Category: This Issue

  • Finally Face-to-Face

    Finally Face-to-Face

    Exhibitors react to the industry’s first trade show since the Covid-19 pandemic struck in March of 2020.

    By Timothy S. Donahue

    The vaping industry has a lot of trade shows and conferences every year. So, when the Covid-19 pandemic struck in March 2020, it was a big change. Gone were face-to-face meetings and the networking opportunities the events offer to business owners. Many businesses saw sales slump and profits nosedive. Coupled with other regulatory requirements, the pandemic caused many businesses to close.

    That’s what made this year’s Tobacco Plus Expo (TPE) trade show so special. After being postponed nearly four months, many retailers said they had surpassed their sales goals for the entire show on the first day. TPE attendees said it was a good feeling being able to fist bump clients and talk about the industry in person instead of through a Zoom conference. The TPE felt like the beginning of a much-needed return to normal.

    Held May 12–14, an estimated 2,500–3,000 people visited the TPE on the opening day of the three-day event. According to security staff, approximately 4,000–5,000 attended overall. Every morning, several hundred attendees waited at the entrance to see the more 350 exhibitors. The show was moved to May from its typical January date due to the pandemic and was also the first major trade show to be held at the Las Vegas Convention Center (LVCC) since it closed in March of 2020.

    Dan Bilzerian (right), owner of the cannabis company Ignite

    Even professional poker player Dan Bilzerian, owner of the Ignite cannabis brand, made an appearance. “Honestly, I’m excited to be back,” Bilzerian said. “This industry is really set to take off again.” When asked about Ignite sales at the show during the second day of the event, Bilzerian said the numbers looked good. “We hit our sales target for the show on our first day,” he said. “We’ve had an excellent response.”

    Many exhibitors said that the show had exceeded expectations. Rich Zagari, a sales representative for Bantam Vape, said they were unsure of what the show would be like considering it was the first industry trade show in over a year. “We didn’t know what the response was going to be, but there’s a lot of people here,” he said during the second day of the show. “Yesterday was great and today’s already shaping up to be even better. When you’re seeing customers come up to the booth, having conversations and placing orders, it makes a difference. It’s good to be back doing business face-to-face.”Zachary Kestenbaum, VP of sales for The Beard brand, said that while he was hoping for a bit more foot traffic this year, for his company the TPE was more about getting facetime with distributors, vape shops and other industry players. “I enjoy face-to-face sales more than phone sales, anything of that nature,” he said. “I think it’s much better to conduct business outright. In that regard, the show has been a great success.”

    Some exhibitors initially questioned whether the show would be able to bring in foot traffic at all. Andy Lucas, director of sales for Ripe Vapes, said with the influx of restrictions, such as the premarket tobacco product application (PMTA) requirements for the U.S. Food and Drug Administration and the recent placement of electronic nicotine-delivery systems (ENDS) under the Prevent All Cigarette Trafficking (PACT) Act, alongside the issues brought about by Covid-19, he was a little hesitant about exhibiting.

    “Actually, it’s been pretty good. It’s been more like a traditional show, especially for a big show like this. You got all these organizations with tobacco and the hemp industry, the e-liquid industry; it has really lived up to the hype surrounding its opening,” said Lucas.

    Jakob Gutierrez, product specialist for JustCBD, said he was happy to be back in Las Vegas. The attendees were also ready to spend money. While he had hoped for even more buyers to visit the TPE, JustCBD had received more orders by Day 2 of TPE than the company had gotten at the last couple of shows it attended, according to Gutierrez. “People keep stopping by and loving our products,” he said. “People are absorbing it, taking it and just asking us for more. We keep providing high-quality products, and our customers keep coming back.”

    There was a noticeable reduction in the number of nicotine vaping companies showing on the floor. The impact of PMTA and PACT Act regulation was evident. There were only an estimated 16–18 e-liquid vendors, including Coastal Clouds, BLVK E-liquid and Fresh Farms. There were an estimated five to seven hardware manufacturers, including Mi-One Brands, Myle, NJoy and Inspire, and most of them produced their own brands.

    There was also a noticeable reduction in international participants, said Tony Riva, CEO of TD Distribution Co., the parent to the Hi-Drip e-liquid brand, which was also exhibiting. Normally, there are at least 20–30 exhibitors from China alone; this year, there were only a few Chinese brands present, and the booths were manned mostly by U.S.-based personnel.

    “The international community that is normally present at this show just isn’t here this year. That’s obviously due to the Covid restrictions and complications of international travel,” he said. “That’s having an impact on sales, I think. But business is good. We are just trying to navigate the changing regulatory environment and new policies that have been put in place.”

    Regulatory concern

    Before the show, exhibitors were concerned about what impact the PACT Act would have on show sales. The rule requires a manufacturer to gather data from customers to file the mandatory monthly reports with native, state and local governments disclosing the identity, address and product received for all customers as well as remit any excise taxes owed.

    “As a best practice, it’s our priority to collect licensing information upfront from any new customer and we were glad potential buyers came to the show prepared,” said Zagari. “They had copies of these documents on hand or emailed them right away.”While many companies have already stopped using the United States Postal Service (USPS) because the PACT Act prevents the USPS from mailing ENDS products to customers, the rules have not yet taken effect. At the time of writing, the USPS had yet to publish the finalized rule. Lucas said Ripe Vapes had a large following for online sales. However, Ripe Vapes has ended all direct-to-consumer sales because of the PACT Act and now only conducts B2B sales in the U.S. “It was a difficult decision,” he said. “In the end, it was the right one to make.”

    Zagari said Bantam plans to ship through USPS until the final rules go into effect. “We are working to identify alternative shipping options, which will help us continue online consumer sales once the USPS final rule is published,” he said. “It’s our goal to ensure our customers always have access to our high-quality, flavor-filled e-liquids that are in compliance with all regulatory requirements.”The PACT Act’s definition of ENDS is so broad that it includes vape-able hemp cannabis products too. JustCBD only sells cannabis products and felt that they were “suckered in” to the ENDS definition, according to Gutierrez. The company has filed an exemption with the USPS, but that exemption will not be considered until after the final rule goes into effect. “It seems like we are jumping through a lot of hoops to sell a legal product that has nothing to do with nicotine or tobacco,” Gutierrez said.

    Beyond the PACT Act, TPE exhibitors and attendees remain concerned about the PMTA process and the full impact of FDA regulation on the vaping industry. Numerous companies, including major industry players like Dura Smoke, My Freedom Smokes, Logic and Vape Wild, have gone out of business, merged with other companies or ended all online sales.

    Kestenbaum said that as the market condenses and regulation pushes players from the market, naturally sales to the companies that remain would increase. The recent release of the list of manufacturers that have submitted PMTAs has also served a guidance for vape shop owners. Companies cannot now claim they have submitted a PMTA without having done so.

    “So many companies were saying, ‘We’re going through PMTA. We’re doing it. We’re doing it,’ and they weren’t. I think we are starting to see many of those companies drop out of the industry, said Kestenbaum. “We’re trying to run everything by the book … I feel like we’ve gotten burned for doing that because there were a lot of companies that were not. The PACT Act, PMTAs, these aren’t all bad. Let’s clear out the lawless, let’s get a little bit more organized and allow the ones doing the right thing to continue.”

    Lucas said Ripe Vapes submitted only one PMTA for its VCT flavored e-liquid. The company has a considerable international business, so its other popular flavors, such as Key Lime Cookie, are still available outside the U.S. “Our attorney said, ‘Look, your best chance … the way this is going to go, looking at it from a cost standpoint, take your No. 1 e-liquid and just roll with it,’” said Lucas. “Some of these guys are trying 10, 15 or 20 flavors. They may get it if they have enough money, and there’s a couple of guys in this industry that probably do have enough money.”

    Another concern is that the FDA has been taking its time in reviewing PMTAs, according to Lucas. He doesn’t see a path for the regulatory agency to complete reviews on the more than 6 million PMTAs submitted by the 1-year deadline (Sept. 10, 2021).

    “We find it kind of hard to believe they’re going to have this done by next year. That’s what my next question is: What happens? Do they give you an extension? I think the industry is going to force them to make some decisions because you’re putting us through this,” explains Lucas. “The submittal alone for us was huge. So, when you’re spending all this money, you want some results. … It’s going to be an interesting thing as that deadline approaches.”

    Bantam Vape has received a filing letter for its submitted products, according to Zagari. He said that the company hopes to hear back from the FDA soon but is preparing for the likelihood that the agency will not complete all reviews come September. “We are working to better understand our options and in the meantime, we are continuing to monitor FDA communications and actions.”

    TPE 2022 will be held Jan. 26–28, 2022, in Las Vegas.

  • Market Watch: India

    Market Watch: India

    Credit: Alin Andersen

    E-cigarettes have been banned in India since 2019, but the ‘grey’ market continues to grow.

    By Vapor Voice staff

    There are more than 100 million cigarette smokers in India. The country suffers from over 1 million tobacco-related deaths each year. But Western-style cigarettes account for only a fraction of tobacco consumption in India. According to data from the Global Adult Tobacco Survey (GATS) of 2016–2017, India has the second-largest tobacco-consuming population in the world (China is first). An estimated 267 million Indians use tobacco in some form.

    Tobacco also plays a significant role in India’s economy. More than 4.2 million hectares of farmland in India are dedicated to growing tobacco. The government also owns a 28 percent stake in ITC, India’s dominant tobacco company. Currently, there are only 19 smoking cessation centers for the nearly 270 million tobacco users, and there is no national policy to make telemedicine or other medical support available, according to the CDC Foundation.

    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. Ministers at the time said the decision aimed at averting health risks related to e-cigarettes. The Indian vaping ban came amid an updated guidance from the World Health Organization (WHO), which encouraged the prohibition of e-cigarettes. India’s ban does not cover the personal consumption of vaping products, although the rule is ambiguous and doesn’t define personal consumption.

    Before the vapor ban, many vapers would purchase their products at tobacco shops, known as paanwalas. These shops sold mostly basic 510-threaded vaping devices, low-quality shisha-flavored e-liquids and cheap closed pod systems, according to sources familiar with vaping in India. Shop owners knew little about tobacco harm reduction (THR) and the role vapor products play. A handful of large importers were supplying the shops, and in 2014, ITC even released its own e-cigarette, Eon, that it marketed through the local shops.

    India also had a small fraction of vapers, mostly former smokers, that understood the THR concept of vaping and its purpose as a quit smoking aid. “They opened a few shops and were quality conscious. They wanted to help customers stop smoking combustible cigarettes,” said a former vape shop owner, who asked to remain anonymous due to the illegal nature of vaping products in India. “These shops sold mostly high-end brand devices and e-juices from trusted manufacturers. “Almost all of them had online shops and social media presence and nationwide reach, and a few also had brick-and-mortar stores.”

    Then came the ban. India’s legal vaping market abruptly stopped overnight. All websites were shut down immediately, sources said. The law, as written, is strict with severe penalties. Initially, all players in the vaping industry in India were terrified. “After some time passed, with little to no enforcement action, the market began to slowly reemerge,” said another former participant in the Indian vape market. “Vendors returned, although in much smaller numbers. The cheap, low-quality vapes are back at the bigger paanwalas. Often these shops do not care what age a customer is when selling tobacco products.”

    Amplifying the issue is that most of the employees running the paanwalas do not possess the knowledge to properly educate customers about the usage and maintenance or the pros and cons of vaping products, according to the former vape store owner. “This market needs restrictions and regulations. The less educated, less privileged masses perceive vapes as just another way to exhale dense clouds,” he said. “Also, this market is less afraid of the law because, in most places, the local police have arrangements with small stalls/shops/kiosks of all kinds, where they collect a weekly fee (called a hafta) to look the other way when they flout rules.”

    Vaping products are even being displayed on some store shelves now in India. 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. Most of the specialists are discerning and do not entertain new customers without a reference from a known customer.

    “The black market is not large at present. However, as India has a huge population (1.4 billion), even ‘not large’ can be sizable. Unofficial estimates say India had a million vapers before the ban, and there are still approximately 200,000 to 300,000 vapers in the country,” the former market player said. “The penalty for selling vapes to anyone—even an adult—is up to three years in prison and fines up to INR500,000 ($6,700). You will be amazed to know that the penalty for selling [combustible] cigarettes to a minor is only INR200 ($2.75) with no imprisonment. How is this allowed?”

    According to Anupam Manur, an assistant professor of Economics at the Takshashila Institution in Bengaluru, banning vapor products has caused the government to lose all controls over the products.

    “If a seller is selling an illegal product anyway, what difference would the age of buyer make—whether it is above or below 18 years?” Manur wrote in Business Insider. “Furthermore, since it is illegal, would it make sense for a seller to ensure product quality and safety? There have been numerous reports of substandard and potentially dangerous products being sold in India on the black market,” he said. “It would behoove the government to learn the lessons from the U.K. and the U.S. and choose a harm reduction approach, which would involve developing a regulatory plan for e-cigarettes that maximizes smoking cessation among adults while limiting youth uptake.”

    The WHO was more enthusiastic about India’s approach, even giving Indian Health Minister Harsh Vardhan a top award for pushing the policy. Vardhan is a former WHO advisor and was until recently the chair of WHO’s executive board, and hence deeply steeped in the WHO’s anti-THR stance. “His leadership was instrumental in the 2019 national legislation to ban e-cigarettes & heated-tobacco products,” tweeted the WHO secretary-general, Tedros Ghebreyesus, after announcing the award. “Thank you, minister!”

    Samrat Chowdhery, director of the Association of Vapers India (AVI) and president of the International Network of Nicotine Consumer Organizations, a global consumer advocacy group comprising 40 national and regional bodies, does not expect anything to change in India’s vapor market any time soon.

    Samrat Chowdhery

    Politics aside, the negative impact of the ban will become clear in time, he says, adding that the nations that have embraced vaping products as THR tools are reaping the rewards of accelerated smoking declines after allowing (and in some cases encouraging) smokers to make the switch.

    Countries that have experienced lower health costs because they have embraced vaping products and invested in THR may one day offer enough evidence to force a shift in India’s policy toward e-cigarettes, according to Chowdhery. “Currently, Thailand is the only other major country in Asia that bans safer nicotine inhalation alternatives, and it is worth noting along with India, it too has a state-run tobacco enterprise which is facing competition from replacement products,” said Chowdhery. “China is moving toward regulation too. This ‘ban group’ is likely to shrink further over time.”

    If electronic nicotine-delivery system products continue to be available in some form in India, the number of ex-smokers who have switched will continue to grow, according to Chowdhery. With the ban slowing this transition and potentially even halting it, he believes at some point the vaping ban will create its own critical mass to call for a rethink.

    “Another possibility is that the courts intervene and either discard the law altogether or create caveats which render the law infructuous. Such challenges require substantial financial backing, which established commerce in this field can support,” said Chowdhery. “The courts have so far been reluctant to delve into this issue because of the emotional ‘think of the children’ pitch attached to it, but over time, rationality and pragmatism will win over. A country with this large of a tobacco problem cannot for long ignore effective measures to reduce related mortality and morbidity.”

  • Unintended Consequences

    Unintended Consequences

    Credit: Lost in Midwest

    Harm reduction advocates worry about the effects on vapers when the USPS implements PACT Act requirements for ENDS.

    By Vapor Voice staff

    The United States Postal Service (USPS) has delayed the implementation of a requirement to place electronic nicotine-delivery systems (ENDS) under the same shipping rules as combustible cigarettes. As of this writing, the USPS has not published its final rule for mailing ENDS products in the Federal Register. The USPS has stated that the rules will take effect immediately when the final rule is published.

    The rule has been delayed because the USPS is still determining how it will handle the broad definition of ENDS set by the U.S. Congress and how the USPS will process and determine eligibility for companies seeking an exception to the Prevent All Cigarette Trafficking (PACT) Act rules. For example, CBD vaping devices fall under the ENDS definition, but it is believed that it was not the intent of Congress to ban the mailing of hemp products. No date has been announced for when the USPS intends to publish the final rule.

    Emily Burns, of counsel for the Green Light Law Group, noted that while the USPS could have banned vaping products altogether as part of the new rule, the USPS is now taking time to revisit the implications of an all-encompassing prohibition on shipments of vaping products. She wrote in the firm’s blog that the USPS must not exceed its own legal authority under the PACT Act by regulating vaping products that fall outside the definition of tobacco product as such a rule could be subject to challenge by various industry groups.

    Credit: Aleksandr Yu

    “If lawmakers intended to truly change the way the federal government defines ENDS to include nontobacco and non-nicotine products, it is rational to assume that Congress would have also amended the [Tobacco Control Act] to allow the FDA to regulate these other substances. The strategy moving forward should be to encourage USPS to specifically focus on the ENDS market … anything done in relation to cannabis or hemp should be seriously challenged by the industry.”

    The USPS confirms Burns’ concerns and has stated that the process is turning out to be more complicated than just ending all vape mail of vapor products. On April 19, the USPS issued guidance for exemptions to the requirements for mailing all vapor products, including cannabis. The USPS was inundated with exemption applications, none of which will be addressed until the final rule is published, according to the USPS.

    The USPS refers to possibly exempting cannabis products in its guidance. Other exceptions include intrastate shipping within Alaska and Hawaii, shipments between businesses engaged in tobacco product manufacturing, distribution, wholesale, export, import, testing, investigation or research, shipments by individuals for noncommercial purposes (including return of goods to manufacturer), limited shipments by manufacturers to adult smokers for consumer testing, and limited shipments by federal agencies for public health purposes.

    For cannabis-based product exemptions, the guidance states that “mailers must retain, and prepare to make available upon request, records establishing compliance with all applicable federal, state and local laws pertaining to hemp production, processing, distribution and sales, including the [2014 Farm Bill] and [2018 Farm Bill].” The guidance says such records may include “laboratory test results, licenses and compliance reports.”

    Burns stated that the USPS guidance also indicates that cannabis products with greater than 0.03 percent THC would be nonmailable if they are deemed to be drug paraphernalia for purposes outlined under the Controlled Substances Act (CSA), which includes a federal ban on mailing drug paraphernalia that already exists outside of the PACT Act. However, the CSA prohibition on drug paraphernalia does not apply to “any person authorized by local, state or federal law to manufacture, possess or distribute” such items.

    “In the case of medical and recreational cannabis states that have removed criminal statutes penalizing drug paraphernalia used to consume cannabis, anyone who is shipping from one legalized state to another would technically fall under the paraphernalia definition exception, thus providing a legal basis for exception from the PACT Act requirements,” Burns states.

    The move to place ENDS under the PACT Act has been heavily scrutinized. Several harm reduction advocates say the new rule will bring unintended and deadly consequences. During a seminar sponsored by Hall Analytical in mid-May titled “PMTA and Beyond: A Global Outlook on ENDS Regulatory Requirements,” David Lawson, CEO of Inter Scientific, said that placing vaping products under the PACT Act only serves to benefit large tobacco companies and could push former smokers who shop for vaping products online back to combustible cigarettes.

    “If you’re a large tobacco company in the U.S., you most likely sell directly to the likes of Walgreens and these kinds of stores. They then sell them to consumers. Many of the independent vaping companies and manufacturers, they sell online. The PACT Act doesn’t really impact store sales. It only impacts online sales,” explains Lawson. “So a company who relies entirely on online sales may have gone through the [submitting a premarket tobacco product application (PMTA) to the U.S Food and Drug Administration] process. They’re now risking the potential for not being able to ship to their clients at all. I think from that perspective, it’s quite negative and damaging.”

    Lawson said that what lawmakers failed to realize when moving ENDS under the PACT Act is that online retail has the advantage of being able to do more thorough ID checks than a local mom-and-pop shop. A credit card is needed for an online purchase, for example, along with a photo ID. At a brick-and-mortar store, a youth simply needs a fake ID and cash. “It’s much easier to do detailed checks on people online than it is to do them in store,” he said. “It is a growing concern for the U.S., the ability of youth to get access to ENDS, but I think, from the experience I’ve had, from what I’ve seen from our clients in the U.S., the kids aren’t getting the products online.”

    Credit: Michael Vi

    Another consequence of the PACT Act is that when adult consumers who purchase vaping products online can’t get their products anymore, they may go back to smoking combustible cigarettes, which are more readily available in local stores, according to Lawson. 

    “In the U.S., if you’re buying a specific product online, certainly it’s not going to be available anymore. You have the option there to try and find an alternative brand or risk going back to cigarettes. I think there’s a huge risk impact that will result in adult smokers who are currently vaping going back to smoking again, which is, obviously, not good for public health,” said Lawson. “I don’t personally see the value of the PACT Act. I think it’s kind of a step backwards. It does risk impacting public health negatively.”

    While the industry continues to wait for the USPS to publish its finalized rule and what a PACT Act exemption might entail, Burns recommends that concerned business owners “reach out to a regulatory attorney about the compliance process ahead of time in preparation of the forthcoming regulatory changes.”

    Coupled with the requirement to submit premarket tobacco product applications to the FDA, the PACT Act and flavor bans, ENDS regulations have become overly stringent, and the complex rules can turn smokers away from the idea of switching to ENDS products, said Lawson, especially when that regulation doesn’t allow for clarification of the science behind vaping products.

    “The issue here really is around all this information from the perspective of science, perhaps. When ENDS first entered the market back in 2006 … there was a lot of bad science and bad data generated. When you generate a bad set of data and it becomes publicly available, people don’t necessarily question and interpret how the information has been generated or the validity of that data,” said Lawson. “I think there’s a huge risk with the media and with the interpretation of science that it can certainly switch people away from using ENDS.”

    There are other regulatory challenges coming too. The Tobacco Tax Equity Act Of 2021, a bill that would establish the first federal e-cigarette tax, increase the traditional tobacco tax rate and close tax loopholes, is currently making its way through the U.S. Senate. The rule would follow the lead of 21 states, and Washington, D.C., that have set their own state taxes on vapor products by setting a federal tax on ENDS products.

    Senator Dick Durbin, who sponsored the bill, said tobacco-related disease accounts for one out of every five deaths in America. He did not mention that there has never been a reported death associated with vaping of legal nicotine products.

    “Data shows that the most effective strategy to prevent children from starting this deadly habit is to price it out of their range. This bill would help reduce tobacco and e-cigarette use by ending loopholes that the industry has exploited to target our children,” he said in a statement. “If America can kick its nicotine addiction, it would go a long way to improving our public health for generations to come.”

    The repercussions of the USPS vapor mail ban on the vaping industry will not be realized for some time. While the PACT Act requirements have forced many businesses to close, the vapor industry is used to dealing with a great amount of uncertainty. With numerous regulatory hurdles on the horizon, it does not seem like that is going to change any time soon.

  • Attack of the PACT Act

    Attack of the PACT Act

    An amendment to the PACT Act to include vapor products has caused major disruption throughout the vapor industry.

    By Timothy S. Donahue

    When a 5,000-plus page omnibus bill, the Consolidated Appropriations Act of 2021, was signed into law on Dec. 28, 2020, the vapor industry knew its impact would be bad. It was impossible to know at the time how crushing a blow it would be. Buried deep within the bill (page 5,136) was the Preventing Online Sales of E-cigarettes to Children Act. It was a provision that effectively bans the United States Postal Service (USPS) from shipping electronic nicotine-delivery systems (ENDS).

    The updated provision redefines the word “cigarette” under the 2009 Prevent All Cigarette Trafficking (PACT) Act to include ENDS products. ENDS would now be subject to the same shipping laws as combustible tobacco. The ensuing shipping problems for vapor retailers forced many companies to end all U.S. online sales and many others have been forced out of business. Chris Innes, owner of Elevated Vaping in Houston, Texas, announced that he would be closing his shop due to the PACT Act and the U.S. Food and Drug Administration’s stringent premarket tobacco product application (PMTA) requirements.

    The Vape Spot in Los Angeles also announced it would be closing its store due to the PACT Act after eight years of helping smokers make the switch. Securience, parent to DuraSmoke, announced a merger with VapinDirect to stay in business. Logic ended all online sales on March 16. White Cloud Electronic Cigarettes ended all online U.S. sales on March 26. Vapewild and Vistavape went out of business entirely. The list goes on.

    “If the increase in shipping costs wasn’t enough, the bill also imposes huge paperwork burdens on small retailers and backs it up with threats of imprisonment for even innocent mistakes,” said Gregory Conley, president of the American Vaping Association. “This is not a law designed to regulate the mail-order sale of vaping products to adults; it’s an attempt to eliminate it.”

    According to Karen Goss of Chemular, a business improvement solutions and compliance systems provider, the PACT Act affects the entire vaping industry from the manufacturers shipping to the distributor, the distributor shipping to the retailer, and businesses taking orders from consumers online regardless of whether the product is even mailed.

    While the legislation was geared toward nicotine vaping products, the law is so broadly defined that cannabis businesses must also comply. This means marijuana and CBD companies selling, manufacturing or shipping vaporizers or associated parts across state lines are required to comply with the provisions of the PACT Act.

    “It affects literally everyone in the distribution chain, regardless of whether you are actively shipping your product into a state. If you are advertising your product for sale in that state, you should be registered with that state for PACT Act purposes. This is for any electronic device that, through an aerosolized solution, delivers nicotine, flavor or any other substance to the user by inhaling from a device,” said Goss during a recent webinar. “This covers liquid and any component, part or accessory, whether sold with the device or separate. It coves liquids with 0 mg of nicotine. It covers synthetic nicotine. It essentially covers the gamut of vaping products.”

    The PACT Act has turned out to be an even greater hurdle to the vaping business than the FDA’s onerous PMTA applications, which had to be submitted to the regulatory agency in September of last year, according to James Xu, chairman and CEO of Avail Vapor, a major chain of brick-and-mortar vape shops. He said FDA regulations took time; the PACT Act was implemented in less than four months.

    “It was just like, wow, this is happening. The PACT Act can take away the majority of online vapor businesses. Smaller companies aren’t going to be able to comply, especially these companies that are selling e-liquids for $10 a bottle that are now going to have to go up to $50, $60 a bottle,” he said. “They’re not going to survive; there’s no way they can survive. They were already cutting their profit margins just to be able to push product out.”

    Credit: Sam Larussa

    Rules of the road

    PACT Act regulations are so stringent for online merchants that leading private shipping companies will also stop delivering vapor products. “Effective April 5, 2021, UPS will not transport vaping products to, from or within the United States due to the increased complexity to ship those products,” said UPS spokesperson Matthew O’Connor in a statement. FedEx began no longer accepting vapor products for delivery on March 1, 2021. DHL had already previously banned all shipments of nicotine-containing products and has now also ended all cannabis vapor product shipments.

    The only shipping option that remains is Austin, Texas-based X Delivery, a private B2C shipping company. “The shipping carrier X Delivery isn’t afraid of a little red tape,” the company’s website states. “X will verify the age of the purchaser and obtain the required signature of the adult, as outlined in the PACT Act, with every vape-related delivery.” Another company, Vapefreight, was preparing to ship B2B vapor products but was still conducting trial runs as of this writing.

    Many businesses were unsure if B2B mailing would be allowed. According to Azim Chowdhury, a partner at Keller and Heckman, the PACT Act has historically exempted business-to-business deliveries from the USPS ban. Specifically, the USPS ban does not extend to tobacco products mailed only for business purposes between legally operating businesses that have all applicable state and federal government licenses or permits and are engaged in tobacco product manufacturing, distribution, wholesale, export, import, testing, investigation or research.

    “Companies seeking to use USPS for business-to-business deliveries must first submit an application to the USPS Pricing and Classification Service Center and comply with several other shipping, labeling and delivery requirements,” said Chowdhury. Under the B2B exception for the USPS, all transactions must be done in-person, face-to-face, according to the USPS.

    “This was not a requirement set by Congress, and it imposes time and money burdens on both businesses and the USPS infrastructure,” said Conley. “USPS should accept the approved business purposes exception documentation, verify that a recipient is a covered and approved authorized business recipient of ENDS products, and allow mailings through both the USPS pickup and drop-off system in place for other USPS-handled packages.”

    The USPS mail ban on vaping products will go into effect on or before April 27, 2021. After this date, retail customers will no longer be able to receive vaping products by way of USPS delivery, according to the USPS. However, the USPS rule states that the agency will mail vapor products under narrowly defined circumstances:

    • Noncontiguous states: intrastate shipments within Alaska or Hawaii;
    • Business/regulatory purposes: shipments transmitted between verified and authorized tobacco industry businesses for business purposes, or between such businesses and federal or state agencies for regulatory purposes;
    • Certain individuals: lightweight shipments mailed between adult individuals, limited to 10 per 30-day period;
    • Consumer testing: limited shipments of cigarettes sent by verified and authorized manufacturers to adult smokers for consumer testing purposes; and
    • Public health: limited shipments by federal agencies for public health purposes under similar rules applied to manufacturers conducting consumer testing.

    The USPS rules also state that the listed exceptions cannot feasibly be applied to inbound or outbound international mail, mail to or from the Freely Associated States, or mail presented at overseas Army Post Office, Fleet Post Office, or Diplomatic Post Office locations and destined to addresses in the United States. Because of this inability, all ENDS products “in such mail are nonmailable, without exception.”

    One way USPS could simplify the exception process would be digitizing not only the specific business requirements but also the exception application itself, suggested Conley. He says that by uploading the necessary permits and business filing documents online, USPS would have access to verified businesses anywhere in the nation, ensuring that there are not unnecessary delays in the shipping process for ENDS businesses. “This online portal could also be used by applicant businesses to verify the status of an approval for utilizing USPS as a shipping provider of ENDS in a timely manner,” he said.

    Excluded from the statutory definition are products approved by the FDA for sale as “tobacco cessation products or for other therapeutic purposes and marketed and sold solely for such purposes.” The USPS also proposes to treat ENDS as a standalone category, “albeit one generally subject to the same restrictions and exceptions as cigarettes, consistent with the statute.”

    According to the PACT Act legislation, anyone selling vaping products must:

    • Register with the U.S. Attorney General;
    • Verify age of customers using a commercially available database;
    • Use private shipping services that collect an adult signature at the point of delivery;
    • Register with the federal government and with the tobacco tax administrators of the states if selling in states that tax vaping products;
    • Collect all applicable local and state taxes, and affix any required tax stamps to the products sold;
    • Send each taxing state’s tax administrator a list of all transactions with customers in their state, including the names and addresses of each customer sold to and the quantities and type of each product sold; and
    • Maintain records for five years of any “delivery interrupted because the carrier or service determines or has reason to believe that the person ordering the delivery is in violation of the [PACT Act].”

    Retailers can be cited by states for not following their individual requirements for tax payments and filings, and they may have to purchase tobacco and other licenses or hire a registered agent in the state. The cost for being PACT Act compliant can range anywhere from $40 to $250 or more per year per state, according to Goss. “There are a variety of companies that perform PACT Act compliance,” she said. “I put those numbers out there so that you have some sort of ballpark figure and you know you’re not getting overcharged. At the same time, it gives you a view of what to expect for this process on an ongoing basis.”

    Credit: Manuel Alvarez

    Registered for mail

    In addition to the nonmailing provisions, the PACT Act requires anyone who sells ENDS products to register with the Bureau of Alcohol, Tobacco and Firearms and Explosives (ATF) and the tobacco tax administrators of the states into which a shipment is made or into which an advertisement or offer is disseminated, according to Chowdhury. Retailers who ship ENDS, cigarettes or smokeless tobacco to consumers are further required to label packages as containing tobacco and maintain records of all delivery sales for a period of four years after the date of sale, among other things.

    Registering with the ATF online requires visiting the agency’s website (www.atf.gov) and filling out a single-page form. Goss said that companies should notice that in the first section under “Person,” the company would enter its name; person is defined as the business. “Another item to note is that you should list all of your business locations that are receiving product,” she said. “For example, if you have multiple distribution hubs, list all of them on this form. Save yourself the trouble of filling out multiple forms and lump all your business locations into one form.”

    Companies will also have to tell the ATF where to send service of process in each state the company operates in case of any potential lawsuits. This is another area where hiring an agency to serve as a registered agent can make things easier. “There are a number of registered agent organizations that have offices in every state across the U.S. When you find a company that you like, they can most likely be your agent in all states that you require their services in,” said Goss. “Basically, they’re your mailbox in that state.” There’s not any further interaction required with the ATF after filling out the form unless a company changes agents or any information such as addresses change.

    Completing the requirements to register with the states is more complicated. Each state has its own rules for companies doing business in the state. Retailers can be cited by states for not following their individual requirements for tax payments and filings. Some will have special forms while others will accept the same letter copy of the federal registration (addressed to the state). “Go to each state’s tobacco tax office website, if there is one,” said Goss. “Typically, that’s where the state will have information on how to register.”

    The state and ATF registration requirements only apply when the destination state taxes ENDS products, according to JDSupra.com, a business news source. This is important for cannabis companies since some states, Oregon for example, have exemptions for ENDS shipments of cannabis (THC and CBD) devices.

    The most arduous requirement of the PACT Act is monthly reporting. Similar to the ATF and state registration requirements, the state reporting requirements only apply when the destination state taxes ENDS, according to JDSupra. Just like with the registration process, states have different ways to submit information, and states also want varying amounts of information, according to Goss.

    Some states want a form and hard copies sent in, while others have an online portal with templates. Typically, for each delivery sale and each person who has delivered product in connection with a delivery sale, it is required to file a delivery sales report with the comptroller’s office.

    “The same product may get reported to the state multiple times. A bottle of e-liquid will get reported when it’s shipped from the manufacturer to the distributor, and then the distributor is going to report it when it ships it to the retailer,” says Goss. In most states, the reports must also include a memorandum or a copy of an invoice that provides:

    • the name, address and phone number of the person delivering the shipment to the recipient on behalf of the delivery seller;
    • the name, address, telephone number and email address of the individual to whom the delivery sale was made;
    • the brand or brands of the ENDS products sold; and
    • the quantity of ENDS products sold.

    California, however, requires brand names and wants registrants to identify and distinguish between various types of ENDS products (a coil and an e-liquid, for example) with all invoice information relating to specific customers to be organized by city or town and by zip code. Texas wants only the brand name and the quantity sold. Every state requires the reports to be submitted on or before the 10th of the month for the previous month. For many states, the first reports were due April 10 for sales from March 27 to March 31.

    Credit: John R Perry

    Back to the basics

    Many believe that including ENDS products in the PACT Act requirements is going to be a detriment to the overall public health of the country. If ENDS products cost more than combustible cigarettes and are harder to acquire, smokers who quit cigarettes with vaping will likely return to smoking combustibles. States are going to know where all the ENDS shipments are going now and how much was purchased. Alongside all the other requirements that vary by state, each state also has varying rules and regulations for when and who should apply and collect any excise taxes.

    Xu says that many online companies do not charge either state or local sales tax or excise taxes. Now, the consumer will be responsible for all the taxes and the additional shipping costs. This could mean the end of online vapor sales entirely in some states. For example, numerous vapers from California order online due to their state’s complex tax regime, explains Xu.

    According to the California Dept. of Tax and Fee Administration (CDTFA), the state’s statewide sales tax rate is 7.25 percent. The excise tax rate on vapor products is 59.27 percent of wholesale value. In most areas of California, local jurisdictions have added district taxes that increase the tax owed by a seller. Those district tax rates range from 0.10 percent to 1 percent. Some areas may also have more than one district tax in effect.

    “That will be a huge cost increase to the consumer when they add up the sales tax, local tax and the vaping excise tax. People order online, one for convenience, but mostly it’s for the cost. That cost advantage is going to go away,” said Xu. “Add an adult signature fee with the shipping-related cost and suddenly the online purchase is just as costly as from the brick-and-mortar stores … possibly even more. [In some states], it’s immediately become a level play[ing] field with brick-and-mortar stores.”

    There is no arguing that the PACT Act will change the vapor market. There are going to be supply chain issues, and companies may receive warning letters, felony charges and fines as they navigate the new process. As numerous online retailers close or move to a distributor, those customers will most likely move to brick-and-mortar vape shops.

    There are some positives, according to Xu. “The online market is going to suffer, and sadly, it’s going to push some back to traditional cigarettes. However, the local brick-and-mortar vape shop can do a better job at educating consumers about vapor products and helping people transition away from deadly combustibles,” he says. “Most shop owners and employees take pride in their customer service and their knowledge of the product. It’s too early to tell what type of impact the PACT Act will have on our retail stores or the industry as a whole. Right now, it’s still wait and see.”

  • Stand and Deliver

    Stand and Deliver

    X Delivery wants to be the logistics answer to the challenges of mailing PACT Act-compliant vaping products in the U.S.

    By Timothy S. Donahue

    When the options seemed bleak, X Delivery took on the challenge. Buried within the omnibus spending bill passed at the end of last year was the Preventing Online Sales of E-Cigarettes to Children Act that prohibits the U.S. Postal Service (USPS) from delivering nicotine or cannabis vaping products directly to consumers by bringing electronic nicotine-delivery systems (ENDS) and cannabis products under the 2009 Preventing All Cigarette Trafficking Act (PACT Act).

    All the major shipping carriers (UPS, FedEx, DHL) stopped shipping vaping products too. It seemed the online market for vaping products had ended abruptly (see “Attack of the PACT Act,” page?). Then came X Delivery. The shipping carrier with the simple name offered a solution. While there is still room for growth and bringing on more drivers to deliver vaping products to more zip codes, X Delivery has given many online retailers hope.

    The PACT Act requirements make shipping vapor products complicated. Paul Vinuelas, chief logistics officer for X Delivery, said that the company can fulfill all the PACT Act requirements, including verifying the age of the purchaser and obtaining the required signature of the adult with every vape-related delivery. All packages containing vaping products cannot weigh more than 10 pounds (4.5 kg) and all shipping packages must also carry a sticker stating the contents contain a “tobacco” product, along with a statement reminding the recipient that taxes are owed on the purchase, according to Vinuelas.

    “All shipping has unique challenges. The fact that the national carriers have opted out of vape shipping shows us that they are only interested in the drop-and-run delivery model. They are not confident in their ability to deliver to a person 21 years or older,” explains Vinuelas. “That’s where X Delivery comes in; we have a network of dedicated individuals who take the PACT Act seriously. We are dedicated to ensuring compliance and protecting youth from obtaining these products. It takes a bit more effort to perform our deliveries and audit them for PACT Act compliance, but we think it’s worth it.”

    X Delivery has the capability to ship products to consumers nationwide and can currently deliver to about 90 percent of the U.S. population for vaping products. Vinuelas told Vapor Voice that the company is working to increase its coverage to 100 percent of the country as soon as possible.

    “Our final-mile delivery partners are required to check IDs and obtain adult signatures. From an end-customer’s perspective, ordering from an online merchant that ships via X Delivery is just like getting an order from an online merchant that ships with a household-name shipping carrier: You get tracking updates from the moment your order is placed all the way through to your delivery,” says Vinuelas. “We take it a step further and work to notify customers when their package is arriving soon to make sure they are home to receive their package.”

    X Delivery was started by CEO Chris Guggenheim, who has a storied career in the entertainment and ecommerce technology industries. These experiences led Guggenheim to invest in technology that drives commerce and opened “X.” The technology company X powers X Delivery, and there are more offerings that will come to market over time under the X umbrella. In 2019, his highest-volume clients asked for help solving challenges they were facing regarding delivery. The technology company soon began supporting the high-tech nationwide shipping carrier X Delivery, which Guggenheim started in early 2020. In just six months after beginning operations, X Delivery delivered more than 10 million packages within a two-day average delivery time nationwide. The company began shipping vape products in late 2020.

    “Over the last 6 months, we have partnered with vape companies to build a fully compliant shipping carrier service leveraging our existing technology and logistics capabilities,” explained Vinuelas. “We appreciate the seriousness of these residential deliveries and our local, state and federal regulation compliance efforts have been exhaustive yet successful.”

    The knowledge gained running X helped Guggenheim solve a variety of retail issues for merchants, according to Vinuelas. “When we began to pilot our service in 2019, we realized that building technology from the ground up was the only way to support high-growth D2C [direct-to-consumer] e-commerce businesses long term,” he said. “When we talk about the value of X Delivery, it is to improve customer experience, sales conversion and to enable merchants to experience peak performance from one warehouse.”

    X Delivery’s official slogan is “Reimagine Delivery.” X Delivery has an unofficial slogan too: Fix logistics. The purpose of X Delivery is to “simplify package delivery through technology, reliability, speed and price,” according to the company’s website, xdelivery.ai. Vinuelas says the company has developed a new approach to logistics by leveraging in-motion supply chain assets, from empty warehouses to local delivery services, and connecting them to new technology.

    “Most e-commerce merchants will not be able to accurately answer how much it costs them to ship a package. Many e-commerce merchants incorrectly believe that running an operation out of multiple warehouses will help them take advantage of faster shipping and lower costs. This is not true, and this is what is broken,” explains Vinuelas. “Shipping carriers need to understand that all customers should get the same service no matter where they are shipping from or where they are shipping to in the U.S. This is our purpose in the market today. I’m also going to add that it shouldn’t take a Ph.D. to figure out what it will cost a merchant to ship in the U.S. Shipping carriers need to stop with the extra fees, fuel surcharges, Covid-19 fees, etc. We have done that.”

    Paul Vinuelas

    X Delivery uses an application programming interface (API) to help streamline its shipping process. An API is a set of protocols that sync up data in real-time across various platforms by allowing the backends of software and applications to communicate with each other over the internet.

    According to the X Delivery website, with the help of an API, one program (application A) can “call” another program (application B) to access its data or functionalities. For example, users can see data from application A via application B’s interface without manually transferring the data from one program to another. API integrations allow users to automate processes across various digital applications to make the flow of information seamless and instantaneous.

    “APIs allow companies to integrate shipping functionality directly into their system or other platforms so they can customize the interfaces to improve productivity and expand fulfillment capabilities while minimizing errors and delays associated with manually transferring data,” the website states. “Our API drives the future of logistics management. We help you simplify package delivery through technology, reliability, speed and price by leveraging in-motion supply chain assets to give you the best shipping options available in real-time.”

    Currently, X Delivery is only shipping for customers with a minimum of 500 packages a day, shipping out of one warehouse with a weight limit of 10 pounds; however, Vinuelas says that the company is working on lowering the minimum package threshold. “We are working hard to eventually offer our service to smaller companies,” he said. “For now, we have partnered with several carefully selected fulfillment companies to help those (smaller) companies tap into the X Delivery network.”

    Shipping with X Delivery will be slightly more expensive than shipping with the big-name delivery services but not much more than the cost of USPS delivery with adult signature collection. A 1-pound package costs approximately $6–$7, depending on the amount of packages shipped, and a 10-pound package costs approximately $10–$11 with X Delivery. Those costs are expected to decrease as the network broadens and more companies start shipping through X Delivery, according to Vinuelas.

    Moving forward, X Delivery is dedicated to optimizing delivery routes. By joining the X Delivery team, businesses have access to multiple delivery options from anywhere in the country.

    “We understand that nothing we say will earn trust better than showing results. We are 100 percent transparent with our clients and their end-customers. We also make it easy for anyone to try us out. Once you try us, you will understand how logistics should work, and you will never want to go back to the old way,” says Vinuelas. “Our long-term goal is to be the No. 1 shipping carrier for D2C ecommerce brands. Vape and e-cigarette merchants want to partner with people who understand the relevant laws in detail and will be a good partner to them. We are that partner.”

  • The People’s House

    The People’s House

    Montana vape shop owner Ron Marshall is taking the right to vape to a whole new level.

    By Maria Verven

    Ron Marshall, who owns Freedom Vapes with three vape shops in Montana, is taking the right to vape to the people’s house. Marshall ran for election to the Montana House of Representatives and won in the general election last November. A Republican, Marshall assumed office in January and will represent District 87—a section in the far western region of the state—for the next two years.

    Even before he took office, Marshall worked on two pro-vaping bills—B106, which seeks to prohibit expansion of the Montana Clean Indoor Air Act, and HB137, which seeks to revise the laws around vaping and alternative nicotine products. “Writing laws should be done in this house—the people’s house,” Ron Marshall told members of the House Human Services Committee during a hearing at the state capitol in January.

    Making a Difference at the State Level

    Although the U.S. Food and Drug Administration classifies vapor devices as tobacco products, Marshall’s bill HB137 seeks to differentiate the two. If passed, the bill would cancel bans on indoor vaping and on the sale of flavored nicotine solutions as well as previous anti-vaping regulations enacted by various counties and cities in Montana.

    In short, the bill would prevent the state of Montana from regulating the sale, manufacture, flavoring, marketing, product display, public exposure and access to “alternative nicotine products or vapor products.” Opponents said the bill would prevent individual communities from deciding what is best for them and that enacting the legislation would result in increased use of the addictive flavored nicotine products by young people.

    Vapers and vape shop owners gave passionate testimony in favor of the bill, asserting that the state legislature should adopt rules for businesses that ensure reliable access to vapor devices, which are primarily used by smokers to help them quit combustible cigarettes. “Everyone that owns vape shops share the same mission as myself and my family—to help people whom everyone has forgot[ten] about—the daily smokers,” testified Keith Bowman, part owner and general manager of six e-cigarette vape stores in Montana. 

    Fighting an Uphill Battle

    In 2019, the Montana Department of Public Health and Human Services enacted an emergency rule prohibiting the sale of flavored e-cigarettes. Last November, the city of Missoula became the first in the state to permanently ban the sale of flavored e-cigarettes. The state health department also proposed a permanent statewide ban on flavors but ultimately backed down after facing pushback from legislators. Nearly a dozen counties in Montana prohibit indoor vaping.

    Ron Marshall / Credit: State of Montana

    These anti-vape policies have harmed vape businesses across the state, Marshall said. “During the 2019 session, we defended against eight anti-vaping bills around taxes and clean indoor air. It was out of control,” he said. “We have no problem with sales to customers 18 years or older. The shops had already been doing that without being told. We wrote our own bill to curb youth access through store purchases. It didn’t make it out of committee, but the seeds had been sown.

    “Our problem is being called a tobacco product. We are not. Our bill separates tobacco products from alternative nicotine products. We aren’t the same by law in Montana,” he said, explaining that they pay $5 each year to the Department of Revenue for a license to sell alternative nicotine products.

    Marshall finally decided to take the fight to the people’s house and ran for the House of Representatives in his district.

    “Our current representative termed out, and the seat was open. After a three-way primary and general election, we won! It was a great feeling and a sobering experience,” he said. “The experience you have in everyday life is transmitted to how I look at legislation. If it sounds fishy, it probably is. Ask tough questions. Every time you vote on a bill, it will change someone’s life.”

    The Joy of Helping Others Quit Smoking

    The Marshalls started their vape business in 2014 after Ron’s wife Deanna suffered from a bad respiratory infection. “She used a disposable V-2 device that someone had recommended, and it worked great for her. After about 10 days, the infection healed. She tried to smoke a cigarette, but it was so disgusting, she couldn’t do it.

    “Being a smoker myself, I gave it a try,” Marshall said. “It was good, but not great. Deanna searched the internet looking for something better and found it in the form of SMOK Ego pens. We gave them a try, and it was perfect for both of us. It took me about 10 days to quit smoking completely.

    “After that, several people asked us how we did it. The answer was simple. The hard part was accessibility. There were no vape shops in Montana.”

    So, in February 2014, the Marshalls opened their own vape shop. “It was slow at first. Deanna put all her time and energy into it. I was only able to be in the shop two days a week,” Marshall said. “But after it took off, it was great. The joy of helping others get away from smoking and improving their lives was a reward that cannot easily be explained.”

    Freedom Vapes now has 10 employees with stores in three locations—Hamilton, Missoula and Belgrade. The Marshalls said most of their customers vape as a way to wean themselves off combustible tobacco products. While they and other vape shops refuse to sell products to anyone under age 18, young people can still buy products online, Marshall said.

    And while all of Freedom Vape’s flavorings are water-based, online products can potentially contain harmful contaminants. Still, other vapers may resort to mixing their own vape juice if a ban goes into effect.

    “That’s very dangerous,” Marshall said. “If they don’t get the right flavoring or use oil-based materials, they can harm themselves. We tell our customers not to buy anything off the street or use any product if they don’t know its source. This ban won’t make the problem go away. It will make it more of a problem.”

    Perspective From the ‘Inside’

    Marshall said it’s totally different being on the “inside.” “It’s a whole different outlook. I spend lots of time in committee hearings on lots of issues. Plus, you need to draft your own legislation and get it through the system.”

    Marshall had worked on his bill HB137 even before he was elected. After the election, a legislative drafter contacted him to ask what section of the Montana code the bill dealt with. A rough draft was sent back to him for input and adjustments before going through legal and other reviews.

    “Once it was done, I signed the bill, and then it was off to committee assignments. The committee’s job is to look at the intent of the bill. The intent of HB137 is simply to prevent local cities, counties or state bureaucrats from banning a legal product. It defines and categorizes flavors and definitions of alternative nicotine products and vapor products.”

    HB137 then made its way out of committee and on to the floor of the House. When the hearing was held in the House Health and Human Services committee, it was loaded with all the ANTZ (anti-vaping) groups. “It was easier for them to load the hearing with opponents—most of whom were from out of state—because they had to use Zoom during this Covid stuff. We have heard this all before. Nothing new here,” Marshall said.

    Montana’s 100 lawmakers then debated it on the floor. “It was tough, but it made it,” Marshall said. The vote was 62 in favor and 37 opposed. “Some of the opposed injected their own personal beliefs into the vote. That is bad policy. You should not dictate your lifestyle on others.

    “As a representative of the people, it is their—the people you represent—decision. If HB137 makes it through the Senate and to the Governor’s desk, it will make sure that the people of Montana have access to a product they want.

    “It will ensure that small businesses won’t be shut down and closed. Montana will be a vape-friendly state for both consumers and business owners.”

    The original “Vaping Vamp,” Maria Verven owns Verve Communications, a PR and marketing firm specializing in the vapor industry.

  • The Voice of Reason

    The Voice of Reason

    The UKVIA does a commendable job of promoting sensible vapor regulations. Will health authorities listen?

    By George Gay

    In March, I received a press note entitled, “The U.K. Vaping Industry Association [UKVIA] blasts World Health Organization [WHO] and says it risks becoming an ‘enemy of harm reduction.’”

    The UKVIA cannot be described as a militant organization. It has firm ideas, but it prefers to work quietly and closely with the U.K. government, health authorities and anybody else willing to listen to its tale of running businesses that promote tobacco harm reduction while trying to turn a profit. So, the tone of the heading made me sit up.

    What the UKVIA objected to in the first instance was what it described as “[r]ecent recommendations made by the WHO study group on Tobacco Product Regulations that would prohibit electronic nicotine[-delivery] and nonnicotine-delivery systems where the user can control device features and liquid ingredients.”

    On the face of it, I can certainly understand the UKVIA’s concern. Banning such products would be like banning automobiles with accelerator pedals because they could be used to make a vehicle travel at beyond the speed limit or banning glasses because they could be used to mix mind-altering drugs with lemonade.

    It has been said—rightly in my view—that newspapers are organizations that cannot tell the difference between a bicycle accident and a world war. By the same token, it would seem the WHO has become an organization that cannot tell the difference between a pandemic and everyday life—admittedly, life in all its messiness.

    The UKVIA said the WHO had called also for a ban on vaping systems that have a higher “abuse liability” than conventional cigarettes have; systems that, for example, allow the user to control the emission rate of nicotine. In this case, I’m so underwhelmed by the sound of the problem that I can assume only that I have misunderstood what is being said here. Isn’t it the case that nicotine uptake is controlled by the inhaler at a subconscious level?

    In any case, I cannot see what business this is of the WHO. Does it want to micromanage every aspect of the lives of everybody on the planet? Is it going to start looking into the “abuse liability” of high-performance cars, over-proof alcohol and sickly candy bars? Of course, if it wants to make itself useful and if it is happy working at a national rather than a world level, it could end no amount of inflicted harm by helping to do something about the abuse liability and abuse reality of the many and increasing dictatorial regimes around the world.

    Empowered personal choice

    The director general of the UKVIA, John Dunne, believes the WHO poses a threat to smoking cessation and harm reduction in the U.K. “While the WHO is scheduled to hold a crucial summit on vaping in November 2021, known as COP9 [the Conference of the Parties to the WHO Framework Convention on Tobacco Control (FCTC)], it continues to find itself at odds with health and industry advocates,” he was quoted in the press note as saying.

    “Certain WHO positions are now so out of date, and so thoroughly refuted by the experts, that they may as well be saying the earth is flat. They deviate dramatically from leading experts, including Public Health England (PHE) and Action on Smoking and Health …

    John Dunne

    “Take for example vaping helping people to quit smoking, which the WHO says there is ‘little evidence’ of. As early as 2019, clinical trials were finding vaping to be almost twice as effective as nicotine-replacement therapy …

    “Just this month, … PHE … found in its Vaping Evidence Review 2021 that smoking quit rates involving a vaping product were higher than with any other method in every single English region. For the WHO to hold such contrary views is either bad science or bad faith. Both risk it becoming an enemy of harm reduction.”

    Dunne made the point that vaping’s success as an industry, and its potential for public health improvements, were built on empowering personal choice. “Different systems, styles and flavors give consumers the options they need to leave combustible cigarettes behind,” he said. “I would urge the WHO to engage with vapers, to hear their stories and discover the life-changing decisions they’ve made… Prohibition is simply not the answer.”

    The press note also said that the U.K. was due to send a delegation to the COP9 summit later this year, the first time it would be attending such a summit since leaving the EU, and it was to be hoped that this would provide an opportunity for it to promote harm-reduction. In addition, it said the UKVIA had been among expert guests invited by the All-Party Parliamentary Group for Vaping to advise on the COP9 delegation’s approach.

    “The U.K. has a genuine opportunity to promote harm reduction as a valid, progressive strategy for public health on the world stage,” said Dunne. “We must not allow misinformation to undermine this potential, irrespective of the source.”

    It is indeed to be hoped that the U.K. delegation to COP9 can bring a little reason to the table, assuming it gets to the table. From what we of the outer dark can ascertain, however, the FCTC does not brook dissent and, as part of its strategy to avoid it, tends to block the attendance at meetings of those not of the true faith. It will be interesting to observe what it will make of a delegation that has been in direct or indirect contact with a vaping body, assuming the delegation does not cave in and join the happy-clappies.

    Return to sender

    Meanwhile, the UKVIA has a further problem. In another press note in March, it said it was deeply concerned by news that U.K. businesses were being impacted by the U.S.’ “vape mail” ban, part of a congressional spending bill passed under former President Trump. By April 27 [after this report was written], leading carriers, such as UPS, FedEx, DHL and the U.S. Postal Service, were due to be off-limits for vaping shipments.

    FedEx had cited “cigarettes, cigars, loose tobacco, smokeless tobacco, hookah or shisha, vaporizers (and) e-cigarettes” as “tobacco products,” which would no longer be accepted. The UPS said it would prohibit “any and all noncombustible liquid or gel, regardless of the presence of nicotine, capable of being used with or for the consumption of nicotine” as well as “all related vape devices, products and accessories …”

    Again, we find ourselves in a bizarre world. I take it these bans are somebody’s idea of a health and safety policy, but, with more “premature deaths” worldwide attributed to outdoor pollution than to tobacco consumption, logically, the carriers should ban deliveries of everything—they should remove themselves from the roads, the air and the sea. Or there should at least be an acceptance that both tobacco smoke and vehicle pollution are health hazards and that whereas carriers might be trying to lessen the pollution they create by switching to cleaner vehicles, craft and vessels, the tobacco industry is trying to lessen the amount of tobacco smoke by getting consumers to switch to vaping, a task not made any easier by carrier bans. Of course, there is little the carriers can do to reverse this nonsense, but they could at least have a word with any politician ready to listen.

    “The vaping supply chain is a global one, bringing together resources and expertise from around the world,” said Dunne. “It is bitterly disappointing to see these American restrictions having a negative impact in the U.K., but the nature of the supply chain makes it inevitable. In the EU, too, we are hearing of vaping businesses being turned away from major carriers.

    “The potential impact on public health is grave as so many people are relying on shipped goods as a lifeline during the pandemic. Without proper access to harm reduction products, we know people can revert to smoking cigarettes, today in the U.S. but perhaps tomorrow in the U.K. With businesses already struggling through lockdown, and our health services under great strain, supply chain issues really are the last thing we need.

    “I call on the distribution industry, many of whom have been partners of the vaping industry for many years, to do all they can to support their U.K. customers and to avoid the blanket implementation of U.S. restrictions worldwide.

    “Furthermore, I call on the U.K. government to ensure that carriers in this country are free to continue to deliver vaping products to retailers and direct to consumers and to resist any urge to follow the U.S. down this regressive route.”

    I take it that the “vape mail” ban is largely about keeping vaping products out of the hands of young people. It’s a strange thing that the activities of adults, which have always been restricted by the need to guard against criminal activities, are now increasingly becoming restricted by perceived threats to young people—often inappropriately referred to as “children” when it becomes necessary to ramp up the emotional blackmail.

    Credit: Haiberliu

    Such restrictive measures would be acceptable in my view if they were applied across the board, but they are not. Young people are seen by many people in authority as having to be protected against the minuscule threat posed by vaping products while many youngsters are allowed to go hungry, threatening their development and negatively affecting their whole lives.

    It would seem that young people are granted protections when those protections do not inconvenience the majority of voters. See how far you would get trying to introduce a 20-mph speed limit in cities so as to cut the number of deaths and injuries suffered by young people in collisions with cars.

    The Conservative Party, which has been in government in the U.K. for more than 10 years, has a poor record on child poverty, which has shot up under its governance, and on child hunger, in the face of which it twice provided relief for the neediest children during lockdowns only after being shamed into doing so by a campaigning footballer.

    But, on the other hand, it has had a good record in respect of supporting the tobacco harm reduction potential of vaping, and the UKVIA is hoping the situation in the U.K. can be improved further following the country’s exit from the EU.

    On March 15, the UKVIA launched its Blueprint for Better Regulation in response to the U.K. government’s consultation on the Tobacco and Related Products Regulations (TRPR) (and the Standardized Packaging of Tobacco Products Regulations), in which it was seeking until March 19 feedback on the effectiveness of the legislation in achieving its objectives and any unintended consequences that may have occurred.

    In a foreword to the blueprint, Dunne said the review of the regulations represented a defining moment in the history of the vaping industry, one of the leading market disruptors in the 21st century responsible for a significant decline in smoking across the U.K. It also presented the biggest opportunity yet for the government to create fair and proportionate vaping regulation that supported its 2030 smoke-free target and ensured the sector could make a bigger contribution to the nation’s public health and economy in the future.

    To achieve such a goal, the UKVIA needs the help of the government to counter the misinformation currently providing an increasingly powerful drag on efforts to encourage people to switch from smoking to vaping. It needs the government’s help in mounting promotional campaigns aimed at such switching, and its permission to mount its own agreed consumer communication campaigns, including with those buying online. And it needs the freedom in which its members can develop vaping products capable of competing with conventional cigarettes on a nicotine-satisfaction basis.

    There is, of course, much more in the UKVIA’s blueprint. No such presentation would be complete without a discussion of the important role flavors play in encouraging people to switch. The blueprint looks at packaging and labeling, descriptors and product quality and safety. It supports age restrictions on the purchase of vaping products and the need to work with trading standards officers in ensuring such restrictions are enforced. And it wants the government to act in relation to vaping in public places.

    What are the chances? Well, Dunne appears to be confident, and, as is mentioned above, the government has in the past been supportive of the tobacco harm reduction argument made in respect of vaping; so it could be willing to work with at least some the UKVIA’s ideas, perhaps all of them. But caution must be advised.

    Two skills the U.K. government is known for are its shape-shifting and U-turns. And one concern must be the government’s likely reaction if it found that conversions to vaping picked up so fast that tax revenues from tobacco fell dramatically. It’s addicted to such revenue, especially since the promised Brexit dividend, not even mentioned in March’s budget, seems to have melted away.

  • Great Expectations

    Great Expectations

    Priscilla Agoncillo, president of the Cannabinoid Industry Association, says the CBD market is poised for massive growth.

    The cannabidiol (CBD) market is growing rapidly. The market is also preparing for industry regulations from the U.S. Food and Drug Administration as well as the possibility of changing rules under a new hemp bill winding its way through the U.S. Congress. Speaking during an online forum presented by TMG, a tobacco media group, Priscilla Agoncillo, president of the Cannabinoid Industry Association (CBDIA), outlined the current state of the CBD industry and what manufacturers, retailers and consumers can expect through 2021.

    Estimates by New Frontier Data say the CBD market will increase from $390 million in 2018 to $1.3 billion in 2022. Additional research by BDS Analytics and ArcView Market Research suggests that CBD sales will reach more than $20 billion in 2024. CBD already comes in numerous forms, such as oils, tinctures, capsules, edibles, even topicals and cosmetics. CBD products also are expected to expand into infused beverages, suppositories, sprays, inhalers and a wide variety of hemp smokable products, according to Agoncillo. There will also be a significant increase in cosmetics and supplements that contain CBD as well as more novel drugs introduced as companies expand research and development efforts.

    “In distribution channels, despite strict rules and regulations, the number of dispensaries and authorized retail storefronts that sell cannabis-based products to consumers will be opening due to new regions and states legalizing (marijuana) to meet the demand of consumers,” Agoncillo said. “Additionally, with the increase of product types, more big-box retailers will be stocking more CBD products and fostering relationships with CBD companies in research and development.”

    Agoncillo expects the popularity of CBD products to continue to grow as the scientific evidence of CBD’s benefits comes to light. The research and findings will also boost efforts by companies looking to introduce new products and develop new uses for various types on cannabinoids, which will increase integration with new technology and delivery systems. There are currently an estimated 104 cannabinoids in the cannabis plant.

    Looking at the top CBD trends in 2021, Agoncillo says that niche market efforts will become larger and more formalized as brands continue to seek out less crowded consumer segments. This will further diversify and differentiate each brand and allow for businesses to achieve higher returns on investments (ROIs) on exploratory segmented marketing efforts.

    “Brands will move toward proven consumer packaged goods (CPG) models focused on brand family extensions, including the marriage of complementary products and product iterations. Companies will work towards developing diversified portfolios and specific consumer segmentation,” she said.” You will see brands that will follow the Procter & Gamble family of brands business model or create line extensions of existing brands.”

    Priscilla Agoncillo

    Moving forward, Agoncillo says that the success of the CBD market will be predicated on understanding consumer market entry and adoption trends. According to High Yield Insights, CBD gummies are the entry point for most new consumers (at a rate of 60 percent) before trying other types of CBD products. Another growing entry point is CBD-infused beverages. A recent CBD beverage study released by High Yield Insights and Innovate MR revealed just how much legroom there is in the CBD beverage segment, according to Agoncillo. Among 4,200 survey respondents, only 28 percent report finding “a CBD product brand or format that works for them,” according to the research.

    “We project exponential growth in this segment [along with increased] diversity and inclusivity. Asian, Black and Hispanic consumer marketing efforts will support cultural competence, particularly among the nation’s largest brands,” said Agoncillo, citing her organization’s market expectations. “We expect to see more focus on niche marketing as consumer brand loyalty shifts toward the brands that consumers believe, respect and understand. More brands will concentrate on the growth opportunities within the Asian, Black and Hispanic consumer market, which have remained relatively untapped by CBD companies. One of the first signals of brand dominance in this segment market is the introduction of unique campaigns, specifically built to appeal to Black and Hispanic consumers, as well as Spanish-language advertising, packaging and support.”

    Exploding anxiety rates and associated mental health issues, especially surrounding the Covid-19 pandemic, will also provide hemp and CBD brands with new opportunities to promote the efficacy of CBD. Agoncillo says her organization is seeing increased focus on this niche market, which can be tricky to navigate due to advertising restrictions.

    “Brands are finding value in workarounds that allow them to leap over ad restrictions via targeted keyword searches; 25 percent of new market entrants purchased CBD to cope with pandemic-related stress and anxiety,” she said. According to High Yield Insights, more than 83 percent of U.S. employees reported mental health issues during 2021, and over 67 percent of U.S. employers project another mental health crisis within the next two years.

    “We project heightened partnership and growth opportunities in CBD products focused on stress, anxiety and sleep. Staying ahead in CBD as a highly regulated, newly developing industry, it is important that you obtain legal counsel to assist in the understanding of changes in regulations as well as to help you keep up with the constantly changing atmosphere,” explained Agoncillo. “Keep your company in compliance with regulations, always. As many of the regulations have not been finalized to cover the entirety of the CBD industry, it is safer to always err on the side of caution by operating your company according to GMP and other top-tiered standards.”

    New regulations for the CBD industry are also on the horizon. Draft rules from the FDA are currently with the White House’s Office of Management and Budget; however, review of those rules is currently being postponed by the Biden administration. Agoncillo says that no one in the industry knows exactly what those rules entail.

    “It’s very interesting because I remember when that report came out; it was back in October 2020, and the media would contact us and ask for our opinions on what that report was and what the regulations are. The truth is that they didn’t release it to anyone,” she says. “Through the CBDIA, we have a lobbyist in Washington that’s dialed in and has his finger on the pulse of everything that’s happening. And they haven’t shown what those regulations are to anyone. However, we do know that it is suggested that things are moving towards GMP standards. In the U.K., they’ve adopted the novel foods application for their CBD products. They’ve moved full steam ahead there. So there’s a suggestion that it might follow that closely. But obviously, we don’t know until they actually come out. This is why it’s really important to be involved with different industry associations and different organizations because they are going to be the first to get the word of how it’s going to actually roll out.”

    Another legislative change is brewing in the U.S. Congress. On Feb. 4, 2021, Congress introduced another CBD deregulation bill, H.R. 841—the Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2021. If passed, the bill would legalize the marketing of hemp, CBD or any other ingredient derived from hemp in a dietary supplement, provided the supplement satisfies other applicable requirements. The bill is in committee as of this writing.

    Agoncillo says another important part of the success of a CBD business is participating and supporting the community. She says that owners can help their company succeed by joining and being active in relevant cannabinoid-related industry associations, attending and being present at key conferences and crafting business outreach accordingly. Owners also need to hire the right staff to help them grow.

    “Keep your CBD company ahead by staying on top of the latest medical research and/or participating in the R&D to further advance the science of CBD and the industry as a whole. Hire talent with five-plus years in the cannabis or hemp industry to help navigate through the development of the CBD segment of your business model,” she says. “You will need a seasoned insider that understands the culture and can effectively translate that to your company.”

    Experienced staff can help guide business owners through the smoke and mirrors to avoid pitfalls, harmful partnerships and assist in forming a proper strategy for a business model. Additionally, experienced talent will have key relationships and resources in place to assist in executing business endeavors, according to Agoncillo.

    “We need high-operating brands and companies out there to apply their talents and their products and their technologies into the CBD space. The consumers need it,” she says. “We want it. And there’s no better time to really sink your teeth into this industry. And it’s very exciting because we can form this industry into what we need it to be.”

  • Consumer’s Choice

    Consumer’s Choice

    INNCO works with consumer advocacy groups to promote tobacco harm reduction around the globe.

    By Timothy S. Donahue

    Most of the world’s cigarettes are consumed in low-income to middle-income countries (LMICs). From Armenia to Zambia, these countries can also have high rates of adolescent smoking, particularly among males. Rates in some countries can reach as high as 46 percent, according to the U.S. National Institutes of Health. Research suggests that 80 percent of the world’s combustible cigarette users are in LMICs.

    While numerous studies have shown otherwise, the World Health Organization (WHO) has long insisted that less risky nicotine products, including vapor products and e-cigarettes, are as harmful and dangerous as combustible tobacco products and should be banned or heavily regulated. The International Union Against Tuberculosis and Lung Disease (The Union), a Bloomberg partner for The Initiative to Reduce Tobacco Use, published its fourth position statement on e-cigarettes last year. It called for a blanket ban on all electronic nicotine-delivery systems (ENDS) and heated-tobacco products (HTPs) in all LMICs. These organizations, typically through groups funded by Michael Bloomberg, the billionaire anti-smoking advocate, will often donate millions of dollars to poor or struggling countries if governments agree to ban or heavily restrict access to less risky products.

    As a result of policies based on false information from organizations such as The Union and the WHO, nicotine consumers in LMICs often have no delivery system available other than combustible products. Experts say that the lure of massive amounts of funding is just too great for such countries to resist.

    The International Network of Nicotine Consumer Organisations (INNCO), a global advocate for sensible tobacco harm reduction (THR), states in a recent position paper that bans on ENDS are overly simple solutions that make the problems that come with combustible cigarette use worse. It also states that reduction and substitution are valid goals for smokers in LMICs as replacing combustible tobacco with alternative nicotine products can reduce risk of harm by at least 95 percent.

    “The hundreds of millions of people who smoke in these countries should have the ability to make decisions about safer nicotine products, particularly when their own health is on the line,” said Samrat Chowdhery, president of INNCO’s governing board. “Overly simplistic policy solutions, such as proposed bans on all ENDS and THR products by the Bloomberg Philanthropies-funded The Union, are being offered as a blunt and impractical tool for a situation that requires pragmatism and nuance.”

    The need for INNCO

    INNCO was founded in 2016 to build cooperation between the growing number of global associations that advocate for THR. An organization can join INNCO if they are nonprofit, consumer-controlled and focused on tobacco harm reduction. The organization has 40 members in 35 countries, including the U.S.-based Consumer Advocates for Smoke-free Alternatives Association, a well-established advocacy group that raises awareness and protects the rights of consumers to access reduced harm products. INNCO also has members from Canada, Denmark and Greece to the Philippines, Brazil and Kenya.

    The organization continues to grow. “We are enlisting new members in several countries,” Chowdhery told Vapor Voice after the release of the position paper in March. “We are helping consumers form organizations where there are none. Africa came on board, where we have four, five members from that region this year, and since 80 percent of smokers do live in LMICs, it’s an additional focus that we have developed. It is something that, with this paper, we want to really say, ‘OK. We want to participate in discussions on these issues in LMICs.’”

    Samrat Chowdhery

    When The Union released its position paper calling for outright bans, Chowdhery says the recommendations were discriminatory. It was centered on the idea that if LMICs would not be able to enforce regulations, the only other option was a total ban on reduced-risk products.

    “They were not very mindful of the situation where if you could not regulate, it’s likely that you will also not be able to enforce a ban either. We know this because it’s what has happened in Mexico, Brazil and Thailand, where there have been bans, but products are very easily available,” explains Chowdhery. “If they would have instead implemented some sort of a regulatory control, you could ensure that there are product standards, they’re not sold to minors … but only having them available on the black market, those controls are not there, and you end up increasing the level of population harms to health.”

    Typically, when organizations like the WHO or United Nations develop policy, the organizations involve the industry stakeholders. After all, these are the people and businesses that the policies impact, says Chowdhery. Tobacco is the only industry that consumers and stakeholders do not have a say in policymaking.

    “The media should be taking this up. There is some trickery here,” he says. “The way the debate has been developed and the way Article 5.3 is getting misused all the time—it is a tough fight, but we’re up for it … we have our lives in the balance.” Article 5.3 of the WHO Framework Convention on Tobacco Control (FCTC) states that when setting and implementing their public health policies with respect to tobacco control, “Parties shall act to protect these policies from commercial and other vested interests” of the tobacco industry. Many anti-tobacco organizations have interpreted this as a ban on all interactions with the industry.

    Words of reason

    In the paper, INNCO claims that blanket bans on vaping and HTPs are a detriment to LMICs. The report, “10 Reasons Why Blanket Bans of E-Cigarettes and HTPs in low-[income] and middle-income Countries (LMICs) Are Not Fit for Purpose,” warns policymakers that limiting nicotine consumption options to reduce harm will only increase the number of people smoking combustible tobacco. The paper lists the following reasons:

    • Bans are an overly simplistic solution to a complex issue and will not work.
    • Prioritizing the banning of reduced harm alternatives over cigarettes is illogical.
    • Reduction and substitution are valid goals for smokers in LMICs.
    • People who smoke have the right to choose to reduce their own risk of harm.
    • Reduced harm alternatives can significantly contribute to the aims of global tobacco control.
    • Lack of research in LMICs is not a valid reason to ban reduced harm alternatives.
    • The prohibitionist approach in LMICs is outdated, unrealistic and condescending.
    • Bans will lead to illicit markets with increases in crime and no tax revenue.
    • Banning reduced harm alternatives leads people back to smoking and greater harm.
    • Blanket bans in LMICs are a form of “philanthropic colonialism.”

    INNCO says many LMICs risk an increase in smokers as a result of their policies. Leveraging the paper’s findings, INNCO states that it will work with its global membership to inform policymakers in developing nations to help achieve risk-relative regulations and access to THR products

    “Africa is home to some of the highest-ranked smoker countries on the planet,” said Joseph Magero, chairman of the Campaign for Safer Alternatives, a pan-African nongovernmental member organization dedicated to achieving 100 percent smoke-free environments in Africa. “While improving overall public health has made great strides in these regions, efforts to directly address smoking cessation and harm reduction strategies have lagged due to limited or no access to safer, noncombusti[ble] nicotine products. By denying smokers access to much safer alternatives while leaving cigarettes on the market, policymakers would leave only two options on the table—quit or die.”

    Nancy Loucas of the Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA), a grassroots alliance of THR advocacy organizations and an INNCO member, said a blanket ban in LMICs is a form of philanthropic colonialism, suggesting that these countries and their citizens cannot be trusted with any level of self-determination. “Inhabitants are treated as second-class citizens, which is offensive,” she said. “There is no benefit in limiting choice of safer nicotine products but only the potential for increasing harm.”

    Samsul Arrifin, president of the Malaysian Organisation of Vape Entities (MOVE) and an INCCO member, concurred with the INNCO assessment, saying that “any move to deprive smokers and consumers of better alternatives to cigarettes, such as vapes, would only contribute [to] the problem that [it] seeks to address.”

    Francisco Ordonez of the Asociacion por la Reduccion de danos del Tabaquismo Iberoamerica, a network of consumer organizations in Latin America and an INNCO member, says that few LMICs have adopted even the most basic prevention measures suggested by the WHO. “Policymakers should embrace harm reduction as a valid goal, particularly in LMICs where access to cessation programs is extremely limited,” said Ordonez. “Replacing combustible tobacco with alternative nicotine products can significantly reduce the risk of harm by at least 95 percent. It works in industrialized nations and can do the same in LMICs.”

    The Bloomberg conundrum

    Much of the ire of the THR community is reserved for Bloomberg Philanthropies (BP). In September 2019, Bloomberg and Matthew Myers, president of the nonprofit Campaign for Tobacco-Free Kids, launched a $160 million three-year campaign to end what they described as an epidemic of e-cigarette use among kids. The campaign is supported by several large nonprofits, like the Truth Initiative, American Cancer Society, American Heart Association and American Lung Association. Together, the organizations are pushing for a national ban on flavored ENDS products in the U.S.

    Chowdhery says that Bloomberg is using philanthropy in an unprecedented manner. “I’ve not seen anyone do this. This is so insidious. You have Bloomberg-funded attack groups,” says Chowdhery. “They were anti-smoking for a long time until these new [reduced-risk] products came on the market. Then they expanded their focus to become anti-nicotine … they are becoming more and more radicalized, proposing more and more extreme ideas as we go along. You have groups that their only stopping-tobacco tactic is just attacking people. That’s their job. That’s all they do.”

    Bloomberg, both as an individual and through his foundation, has committed nearly $1 billion to combating tobacco use worldwide, most of it focused on LMICs, according to BP. “These policies are what we call philanthropic colonialism because they’re just pushing an idea they have, an idea a New York billionaire has, on countries, which may not be suited for this,” explains Chowdhery. “He’s not proposing those policies [total bans] in the U.S.”

    Chowdhery says Bloomberg and his charities spread lies and disinformation without any regard for the negative impact on public health. During an appearance on CBS News, Bloomberg suggested vaping lowers IQ, even though there is no evidence about a relationship between nicotine use and intelligence.

    Chowdhery hopes the INNCO position paper will be read by the policymakers working with Bloomberg. “That was the main objective of the paper: to reach out to policymakers, reach out to media and professionals and let them know … what is being proposed has another side to it,” said Chowdhery. “See, this is a David and Goliath problem. What they have are well-funded organizations to push this narrative. And what they also have is credibility because a lot of this is coming from [well-known nonprofit groups]. Even if they publish a paper with lots of misinformation and have a disclaimer: ‘We received a million dollars from Bloomberg but that did not influence our work.’ That is a big problem.”

    The push forward

    The pandemic hit INNCO hard. Chowdhery, a former journalist, founder of the Council for Harm Reduced Alternatives and the director of the Association of Vapers India, was approached to head INNCO in July 2020. He said the organization had a lot of plans for the year, including regional meetings and setting up networks, projects that required a lot of on-ground activities. Then everything needed to be scaled back. The year 2020 became about recalibrating INNCO’s efforts. “The year was full of uncertainty and adapting and doing things differently. We did a lot of online meetings and a lot of internal objectives online,” said Chowdhery. “We enrolled more members. When we put out a call for a CEO, we got 400 resumes.”

    Chowdhery says that the main goal for INNCO now is to have a say in policymaking and be recognized as a legitimate stakeholder in this tobacco control intervention. It won’t be easy. Already, groups funded by Bloomberg are trying to discredit INNCO. “Our strength is our membership base. They are organizations that might be poor but [are] passionate, and they are volunteering their time and effort[s]. That is the real strength, and we need to leverage that and get everyone on the same platform so that we speak with common messaging,” says Chowdhery. “This is the first year that we actually have a budget to do our work. Unfortunately, we’ve not started because of Covid-19. We’re getting a new CEO, who should be with us soon. Things are looking really good.”

    In a recent essay in the journal Science, “Evidence, Alarm and the Debate Over E-Cigarettes,” five experts in public health state that it is a mistake to restrict access to vaping products while leaving deadly cigarettes on the market. The authors include Cheryl Healton, the former chief executive of the Truth Initiative, who is dean of the New York University school of public health, as well as the deans of the schools of public health at Ohio State and Emory universities. The essay concludes: “Careful analysis of all the data in context indicates that the net benefits of vaped nicotine products outweigh the feared harm to youth.”

    Chowdhery says that 15 years ago, there were no groups championing tobacco consumer rights. It’s now, when safer means of consuming nicotine are available, that consumers want to have access to them. “We consider that a right. This campaign of misinformation and regulatory overreach is a disaster waiting to happen,” says Chowdhery. “People in tobacco control, they’re earning paychecks to develop a policy which they then get passed through Parliament somewhere and they believe their work is done and they go home. The problem is, did legislation stop the use of that product that day? No, it just went underground. It became riskier. Now, it’s costing people their lives.”

  • The Blinc Reflex

    The Blinc Reflex

    Cannabis vaping needed a full-service hardware manufacturer with products designed for CBD and THC oils.

    By Timothy S. Donahue

    When the cannabis industry began to take off in the U.S., vaping became a popular way to consume cannabinoids. However, many of the devices used to vape nicotine products did not work as well with the more viscous cannabinoid oils, especially THC and cannabidiol (CBD). There was a massive need for high quality vaping products that were specific to the fast-growing cannabis industry.

    The Blinc Group started in 2017 to provide industry-specific vaping hardware to cannabis companies in Canada, the U.S. and Europe, according to co-founder and CEO Arnaud Dumas de Rauly. The company offers off-the-shelf products that can be fully customized and creates bespoke products. Dumas de Rauly says Blinc Group isn’t a cannabis company; it’s a technology company that serves the cannabis industry. Blinc Group provides every level of service from product design and customization to compliance testing, manufacturing, shipping and logistics.

    When the legal cannabis industry began to grow and more states legalized marijuana in some form, it wanted to separate itself from the nicotine vaping industry. There was little crossover between products. To Dumas de Rauly, who honed his skills in nicotine vaping hardware, it was baffling that no one was applying the knowledge gained in nicotine vaping to cannabinoids. He says that the cannabis industry today is in the same situation the nicotine vaping industry was in two or three years ago.

    Arnaud Dumas de Rauly
    Arnaud Dumas de Rauly / Credit: The Blinc Group

    “It’s becoming more accepted by regulators, by the general public. However, I can see the cannabis industry making some of the same mistakes that nicotine vaping had made … such as marketing to kids. That is going to bite our industry in the ass over the next couple of years, especially when all of this becomes federally legal,” said Dumas de Rauly. “We’re going to be really frowned upon if we are using cartoons on our packaging, if we don’t use proper standards.”

    In regulatory matters, the cannabis industry was trying to reinvent the wheel. Instead of using manufacturing standards and regulation that had been developed in electronic nicotine-delivery systems (ENDS), the cannabis industry wanted to create its own standards. When the industry started developing its own way of analyzing product emissions, Dumas de Rauly said he had had enough.

    “We already have these standards in nicotine vaping. We can already use that basis and then just add some components we’ll be testing for that are specific to the terpenes that are specific to more viscous extracts, that are specific to cannabinoids. We already have a base,” he explains. “Radioactive components, for example. It’s something that seems logical. It’s in the nicotine vaping standards. We’ve got to make sure that there are no radioactive materials in there. That’s very easy. You just translate over to cannabis. Why the heck won’t we do it? Testing for aldehydes, heavy metals is stuff we’ve already been doing in nicotine vaping for years.”

    Be on the Blinc

    The same couldn’t be said for the hardware. While standards and regulation could be carried over from the nicotine vaping industry, hardware needed to be specific to cannabis. Eric Newman, director of sales for Blinc Group, says the THC industry in the beginning used hardware designed for nicotine but soon shifted to specific cannabis vaping products. Newman said to get the cannabis industry comfortable developing its own hardware was an educational experience.

    Credit: The Blinc Group

    “Different clouds work well with different types of products. Customer experience is something that we take seriously. For us, it was coming from a product perspective and a knowledge and educational perspective as well. We needed to teach the end user that one device or one product is better than the other and why they should use one product over another.”

    Newman says that more companies are moving toward open systems and that is expected to continue moving forward. He said that Blinc Group is dedicated to passing along its knowledge across all stakeholders and getting more people talking about best practices and standard operating procedures [SOPs]. “I think it’s education first then proving that what you’re educating actually works,” says Newman. “Then you open up the network to the masses.”

    A good example of a hardware change to accommodate cannabis products is the move away from poly-type or plastic cartridges, according to Newman. He says Blinc Group now uses strictly glass cartridges.

    “The whole market hasn’t switched to that model, and we’re pushing the market into, from a quality and safety perspective, going to all-glass type cartridges,” he says. “The next step to that process is actually happening already. We’re making full ceramic cartridges, making full glass cartridges. Except for the inner components that still have to have some metal and ceramic cores—but it’s happening in front of us where we’re seeing those type of products. Unfortunately, Blinc Group hasn’t found any that fit our model, but there’s certainly a revolution happening already, and I think Blinc Group’s ahead of the curve on it.”

    Dumas de Rauly attributes much of the Blinc Group’s success to the emphasis it placed on safety and compliance throughout the EVALI crisis of 2019 and the Covid-19 pandemic. Even outside investors are starting to notice. In early January, Blinc Group successfully raised $1.5 million in bridge funding.

    “Our team navigated 2019’s vape crisis helping set standards and advise regulators on testing and compliance, and last year, the company saw our best quarter yet amid the Covid-19 pandemic as the industry learned the benefits of safety and traceability,” said Dumas de Rauly. “We have shown that we are a resilient company that puts consumers first, which has made all the difference.”

    In just over a year, Dumas de Rauly and his two partners managed to turn their company into a business generating approximately $1 million in revenue, adding an additional five team members in the process. By 2019, the company was grossing over $4 million in revenue and had 15 employees. In 2020, Blinc Group more than tripled its orders with more than 330 percent year-over-year growth.

    The technology company seemed to have a knack for expanding in an increasingly difficult regulatory landscape. “I don’t have the exact numbers yet, but I know in terms of sales orders, we hit $14.2 million in 2020,” said Dumas de Rauly. “We have increased our team to 21 members, and we are really excited about our future in this unique and exciting industry.”

    Blinc of an eye

    The Blinc Group specializes in standards and quality. The company was created to help the cannabis industry comply with Canada’s robust regulatory requirements through the highest quality testing and supply chain standards. Canada legalized recreational marijuana in 2017.

    Dumas de Rauly and his two Blinc Group co-founders, Givi Topchishvili and Alexander “Sasha” Aksenov, who also serves as chief innovation officer, had the collective experience needed to change nearly every aspect of how the cannabis industry was operating, from standards and other regulatory needs to lobbying, manufacturing and even sales. Topchishvili is an entrepreneur, investor and author with 30 years of market entry experience in Europe, Asia and the U.S. Aksenov has been in the cannabis vaping industry for more than seven years. He has created several ventures ranging from branding studios, record labels and media management companies to marketing agencies.

    Dumas de Rauly is the scientist. He currently chairs the ISO (International) Standards Committee TC126/SC3 on Vaping Products and the CEN (European) Standards Committee TC437 on Vapor Products. He is also a member of the informal Marijuana Science and Policy Work Group managed by the Colorado Department of Revenue’s Marijuana Enforcement Division and Colorado Department of Public Health and Environment. Dumas de Rauly is also the former president of FIVAPE, the French vaping trade federation, and now serves as the organization’s secretary-general for international relations.

    “As chairman of ISO standards on vaping products, I was getting a lot of friends that were coming up to me and asking me what I thought of their vaping products. And when I looked at them, I quickly saw that the products they were using were not adapted to the format of the [cannabis] extract, which is very, very viscous, oily, in some cases, really like molasses,” explains Dumas de Rauly. “I got concerned about the safety issues, started looking into it and … my partners and I decided to create the Blinc Group to bring the wealth of experience we had in nicotine vaping over to the cannabis industry.”

    What sets Blinc Group apart from other cannabis industry hardware manufacturers is its involvement in every aspect of the process, from design to sales—what Dumas de Rauly calls “enterprise solutions” or consultative sales. The company doesn’t do sales on a traditional transactional basis. Every Blinc team member gets involved. “We can move along the entire vaping value chain. We have done product formulations for clients; we go through automation with filling and capping SOPs all the way down to point of sale and training,” says Dumas de Rauly. “We train our clients’ salespeople on specific hardware. We really insert ourselves throughout the entire value chain of vaping products in cannabis.”

    Eric Newman

    The Blinc Group may be the only cannabis industry vaping hardware manufacturer that controls its entire supply chain. This is important because when a manufacturer orders from a factory in Shenzhen, China, where most vapor hardware is produced, that company has no clue where the raw material is sourced. The factory knows but not the client. Blinc Group sources the raw material suppliers. It then tells the subcontracted factory that those factories need to use the Blinc-sourced suppliers.

    “We have an entire audit trail of every single material that comes into the device. That is one very important [differentiator] and one of our biggest differentiators. It also allows us more resiliency and redundancy within our supply chain because we’re not buying just from one factory,” Dumas de Rauly says. “We have four different manufacturers we work with—or assemblers, as we call them because they don’t really manufacture. They assemble products. And when one of them is not available, we can have the same product manufactured by another one because we own all of that supply chain.”

    Blinc and you’ll miss it

    There is one fundamental reason for controlling the supply chain: safety. Alongside innovation, quality and integrity, Dumas de Rauly says safety is part of Blinc Group’s foundation. It’s the company’s main focus in advocacy as well. For example, recently, the company worked with the U.S. state of Colorado to implement emissions testing in vapor products.

    “[Colorado is] the first state in the U.S. that is requiring emissions testing, but that just goes to show that we’re even willing to put barriers in front of our business to make sure the consumer is safe. We have pioneered the use of medical-grade stainless steel in the products instead of using the regular H59 material to avoid any leaching of lead,” Dumas de Rauly explains. “We push our analysis and the control of the supply chain specifically for these reasons. Another example: In a typical 510-threaded cartridge, you have all of the materials that come into contact with the oil inside. Each one of those materials is sent off from each supplier—and we have four suppliers for each material—to undergo testing in an international lab. And given what we find, we adjust that material to make sure that individually, every single piece one of our cartridges will not leach, for example, heavy metals.”

    Blinc Group has a large presence in Canada specifically because of the company’s compliance and regulatory stance, according to Dumas de Rauly. He expects the U.S. to adopt a similar type of regulatory framework soon. “People have already started understanding the need for regulations since the EVALI vaping crisis,” he said. “I’m very confident that this year, we’re going to be focusing a lot of our attention on the U.S. market and growing our U.S. presence.”

    After Canada legalized recreational marijuana, the country passed the Cannabis Act. It includes some of the most stringent rules for cannabis on compliance and regulation in the world. Batteries, for example, need to be UL 8139 certified. In the U.S., it’s only a recommendation. The certification costs a little more, and the UL process could take anywhere from three-month to six-months, says Dumas de Rauly, but it’s necessary to protect the end user.

    “We were the only ones attacking that market with UL-certified products in terms of batteries. We were the only one attacking that market with FDA, CFR21 or CPG21 certifications for our raw material. That was our edge, and that’s why we made such a big impact in Canada in 2020,” says Dumas de Rauly. “As regulation is becoming a little more stringent in the U.S. and after the EVALI scare, those consumers are starting to understand that they need to be paying attention to what’s in the vaping hardware.”

    Blinc Group virtual meeting

    As EVALI soared in the U.S., many believed the vaping industry was dead and the disposable option was a fad. Dumas de Rauly says that, in reality, cannabis accounts for more than 30 percent of the market in some states. Some states with legal medical marijuana allow only the sale of THC vaporizers. This is because contents and strength can be easily regulated in a vaping product. The same is not true for cannabis flower products. He sees the industry growing even more rapidly in the U.S., especially if marijuana is legalized on a federal level.

    “The road is going to be bumpy. There is going to be more regulation. We are pushing for more regulation because we want to make sure that our business is sustainable over the next five to 10 years,” he says. “We don’t want to see what happened to nicotine vaping happen to cannabis vaping. We’re really pushing for good stewardship for the industry. We are thought leaders in the space, and we want to be at the forefront of education and making sure that consumers get safe products.”

    As the legal cannabis market grows in the U.S., Dumas de Rauly says that the Blinc Group will be growing and continuing to grab more market share as well. He says that the Blinc process is highly developed. It runs like a well-oiled machine. “We have a very strong team,” says Dumas de Rauly. “We have a strong presence. Our processes are well refined. I believe we’re going to be doing very, very good this year.”