Category: Uncategorized

  • Meaningful results

    How to get the most out of e-liquid lab testing

    By John H. Lauterbach

    It seems popular these days for suppliers of e-liquids to send their products to various testing laboratories for analysis. E-liquid suppliers appear to believe that having a laboratory determine the concentrations of diacetyl (often abbreviated “DA” and also known as 2,3-butanedione) and acetylpropionyl (often abbreviated “AP” and also known as 2,3-pentanedione) and sometimes acetoin (also known as 3-hydroxy-2-butanone) in their e-liquids is the right thing to do, especially if they publish the results on their websites.

    What does it mean if one or more of these compounds are found or if their levels are so low that they are below the detection limits of the method used by the laboratory? Does it mean the e-liquid has more or less toxicity than the usual unflavored e-liquid consisting of glycerol (VG) and/or propylene glycol (PG) and nicotine, if used? Quite frankly, it depends on a number of factors, the most important of which is toxicity of the aerosol under the conditions it is used, including the e-cigarette device and the behavior of the person who is inhaling the aerosol. Even e-liquids composed of only VG and/or PG can yield the toxicants formaldehyde, acetaldehyde and acrolein under certain conditions (the so-called dry puff) in certain devices.

    However, DA and AP, in particular, as well as some of the other aldehydes used to flavor e-liquids, have become lucrative targets for those who wish to ban or severely regulate e-cigarettes and e-liquids. Consequently, formulators of e-liquids should not use AP or DA or flavors that may decompose to those compounds when the e-liquids are subjected to accelerated aging. Assuring that does not necessarily require testing e-liquids for AP and DA. This report will tell you if, and when, you need to have your flavors and/or products analyzed, and how to get analytical data you can trust and that is business-relevant.

    Discussion

    Those who have directed analytical chemistry laboratories –whether as part of a company that makes products or part of a commercial laborator—know that when clients “throw” samples at a laboratory, they are putting themselves in the same position as a quarterback throwing a forward pass in an American football game. Three things can happen, and only one of them—a completed pass—is good. The laboratory equivalents of incomplete or intercepted passes are all too common, and even the best laboratories get their passes intercepted. Furthermore, unlike a well-trained quarterback who has “read” the defense and knows where to throw the ball (or when to run with it), most who are submitting their e-liquids to laboratories do not have the equivalent knowledge.

    Yes, bad things can happen even in the best laboratories, and unless the client is very knowledgeable about laboratory operations or has hired someone to act as his representative to the laboratories he is using to have his samples analyzed, the business value of the data he receives may be questionable. For data to have business value, you first need to know why you are having the sample analyzed and how you are going to interpret the data. Even if you are having your samples analyzed to comply with a regulatory mandate, you still need to know what the data mean, particularly if regulators can use the data you submit to bar the distribution or sale of your product. Adverse regulatory rulings can hurt your profitability just as an intercepted pass can lose a game. Unless you have the expertise in analytical chemistry and laboratory management equivalent to the skills of an experienced football quarterback, you may wish to have someone help you so your pass is not intercepted on the way to and through the laboratory.

    Do I really need to have my products tested?

    As of this writing, there is no regulatory mandate for the testing of e-liquids and/or e-cigarettes in the United States. Thus, it is your decision whether to have your products tested. This is a business decision, not a scientific one. The cost of testing is a direct cost, and there are indirect costs that will be discussed later. The cost of testing may become a significant part of your expenses. The laboratories you will likely use have highly skilled scientists and technicians who need competitive remuneration for their efforts. They are often using state-of-the-art instrumentation and equipment that is costly to buy and maintain. The laboratories recover these costs and get a return on their investments in people, instrumentation, equipment and facilities through the fees they charge for testing samples. Pricing of laboratory services is generally competitive so you will likely want to solicit quotations from several laboratories. Discounts are often given when sending multiple samples for the same tests at the same time, but at the end of the day, you need to ask, “Will I get business value for the price I am going to pay for having my samples tested?”

    The first question you should ask at this point is, “Do I really need to have the testing done to get me the business-relevant information I need? E-liquid suppliers that are selling to retailers or directly to consumers should know the ingredients and impurities in the products they are selling. Such knowledge is part of basic product stewardship. We should not expect retailers and consumers to be experts on the safety of e-liquids. If a supplier wants to provide e-liquids that contain no detectable DA and AP, then it should insist that the vendors they use for flavors not only certify that their products do not contain DA and AP but also provide a quantitative list of the components in the flavors provided.

    While flavor suppliers may balk at providing a quantitative list of the ingredients in each flavor they provide due to concerns about loss of trade secrets and lack of knowledge on the part of the supplier to understand the information provided, they should not hesitate in certifying that their flavors are free of both DA and AP, and providing experimental data to support that certification if requested. Obviously, if you doubt the veracity of the certification and intend to claim your e-liquids contain no detectable DA or AP, then it is time to have those ingredients tested.

    So I have concluded I need to test, what next?

    There are likely two main reasons you want to test. First, as above, you want to test the veracity of a supplier’s certifications, either because you suspect something is wrong or because you are testing the ingredients you receive just to make sure the vendor certifications you are receiving are accurate. If you want to make sure that the ingredients you are purchasing are free of DA and AP, you only need to get quotations from the laboratories that are making a market for such work, and make sure that the sample you are sending is representative of the material you want tested. This is important because some flavors may separate into a top and bottom layer on standing. The laboratory you chose should be able to advise you how to sample the bulk material and what container to use to send the sample to the laboratory. If the laboratory reports anything but nondetectable, then you have the business-relevant information you need to discuss the matter with the vendor. Second, another reason for testing is that you want to verify that your e-liquid has been properly formulated and is not changing over time. It has been known for years predating the introduction of e-liquids that aromatic aldehydes commonly used in flavors (e.g., ethylvanillin in vanilla flavors and benzaldehyde in cherry flavors) will react with PG and VG to form compounds called acetals. These acetals do not have the same hedonic characteristics as the flavorful aldehydes and will likely reduce consumer acceptance of your products.

    Not all laboratories may be able to carry out the needed analyses, the analyses may be costly, and the data you receive from the laboratory may need expert interpretation. In such cases, you need to retain an expert. Such an expert is sometimes called a consultant, but if you are looking for someone to shepherd your samples through the entire process, from deciding what analyses are needed to providing you with the business-relevant information you need, you are really looking for an expert who is sometimes called a “sponsor’s representative” (SR), with you and your company being the sponsor.

    The sponsor’s representative

    The SR’s job is to take the worry about all aspects of testing and interpretation of test results off your back. Testing includes chemical testing but also toxicological testing, because sooner or later this is likely to be required—chemical tests may not always reflect the toxicity of an e-liquid. The SR should be experienced in laboratory management with appropriate credentials in chemistry and toxicology (e.g., DABT).

    The SR starts by working with you and/or your management team to understand the business-relevant information you expect to gain through testing and data that you may be required to submit to regulatory authorities. The SR takes that information, develops a plan for what testing is really needed, selects laboratories that can do the testing and obtains quotations (cost and time for completion) for the needed testing. The SR reviews the quotations with you and makes recommendations for one or more laboratories to use.

    Once you have placed the purchase order, the SR works with you and/or your staff to obtain representative samples of the ingredients and/or products to be tested and makes sure they are put in the proper containers and shipped to the laboratory. The SR (with your written authorization) communicates with the laboratory as to the safe receipt of the samples, any changes in protocols and control samples that may be needed for your samples, and also monitors the progress of the analyses, including dealing with any unexpected events that are unique to your samples.

    This communication and monitoring is generally done via email and/or telephone. However, the SR may ask you for permission to visit the laboratory (at your expense) if things are not going well. The laboratory will send the data to the SR for review before it goes to you. The SR will review the laboratory’s calibration and control data that were generated during the testing of your samples to make sure that the work was done properly. He will also review the data for differences between expected results based on his knowledge of your samples and the reported results (for example, occasionally samples get out of order when they are transferred from the sample preparation laboratory to the autosampler of the gas chromatograph running the analyses). The SR will ask the laboratory to rerun any samples with suspect data.

    When the SR is satisfied that the data are correct for your samples, he will turn the data over to you along with his interpretations of the data and the business relevance of the findings. The review of the laboratory data by the SR minimizes chances of erroneous data reaching your files. Yes, the SR’s review and interpretation of the data will involve costs for the SR’s time, but on the other hand, you are receiving business-relevant information, not just a set of numbers that may have no business relevance. The SR’s review of data from in vitro toxicological assays (for example, cytotoxicity assays on e-liquids) is particularly important due to the inherent variability of bioassays relative to chemical assays and the fact that results are often present as percent of control sample.

    In addition to dealing with the entire analytical process and interpretation of the data into business-relevant information, a good SR should also be able to receive any ingredient information from suppliers in confidence, review that information and let you know whether those materials are satisfactory for use in your e-liquids from both chemical and toxicological perspectives. If the SR finds a problem, he will communicate that with the relevant supplier and ask for a reformulation of the material.

    Conclusions

    If you have laboratory testing of your e-liquids done without prior thought to the business relevance of the data you will receive and how you will ensure that the sampling and analysis is done correctly, you may be not only wasting your money but you may also make the wrong business decision by acting on the data. Use of a sponsor’s representative to help you determine the information you need, choosing the right testing and laboratory, ensuring data quality, interpreting the data, and converting them into business-relevant information may be a wise investment.

     

    John Lauterbach is the owner of Lauterbach & Associates LLC, a provider of scientific and regulatory-affairs services for the tobacco and e-cigarette industries.

     

     

  • The deeming dragon

    China, too, is trying to determine how to regulate vapor products. As the world’s largest tobacco market, its decisions will reverberate far and wide.

    By Azim Chowdhury, David Ettinger and Yun Chen

    Tobacco and tobacco-related products have been popular in China for centuries. In the 1600s, tobacco was brought into mainland China through the South China Sea by European merchant ships. Today, China has the world’s largest smoking population. According to statistics from Bloomberg, Euromonitor and the World Health Organization (WHO), one-third of all cigarettes manufactured globally every year (approximately 2.5 trillion) are smoked in China. This is more than 10 times greater than the number of cigarettes smoked in the U.S. Not surprisingly, China also has an extremely high fatality rate due to tobacco use. Each year, approximately 1 million deaths in China are caused by tobacco, which translates into 3,000 deaths every day or one death every 30 seconds.

    The Chinese tobacco business is controlled by China National Tobacco Corp. (CNTC). According to Bloomberg and Euromonitor, CNTC has a global market share of 43.2 percent, which is more than its four largest competitors combined (Philip Morris International has 14.3 percent of the global market, British American Tobacco 11.6 percent, Japan Tobacco International 9.4 percent and Imperial Tobacco 4.9 percent). To put its size into perspective, among the top 10 global cigarette brands, seven belong to CNTC.

    CNTC’s dominant global market share, however, is almost entirely the result of its monopoly of the domestic Chinese tobacco industry. More specifically, CNTC operates under the State Tobacco Monopoly Administration (STMA). STMA/CNTC is a government-granted monopoly under China’s Tobacco Monopoly Law, which gives the STMA control over virtually all stages of the production, sales, import, export and distribution of tobacco products in China. This would be analogous to the U.S. Food and Drug Administration (FDA) becoming the only authorized drug manufacturer and seller in the U.S. Simply put, by being both the central planner and the regulator in China, STMA/CNTC is entitled to all rights and benefits enjoyed by both a monopoly business and a government agency.

    Whether the e-cigarette and vapor industry can grow and gain influence in China will depend in large part on how these products are viewed by STMA/CNTC. Although the most recent reincarnation of the e-cigarette was invented in China, history reveals that others had previously invented products similar in kind. In fact, as early as the 1930s, the original vaporizer concept for medicinal compounds was patented by Joseph Robinson from New York, USA. While this device was not intended to be a tobacco alternative, its design is very similar to the modern e-cigarette. Some 30 years later, in 1963, Herbert A. Gilbert, a scrap yard worker from Pennsylvania, USA, filed a patent for a “smokeless nontobacco cigarette,” intended to replace burning tobacco with heated, moist, flavored air. This time it was designed to resemble a cigarette. Two years later, a patent was issued to Gilbert, but the product was never commercialized.

    A maker but not a user

    It was not until 2003 when Hon Lik, a Chinese pharmacist and a heavy tobacco smoker, invented the modern e-cigarette in Beijing. The company he worked for was then renamed Ruyan, which means “like smoke” in Chinese. In 2006 and 2007, e-cigarettes officially entered the European and U.S. markets and soon became a huge success. From 2010 to 2014, the sales of e-cigarettes grew almost fortyfold in the U.S. In 2015, the sales estimate for e-cigarettes is nearly $3.5 billion. Ironically, although e-cigarettes were “reinvented” in China and more than 95 percent of today’s worldwide e-cigarette production takes place in Shenzhen, a city in southern China, most Chinese people outside of Shenzhen have never even heard of e-cigarettes. This is because almost all of the e-cigarettes manufactured in China are for export rather than domestic sale. In short, China, the world’s largest market for tobacco products, is still a virgin market for e-cigarettes.

    Why is the e-cigarette relatively unknown to Chinese consumers? To start, smoking is an ingrained part of Chinese culture. Cigarettes are often provided as gifts at business meetings. Most restaurants in China do not have a separate smoking area because smoking during social gatherings is tolerated and even desirable to most Chinese people, including nonsmokers. Older generations of Chinese smokers are often very loyal customers to their favorite CNTC cigarette brands and unwilling to trust or switch to non-CNTC products.

    In addition, many of the Shenzhen e-cigarette manufacturers believe e-cigarettes are banned from commercial sale in China. Such misbelief may well come from the concern that, in the future, STMA/CNTC could exercise monopoly power over e-cigarettes. If that happens, then the Shenzhen companies can only legally sell e-cigarettes in China if they are licensed to do so by STMA/CNTC. Faced with such regulatory uncertainty, most Chinese vapor companies are hesitant to explore their home market, betting instead on the foreign markets for exporting their products. These factors likely contribute to the poor reception of e-cigarettes in the Chinese market in the past decade.

    As noted earlier, STMA/CNTC derives its authority over tobacco products from China’s Tobacco Monopoly Law. What is the legal definition of a “tobacco product” under that law? Pursuant to Article 2 of the current Tobacco Monopoly Law, the following tobacco and tobacco-related products are subject to the STMA’s monopoly control: cigarettes, cigars, cut tobacco, redried leaf tobacco, leaf tobacco, cigarette paper, filter rods, cut tobacco and equipment exclusively for use in the manufacture of tobacco products. Notably, neither e-cigarettes nor e-liquid is currently subject to the Tobacco Monopoly Law, as these products do not fit within the current definition of a “tobacco product.” However, such a regulatory vacuum will not last long, as various sources indicate that the Chinese authorities are considering regulating e-cigarettes by potentially seeking to expand the tobacco product definition. It remains to be seen if the law will be revised to include e-cigarettes and vapor products.

    Smoking bans—an opportunity for vapor?

    Despite the continued popularity of smoking in China, health regulators from agencies such as the Chinese National Health and Family Planning Commission (NHFPC) and the Center for Disease Control and Prevention have been pushing to educate Chinese consumers about the dangers of smoking. Cigarette smoking bans in public places are being established throughout the country, although they have been difficult to implement and enforce. For example, although the local government of Shanghai adopted a public smoking ban in 2010, a survey conducted by the Shanghai Municipal Statistics Bureau found that only 26 percent of those polled consider the city’s ban effective, while 36.7 percent attributed its failure to the poor enforcement of the law. It remains to be seen how effective the recent bans prohibiting smoking in all indoor public places and work places in Beijing, where about 23 percent of the population smokes, will be.

    If enforced, these smoking bans might actually provide a unique opportunity for e-cigarettes in China, considering vapor products are generally far less harmful than combustible cigarettes. Smokers who are unable to smoke in public places could be more likely to turn to e-cigarettes as a less-harmful alternative. Of course, if e-cigarettes become more popular, the smoking bans could be extended to include vaping, unless the Chinese health regulators can be convinced that doing so could actually harm the public health in the long-run.

    STMA/CNTC is well aware of the global e-cigarette phenomenon and is exploring opportunities to enter this industry. At China’s National Tobacco Conference held in January 2014, Ling Chengxing, the general director of STMA/CNTC, noted for the first time that “the tobacco sector should pay attention to the development of new tobacco products, including e-cigarettes.” In response to Ling’s comment, several provisional affiliates of CNTC took action to develop such products. For example, Jilin Tobacco Industrial Corp., together with three business partners, announced the joint development of the new e-cigarette brand Changbaishan Cigarette Mate. In July 2014, Yunnan Tobacco Industrial Corp. opened a public bidding for a “new tobacco product sample making and processing project.” Additionally, recently a number of e-cigarette-related patents have been disclosed by China’s State Intellectual Property Office.

    Filling the regulatory vacuum

    While tobacco products are heavily regulated in most developed countries due to many safety and health concerns, e-cigarette regulations are still in the early stages of development. In some countries, e-cigarettes are treated as tobacco products, in other countries as medicines or medical devices, and in some countries they are not regulated at all. In the U.S., for example, e-cigarettes (and e-liquid) that contain nicotine derived from tobacco fall under the broad definition of “tobacco product” as set forth in the Family Smoking Prevention and Tobacco Control Act (known simply as the Tobacco Control Act), which amended the Food, Drug and Cosmetic Act to give the FDA authority over tobacco products.

    Although such e-cigarettes are considered tobacco products, the Tobacco Control Act only gave the FDA the immediate authority to regulate certain types of tobacco products, such as cigarettes, cigarette tobacco, smokeless tobacco and roll-your-own tobacco. Other tobacco products—including e-cigarettes, cigars, hookah, etc.—will not be considered regulated tobacco products until the FDA finalizes its proposed deeming regulation, expected later this year. At that time, e-cigarettes will likely be required to comply with the same regulatory requirements as cigarettes, including warning statements, age restrictions, ingredient and product disclosures, testing requirements for harmful substances and premarket authorization. E-cigarettes and e-liquid that do not contain tobacco-derived nicotine, an increasingly popular segment of the industry, would not fall under the FDA’s tobacco authority (but could still be considered drugs by the FDA based on the agency’s historical stance on nicotine-containing products).

    In the European Union, e-cigarettes that contain nicotine (regardless of whether it is derived from tobacco) would fall under the new Article 20 of the Tobacco Products Directive (TPD). Generally, e-cigarettes with nicotine levels of less than 20 mg per milliliter and that do not make any health or therapeutic claims would be considered consumer tobacco products subject to a premarket notification procedure and other TPD requirements, as implemented by the member states. Other e-cigarettes would be considered medicinal products subject to the member state laws on pharmaceuticals.

    We are likely going to soon have some clarity as to how China will regulate e-cigarettes. This was made apparent when the spokesman for the NHFPC stated during the 16th World Conference on Tobacco or Health in Abu Dhabi, United Arab Emirates, this past March that the Chinese authorities are planning to develop e-cigarette regulations. The NHFPC is the administrative agency directly under the State Council of China that is in charge of all health-related issues, including drafting laws and regulations related to public health. Historically, the Tobacco Control Office under the NHFPC has not reached a consensus with STMA/CNTC on smoking-control policies. It will be interesting to see how the NHFPC moves forward with the regulation of new vapor products that are currently not governed by the Tobacco Monopoly Law. However, this will be quite a different story if STMA/CNTC is authorized to exercise monopoly power over such new products in the future.

     

    Azim Chowdhury, David Ettinger and Yun Chen are attorneys at Keller and Heckmann, a law firm specializing in regulatory law, litigation and business transactions, with offices in Washington, Brussels, San Francisco and Shanghai.

     

     

     

  • Common ground

    Common ground

    “We won’t get fooled again,” says the public health community, as it equates vaping with smoking. Scott Ballin is trying to get them to sing a different tune.

    By Maria Verven

    Scott Ballin has spent more than 40 years enmeshed in issues surrounding tobacco and public health and is now one of the central figures in the vapor wars.

    A tobacco and health policy consultant in Washington, D.C., USA, Ballin was vice president and legislative counsel with the American Heart Association and chaired the Coalition on Smoking or Health for more than 10 years. He’s played a part in U.S. Food and Drug Administration (FDA) regulations, excise tax increases, clean indoor air laws, tobacco agriculture and labeling reforms, among other important developments.

    But even Ballin is growing battle weary with the current vapor wars.

    “Many of my public health friends and colleagues at the American Cancer Society, Campaign for Tobacco-Free Kids and the American Heart Association, where I worked for many years, are unwilling to even engage in a dialogue. They’re stuck in the 1990s,” he says, referring to their battles with Big Tobacco.

    “I was in the middle of that and fought with the tobacco industry for years,” Ballin says. “They couldn’t be trusted. Do you remember when the CEOs stood before Congress, swearing that nicotine was not addictive? It’s easier for some in public health to just say ‘we won’t get fooled again.’

    “The resistance coming out of the public health community today is no different than during the tobacco wars; in fact, it is in some ways even worse. The perplexing thing is, they’re digging their heels in even more. They don’t want change. They don’t want new products. They’re basically throwing the baby out with the bath water, which ultimately could be a detriment to public health.”

    Fingers in their ears

    Ballin has seen that, by bringing parties together to discuss the issues, the dynamic can and will change. He first saw it in 1985 when former President Jimmy Carter brought stakeholders together at the newly established Carter Center to talk about tobacco. He witnessed it in the 1990s when the University of Virginia fostered face-to-face dialogues between tobacco growers and the public health community.

    “It was quite extraordinary,” Ballin says. “Tobacco growers learned the public health community wasn’t the bad guys, that we weren’t trying to put them out of business,” he says. “And the public health folks learned that, even if they could put tobacco growers out of business, it wouldn’t reduce the number of cigarettes coming into the U.S. The products would just be less regulated.”

    “By engaging with the growers, we basically took some of the wind out of Big Tobacco’s sails. When both sides agreed on about 95 percent of the issues, Big Tobacco could no longer use tobacco growers to do their lobbying,” he says. A senior vice president from Philip Morris later told Ballin it was one of the most strategic things the public health community had ever done.

    Ballin says a key issue is that the public health community doesn’t want to be perceived as supporting the use of any tobacco or nicotine product. “They’re always raising the issue of unintended consequences: What’s in these products? Are they being marketed to kids? They don’t see it as any different than what the tobacco industry did to promote low-tar, low-nicotine cigarettes: fight FDA regulation and pull the wool over the health community’s eyes.

    “These issues can and should be resolved, but public health won’t talk with anybody in the industry about their concerns or how we can work together. They think it’s a purely black and white war. But there are many gray areas, and those gray areas offer opportunities for stakeholders to work cooperatively to achieve a very important objective—to reduce disease and death from combustible cigarettes.”

    Relative risk and the FDA’s role

    Ballin strongly advocates regulating products based on their relative risk compared to smoking.

    “Vaping provides a solution to smoking. Traditional patches and gums weren’t doing the trick. There needed to be more attention given to harm-reduction strategy,” he says.

    “You just can’t have a spectrum of products out there with people saying, ‘It’s lower in risk than cigarettes.’ We need a more effective regulatory structure that takes relative risk into consideration,” he says. “Regulate tobacco cigarettes as rigidly as possible at the high end, and then go down that continuum of risk into noncombustible products, then the e-cigarette category, and then the [nicotine-replacement therapy] NRT products.”

    While its final regulations have yet to be published, the FDA shared its deeming regulations well over a year ago. Ballin credits Mitch Zeller and the FDA for going to great lengths to engage stakeholders in its regulatory process, including those in the e-cigarette and tobacco industries. “That never occurred in the 1990s,” Ballin says.

    Now there’s little more to do but wait until the final regulations come out later this year or early 2016.

    “The FDA is going to have to deal with some major issues related to how they’re defining e-cigarettes,” he says. “They’re working from a statute—and I can’t emphasize this enough—that was outdated the day it was signed into law. It didn’t reflect what was happening in the marketplace, and that’s why we’re having this discussion about the dates of implementation and why they originally proposed that e-cigarettes developed after 2007 be thrown out the window.”

    Ballin also advocates setting marketing, advertising and labeling standards that reflect the relative risk, so consumers can understand what these products are, and what they can expect from using them—whether it’s deadly cigarettes at one end or NRT products at the other end.

    “Your article [“Too Big for the Bathtub,” Vapor Voice Issue 3, 2015] is a perfect reflection of the fact that we need good product and manufacturing standards for this industry. The public health community should have said, ‘We agree and collectively we need to work together to determine what those product standards should look like.’ But for the most part they do not want to engage at this point, although there is some movement on the part of a few.”

    Tax based on relative risk

    Ballin also has strong opinions with regard to taxing e-cigarettes. “It’s easy to simply tax the vaping products at the same level, which is why there’s a lot of talk to make vaping equal to cigarettes and apply all the same requirements, restrictions and taxes.”

    However, Ballin believes we need a comprehensive nicotine policy that regulates products based on relative risk. “Tax the hell out of combustible, deadly cigarettes. But if it’s scientifically established that these products are lower in risk, I don’t think they should be taxed at the same level as cigarettes. In fact, I think there should be incentives.”

    He acknowledges that, if the rate of smoking drops, both state and federal tax revenue will decline. “It’s just not public health that’s at stake here. It’s also revenue streams going into state activities. If you’ve been funding programs with an excise tax, and that goes away if everybody stops smoking, where is that money going to be made up?”

    Ballin notes that public health organizations still receive money through the Truth Initiative (the renamed American Legacy Foundation established with money from the 1998 Master Settlement Agreement). State money also gets dispersed to help fund tobacco control programs. But he says, so far, no one has tried to sort through where the money is coming from, where it’s being dispersed and then evaluate the financial consequences of declined cigarette use.

    “That’s an important issue, because that money enables them to continue their programs and activities. But I don’t think the public health community is necessarily motivated to address that issue yet,” Ballin says.

    The world is changing

    Ballin has started getting various stakeholders together at the University of Virginia to talk about how to define, regulate and monitor e-cigarette products in ways that are fair and effective for all stakeholders.

    “We’re trying to bring people who normally don’t talk to each other to take off their hats and check their egos at the door,” he says. “We’re asking them to come as individuals, not representatives of an organization or company, to talk about harm reduction, our common goals and how we can remove some of the barriers and obstacles to reaching our goals.

    “The world has changed. Mitch Zeller is talking about a comprehensive nicotine policy, not a tobacco policy, at the FDA. But every time I pick up an article, it’s clear that we’re not there yet. Public health is still fighting, and it’s still a very volatile environment. Many still oppose having e-cigarettes on the market, in spite of the growing evidence that these products could have a very positive role in the public health agenda.

    “Many years ago, a public health colleague of mine said, ‘If you keep running into a brick wall, just go around it.’ That’s exactly what we’re trying to do with these dialogues. We’re trying to find another route to achieve our public health goals and make that route accessible to all stakeholders.”

     

    The original “Vaping Vamp,” Maria Verven is partner and chief marketing mentor of VapeMentors.com.

     

     

     

  • The chaff from the wheat

    The chaff from the wheat

    Stricter regulations will force brick-and-mortar shops to step up their game, but the shakeout may not be as severe as alarmists predict.

    By Stephanie Banfield

    Since e-cigarettes were initially introduced to the United States less than a decade ago, the vapor industry has grown exponentially, raking in billions of dollars and giving thousands of vape shops—from enormous enterprises to tiny mom-and-pop shops—the opportunity to flourish. With hundreds of new products entering the market each year, there is no shortage of options to choose from as vapers search for the device that’s right for them. Although the popularity of vaping is virtually undisputed, an increase in the number of online retailers able to sell vapor products at a lower price point—and looming legislation that could stop some shops from conducting business as usual—have recently called into question the future of brick-and-mortar stores.

    According to Reuters, the U.S. is currently home to 8,500 vape shops—and estimates from Wells Fargo Securities indicate that the U.S. e-cigarette market will reach $3.5 billion by the end of this year. But despite the constantly climbing sales of vapor products year after year, brick-and-mortar vape shop owners competing with online vendors are faced with an assortment of challenges that range from skyrocketing operating costs and inventory management to hiring knowledgeable staff members and keeping customers coming back for more.

    “You have to worry about things such as location and operating hours that are non-issues with an online store,” says Kenny Spotz, public relations specialist for Lynden, Washington-based Mount Baker Vapor, which operates both a brick-and-mortar storefront and an accompanying online store. “Your reach is also limited. With an online store, we open ourselves up to customers around the world, whereas a brick-and-mortar isolates us to a certain geographic area. There’s also the issue of physical space. It’s much easier to stock a warehouse and to ship out of it than to have a retail storefront that is big enough to house the kind of selection we offer on our website.”

    For Peter Denholtz, CEO and founder of Henley Premium Vapor and The Henley Vaporium in New York City, inventory is another issue that can’t be ignored.

    “One of the biggest challenges of this business, for me, is how much of this product do I buy, how long is it going to be hot, and when is it going to go away?” says Denholtz. “I’ve got $4,000 worth of one mod sitting downstairs that we thought was going to blow off the shelves—and I’ve had it down there for six months. And I’ve got other stuff that I am scared to buy because I don’t know if it’s going to sell. So I’ll buy too little, and then it goes like crazy in a day or two, and then it’s going to take me too long to get more in where I can stay on top of the crest of that wave and make that product a success here at Henley. That balance and understanding of what product to buy and when to get it in is a great, great challenge.”

    When it comes to challenges met by brick-and-mortars, being able to compete with the price point offered by online retailers is paramount.

    “The biggest disadvantage for brick-and-mortars when being competitive with online stores is price,” says Chip Paul, CEO and co-founder of Oklahoma-based Palm Beach Vapors, which has 17 locations throughout the U.S. “Websites operate at very, very slim margins, and they have very low overhead. So they can offer things at deep, deep discounts. Price is the driver of online purchases. You can just get stuff cheaper online.”

    One on one

    Despite the high costs associated with operating storefronts, brick-and-mortars have a serious advantage over their virtual competition: the ability to offer one-on-one interactions with their customers.

    “Compared to an online shop, the biggest advantage of operating a brick-and-mortar shop is the level of interaction it allows us to have with the consumer,” says Spotz. “There is no replacement for being able to have a face-to-face conversation with someone who is interested in our product. It allows the customer to see the human side of the business, which can be hard to perceive online.”

    The customer service component of a brick-and-mortar is key, particularly when it comes to novice vapers attempting to navigate the seemingly endless supply of vapor products on the market, or hoping to find a device that better suits their needs after experiencing a series of failed attempts with previous products.

    “Usually, we’re sort of the last stop,” says Paul. “Sometimes people have been educated about vaping a little bit, and they can go online and make purchases, and everything works. But generally people have been through the c-store experience, and they’ve been trying some online stuff, and that hasn’t worked for them. So they just want to come in and find out how everything works—what’s the best tank, what doesn’t leak, and what’s hot and what’s not right now. They just need more information than you can find online. You can find a lot of stuff online, but it’s just in-your-face products, which is just overwhelming.”

    According to Spotz, having customer service representatives and knowledgeable staff members in place not only helps people who are new to vaping pick the right product; it can also ensure that their switch to vapor devices from combustible cigarettes is a successful one.

    “Every day, new people are getting started, and many are confused by the number of hardware and juice options out there,” he says. “Having a real person to talk to in-person can make all the difference in allowing them to have a successful start to their vaping experience. Also, brick-and-mortar stores allow customers to try juices before they buy them—a huge factor in making sure they get a flavor that will satisfy their needs. One of the reasons customer service has always been the No. 1 priority for us is because it plays such an important role in helping smokers successfully complete the transition to vaping.”

    To bridge the customer service gap commonly encountered with online sales, Mount Baker Vapor boasts a customer service center and live chat feature on their website, where experts are available to answer a variety of questions from online shoppers who need extra assistance.

    “Customer satisfaction has always been our top priority, and having a convenient, accessible response center is a crucial part of that goal,” says Spotz. “Live chat is an instant service for people that have quick questions on anything from a piece of hardware to the services that we offer. It runs from 7 a.m. to 11 p.m. [PST] and offers a U.S.-based representative to answer any questions a customer might have. The main goal is to provide resources for any problem a vaper might run into in day-to-day operation. Our specialists are knowledgeable about anything from hardware issues to DIY questions. Our main focus is to make the newbies feel advanced, and for advanced vapers to feel as if they are speaking with a peer. The feedback we have received so far makes us feel like we are achieving that goal.”

    Looming regulation

    While offering superior customer service is a major draw for vapers looking for personalized attention, it can’t protect brick-and-mortars from the impending threat of U.S. Food and Drug Administration (FDA) regulation that has the potential to dramatically alter business as many vape shop owners know it, particularly those who rely on revenue from producing their own e-juices.

    “With the deeming regulations, you’re going to have to have very deep pockets and be ISO certified and have cleanrooms and all sorts of things,” says Denholtz. “The guy producing stuff in his garage today might be making some unbelievable e-juices—and there are some great e-juices coming out of people’s garages, and there are some shitty e-juices coming out of the labs. But regardless of whether we think it’s good or bad, the FDA is going to put its foot down and determine that it has to be done in a certain fashion, and that’s going to weed out 90 percent of the people that are currently producing e-juice. I would be very scared if I was in the juice manufacturing business right now. I’m rooting for the guys that might fall by the wayside, but I think it’s a tough road for them.”

    While many in the vapor industry fear regulatory changes could result in brick-and-mortar vape shops being forced to close their doors if they are unable to comply, others aren’t concerned with pending legislation and welcome requirements that will standardize the industry and improve the products available on the market.

    “With FDA’s deeming regulations, the media is making such a big deal out of this closing down vape shops, and honestly those regulations are childproof caps and warning labels on juice, etc.,” says Paul. “The FDA is not going to shut down an industry, and certainly not an $8 billion industry. A lot of what you read is just a lot of BS and scare tactics. If you really dig down into the facts and go out and read the deeming regulations word for word, [Palm Beach Vapors] already complies with them. Every single unit in our system already complies with every proposed regulation in the FDA deeming regulations. So it’s kind of severe, but it’s not an insurmountable mountain; it’s not going to shut down 90 percent of the industry.”

    Differentiation

    The effect the FDA’s deeming regulations will ultimately have on vape shops remains to be seen, but many brick-and-mortar vape shop owners are launching a pre-emptive strike and attempting to diversify their business as much as possible. From creating unique lounges where vapers can spend hours socializing or simply relaxing while vaping to hosting competitive vaping tournaments that offer prizes and bring enthusiasts together, brick-and-mortar shops across the U.S. are preparing for changes by providing more offerings to their patrons than ever before.

    “We’re very lucky because we have the largest backyard in SoHo in New York City, and we have barbecues and yoga-type events and TED-type talks, mural paintings and bazaars where people can buy stuff,” says Denholtz. “We view Henley Vaporiums as three pieces: an education center where people can come learn about and test different products; a retail operation where we can sell those products if they decide they want to engage; and, lastly, what differentiates us is that we also view ourselves as a community center—as a gathering place for people, whether they are into vaping or they’re not into vaping. And we have our share of both that come in here. People will come into Henley and just use the Wi-Fi, grab a cup of coffee and hang out.”

    According to Denholtz, offering an experience for customers to enjoy—rather than just shelf after shelf of vapor devices and supplies—is a surefire way to give his company staying power in a constantly evolving industry.

    “I believe that having that differentiation will allow us to be more versatile and keep our options open to where this industry is going, whether it’s educating people or whether it’s selling them more products,” he says. “That differentiation is incredibly important to the long-term survival of vape shops.”

    Stepping up their game

    Although opinions differ greatly regarding the ultimate fate of brick-and-mortar vape shops, there appears to be agreement on the characteristics of the stores that will ultimately survive.

    “We think there will be an uptick in the quality of brick-and-mortars, but fewer of them overall,” says Spotz. “As the market matures and consumers become more informed about the high-quality options, you will see less and less of the dark, dingy storefronts that you hear many vapers complain about.”

    For Denholtz, it’s the better businesspeople in the bunch who will continue to enjoy success in the vape store space.

    “This industry started when the economy was really bad, and a lot of people that got into this business were people that didn’t have jobs,” says Denholtz. “Some of them were horrible businesspeople who never did business, and some of them turned out to be great businesspeople. There was very little barrier to entry to getting into this business: You could buy some product from China, set up a business, and you’re ready to go. As a result, there is so much crowding and competition among vape shops, but that is starting to change now. So a lot of these people are going to start to go away, and the people with deeper pockets that were better businesspeople are going to remain.”

    No matter where the industry goes and which stores are left standing once the FDA’s deeming regulations come into force, one thing is certain: Those who are in the business of helping smokers successfully switch from combustible cigarettes to vapor products won’t give up without a fight because they’re involved in an industry that makes a difference in people’s lives.

    “I truly believe we’re changing the world, and I truly believe that we might be working with one of the greatest life-saving devices ever invented in our lifetime—and I’m proud to be a part of that,” says Denholtz. “When you get a chance to save lives and make a living at the same time, that’s pretty awesome.”

  • E-njoint to manufacture Jimi Hendrix vaporizer

    Jimi_Hendrix_3in1_E-njoint_Vaporizer_3D-renderDutch company E-njoint has signed a contract with Purple Haze Properties to manufacture a Jimi Hendrix vaporizer.

    Based in Hollywood, California, USA, Purple Haze Properties is the premier licensor of Jimi Hendrix products into the cannabis scene. The company is run by Andrew Pitsicalis and Jimi’s brother Leon Hendrix, who has endorsed the new product, called Jimi’s Vaporizer.

    “My brother would be so proud of this art piece, I wish we could have vaped together, because we all know how much Jimi loved that beautiful flower,” Leon Hendrix stated in a press release.

    Purple Haze introduced Jimi’s Cannabis Collection this year to honor Jimi Hendrix. Jimi’s Vaporizer is a 3-in-1 vaporizer that can be used for dry herbs, wax and oil. The product comes with a range of accessories that include a cleaning kit, a dual car charger and a power bank.

    E-njoint, based in the Netherlands, is known for manufacturing the world’s first electronic joint. Having gained popularity throughout Europe over the past two years, E-njoint now hopes to establish a following in the United States. The company recently launched three new products developed especially for the U.S. market and has also opened a warehouse in Los Angeles, California, and launched a U.S. website: www.e-njoint.us.

    The contract to manufacture Jimi’s Vaporizer will help to bring E-njoint to the next level. It’s just a matter of time before the product will be available in stores across the United States.

    Jimi’s 3-in-1 Vaporizer will be available worldwide in January 2016. A special pre-order discount for dedicated Hendrix fans was offered on Jimi’s birthday, Nov. 27, and will run until the end of 2015.

  • Reynolds launches Vuse Connect Solo

    vuseR.J. Reynolds Vapor Co. is launching Vuse Connect Solo power units in the United States on Nov. 24.

    The units feature Bluetooth low-energy technology that enables adult tobacco consumers to pair the device with a mobile app to monitor things such as battery level, battery life and cartridge levels.

    The power units will be available for purchase only online, at www.vusevapor.com, which is restricted to age-verified adult tobacco consumers who are 21 years of age or older.

    The Vuse mobile app also allows adult tobacco consumers to lock the unit to help prevent use of the device by youth and others.

    The Vuse Connect Solo power unit works with traditional Vuse cartridges that are already on the market and available for purchase at retail by adult tobacco consumers.

  • Fontem settles another e-vapor patents case

    Imperial Tobacco’s Fontem Ventures, and CB Distributors and DR Distributors (CBD and DRD) have settled patent infringement litigation in the US, according to a PRNewswire story.

    Fontem is the owner of the electronic cigarette brand blu, while CBD and DRD own and distribute the electronic cigarette brands 21st Century Smoke and Vapin Plus.

    “The settlement ends another of eight patent infringement cases originally brought by Fontem Ventures and Fontem Holdings in March 2014 in the United States District Court for the Central District of California in relation to e-vapour technology,” the note said.

    “Under the terms of the settlement, Fontem Ventures has granted CB Distributors, Inc. and DR Distributors LLC a non-exclusive royalty-bearing licence under the patents-in-suit and certain other e-vapour technology related US patents. The remaining settlement terms are confidential.”

  • Malaysia vapor industry seeks guidance from authorities

    Vapor industry players in Malaysia have sought guidance from authorities on how to conduct their business properly, following last week’s nationwide raid on vape outlets.

    On Nov. 5, the Health Ministry raided hundreds of vape shops in search of illegal vape liquid and unlicensed businesses. More than 50 vape stores were raided in Selangor alone, with owners incurring millions in losses, according to The Star.

    The Malaysian Vape Chamber of Commerce secretary-general Ridhuan Rosli said vapor industry players were willing to cooperate with authorities if there were guidelines from the government on how to operate their businesses.

    “While we agree that what they did was according to the law, they should have helped and guided us on how to obtain the permit or license to sell vapes,” said Ridhuan. “At least give us a timeframe to improve. If there are still among us who do not comply with the regulations, then take action.”

    Ridhuan said most of the chamber’s members have limited knowledge on the sale of nicotine-based vapes, and that the shop owners shouldn’t be entirely blamed as they were merely “at the end of the supply chain.”

    “If they really want to clamp down on vape, go after the manufacturers of the liquid,” he said.

    The Malaysian Organisation of Vape Entity (MOVE) echoed that sentiment and chided the Health Ministry for conducting the raid when there was no ban on vaping.

    “What they should’ve done was to propose regulations and guidelines for the manufacturing of the products,” MOVE President Samsul Kamal Ariffin said. “If it is about nicotine, they should come up with regulations and share with us. Once the regulation is out, we want to adhere and follow.”

    Malaysia E-liquid Brewers Association also requested flexibility in the license to sell nicotine-based liquids.

    “We are ready to work with the ministry to assist the producers and traders so they can comply with the standards specified by the ministry,” said the organization’s president, Muhammad Furqan Hakimi.

    The Health Ministry said there was no need to warn the shops before the raids as the Poisons Act was clear on nicotine rules. Shops selling nicotine-based vape are required to get a permit from the National Pharmaceutical Control Bureau.

    Following Thursday’s raid, it is understood that the Health Ministry, under the pharmaceutical control bureau, would conduct another round of raids.

  • Electronic cigarette deeming regulations ‘onerous’

    The Tobacco Vapor Electronic Cigarette Association (TVECA), a coalition of private sector companies engaged in electronic cigarette technologies, is publishing on its website (http://www.tveca.com/) a preliminary version of the US Food and Drug Administration’s yet-to-be released final ‘deeming regulations’ on currently unregulated tobacco products such as electronic cigarettes, according to an association press note carried by the TMA.

    TVECA described the regulations as onerous and said they would greatly restrict the public’s access to the products of its members.

    The association plans to hold a series of conference calls with e-liquid manufacturers and e-vapor advocacy groups to ‘solidify’ the industry and its message.

    More information available here.

  • VapeMentors hosts free webinar on FDA regulations

    VapeMentors, the only educational resource exclusively devoted to the vape space, will host a free webinar on Nov. 18 at 5 p.m. PST/8 p.m. EST to help vape space businesses prepare for upcoming U.S. Food and Drug Administration (FDA) regulations.

    The FDA sent its final deeming regulations to the Office of Management and Budget last week—the final step in the agency’s process to regulate the marketing and manufacturing of vapor products. The FDA’s final regulations are expected by the end of this year or in early 2016.

    The one-hour webinar, which is entitled “‘Knock, Knock. It’s the FDA Calling,” aims to help business owners “future-proof” their vape shop or e-liquid company and avoid getting shut down by the FDA.

    The webinar will be run by Azim Chowdhury, an attorney with Washington, D.C.-based Keller and Heckman, LLP and head of the firm’s e-cigarette practice who has represented many e-cigarette and e-liquid manufacturers, suppliers and trade associations in matters of FDA regulatory and corporate compliance.

    “We have a pretty good idea what will be in the FDA’s final [regulations] and how will it affect vape shops and e-liquid manufacturers,” said Chowdhury. “Basically, anyone who’s mixing e-liquids would be considered a manufacturer, and your e-liquids will be subject to FDA regulation and inspections. Unless the FDA makes major changes from their deeming [regulations], e-liquid companies must submit their entire list of ingredients and obtain pre-market approval from the FDA. If they don’t comply, the FDA could shut them down forever. And it could happen as early as next spring.”

    To register for the FDA webinar, visit www.vapementors.com/FDAwebinar. The webinar is free and open to anyone working or interested in the vape industry. It will also be recorded and available for replay.

    The webinar is sponsored by Molecule Labs, NicSelect, VaporSearchUSA, Calco Commercial Insurance and Parrot Vapors.