of the more than 6.5 million PMTAs submitted by 500 companies. Only an estimated 80,000 products remain under review and, as of press time, only the Vuse Solo and two tobacco-flavored Solo pods have received a marketing approval order. Many of the applications still under review are “ones submitted by the companies with the largest market shares because they tend to be the largest and most complex applications,” according to Mitch Zeller, head of the FDA’s Center for Tobacco Products (CTP).
The U.S. Postal Service (USPS) banned the mailing of vapor products in 2021, and Congress started debating a federal nicotine tax, which at press time had been removed from the legislation. Last year, many MDO recipients had those orders stayed by a court or rescinded by the FDA. Withdrawn products returned to market, leaving retailers confused. Misinformation about vaping was widespread throughout the year. Synthetic nicotine and disposable vape pens began to dominate sales and several new cannabinoids came to market. Let’s look back at the top stories of 2021.
January
Beverly Hills and Manhattan Beach, both in the Los Angeles area, began to enforce a ban on vapor products, the strictest vaping rules in the U.S.
Shares in Chinese e-cigarette maker RLX Technology, parent to the RELX brand, jumped 146 percent in their trading debut after raising $1.4 billion in its U.S. initial public offering.
Following the enactment of smoke-free laws in Paraguay, every South American country banned vaping and smoking in most public places.
The FDA sent its first warning letters to manufacturers of ENDS products that did not submit PMTAs by the Sept. 9, 2020, deadline.
Credit: TPB
February
Turning Point Brands announced a proposed private offering of $250 million aggregate principal amount of its senior secured notes due 2026.
The public comment period began for the U.S. Postal Service’s ENDS mailing rules. R.J. Reynolds Vapor Co.’s (RJRV) Vuse Alto began selling nationally in the U.S.
Utah Senator Mitt Romney pushed for flavored vaping products to be pulled from shelves across the United States.
March
The World Health Organization study group on Tobacco Product Regulations recommended prohibiting open systems.
The litigants in two lawsuits challenging the constitutionality of the FDA’s Deeming Rule for vapor products, Big Time Vapes and Moose Jooce, asked the Supreme Court of the United States (SCOTUS) to take up their cases.
The Preventing Online Sales of E-Cigarettes to Children (PACT) Act forced many companies to end online sales to U.S. customers. Many went out of business altogether because of the new rules.
China announced its intent to overhaul rules governing the ENDS market. The news caused a steep drop in the value of RLX Technology shares, from which the company has yet to recover.
Kate Wang / Credit: RELX
April
Virginia became the 16th state and first southern U.S. state to legalize the possession of small amounts of marijuana.
Charlie’s Holdings, parent to the Charlie’s Chalk Dust and Pacha Mama brands, raised $3 million in a private stock sale.
American TV personality Phillip Calvin McGraw, also known as Dr. Phil, wrongly blamed the e-cigarette or vaping use-associated lung injury (EVALI) lung illness outbreak on vaping nicotine products. The USPS published its guidance for mailing vaping products in the Federal Register.
The FDA stated its intent to ban menthol as a characterizing flavor in cigarettes, saying it would exclude e-liquids.
May
An estimated 3,000 people visited the Tobacco Plus Expo (TPE) on the opening day of the three-day event, the first vapor trade show since the pandemic began.
The WHO reasserted its abstinence-only approach to nicotine. The U.S. International Trade Commission (ITC) ruled that Philip Morris International’s IQOS device infringes on two patents owned by BAT subsidiary Reynolds American Inc.
Meanwhile, a judge ruled that RJRV’s Vuse Solo and Ciro e-cigarettes infringe patents owned by Fuma International. Joining a growing number of U.S. states, New York expressly prohibited Delta-8 THC and other THC isomers derived from hemp.
The FDA published a list of ENDS products that could be legally marketed in the U.S.
June
Poda Holdings launched its “zero cleaning” heat-not-burn (HnB) product after six years of development. SCOTUS denied Big Time Vapes and Moose Joose a request for a writ of certiorari. The German Bundestag signed off on a bill to raise taxes on combustible cigarettes, e-cigarettes and HnB tobacco products.
An investor filed a class action suit against RLX Technology, claiming the manufacturer overstated its financials and misrepresented potential regulatory risks when it filed its IPO. San Francisco, Connecticut, Washington, D.C., Los Angeles and Canada proposed or enacted flavor bans.
A study in the U.K. gave homeless people free e-cigarette starter packs. North Carolina settled its lawsuit with Juul Labs for $40 million.
July
Vaporesso and FEELM parent, Smoore International Holdings, was the only vaping technology company to make the Forbes 2021 Global 2000 list.
Australia set maximum fines of up to aus11 million ($8.2 million) for businesses caught selling illegal nicotine vaping products.
The FDA was accused of issuing unwarranted warning letters and leaving companies off of its list of accepted PMTAs. The agency was also criticized for using poorly functioning PMTA filing software.
Juul Labs paid $51,000 to buy an entire issue of the American Journal of Health Behavior to publish its own vapor studies and make it publicly available. The town of Brookline, Massachusetts, prohibited the sale of all tobacco-related products to anybody born after Jan. 1, 2000. The Chinese vaping company Aspire Global announced terms for its U.S. IPO—which didn’t happen.
The Federal Bureau of Investigation and the Drug Enforcement Administration raided the cannabis culture and accessories trade show, CHAMPS, because vendors were giving unauthorized Delta-8 THC product samples. Bidi Vapor parent, Kaival Brands, began trading on the NASDAQ.
August
The FDA issued a Refuse to File letter to the JD Nova Group for its estimated 4.5 million PMTAs, which accounted for approximately two-thirds of the total number of PMTA submissions.
Smok Parent, IVP Technology, considered a Hong Kong IPO—which didn’t happen. The FDA issued the first MDOs covering more than 55,000 products.
A study found that, contrary to what earlier studies suggested, vaping products are not associated with increased heart attack incidence among people without a history of smoking combustible cigarettes.
September
As the PMTA deadline approached, the FDA asked for more time before deciding whether some “e-cigarettes from market leader Juul Labs” and others are appropriate for the protection of public health. Numerous companies received MDOs from the FDA the night before the deadline.
Vuse became the No. 1 global vaping brand by value share. No product got marketing orders on the court-imposed Sept. 9 deadline; instead, the FDA issued MDOs to more than 130 small companies, including Turning Point Brands, requiring companies to pull an estimated 946,000 products from the market.
Congress proposed the U.S. Tobacco Tax Equity (TTE) Act, which would tax vaping products the same as combustible cigarettes. The legislation later gets attached to the Build Back Better (BBB) Act. The FDA released its annual National Youth Tobacco Survey (NYTS) showing that youth use of e-cigarettes fell sharply in 2021, the second consecutive year of major declines.
The FDA said the 2021 NYTS can’t be compared to previous years because Covid-19 caused schools to close and altered testing procedures.
October
Zanoprima Lifesciences announced the commercial production of its SyNic brand of synthetic (S)-nicotine. Turning Point Brands had its MDO rescinded by the FDA because the company did in fact submit newly required studies.
The FDA’s Fatal Flaw review process was revealed after court documents were released. After more than six months, the USPS finally posted for public inspection its rules for mailing e-cigarettes in the Federal Register.
The FDA gave the first ENDS marketing approval to RJRV’s Vuse Solo device and two tobacco-flavored pods, which are widely regarded as antique products compared to current vaping offerings.
The FDA authorized the marketing of four oral tobacco products that are no longer on the market. Ten MDOs were rescinded or stayed by the FDA or in court.
November
More details surfaced surrounding the Fatal Flaw review, a simple review in which the reviewer examines the submission to identify whether it contains the necessary types of studies. “The Fatal Flaw review will be limited to determining presence or absence of such studies; it will not evaluate the merits of the studies,” an FDA memorandum states.
Previously proposed nicotine/vapor tax increases were removed from the BBB Act.
The Conference of the Parties to the WHO Framework Convention for Tobacco Control held its ninth session, this time virtually.
The nicotine tax resurfaced in the BBB Act. RJRV settled its Fuma lawsuit two days before the trial was set to start.
Biden nominated former FDA chief Robert Califf to again lead agency.
December
Draft rules governing e-cigarettes and vapor products were issued by China’s tobacco regulator.
The nicotine tax was again removed from the BBB Act.
The U.S. Trade Representative upheld the ITC’s finding that Philip Morris International’s IQOS infringes on BAT patents and Altria ended all U.S. sales.
The Spanish government took control the country’s sales and distribution of vaping products.
CTP Director Mitch Zeller announced plans to retire from the CTP in April.
Once the largest chain of vape shops, Avail Vapor sold the majority of its retail locations and closed its remaining stores.
Turning Point Brands received a USPS exemption for its VaporBeast subsidiary’s vape mail.
The FDA authorized the marketing of 22nd Century Group’s low-nicotine, combustible filtered cigarettes as modified-risk tobacco products.
Looking ahead
The outlook for 2022 is vague at best for vapor. The FDA has a new director, and Zeller is retiring from the CTP, and things can change quickly under new leadership. It’s expected that the FDA will make decisions on the major ENDS brands at some point in the year, and there are still an estimated 44 lawsuits pending over the issuing of MDOs. The industry has already seen numerous vapor-related businesses close, consolidate or be bought out by larger competitors. Experts say that much of the same can be expected in 2022.
“With the announcement of Zeller stepping down, I think we will continue to see vastly extended approval times for the majority of vapor products still being evaluated by the FDA, especially with open litigation covering many of these products,” said Josh Church, managing director of Roots Holding. “The products that do make it through the approval process will be high-value SKUs to large tobacco product manufacturers and will likely either be bought outright or there will be some agreement in equity share to utilize tobacco’s historic distribution network.”
Last year left a lot of questions that the industry still needs answers to in 2022. There also probably won’t be many major changes in the vapor market other than continued sales growth in 2022, according to Church. “I think we can all agree that 2021 was a rough year. I believe that this year, we will observe the run out of the mail ban—effects of the PACT Act—on ecommerce,” he said. “That will come alongside continued brick-and-mortar business closures for those who don’t diversify their product offerings. I wouldn’t say 2022 is going to be worse than 2021, but I don’t expect it to change very much either.”
The long roller coaster ride for the vapor industry will likely continue for the foreseeable future.
By Chris Howard and Rich Hill
It’s been a long and arduous journey since the finalization of the Deeming Rule in 2016. As most of you will recall, this was the moment when we transitioned from operating in an unregulated market to plowing forward under a complicated and onerous regulatory scheme in the blink of an eye. Shortly thereafter, the U.S. Food and Drug Administration announced a renewed prioritization of harm reduction and proclaimed that vapor could play a leading role in that effort.
Chris HowardRich Hill
Then, as quickly as a bright future for harm reduction blossomed, the lights dimmed, and vapor became the villain in the harm reduction story overnight. In addition to paralyzing propaganda and misplaced demonization by activist groups throughout the U.S., the industry also faced an onslaught of crippling requirements associated with a 10-month window to submit premarket tobacco product applications (PMTAs). Costing millions of dollars, 99 percent of the PMTAs ultimately submitted to the FDA’s Center for Tobacco Products (CTP) were summarily rejected based upon a standard, akin to a clinical cessation trial, that none in the industry expected.
As of the date of this writing, some of the largest players in the e-liquid space have closed their doors or have moved into yet another risky proposition—synthetic nicotine. Despite the setbacks over the past several years, many still believe reports of vapor’s death as a harm reduction tool are greatly exaggerated. Notwithstanding this cautious optimism, it is clear that 2022 is going to be yet another difficult year for the vapor category.
Current state as we enter 2022
As we enter 2022, much of the flavored e-liquid market is gone and may never return. While we have seen marketing orders for first-generation e-cigarettes and tobacco disks that are no longer marketed, we have not seen marketing orders for any modern electronic nicotine-delivery system (ENDS) or oral nicotine products. We have seen a marketing order for a combustible low-nicotine cigarette, along with a reduced exposure order for the same. While litigation continues around the rejected PMTAs, the FDA still lacks a commissioner, and we have no knowledge of who will replace retiring CTP Director Mitch Zeller. Most importantly, other than removing flavors from the market, we have no clear understanding of the FDA’s harm reduction strategy.
Predicting the future in 2022
PMTAs. Few question the fact that the CTP was given a Herculean task by the Maryland federal court. Processing, let alone reviewing, 6.5 million PMTAs in a year was unquestionably an impossible requirement. Candidly, the fact that the CTP was able to get the majority through acceptance and filing was a significant achievement. Of course, for most reading this, the outcome was obviously disappointing as nearly all requests for marketing orders for flavored ENDS products were rejected in late 2021. As the various challenges to the marketing denial orders play out over the next year, many hold out hope that the CTP will be found to have violated the Administrative Procedures Act and/or acted arbitrarily or capriciously in its decision-making process.
Credit: JHVEPhoto
With respect to those applications that remain pending with the CTP (primarily tobacco and menthol flavors, pod systems and disposable devices), we believe the FDA will issue marketing orders for several tobacco-flavored pods and disposable e-cigarettes in 2022. Assuming the remaining applications otherwise meet the statutory standards, there is little reason for the CTP to deny applications for tobacco-flavored pods, e-liquids and disposables given the evidence that such products are not particularly attractive to youth. That said, we question whether any action will occur before the new FDA commissioner and CTP director are in place and have an opportunity to address policy concerns.
As for menthol offerings, we anticipate that the FDA will not act until the proposed product standard banning menthol is released. It was interesting to note that a menthol-flavored combustible cigarette with lower nicotine levels was granted an exposure modification order. The CTP’s action may indicate a desire to provide “off-ramps” for combustible menthol cigarette smokers in a world where menthol cigarettes are potentially banned. Ideally, the CTP will grant marketing orders for menthol-flavored ENDS to provide an alternative product for current menthol cigarette smokers. This would provide a potential cessation or maintenance product to the millions of menthol smokers in the U.S.—thus reducing the risk of the formation of black and gray market activities.
Credit: SYCprod
Finally, marketing orders for flavored ENDS products seem unlikely in 2022. If the clinical cessation trial/longitudinal cohort study requirement proves to be administratively appropriate, it would seem difficult, if not impossible, that any flavored product will even make it to the review phase with such data for six months to 12 months at a minimum. Even then, it is an open question as to how much and what kind of data will be deemed to be sufficient by the CTP. We see a world where flavored ENDS are once again marketed, but it seems unlikely to occur in the near future.
Product standards. We have all heard that the CTP intends to issue draft product standards banning both menthol in cigarettes and flavored cigars by April of this year. These purported product standards, along with the recent marketing orders granted for lower nicotine combustible cigarettes, are telling with where the focus of the FDA’s policy stands. The standards appear to demonstrate an agency bent on removing any flavors from combustible tobacco products unless those products cannot create or sustain addiction. We can be assured that the product standards will face a blizzard of regulatory and legal challenges and will likely take many years to implement.
Synthetic nicotine. A few months ago, synthetic nicotine seemed like the last bastion of flavored ENDS products in the marketplace. While these products currently do not have a regulatory home, we fully expect that the existing legislative efforts will ultimately provide the CTP the authority to regulate synthetic nicotine. Once granted, all regulatory requirements for deemed tobacco products will apply, such as PMTAs. In the unlikely event Congress does not successfully provide such authority, we expect state legislatures to address the issue with prohibitive laws banning synthetic nicotine.
FDA administration. One wildcard in the mix is the turnover in key personnel at the FDA. In his largely collegial confirmation hearing, the commissioner nominee, Robert Califf, stated that his top two priorities upon confirmation were not tobacco related. Rather, he intends to focus on (a) emergency preparedness and response and (b) patient and consumer protection through “systematic evidence generation” related to medical and food products. While he faced few questions on tobacco-related issues, many skeptics believe his views toward tobacco products are similar to the current administration. Whether he will take a proactive stance toward prioritizing harm reduction is unknown.
Credit: Neil Lockhart
Unfortunately, Zeller’s retirement removes a harm reduction proponent. What can we expect in a replacement? In short, the most likely replacement will be a candidate who has solid tobacco control chops and is aligned with the current policy flow against flavored products. We don’t expect to see any novel tobacco control or harm reduction policies (akin to former FDA commissioner Scott Gottlieb’s approach in 2018).
The roller coaster ride continues
Unfortunately, it appears that the long roller coaster ride for the vapor industry will continue for the foreseeable future. The good news, if you can call it that, is that the Biden administration has a variety of nontobacco-related issues to address—particularly up to the mid-term elections—which could lessen the likelihood of additional draconian polices imposed on the industry. At this point, it appears that 2022 will be about waiting—waiting for court decisions, waiting for policymakers and waiting for policy decisions.
We won’t be so naive as to say that things can’t get worse in 2022. That said, if you have made it this far, now certainly doesn’t seem like the time to give up.
Chris Howard is vice president, general counsel and chief compliance officer, and Rich Hill is compliance director and associate general counsel of E-Alternative Solutions, an independent, family-owned innovator of consumer-centric brands.
Many countries continue to limit access or have outright banned vaping and e-cigarette products.
By Norm Bour
As much as we would like to think that vaping and the sale of vape products is universally accepted, that is not the case. The world has changed a lot over the past 10 years, and the medical community’s support has carried some weight, but old customs and rituals die hard. Here is an overview of where the status of vape remains iffy.
Turkey
You can use vape products where tobacco is permitted, but the Turkish government is vehemently anti-vape—regardless of the medical documentation that shows the advantages of vaping over combustible cigarettes. Since 2009, President Recep Tayyip Erdogan has led the campaign against all tobacco products, including cigarettes, regardless of their popularity.
Turkey banned the import of e-cigarettes and related products on Feb. 25, 2020. The ban covers e-cigarettes, accessories, spare parts and solutions (e-liquids) as well as e-cigarette products that use heating or incineration, like electronic hookahs. The country had already banned the sale of electronic cigarettes.
Erdogan’s aggressive posture has resulted in the seizure of almost 18 million packs of cigarettes in 2020 and 140,000 e-cigarettes. The government offers a hotline for people to call and blow the whistle on illegal products, and 1,500 teams scour the country doing random inspections. For vapers, the online channel remains open, and there are many foreigners who vape in the street without concern.
India
With a population of 1.38 billion, India has banned vaping products since 2019. With an estimated 120 million people lighting up, India has the dubious honor of having 12 percent of the world’s cigarette smokers. The country loses about 1 million people per year to tobacco-related illnesses.
India’s aggressive anti-smoking posture has proven successful as the number of smokers has dropped significantly over the past 20 years. In 2000, it was estimated that one-third of the male population smoked, with 5.7 percent of the female population smoking. A decade later, those numbers had dropped to 23 percent for men and 2.5 percent for women. Currently, an estimated 14 percent of the country’s population smokes.
With a 28 percent luxury tax on tobacco, there are huge incentives to quitting smoking in India. The bad news is that vaping products are lumped into the tobacco pile, but evidence for the relative safety of e-cigarettes is gaining ground. The anti-vape campaign was geared toward the young smokers, but there may be light at the end of this tunnel.
Under the guise of preventing potential health risks to the country’s youth, India banned the “import, manufacture, sale, advertisement, storage and distribution” of e-cigarettes in September 2019. However, according to Research and Markets, the Indian e-cigarette market reached a value of $7.8 million in 2018, and it is further predicted to witness a CAGR of 26.4 percent during the forecast period (2019-2024) even with the ban in place.
There is very little regulatory enforcement for vaping products in India. Vaping products are even being displayed on some store shelves. A few of the biggest paanwalas in the cosmopolitan cities reportedly sell Juul and other high-end hardware. It’s not plainly obvious everywhere, and the specialist “vape only” vendors are all clandestine, according to several sources. Most of the specialists are discerning and do not entertain new customers without a reference from a known customer.
Australia and New Zealand
Australia has been a teeter-totter in terms of vapor regulations. In October of 2021, it declared all nicotine products illegal without a doctor’s prescription. The prescription is intended only for the patient and may not be shared or sold. The sole light at the end of this this tunnel is that nicotine- free products are excluded from this heavy-handed ban.
Devices and liquids can be sold in all eight territories, though advertising and promotion is legal in some but illegal in others. Spotty monitoring and enforcement have resulted in a lively online trade in vapor products.
Compared to many countries, the perceived “problems” of youth smoking are modest with percentages of vapers and smokers under 20 percent among different age groups. According to 2021 research from the Australian National University, about 16 percent of current e-cigarette users in Australia are non-smokers who have never inhaled tobacco, while the remaining third are ex-smokers. There are about 400,000 e-cigarette users in Australia.
While often lumped in with Australia by outsiders, New Zealand has followed its own, more reasonable, path in vapor regulation. The small island country of just 5 million people estimates that 11.6 percent of its population smokes. Its priority is on reducing underage vaping and smoking.
The Middle East
Excluding the North African countries sometimes included in the Middle East, this part of the world is home to almost 0.5 billion people and encompasses about 20 percent of the Muslim world. While Islam frowns on tobacco use, many Muslim countries have high smoking rates. While tobacco use has been grudgingly tolerated, vaping was initially disdained, with some countries banning the practice. That is changing, as was evidenced in September 2021 when the World Vape Show was held in Dubai, which has now legalized vaping.
Tim Phillips, managing director of ECigIntelligence, says the United Arab Emirates is leading the Middle East in vape product sales and access, but considering it started from scratch, the numbers are still small. As tobacco-oriented as this part of the world is, buyers prefer flavored liquids with three out of four sales being sweeter fruit flavors followed by menthol flavors.
Across the Middle East, the rules are in constant flux. Currently, Kuwait, Jordan, Egypt, Saudi Arabia and Bahrain offer legalized vape, but Qatar and Oman do not. Market intelligence company Mordor Intelligence projects a growth rate of almost 10 percent through 2025 in the regional vapor market.
In late 2020, a Euromonitor International study found only a very small minority of smokers used e-cigarettes to quit smoking in the Middle East region. Analysts found just 1.8 percent of smokers in the region took up alternatives to conventional cigarettes in 2020. The figure is up from 1.4 percent in 2017 but it remains significantly low when compared to other parts of the world.
South America/Latin America
On the other side of the globe, South America’s 433 million people also face an ever-changing landscape of vaping laws. The largest country, Brazil, allows vaping, with some restrictions in enclosed areas. Sales are highly regulated by the Health Surveillance Agency, which closely monitors underage sales, though enforcement of sales and production is weak.
No. 2 by population, Argentina has banned vaping for a decade and shows no sign of changing its policy. The ban extends to nicotine-free products, and there are virtually no sales, production or importation of e-cigarettes. Ironically, Argentina reportedly accounts for as much as 15 percent of total tobacco consumption in South America.
Contrary to some of its neighbors, Peru has been open-minded about vaping—to the point where the government appears to turn a blind eye to the practice. With an estimated 2.3 million smokers—just under 10 percent of the population—Peru has no official numbers on the vapers and vape products. It seems the country has higher priorities and has decided to leave vapers alone.
According to Mordor Intelligence, as enforcement of e-cigarette laws are often open to local authorities, vape shops are often found in places where they are technically illegal in the region. In the entire region only five countries allow the legal sale of e-cigarettes: Chile, Ecuador, Honduras, Paraguay, and Costa Rica.
Following the recent enactment of smoke-free laws in Paraguay, every South American country has now banned vaping and smoking in most public places. Under Decree No. 4624, approved by Paraguay’s presidency on Dec. 29, consuming lit, heated, or electronic tobacco products is permitted only in uncrowded open air public spaces that are not transit areas for nonsmokers.
Norm Bour is the founder of VapeMentors and works with vape businesses worldwide. He can be reached at norm@VapeMentors.com
Photos courtesy of Demecan and the German Cannabis Association
Germany’s new government plans to legalize cannabis.
By Stefanie Rossel
With Germany’s new government, a coalition of the center-left Social Democrats, the Green party and the liberal Free Democrats, taking office on Dec. 6, 2021, a long-awaited change moved closer to becoming reality. The country, the parties announced in their coalition agreement, will legalize the sale of cannabis to adults—that is, consumers from the age of 18—for recreational purposes. Although no details were mentioned and no timetable was set, the announcement sent cannabis stocks to new heights.
The Financial Times described the announcement as “game-changing precedent for the global business of growing and selling marijuana” that would be closely watched by other countries. With its proposal, Germany would join a movement of cannabis reform around the world. Canada, Uruguay as well as 19 U.S. states and the District of Columbia have already legalized recreational cannabis. In the European Union, Malta in mid-December became the first country to permit the use and growth of weed for recreational purposes. Sales, however, will remain prohibited.
After legalization, Germany will be the biggest EU cannabis market by far. For the time being, the recreational consumption of marijuana in the country is not explicitly illegal, but sales, imports and cultivation are prohibited. Germany legalized medicinal cannabis in 2017.
With further legalization, the government aims to dry out the illegal market, lower criminal justice expenditures and protect public health. According to the German Cannabis Association, illegal marijuana is often contaminated with sand, sugar, glass or spices. Increasingly, synthetic cannabinoids, up to 100 times stronger than natural psychoactive cannabinoids, are used to dilute the weed.
The proposal also includes preventive measures, such as the creation of facilities where consumers can check cannabis from the black market for harmful additives. Marijuana advertising will be strictly regulated. The coalition has agreed to keep the ban on private cannabis cultivation. Whether foreign nationals will be allowed to buy cannabis in Germany, too, remains unclear. According to the coalition agreement, the measure will be evaluated after four years, especially in terms of youth protection.
Georg Wurth
Details Unknown
What cannabis regulation in Germany will look like exactly remains unclear. The coalition is expected to introduce a cannabis tax; a recent study by Heinrich Heine University Duesseldorf estimates that such a tax could contribute €1.8 billion ($1.14 billion) annually to the state treasury. Legalization would bring in an estimated €4.7 billion per year due to additional revenues from corporate tax, trade tax and value-added tax as well as from savings in prosecution and the judicial system. It could also create 27,000 new jobs, the study found.
Apart from pharmacies, the licensed dispensaries mentioned in the coalition agreement reportedly might include tobacconist shops and perhaps even dedicated coffee shops as in the Netherlands, which tolerates recreational cannabis for personal consumption. The new government is expected to define thresholds for the content of tetrahydrocannabinol (THC), the psychoactive ingredient in cannabis, in the products to be sold. The government might also review Germany’s traffic laws, which currently allow 1 nanogram of THC per milliliter of blood serum.
The legalization proposal, long opposed by previous Christian Democrat party-led governments, has triggered a heated debate in Germany. Physicians specializing in addiction treatment warn that it would boost consumption and encourage related issues, such as dependence, depressive and anxiety disorders, psychoses and developmental delays in young people. Meanwhile, law enforcement officials are skeptical that legalization will erase the black market. A tax, they claim, would make legal cannabis significantly more expensive, thus leading to competition between legal and illegal sources.
Georg Wurth, managing director of the German Cannabis Association, does not share law enforcement’s concerns. “The black market will at least be pushed back,” he says. “Every single euro of revenue that will be generated on the legal market will be retracted from the illicit market, and every percent that moves from the black to the legal market is a progress. I’d rather have a legal and a black market than a 100 percent illegal market. If you take cigarettes as an example, there is also a black market, but there are no plans to prohibit cigarettes in order to rein that in.”
The right pricing will be decisive for deflating the illegal market, Wurth adds. “All three coalition partners are aware that they shouldn’t overplay their hand if they really want to force back the illegal market. I am confident that they will succeed if they find the right approach at pricing. In Canada, it took about two and a half years until half of the cannabis revenues came from the legal market.”
Illicit cannabis currently retails at €10 per gram in Germany. Interestingly, this is also the sales price for medicinal cannabis in pharmacies. “Cannabis already is relatively inexpensive in Germany,” says Adrian Fischer, co-founder and managing director of Demecan, which supplies medicinal cannabis. “We presume that consumers will be willing to pay a higher price for legal cannabis for recreational purposes that has a better quality than illegal weed, but the price shouldn’t be much higher than €10. In addition, it has to be guaranteed that there are a sufficient number of points of sale for marijuana. If a consumer must drive 50 kilometers to the next legal dispensary, he is more likely to stick with his dealer round the corner.” If legal cannabis is priced competitively, Fischer forecasts that the German marijuana market will be worth €5 billion in five years.
While the German Cannabis Organization opposes a limit on the THC content, Fischer suggests linking it to certain age limits, as with alcohol. In Germany, drinks with a low alcohol content, such as beer or wine, can be legally purchased from the age of 16 while liquor drinkers have to wait until they turn 18. “Similarly, cannabis with a lower THC content could be made available for 18-year-olds and with a higher THC content for 21-year-olds,” says Wurth.
Adrian Fischer
Important Considerations
The German Cannabis Organization believes the coalition should consider four aspects in shaping regulation. For starters, it should permit private cultivation for personal consumption. “In other countries that have legalized marijuana, such as Uruguay and some U.S. states, this is part of the law,” says Wurth.
Traffic laws are another issue. “Presently, limiting values and criminal proceedings are extremely strict. Cannabis users may lose their driver’s license even though they did not drive stoned, only because they have remainders of cannabis in their blood from consumption days ago that don’t have any effect on their driving behavior anymore,” says Wurth.
He also insists on an amnesty for the cannabis users who are currently listed as criminal offenders. “Their entries have to be deleted,” says Wurth. “In the U.S. states where marijuana is legal, this is regularly being done.”
Lastly, the sale of legal cannabis should remain restricted to specialist shops, according to the German Cannabis Organization. This would also guarantee better youth protection.
However, neither the legalization of cannabis for adults nor prohibition can prevent marijuana consumption among youths, cautions Wurth. “Legalization would nevertheless have a positive impact on youths, even though it cannot principally prevent youth consumption,” he says. “Youths are more susceptible to prevention measures, hence the latter should be stepped up significantly and reformed.
“Currently, police give preventive lessons in schools. They tend to get the message across that youths shouldn’t touch cannabis or else they would end up in the gutter, lose their driver’s licenses, etc. I hope that with the legalization there will also be more investment in better education and credible prevention measures so that youths seek drug counselling help earlier.”
If youths do consume cannabis, Wurth adds, it is safer if their older friends or siblings bring them legal weed from a licensed dispensary rather than potentially contaminated marijuana from a street dealer as is the case now.
Companies currently supplying medical cannabis say they will be able to scale up production rapidly when Germany legalizes recreational cannabis.
Gold Rush
The German illegal marijuana market is estimated at about 400 tons, most of which is imported from Morocco. Since Germany is a signatory to the 1961 United Nations Single Convention On Narcotic Drugs, the country will not be allowed to import or export cannabis for recreational purposes once the substance has been legalized. This means the coalition will either have to negotiate new conditions or stipulate that all cultivation has to take place in Germany.
Presently, only medicinal cannabis is grown in Germany. That business is controlled by three companies: Tilray, Aurora and Demecan. Under supervision of the state-owned cannabis agency, they jointly cultivate 2.6 tons of medicinal cannabis annually to cater to a market that is estimated at 12 tons to 15 tons per year, with demand increasing, according to Fischer. Due to the strict rules and standards, the companies grow the plants in hermetically sealed buildings, with product stored in high-security vaults. The first domestic crop reached pharmacies only last summer; a large amount of medicinal cannabis is still imported.
After legalization of recreational cannabis, manufacturers say they will be able to quickly expand production. Demecan has opened a center for medicinal cannabis in Ebersbach and recently finalized construction of Europe’s largest indoor marijuana production site. It presently has the capacity to produce 1 ton of medicinal cannabis but can supply 50 percent more at short notice, according to Fischer. “Within a year, we could step up capacity to 4 tons and in the mid-term to 10 tons per year. We are prepared to cater to growing demand. Our aim is to cultivate life quality and to ensure patient care, hence it is important to us that legalization of recreational cannabis doesn’t happen at the expense of patients. Therefore, we have built large production capacities to cater to both markets.”
The three providers of medicinal cannabis alone will nevertheless not be able to meet the demand for recreational cannabis, he admits. “To reach this target, legislature must tender licenses for the cultivation of marijuana in Germany relatively quickly and right on time before the actual legalization.”
With medicinal cannabis being a medicine, all aspects of production are subject to the narcotics act and must be compliant with good manufacturing practices and good agricultural and collection practices guidelines. A relaxation of production regulations for the cultivation of recreational weed, Fischer says, could contribute to less costly production.
Medicinal cannabis has been legal in Germany since 2017
Role Models
Wurth expects it to take another one or two years until the law takes effect—and even longer until the first licenses will be allocated, cultivation gets started and the first shops open. “The quickest part of such a law would be the decriminalization of consumers. The U.S. have shown that this can happen immediately.”
In shaping the law, he says, Germany has several role models it could draw upon. “The Netherlands are no example of a legalized market as the coffee shops are only tolerated, and supply is not regulated, so that criminal structures have emerged like everywhere else. But the coffee shops are a good example of allowing consumption on-site, which is not the case in most other countries that have legalized marijuana. As for points of sale, Germany should look to Canada and the U.S.—licensed specialist shops in a limited number; no access for youths; exact declaration of the products, their origins and their CBD and THC contents. Uruguay allows cultivation for personal use; people can even join grower communities to cultivate their weed or have it cultivated.”
In the end, the legalization of cannabis in Germany might go more smoothly, critics fear. In February 2021, the Cato Institute published a study on the legalization of marijuana by some U.S. states. It found that both proponents and opponents overstated their cases. Except for tax revenues, which exceeded some expectations, the report says state legalizations have mainly had minor effects.
Stefanie Rossel is Vapor Voice’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 Vapor Voice, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco and vapor industry news around the world. She is based in Germany.
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.
TMA’s webinar brings industry experts together to share their insights into the rapidly changing nicotine business.
Vapor Voice staff report
The nicotine industry has been struggling to keep up with the growing number of challenges to its existence. From potential new taxes to marketing denial orders (MDOs), mailing restrictions, misinformation and the rise of synthetic products, the ever-changing regulatory landscape has forced millions of products off the market and hundreds of businesses to close.
During TMA’s “From Chance to Change” webinar, held Nov. 17–18, several industry experts discussed the current state of the nicotine industry and what it may look like moving forward. Attendees were updated by the U.S. Food and Drug Administration on its progress on premarket tobacco product applications (PMTAs) as well as the confusion surrounding the issuing of MDOs and why some of those orders have either been rescinded or stayed by a court.
Speakers explained how a proposed tax bill, misinformation being spread by anti-vaping groups and the media, and the growing number of manufacturers moving toward synthetic nicotine is creating confusion for consumers and business owners alike. Some speakers even suggested that if the current pace continues, many former smokers will return to more deadly combustible cigarettes.
FDA Update: Mitch Zeller, director of the FDA’s Center for Tobacco Products
TMA’s webinar began with a bang. Mitch Zeller, director of the FDA’s Center for Tobacco Products (CTP) outlined the progress of the agency’s review of PMTAs that were submitted by the Sept. 9, 2020, deadline. Zeller also provided an unprecedented behind-the-scenes peek into the center as it processed millions of PMTAs.
After a court order that was the result of a lawsuit brought by several anti-vaping groups, the FDA was ordered to complete applications within one year of the deadline. Because companies were not required to submit their applications in a particular way, the agency had to be ready to process for a wide variety of formats. “We had to prepare operationally, technically and logistically to ‘ingest’ all those applications,” said Zeller, adding that the agency was thrilled its submission system did not collapse under the volume of last-minute applications.
“We had to prepare substantively for how the scientific review was going to be conducted for a category of products that previously had not had to submit applications to us,” said Zeller. “The preparation for both the operational and the substantive was daunting.”
Mitch Zeller, director of the FDA’s Center for Tobacco Products
The FDA has by now acted on the vast majority of applications, sending refuse to file letters, issuing MDOs or, in the case of Vuse Solo, granting marketing orders. “We are down to 80,000 products—most of them in the final stages of review,” said Zeller. Those still-pending applications, he acknowledged, include ones submitted by the companies with the largest market shares because they tend to be the largest and most complex applications.
Zeller said the agency has a particular concern for flavored electronic nicotine-delivery system (ENDS) products, other than tobacco, because “we know that they pose a known and significant risk” when it comes to appeal, popularity, uptake and use by youth. He says that youth who are using ENDS products are more likely to use a flavored product than adults. “A company that wants to be able to continue to market a flavored ENDS product is going to have to have robust and reliable evidence that shows that the potential benefits of that product for adult smokers would outweigh the significant risks that are built in when it comes to kids,” Zeller said. “The benefit-risk equation for tobacco-flavored products is different. It raises a different set of considerations because we don’t have the same built-in concern on the front end about the popularity of tobacco-flavored ENDS products with kids.”
Zeller also addressed the fast-growing synthetic nicotine segment. He said synthetic nicotine could be considered a component of e-cigarettes, which would allow the FDA to regulate the product. Additionally, he said the agency was concerned about the use of synthetic nicotine to avoid regulation and enforcement and is considering its options in dealing with the issue.
The Tobacco Control Act defines a tobacco product as anything that’s “made or derived from tobacco that is intended for human consumption, including any component, part or accessory of a tobacco product.” Zeller said that components and parts could include everything from coils and batteries to all the ingredients comprised in producing e-liquids (such as flavorings and vegetable glycerin) even if the product does not contain nicotine.
“That’s an assessment that we need to make on a case-by-case basis based upon the totality of all the information that we have,” said Zeller. Another challenge, he said, is that synthetic nicotine is now of such high quality that it has become difficult to differentiate it from nicotine derived from natural tobacco. “Historically, that hasn’t been a problem,” he said. “It’s not a problem now, but it could become a challenge for us going forward.”
Zeller explained that nicotine is comprised of two isomers: R and S. Tobacco-derived nicotine is 99 percent S, and early synthetic nicotine had a 50-50 split between R isomers and S isomers. However, newer versions of synthetic nicotine have much higher proportions of S isomers (as high as 99.9 percent pure), making it harder to tell them apart from natural nicotine. Tobacco-derived nicotine is also becoming higher in quality.
“Tobacco-derived nicotine is now being made available at a higher quality … pharmaceutical grade from a purity standpoint. And with that, it may be harder for us to see that chemical fingerprint, if you will, whether it’s tobacco DNA or tobacco-specific nitrosamines,” he said. “We could see this as a problem going forward. Coupled with the clear intent of certain companies to do this to evade FDA regulation … We are concerned about what this means for product regulation, for the public health, and a product like Puff Bar proudly proclaiming its use of synthetic nicotine, [and] being the No. 1 brand used by youth.”
In the short term, Zeller said the FDA is talking internally about how to best address the growing number of products that are using synthetic nicotine to skirt FDA regulation. He said the agency is also responding to questions from Congress about synthetic nicotine and providing technical assistance to members when asked.
“There are a lot of companies out there that pride themselves on playing by the rules. They have every right to expect that the playing field is going to be level. That’s where we come in with our compliance and enforcement authorities,” Zeller said. “We agree that one of the most important things that we can do, using our compliance and enforcement tools, is to level the playing field and to have our actions [in the synthetic nicotine space], hopefully, serve as a deterrent. There’s nothing that I can say from a compliance enforcement standpoint on synthetic nicotine other than we have ongoing investigations.”
Zeller also explained that the agency is now facing 45 open lawsuits (as of this writing) by companies that had received MDOs. The lawsuits are based on how the agency reviewed PMTA data and adding a new requirement for longitudinal and cohort studies. Zeller said the agency must work to make “whatever decisions come out” be the right decisions. “Whether it be a marketing denial order that could lead to a lawsuit from a company or a marketing granted order that could conceivably lead to a lawsuit from another sector,” he said. “Our review continues while we are dealing with all the lawsuits that have been filed.”
Panel One: An Applicant’s Perspective
The first panel discussion of TMA’s online seminar, moderated by Jim Solyst, principal of JMS Scientific Engagement, debated the status quo of PMTAs from an applicant’s perspective. The panelists included Brittani Cushman, senior vice president, general counsel and secretary at Turning Point Brands; Beth Oliva, partner at Fox Rothschild; Brian Erkkila, director of regulatory science at Swedish Match; and John Pritchard, vice president of regulatory science at 22nd Century Group.
While all participants expressed appreciation for the FDA’s daunting workload, some voiced disappointment with the fact that many applications appear to have received only a perfunctory “Fatal Flaw” review. The panelists were disturbed by the findings that the agency, rather than reviewing a submission on its merits, simply searched for the presence or absence of certain studies.
Cushman said that the “idea that so many of the applications were reviewed with an eye toward this so-called Fatal Flaw analysis” didn’t “feel like the right direction” for the PMTA review process.
The FDA admitted it made an error in TPB’s PMTA review, and TPB did, in fact, submit studies that the agency decided during the PMTA process were needed after saying for years that the studies were not required. The FDA then rescinded TPB’s MDO and placed its applications back into substantive review. The agency has since rescinded MDOs for 10 companies and is currently facing at least 45 lawsuits for its handling of the PMTA process.
“The way the review process has played out this far, really, feels like the incentive structure in the nicotine industry has been placed on its head. It seems that the lower risk products are receiving heightened scrutiny, kind of an opaque direction as to what’s sufficient,” explained Cushman. “And it just doesn’t feel like these products are getting a kind of equitable treatment in the space.”
The term Fatal Flaw has been at the center of nearly all lawsuits filed against the FDA for its handling of the PMTA process. Court records submitted in the Triton Distribution v. U.S. FDA case and reviewed by Vapor Voice suggest the agency did not fully review all PMTA data submitted, as required by law, but instead only looked for specific studies relating to flavors and youth use.
A memo dated July 9, 2021, written by Anne Radway, the associate director of the FDA’s Center for Tobacco Products’ Office of Science, states that “based on the information available to date, FDA has determined this evaluation requires evidence that can demonstrate whether an applicant’s new nontobacco-flavored product(s) will provide an incremental benefit to adult smokers relative to the applicant’s tobacco-flavored product(s). In particular, the evidence necessary for this evaluation would be provided by either a randomized controlled trial (RCT) or a longitudinal cohort study. The absence of these types of studies is considered a Fatal Flaw, meaning any application lacking this evidence will likely receive a marketing denial order.”
Radway goes on to explain that due to the large number of PMTAs received, the agency would only conduct a Fatal Flaw review of PMTAs for nontobacco-flavored ENDS products. “The Fatal Flaw review is a simple review in which the reviewer examines the submission to identify whether or not it contains the necessary type of studies. The Fatal Flaw review will be limited to determining presence or absence of such studies; it will not evaluate the merits of the studies,” Radway states. “To decrease the number of PMTAs without final action by Sept. 9, 2021, OS used a database query to identify the top twelve manufacturers with the largest number of pending PMTAs [in the substantive review stage of the process] … Following completion of filing those applications that are filed will immediately initiate Fatal Flaw review.”
Radway also states that for the remaining PMTAs not in [substantive review] for nontobacco-flavored e-liquid products, the FDA will send a “General Correspondence letter requesting the applicant to confirm if their PMTA contains such evidence and, if so, to direct FDA to the location in the application where the studies can be found.”
The 5th Circuit Court of Appeals stayed Triton Distribution’s MDO, reasoning that Triton’s legal challenge is likely to succeed on its merits because the FDA “changed its regulatory requirements throughout the process.” The “switcheroo” to now require a randomized controlled trial and/or a longitudinal cohort study—which the agency previously stated on numerous occasions would not be required—is arbitrary and capricious under the Administrative Procedure Act, according to the court. Its ruling stated that the FDA failed to “reasonably consider the relevant issues and reasonably explain” the MDO.
The court further noted that the FDA failed to consider Triton’s marketing plan, surveys and evidence of potential benefits of flavored e-cigarettes. The FDA also failed to consider the company’s legitimate reliance interests as Triton relied on the FDA’s statements made in numerous public meetings, guidance documents and rulemakings that it did not expect applicants would need to conduct long-term studies to support their PMTAs.
Cushman told the TMA webinar audience that, at the end of the day, the FDA’s regulatory treatment of the various product categories is to the detriment of the adult smoker. “We’re all down in the weeds of this. But it’s difficult to see how we ended up at this point. And it certainly can’t be where anyone wanted this process to play out,” she said. “I think this has led to a lot of detrimental outcomes. You have adults seeing a large number of vapor products being deemed as not appropriate for the protection of public health while seeing no change in [combustible] cigarette offerings in their local c-store … This is being celebrated not only by those who are ignorant to the science, but more perversely, those [who understand the science and should] know better.”
To date, the agency has authorized the marketing of only one vapor product—Vuse Solo, a little-used e-cigarette brand that many consider outdated. Panelists worried about how the public would interpret the lack of determinations on major applications by the agency, citing persistent misunderstanding of reduced-risk products and the continuum of risk by legislators, journalists and even physicians.
“I think there are a whole host of negative outcomes that seem to be quickly heading our way if we don’t all kind of shift the way this process is going,” a panelist said. “The way the review process has played out this far, really, feels like the incentive structure in the nicotine industry has been placed on its head. It seems that the lower risk products are receiving heightened scrutiny, kind of an opaque direction as to what’s sufficient. And it just doesn’t feel like these products are getting a kind of equitable treatment in the space.”
Another panelist suggested the industry should consider what it would do when the next e-cigarette or vaping use-associated lung injury (EVALI) happens, referring to a mysterious outbreak of lung injuries in 2019 that was caused by illicit THC products but tainted the entire industry. Another participant stressed the importance of enforcement after all marketing applications have been decided. If any “yahoo” can sell products without authorization, she said, it would render the investments by the good actors worthless.
Panel 2: The Market Perspective
The second panel of the TMA webinar, moderated by Mary Szarmach, senior vice president of governmental and external affairs at Smoker Friendly, reviewed the market from a retailers’ perspective. The panelists included Don Burke, senior vice president of Management Science Associates; Tom Briant, executive director and legal counsel at the National Association of Tobacco Outlets; and Amanda Wheeler, president of the American Vapor Manufacturers Association.
Burke sketched the latest trends in the nicotine market. The pandemic, he said, makes comparisons with 2020 difficult. With many people working from home last year, sales of cigarettes and large cigars experienced unusual growth, but as people returned to the office in 2021, those trends are starting to level off or are even reversing as vapor sales rise.
One of the biggest trends is that during the pandemic, according to Szarmach, consumers that were vaping went back to combustibles because they could use them more frequently at home. “We expect as we looked at our projection for vape that that would change back,” she said. “That as people returned to work and had more workplace restrictions … those people that used to vape would likely go back to vape.”
MSA data supports her observation. After declines in 2019 and 2020, the vapor industry has grown 10 percent to 15 percent in 2021, and Burke expects the industry to continue its growth into 2022. “Vapor cartridges were up by 18.5 percent. But we’ll tell you this: [Through] 2019 going into 2020, we were seeing some declines in vapor. One of the things to keep in mind is at the end of 2019 was that illegal THC vaping [EVALI] crisis,” said Burke. “That turned a lot of people off of vapor even though it was only an illegal product that caused the issues. No legitimate product caused any problems. It’s about a year and a half now since that occurred … because of that, consumers are starting to forget, vapor is coming back.”
Burke said sales of disposables, which are allowed to contain flavors, were up 28.9 percent, and all-in-one kits are growing. He said vape shop and tobacco outlet sales are also on the rise after many closed or limited hours due to the Covid pandemic. MSA’s research covers approximately 300,000 stores.
“We’re looking at distributor to shipment retail data. In many cases, that’s important because a lot of the convenience stores and some tobacco outlets do not collect their data and therefore it’s very difficult to get a clean read,” he said. “The convenience channel—because they were considered essential businesses in most parts of the U.S.—managed to survive the pandemic and, in fact, now are a larger percentage of stores in the U.S. Also, 71 percent of tobacco volume goes through convenience stores.”
Burke said pods for closed pod systems (cartridges) were up 6 percent in the most recent quarter. He said that during the third quarter of 2021, disposables continued to have strong sales, rising by 21 percent, and he expects those trends to continue. Burke also said cannabis sales grew significantly during 2020 and into 2021, but he didn’t elaborate.
Briant provided a regulatory update, touching on the proposed nicotine tax hike in the Biden administration’s Build Back Better legislation, the FDA’s proposal to ban menthol in cigarettes and flavors in cigars and the status of graphic health warnings, which are currently being challenged in court. Litigation has pushed the implementation date to January 2023, and this could be further extended. Briant noted that there have been no hearings yet on the merits of graphic health warnings.
Asked to analyze vapor retailers’ current predicament, Wheeler drew an analogy with the Hindenburg disaster, which shattered public confidence and marked the abrupt end of the airship era. She cited the avalanche of MDOs, the U.S. Postal Service ban on shipping vapor products and the proposed federal excise tax on vapor products, which would make vapor products more expensive than some cigarettes.
“I thought about how to concisely describe the regulatory impact that vaping has endured in recent months. I realize it’s sometimes tough to summarize the catastrophe. It would be like asking the captain of the Hindenburg blimp which factor was the worst: the lightning, the explosion or the gravity,” she explained. “The tragic reality here is that vaping is suffering through a multipronged attack from the Executive Branch, from Congress and from self-perpetuating activist groups, also from the deep-pocketed donors that bankroll them. Each of those parties are being actively cheered on by an irresponsible news media [that has] ignored its public duty to treat issues of scientific importance and policy with balance and skepticism.”
The panelists agreed that black markets are the inevitable result of the regulatory restrictions placed on vaping products. Flavor bans are driving retailers and consumers to both disposables and synthetic products. Briant said that rather than discouraging overall consumption, flavor bans merely cause consumers to shift their buying practices. “They go elsewhere across the city line to the next town, into the next county. It doesn’t solve a problem. In fact, we have three studies now that show … when you ban all flavors, young adults and underage youth switch back to smoking combustible cigarettes. So, the advocates for these flavor bans are actually creating a new public health problem, but they think they’re going to prevent this.”
Asked what kept them up at night, the panelists named employee safety, flavor bans and lack of enforcement. Szarmach related how a tax increase in Colorado had instantly resulted in more break-ins and robberies at her stores—an unwelcome development at a time when workers were already in short supply. Briant said that local flavor bans drove customers away without affecting total consumption—consumers would simply buy their products elsewhere. Wheeler said Arizona was not enforcing Tobacco-21 legislations, enabling bad actors to do good business.
FDA Update: Matt Holman, director of the FDA’s Center for Tobacco Products Office of Science
One of the things that makes TMA conferences unique is that they often include open interactions with the U.S. Food and Drug Administration. While FDA Center for Tobacco Products (CTP) Director Mitch Zeller provided a general overview, Matt Holman, director of the CTP’s Office of Science, offered a more detailed synopsis of the FDA’s recent actions on premarket tobacco product applications (PMTAs), key considerations in the agency’s “appropriate for the protection of public health” (APPH) determinations and the final rules for PMTAs and substantial equivalence reports.
Holman started off by summarizing the agency’s marketing granted orders (MGOs) to four Verve oral tobacco products—all of which were discontinued by Altria Group in 2019—and R.J. Reynolds Vapor Co.’s Vuse Solo vapor cigarette, the only e-cigarette product to receive an MGO as of this writing. In both cases, he said, the applicant had demonstrated that the products have lower toxicity levels and abuse liability risks than cigarettes along with minimal youth appeal. Both applications were also submitted well before the FDA’s Sept. 9, 2020, PMTA deadline.
“Once we looked at the toxicity of these products and really looked at them in comparison to combusted cigarettes and other smokeless products out there in the market, [we found that] their toxicity was significantly lower than that of the combusted cigarettes and lot of other products out on the market,” Holman told attendees. “The tobacco-flavored e-liquids that received the MGO provided data that showed the appeal of these products to youth is low … We are still applying that overall principle as we determine whether a marketing of new tobacco product is, in fact, APPH.”
Holman said that one of the key areas the agency looks for with vaping products, which constitute nearly all of the current PMTAs still under review, is the balance of youth uptake versus combusted cigarette smokers switching to vapor products. “It’s quite a challenging balance … it’s something that we certainly spent a lot of time really looking carefully at the data and all these PMTAs to determine whether we think youth uptake is very low while intention to switch by combusted cigarette smokers is high,” he said.
Holman also told the webinar audience that compliance for the FDA’s final rules for electronic nicotine-delivery systems (ENDS) went into effect on Nov. 4. He said that while previously applicants could provide a summary of studies that had been run, the new rule requires companies to submit those studies in full. “In the past, before the effective date of this rule, we might have filed a PMTA if they had any information about product perception and use intentions,” Holman explained. “For applications received Nov. 4 or later, not only would you have to have that, but you would have to have given us those actual studies.”
Another change in the OMTA rule highlighted by Holman is a change that allows for recipients of an MDO to rectify the shortcomings in their original application with a supplemental PMTA that cross-referenced the original application, thus streamlining the process for both applicant and reviewer.
“I think a very positive thing for both the regulator and the regulatee is the ability now to submit supplemental PMTAs. If we issue a marketing grant[ed] order for a given product and then that product needs to be modified (such as a change in suppliers), the supplemental PMTA can just cross-reference the original PMTA and just focus on providing us information on that new material. The volume on the supplemental PMTA should be a fraction of the volume of the original PMTA.” said Holman. “[The updated application must include] data and information explaining exactly what’s different in the new material compared to the original material and why that change in material doesn’t raise any public health concerns and ultimately, why the applicant thinks that that material change allows that new product to be APPH.”
Holman also explained that it is important for industry stakeholders to comment on proposed rules and to ask questions concerning any potential misunderstandings. Comments have been the source for several major changes in the final PMTA rule. For example, the agency changed all the terminology from “grandfathered” products to “preexisting” tobacco products.
Products that were in a test market before Feb. 15, 2007, will also now be considered preexisting products, a major change to the rules as test market products were not previously considered “grandfathered.” Lastly, the FDA created a new tobacco product category. “There have been products out there called all different things, such as heat-not-burn and things like that,” he said. “We formally defined those as heated-tobacco products [HTPs] distinct from, for example, vapes.”
Holman said that stakeholders must remember that all data submitted to the FDA must include data that addresses youth use. Such consumption remains “unacceptably high” and “still a major public health concern” for the agency. “I’ve said this time and time again, we really, ultimately, want to get in applications that we can accept, we can file, and put into scientific review,” he said. “We’d like to have all the information we need to conduct our scientific review. And ultimately, make a conclusion about whether, in fact, we think the data supports an APPH [decision].”
Panel 3: Early and Often
Matt Holman also participated in a panel discussion, which also sets the TMA conference apart from other tobacco seminars this year. The “Path to Market” panel discussion, moderated by Altria Client Services Director of Regulatory Advocacy Jennifer Smith, also included Gerry Roerty, vice president, general counsel and secretary of Swedish Match North America; Tara Couch, senior director of dietary supplement and tobacco services at EAS Consulting Group; Elaine Round, vice president of scientific and regulatory affairs at RAI Services Co.; and Kimberly Hesse, tobacco lab testing expert.
One of the takeaways from this session was the importance of starting “with the end in mind.” Getting things right from the beginning will save applicants time and money because even minor product changes involve new, time-consuming applications under the FDA’s pathways. Smith said that her company thinks that science and evidence-based product standards might be one way to accelerate review of PMTAs while also benefiting public health. “Tobacco product manufacturers and adult smokers switching from cigarettes would benefit from product standards that define a baseline for safety and quality for harm reduction products,” she said.
According to Roerty, the first question in the journey to market should be: Can we make this product, and can we make it consistently? Applicants should think about samples and suppliers and conduct environmental assessments. With the FDA seeking greater consumer insights, applicants should look for professional assistance in obtaining such information. And it pays to involve product testers early in the process.
“In order to put an application in, you have to test the product. The second thing is you have to make sure you can demonstrate to the agency that you can consistently make the product,” Roerty explains. “That’s fair. I mean, if you can only make one model of it, and you can never remake it again, then what confidence does the agency have that the test data and the application you gave them is repeatable?”
Couch explained that for a device to meet the requirements of APPH, companies must also focus on adhering to good manufacturing practices (GMP). Section 906(e) of the Food, Drug and Cosmetic Act is dedicated to good manufacturing practice requirements. “What it states there … is that the methods used in and the facilities and controls used for the manufacture, preproduction design validation, including a process to assess the performance of tobacco product, packing and storage of a tobacco product must conform to current good manufacturing practices,” said Couch. “And when you think about [it], GMP starts at the design stage.”
Getting products tested is also a major requirement on the path to PMTA approval. Finding the right lab is as crucial as designing the proper testing regime for a company’s products, according to Hesse. Lab workers may be unfamiliar with a specific product and require explanations on its operations. And then there are safety considerations, said Hesse. She recalled instances of products that sparked and ignited when connected to laboratory machinery.
“That’s going to be one of the first things that you do before you try to even think about filing a PMTA. You’re going to want to find an accredited lab and create a proof-of-concept plan utilizing two different pathing regimes,” said Hesse. “This is where you’ll learn whether or not the regimes work with your device … once we discover how the device interfaces and that the smoking regimes are going to work, they’ll do a little bit of testing at this point to find out whether or not the [pathing] regimes are working.”
The panelists suggested that all data collected from every aspect of a product’s cycle to market should be used effectively. Round said one lesson she learned from Reynolds’ successful Vuse Solo marketing application was that “bridging”—the referencing of existing studies—works, provided that the applicant explained it well. “We’ve seen evidence now, both in the Vuse application and [the] IQOS applications as well, that bridging is accepted from prior versions of products to current versions of products,” Round explained. “As you accumulate data, use it as many ways as possible.” She also advised applicants to generate a volume of information that is “exactly enough and not too much.”
Several panelists mentioned the challenge of obtaining consumer insights in PMTAs. They suggested that the FDA should consider allowing more of that information to be gathered as part of postmarket surveillance, which would have the added benefit of generating more realistic data. “Is there a way to try and streamline some of the requirements to rely more on postmarketing surveillance and reporting and streamlining the PMTA process on the front end?” asked Round. “I think that would just benefit adult tobacco consumers sooner who are considering either staying with or migrating back to riskier product.”
Holman said that everyone wants precise and scripted answers to the questions surrounding PMTAs. However, often there is not one single answer. “As scientists, there’s not any one way to get at something, right? And, so, I just want to be clear … we’re not intentionally ambiguous. We try to give a lot of leeway. I just want people to know that we’re constantly sort of assessing all that and trying to make sure that we’re not leaving any sort of work just permanently on the back burner,” Holman explained. “We got a lot of work thrown on our plate, and we’re trying to do our best to be fair.”
Panel 4 – Connecting U.S. and Global Trends
The final session of the TMA webinar explored the differences and similarities between the U.S. and the rest of the world in terms of nicotine product regulation. Moderated by Jeannie Cameron, CEO and managing director of JCIC International, this panel included Abrie du Plessis, regulatory affairs counsel at the South African Trade Law Centre; Patricia Kovacevic, general counsel and head of external affairs and regulation strategy at Cryomass Technologies; Rob Koreneef, public affairs advisor; and Flora Okereke, head of global regulatory insights and foresights at BAT.
The discussion focused on the recently concluded ninth Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control (FCTC), which was developed before the emergence of reduced-risk products and which the panelists agreed was “frozen in time.”
Du Plessis described the positions of the various health bodies in relation to reduced-risk products. The Conference of the Parties, he said, is divided on the issue, providing no guidance on new and emerging products. The WHO has slight ideological opposition to novel products whereas the FCTC Secretariat—which has gradually evolved from an administrative body to an implementation agency—appears to have no use for reduced-risk products. The secretariat, said du Plessis, is focused on getting countries to implement the FCTC’s standard measures.
“I have to give you an overall picture of where these players are or were before COP9 … I think it’s quite simple to say that the Conference of [the] Parties is divided [and] has not come up with any decisive guidance on novel and emerging products,” du Plessis said. “The World Health Organization has but often ideological opposition to novel and emerging products.”
Okereke examined the diversity in regulatory regimes for novel tobacco products around the world. She distinguished three themes: how harm reduction is treated, the premarket approval process and product categorization. Tobacco harm reduction, she said, is acknowledged by regulators in the U.S., the U.K., Canada, Germany, Ireland and New Zealand. Everywhere else, it remains an “elusive concept.”
The U.S. is the only country with a robust premarket requirement, and when it comes to categorization, the world is divided. Some countries put vapor products under existing tobacco regulations (EU); others regulate them as pharmaceuticals (Australia); and yet others ban the products altogether (Brazil, Mexico, Turkey and Japan).
“There is no other place that requires an authorization for the protection of public health. I will say the U.S. is still an outlier in that regard,” said Okereke, adding that how countries regulate flavored products also varies greatly. “Another way to also bring out some of these differences is to look at how flavors are regulated … There is a flavor regulation driven by almost market-based restrictions. In the U.K. and most of [the] EU, most flavors are allowed. The only caveat is that you cannot market it to appeal to youth,” she said. “In the U.S., it doesn’t seem as if they’re going to allow anything but tobacco and possibly menthol flavors.”
Kovacevic highlighted the discrepancy between the United States, where the CTP, which is funded by industry user fees, is required to interact with the tobacco industry, and the rest of the world, where regulators keep the industry at arms’ length. She also pointed out the irony that even though the U.S. is not a party to the FCTC, it generates much of the science that the treaty’s signatories rely on—including industry science generated through the various marketing application processes.
The U.S. is also different from the FCTC in that the U.S. government works with tobacco product manufacturers in building regulations. “The U.S. is actually one of the places where, because of the user fee model of the Center for Tobacco Products, whereas the tobacco companies are paying, the CTP is funded exclusively by funds provided by the industry,” she said. “And because of the PMTA and other premarket authorization pathways, the FDA, as an agency of the U.S. government, actually, not only can but must interact with the industry.”
Kovacevic highlighted the disparity of research coming from various countries. There is a plethora of e-cigarette research coming out of the U.S.; however, there is very little coming from other countries. According to Kovacevic, this is because of the way U.S universities are funded and compensate their academics.
“Let’s say a Romanian or Russian researcher, who’s the university professor, if they conduct additional research on any topic, their salary’s exactly the same,” she said. “In the U.S., of course, there is a pressure to bring funds from well-funded charities such as Bloomberg … and of course, there’s going to be an increased incentive to conduct research because more research, more funds … That mechanism doesn’t really apply [internationally]. Most universities are either state-owned or public not-for-profits … whether you conduct more research or not, your salary at the end of the month is the same.”
During the question-and-answer session following the panel discussion, one participant asked why U.S. tobacco companies should care about the international environment. Kovacevic responded by describing the high barriers to entry in the U.S. If access to the U.S. market closes through MDOs, she pointed out, the only remaining market is abroad. And there is also a moral motive: Most of the smokers who stand to benefit from reduced-risk products live outside of the U.S., often in low-income and middle-income countries. “If companies are committed to harm reduction, they have a civic duty to serve them,” said Kovacevic.
The German Bundestag signed off on a bill to raise taxes on combustible cigarettes, e-cigarettes and HnB tobacco products.
Excluding the North African countries sometimes included in the Middle East, this part of the world is home to almost 0.5 billion people and encompasses about 20 percent of the Muslim world. While Islam frowns on tobacco use, many Muslim countries have high smoking rates. While tobacco use has been grudgingly tolerated, vaping was initially disdained, with some countries banning the practice. That is changing, as was evidenced in September 2021 when the World Vape Show was held in Dubai, which has now legalized vaping.
On the other side of the globe, South America’s 433 million people also face an ever-changing landscape of vaping laws. The largest country, Brazil, allows vaping, with some restrictions in enclosed areas. Sales are highly regulated by the Health Surveillance Agency, which closely monitors underage sales, though enforcement of sales and production is weak.
