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Report: Pandemic Impact Will Last for a Long Time

Image by Gerd Altmann from Pixabay
The disruption caused by the coronavirus will be felt for a long time even in the traditionally recession-resilient tobacco industry, according to a new report made available by Research and Markets.
“This report examines the outlook for the coronavirus (Covid-19) global pandemic on the tobacco industry,” according to Businesswire. “The social, economic and health effects of the Covid-19 crisis will be felt in every global market for several years to come. While it is the case that the tobacco industry is less dramatically impacted in the near term in most (though not all) world markets, the temptation to treat the pandemic as a short period of disruption before a return to normalcy should be avoided.”
The report covers the economic outlook, industry impact, geographic impact and the corporate response to the pandemic.
May 11, 2020
Juul Labs to Exit South Korea, 5 EU Markets
Juul Labs said today it would end operations in South Korea, a year after it entered the market. The company states the cause was its inability to gain market share amid government health warnings.
In a statement, Juul Labs stated that since the beginning of the year it was working through a restructuring process aimed a re-establishing a viable business in South Korea by significantly reducing costs and making changes to its products.
“However, these innovations will not be available as anticipated,” the statement said. “As a result, we intend to cease our operations in South Korea.”
In October last year, South Korea’s health ministry advised people to stop vaping because of growing health concerns, especially after a case of pneumonia was reported in a 30-year-old e-cigarette user that month, according to Reuters news article.
The announcement prompted convenience store chains and duty free shops to suspend the sale of flavored liquid e-cigarettes, including those made by Juul Labs.
In December, South Korean health authorities said they had found vitamin E acetate, which may be linked to lung illnesses, in some liquid e-cigarette products made by Juul Labs, but the company denied using the material, according to Reuters.
Juul Labs launched a product portfolio that was specifically developed for the Korean market in May 2019, but “our performance has not met expectations in terms of meeting the needs of our Korean adult smokers to successfully transition from combustible cigarettes,” according to the statement. “We have learned through this process and are focused on innovating our product portfolio.”
Juul Labs is also reportedly ready to withdraw from a handful of EU markets as well, claiming the regulatory environment has become overly hostile to the device.
According to BuzzFeed News, Juul will soon remove its products from shelves in Austria, Belgium, Portugal, France, and Spain.
The news outlet reports the European Union’s strict requirement that e-cigs contain no more than 20 milligrams of nicotine makes it difficult for Juul to do business there.
Austria, Belgium, and Portugal are very small markets for Juul, but the leading e-cig manufacturer generates significant sales from France and Spain. It will exit France by the end of the year, but withdraw from the other countries in July, paring its presence in global markets to a narrow selection that includes Germany, Italy, Russia, and the U.K.
May 6, 2020
Foundation Debates Covid-19 Crisis’ Impact on Harm Reduction

Sally Satel during the 2019 GTNF in Washington DC | Photo David Parker
The Reason Foundation will host a webinar on May 19, 2020, at 12:30 p.m. Eastern time to discuss how Covid-19 is affecting tobacco harm reduction and policymaking.
Guy Bentley, director of consumer freedom research for the Reason Foundation, will host the webinar. Other speakers will include Sally Satel, resident scholar at the American Enterprise Institute, Michelle Minton, senior fellow at the Competitive Enterprise Institute, and Tim Andrews, executive director for the Taxpayers Protection Alliance.
The webinar is open to the public.
May 6, 2020
U.S. Fourth Circuit Denies PMTA Appeal

Photo: Skypixel | Dreamstime.com
The Fourth Circuit on Monday dismissed an appeal from various vaping groups challenging a compliance deadline for vapor products. The decision states that January directives from the U.S. Food and Drug Administration (FDA) have rendered the appeal moot.
In a per curiam opinion, the appellate judges held that guidance issued by the FDA in January moots the vape groups’ appeal because that guidance supersedes older directives from August 2017 at issue in the appeal and leaves “no possible meaningful relief” that the court could grant, according to law360.com.
“Any ruling by this court as to the procedural or substantive reasonableness of the August 2017 guidance would amount to nothing more than an advisory opinion,” the court said.
The appeal stems from a Maryland district court ruling that ordered the agency to set a May 2020 deadline for premarket tobacco product applications (PMTA) on smokeless tobacco products. The FDA, along with various health and anti-vaping groups, had argued that the January guidance restricting the sale of flavored, cartridge-based vapes rendered moot the vape groups’ appeal.
“Because the enforcement timetable for e-cigarettes set out in the January 2020 guidance is independent of the district court’s order, an order by this court reversing the district court would have no effect on FDA’s enforcement of the statute and regulations against e-cigarette manufacturers,” the agency had previously said.
But the vape groups disagreed, saying the January guidance was enacted without proper notice-and-comment procedures, according to the opinion.
While the court said it can’t offer the vape groups relief in this case, the panel added in a footnote that the groups can challenge the January guidance in a separate action in federal court. The panel also ruled that a Maryland district court did not abuse its discretion in denying cigar industry groups’ motion to intervene, saying those groups did not intervene in a timely manner.
Counsel for the cigar and vape groups and a representative of the FDA did not immediately respond to requests for comment Monday.
Last month, a Maryland federal judge said that in light of the coronavirus pandemic, he would grant a 120-day extension to the May 12 deadline for e-cigarette PMTAs, which have proceeded slowly since the FDA first determined vapes should be regulated like tobacco products. The new deadline is Sept. 9, 2020.
The FDA had previously asked the Fourth Circuit for approval for the lower court to extend the May deadline, saying it would not affect the merits of the appeal brought by the industry groups. The FDA said many of the laboratories and research organizations conducting the clinical trials for the regulatory applications have shut down or otherwise halted in-person testing in light of the COVID-19 pandemic.
Public health groups previously sought to accelerate the FDA’s regulation of vaping products under the Tobacco Control Act, citing vaping-related lung injuries that sickened thousands of people and left nearly 70 dead in 2019. In July 2019, a Maryland district judge effectively allowed the FDA to set the May 2020 deadline, prompting the vape groups to claim the decision was an arbitrary overextension of both the FDA and the court’s authority.
The vape groups had also argued that the May deadline left too little time for manufacturers to file complete applications. Cigar industry groups that filed joint briefs on appeal argued that the district court’s order on deadlines unfairly ensnared cigar and pipe tobacco manufacturers as well.
May 5, 2020
Scientists Urge Caution With Smoking-and-Covid Claims

Image by maja7777 from Pixabay
Recent studies that have found a disproportionally low number of smokers among Covid-19 patients have not provided direct evidence that smoking is protective against the illness, according to Health Feedback, a nonpartisan, nonprofit organization dedicated to science education.
Claims that smoking might protect against Covid-19 have been reported in several media outlets and are currently going viral, with more than 410,000 interactions on Facebook in April 2020.
However, the Health Feedback scientists point out several problems with findings. A French study, for example, did not appropriately factor in comorbidities such as diabetes and hypertension, which can also adversely affect the clinical course of Covid-19, according to the Health Feedback scientists.
“While the preprint did report the prevalence of such conditions within the combined study cohort of inpatients and outpatients, it did not report age or disease prevalence according to smoking status,” they wrote. “It is therefore unclear whether the nonsmoking group comprised more older individuals and/or those with preexisting health conditions than the other, which might have influenced the results.”
Other studies showed similar shortcomings, according to the Health Feedback scientists.
While acknowledging that the findings of disproportionally low numbers of smokers among Covid-19 patients are interesting and deserving of further investigation, the Health Feedback scientists say it would be unwise to begin smoking based on unproven claims that it might protect against Covid-19.

May 4, 2020
COP9 and MOP2 Postponed to November 2021

The World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC) said it would postpone its major conferences for a year.
“In light of the COVID-19 global pandemic and its impact on the conduct of international global conferences and travel, the Bureaus elected by COP8 and MOP1, after consulting the host country, have decided that convening the Ninth Session of the Conference of the Parties to the WHO FCTC (COP9) and the Second Session of the Meeting of the Parties to the Protocol to Eliminate Illicit Trade in Tobacco Products (MOP2), scheduled for November 2020, is no longer possible,” the organization states on its website.
As a result, the Bureaus, in consultation with the host country and the Secretariat, decided during their Third Joint Meeting on 21 April 2020 to postpone the sessions of COP9 and MOP2 to the following dates:
COP9: 8–13 November 2021; .
MOP2: 15–17 November 2021.
The meetings will convene on those dates in The Hague, Netherlands.
April 28, 2020
Court Extends Deadline for PMTA Applications to Sept. 9

Tobacco and vapor companies have an extra four months to file their premarket tobacco applications (PMTAs) for newly deemed tobacco products with the Food and Drug Administration (FDA) following a U.S. court ruling.
On July 12, 2019, the United States District Court for the District of Maryland ordered the FDA to require manufacturers of e-cigarettes, cigars and other deemed new tobacco products that were on the market as of Aug. 8, 2016 to submit applications for premarket review by May 12, 2020.
However, the coronavirus pandemic has drastically impaired the FDA’s ability to adhere to this timeline. As a result of the pandemic and these exceptional and unforeseen circumstances, the agency requested on March 30 a 120-day extension of the May 12 deadline. This request has now been granted.
The court order means applications for premarket review for many e-cigarettes, cigars and other new tobacco products are now required to be filed by Sept. 9, 2020. Consistent with the original court order, for companies that submit timely applications, the agency may continue to exercise enforcement discretion, meaning their products would generally continue to be marketed without being subject to FDA enforcement actions, for up to one year from the deadline (up to Sept. 9, 2021), unless a negative action is taken by the FDA on an application during that time.
Following the Covid-19 outbreak, the agency received numerous inquiries from the tobacco industry expressing concern they would be unable to complete premarket applications by the original May 12 deadline due to disruptions at all stages of preparation, including preventions or disruptions to in-person laboratory work and clinical studies or necessary foreign travel, or from the shuttering of manufacturing facilities abroad.
In a statement, the FDA said it believes the public health is better protected by not having these firms compromise their employees’ health or take actions that would risk spreading Covid-19 to others by trying to meet the previous May 12 deadline. In the more than a dozen requests for an extension that the FDA received, this public health concern was mentioned repeatedly.
Another consideration, according to the agency, was that a number of the FDA’s Center for Tobacco Products (CTP) personnel have been deployed to work on Covid-19 pandemic issues for the U.S. Public Health Service (PHS), leaving fewer staff to process applications. Many of those deployed are among the staff that had been playing a critical role as CTP prepared for this deadline.
“Ultimately, a Sept. 9 deadline will better serve the public health by allowing manufacturers to prepare for, and the agency to conduct, the thorough scientific review of these products that is required under law and vital to our mission of protecting Americans while reducing or eliminating physical contact during this critical period,” the FDA wrote in its statement.
“Importantly, this new deadline does not detract from our efforts to prioritize enforcement of certain e-cigarette products currently on the market. Although the FDA’s in-person compliance checks and vape shop inspections are currently on hold due to the pandemic, review of previous inspections continues, and we continue to monitor the online marketplace and will take action as appropriate.
“Accordingly, the January 2020 enforcement priorities guidance, which independently prioritizes earlier enforcement against certain e-cigarette products that are widely used by youth, remains in effect regardless of whether an application is submitted, although we intend to update it for products for which the Sept. 9 date now applies.”
April 23, 2020
Avail Gives More Than 5,000 Masks to Caregivers

James Xu
Avail Vapor has donated more than 5,000 masks to the Virginia Department of Emergency Management to help medical professionals on the front lines of the coronavirus battle protect themselves.
The idea came to light a few months ago when Avail employees heard about the shortage of masks in China when Covid-19 initially struck. Avail works closely with many Chinese suppliers, and Avail employees wanted to support these suppliers in their time of need.
Employees from around the U.S. gathered masks to donate; as a result, Avail shipped thousands of masks to its overseas partners. Now that the United States is experiencing a shortage in masks, those same Chinese colleagues have returned the generosity and shipped thousands of masks to Avail headquarters for employees and health care workers.
“To be successful, our business has always been highly collaborative with global partners,” said James Xu, CEO and chairman of Avail, and a Chinese American. “To see our employees proactively answer a need for their Chinese counterparts was special. Now we are so grateful to our Chinese friends for helping us defend our citizens in this pandemic.”
In addition, Avail has implemented new programs to help its customers during this unprecedented time. Since March 18, 2020, Avail customers who are burdened with a financial impact from Covid-19, as well as those in the medical community or who are first responders, have been eligible for a one-time purchase of select e-liquids for a penny ($0.01 transactional fee plus applicable taxes). Avail is also offering call-ahead and curbside pickup at all retail locations, as the health, safety and well-being of its staff and customers is paramount.
Avail employs more than 350 people across the U.S. The company has committed to compensate staff for work time lost due to Covid-19 or influenza. In addition, if employees need further financial assistance, they can apply through the Xu Fund, a special employee assistance fund dedicated to supporting Avail staff in the event of personal and family hardships. CEO and Chairman Xu donates 100 percent of his salary to support the fund. Since 2018, the Xu Fund has helped 90 Avail employees.
April 8, 2020
Philter Labs Gets $1 Million in Vapor Filter Funding

Credit: PhilterLabs
Philter Labs, a San Diego-based technology company that produces micro-sized air filters to help reduce the impacts of secondhand smoke, announced it has received $1 million in new investments.
The capital will be used for research and development, building out an extensive product roadmap, and launching what the company says will be first-of-its-kind personal filtration products, according to an article on Benzinga.com.
This new round of funding brings Philter’s total to $3 million. Bravos Capital and Explorer Equity both participated in the effort.
Philter Lab’s patented zero-5 technology utilizes a five step filtration process that manipulates smoke and vapor at the molecular level to dissipate up to 97 percent of emissions and dissolve harmful particulates and pollutants. Also unique to Philter is it’s pocket-sized design, allowing for ease of use and portability.
For over 20 years, the team behind Philter has been working to solve major medical problems, and identify consumer-centric solutions for common issues. Philter also aims to help re-frame popular associations behind controversial human behaviors, according to the article.
Philter’s technology encourages consumers to practice responsible vaping and empowers them to protect those they love, and the environment, by drastically reducing harmful emissions and airborne contaminants. The company’s overarching mission is to change the way people perceive vaping tobacco and cannabis.
CEO Christos Nicolaidis told Benzinga the goal at Philter Labs is to eliminate the impacts of secondhand smoke and harmful emissions while empowering consumers to vape responsibly, according to the article.
“This new series of funding builds on our momentum and will allow us to expand on our scientific research and launch new innovative, cutting-edge filtration products,” Nicolaidis said. “We want to lead the charge on a cultural shift for cleaner air and a better environment — and hopefully change the way people vape for the better.”
April 6, 2020
Significant Impact
A new economic study finds that a flavor ban would force the closure of nearly every brick-and-mortar vape shop in the U.S.
More than 13,000 vape shops would close. Over 150,000 jobs would be lost. The U.S. economy would lose more than $22 billion, including more than $15 billion in taxes. These are the potential catastrophic economic outcomes if e-liquid flavors are banned, according to the results of a recently released study commissioned by the Vapor Technology Association (VTA), a vapor industry advocacy group.
The study, conducted by the analysis firm John Dunham & Associates (JDA), analyzed sales of flavored vapor products in the independent vapor distribution chain. It found that approximately 91.6 percent of sales of vapor products are e-liquid flavors other than tobacco. That number only dropped to 85.7 percent when menthol was included alongside tobacco flavors.
The JDA study concluded that “if a flavor ban was implemented, the independent vapor segment of the market would cease to exist in any meaningful way since the vast majority of the 13,480 independent vapor shops in the country (which currently generate 58,430 full-time equivalent jobs) would likely have to close. No business can continue to exist were it to lose 90 percent of its revenue.”
This study’s findings are significant because, if accurate, they are within the parameters of the White House’s Office of Management and Budget (OMB) rules that state that any regulation that significantly impacts the economy must undergo an extensive regulatory assessment process. One of the factors used to establish whether a proposed rule makes a major impact is that it would have an overall negative impact of at least $100 million on the economy.
“Proposals to ban the sale of all nicotine vapor products that are not tobacco flavored would have impacts on both sales and on the economy far in excess of this guideline,” according to the study. “The same is true of proposals to ban all but tobacco, menthol and mint-flavored vapor products. This would mean that under most normal circumstances, these proposals would need to follow all of [the] OMB’s regulatory guidelines.”
Executive director of the VTA, Tony Abboud, said that the updated economic impact analysis proves that a flavor ban is not the right policy for the vapor industry. “Fortunately, there are many smarter ways to attack the issue of youth vaping outlined in our comprehensive plan 21 & Done! without eliminating the independent vapor distribution chain, made up of more than 14,000 small businesses around the country that are competing every day with Big Tobacco,” said Abboud.
The recently released study is an update to the 2018 Vapor Industry Economic Impact Study released earlier this year. The study estimates the economic contributions made by the vapor industry, which includes e-liquids, coils, box mods and other vapor products to the U.S. economy in 2018. JDA conducted the research, which was funded by the VTA. According to the study, researchers used standard econometric models first developed by the U.S. Forest Service and now maintained by IMPLAN Inc. Data came from industry sources, government publications and Infogroup.
“The study measures the number of jobs in the vapor industry, the wages paid to employees, the value-added and total output,” according to the first study. “In addition, it measures the economic impact of the suppliers that support the vapor industry as well as those industries supported by the induced spending of direct and supplier industries.”
According to the updated study, using data based on a survey of the three largest distributors in the independent vapor distribution chain, 85.7 percent of sales at vape shops are of flavored vapor products and just 6.4 percent are tobacco flavors.
“These data should be more representative of the total market than scanner data (which are discussed below) since well more than half of all vapor sales are of open systems (or e-liquids) and are made at dedicated vapor and tobacco retailers,” the study states. “Using these breaks, [if] the federal government [decided] to ban both flavored and menthol products, the immediate loss would be 91.6 percent of retail sales.” According to the study, were this to occur, adults who prefer these products could react in one of three ways:
• Stop vaping altogether or switch to another tobacco product;
• Switch to vaping tobacco-flavored products; or
• Continue to vape flavored and menthol products but purchase them over the black market or flavor products at home.
“JDA’s modeling suggests that a large portion of consumers would react by purchasing unregulated products over the black market or make their own flavored e-liquids. However, government-sponsored research (that does not include this option) concludes that there would be a large shift toward tobacco-flavored products,” the study claims. “Based on these data, it would be likely that the current 6.4 percent share of tobacco-flavored products would increase to about 8.5 percent of pre-ban sales. Overall, sales would fall to roughly $779.7 million.”
The JDA study found that there were several government-funded studies that found that flavored vapor products didn’t hold a strong market share. However, the government studies are based on data collected from gas stations, convenience stores and grocery stores. The data is collected and distributed by Nielsen, a global measurement and data analytics company. These retail chains do not readily sell open system devices, which make up much of the flavored e-liquid market.
The flawed Nielsen data is then used in research conducted by the Centers for Disease Control and Prevention (CDC), and the federal agency reports that about 10.2 percent of the analyzed vapor products were flavored, roughly 37 percent were menthol and the remaining 52.8 percent were tobacco flavored.
“This essentially reflects chain retailer sales of closed vapor systems (so-called e-cigarettes) over the period from 2012 to 2016,” according to the recent study. “The Nielsen data that this research relies on comes from contracted retailers’ scanner systems. The vast majority of vape shops and tobacco shops would not be included in the data.”
Based on the CDC paper, about 52.2 percent of open system (e-liquid) product sales were flavored while 25.2 percent were menthol. Most tobacco stores and specialized vape shops focus more on e-liquid sales than the conventional chain stores that are included in the Nielsen data. This suggests that the analysis performed here is extremely conservative since conventional retailers represent only about half of the market for vapor products, according to the study.
“Bans don’t work; they never have,” said Abboud. “However, 21 & Done! proposes real solutions, including raising the [purchase] age to 21, implementing 21 specific marketing restrictions, requiring third-party age verification technology at retail and a ‘three strikes and you’re out’ penalty scheme for retailers.”
December 23, 2019