A group of Juul Labs investors is challenging a November 2022 financial bailout by directors Nick Pritzker and Riaz Valani, alleging that the deal benefited insiders at the expense of other investors, reports The Wall Street Journal.
A pioneer in the vaping business, Juul Labs went from dominating the U.S. market to fighting for its survival in a short time. Following its initial success, the company came under regulatory scrutiny over its marketing practices. Thousands of lawsuits alleging the company contributed to an “epidemic” of underage vaping took a toll on the company’s finances.
After the Food and Drug Administration ordered its e-cigarettes off the market and a court stayed the order, Juul began exploring bankruptcy in June 2022.
To avoid bankruptcy, Pritzker and Valani in September 2022 refinanced a Juul term loan and later that fall loaned Juul more money to cover operating costs. Finally, the two directors, along with Juul co-founders James Monsees and Adam Bowen, backstopped a sweeping legal settlement and made an equity investment in Juul.
Juul, after approaching dozens of potential investors, closed a funding round in October 2023 that raised $1.27 billion. That sum included money that entities connected to Pritzker, Valani, and Juul’s two co-founders committed for Juul’s legal settlement and an additional $45 million from the same four investors.
Entities tied to Valani and Pritzker now own nearly half of Juul, while most other investors have had their stakes sharply diluted amid the rescue.
Affiliates of hedge fund D1 Capital Partners and two other investors sued Juul in October 2023 alleging that Pritzker and Valani “leveraged a distressed situation for their own personal gain to the detriment of Juul’s other stakeholders.”
Juul in 2024 aims to raise another $330 million as it fights to keep its existing products on the U.S. market and submits new vaping products for federal authorization.
As I travel from one country to the next, everything changes: languages, currencies, foods—and also vape laws, which are so specific and seemingly random that it is challenging to keep them straight.
Before I arrived in Indonesia, I was in New Zealand and Australia—both modern, contemporary, First World countries.
New Zealand seemed comfortable with its vape laws, and shops were abundant. In Sydney and Canberra, Australia, vape shops were less common, and I had little success getting concrete feedback from shop owners and employees. There seemed to be paranoia there, and maybe there was just cause.
With Health Minister Mark Butler having proudly stated on the record that Australia’s vape laws will be the “toughest in the world,” the vape shop owners’ fears may be justified. The government is lowering the hammer on disposables, and so far, more than A$11 million ($7.3 million) of nicotine-containing vape products—11 tons—have been seized this year.
In November, Butler announced that Australia would ban all imports of disposable vapes beginning Jan. 1, 2024. The ban will be expanded in March 2024 to include all nontherapeutic vapes, including refillable devices, while importers of vapes for medical purposes will need a permit from the Office of Drug Control.
Therapeutic vapes will be restricted from using flavors, have limited nicotine levels and be sold in pharmaceutical packaging under new rules to be introduced in 2024, with a transition period for manufacturers to comply.
The legislative package will also include a total A$75 million in extra funding for the Australian Border Force and the Therapeutic Goods Administration to enforce the new rules. Additional legislation next year will apply the same prohibitions to domestic manufacturers.
When it’s all said and done, it appears that no vape products will be sold without a prescription, and instead, they will be sold at pharmacies. Say goodbye to vape shops, and say, “welcome back, black market.”
New Zealand may not be far behind.
Currently, vaping laws are reasonable in Kiwi Country, and vape shops can operate independently but with significant government oversight. Age restrictions are huge, and to that end, disposables and flavoring (including “enticing names”) will be banned in the near future.
In late 2022, the New Zealand Parliament adopted the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Bill, which regulators said would phase out combustible tobacco product use in the country. However, in November, New Zealand’s new coalition government announced its plans to scrap the generational tobacco ban, which would have prohibited tobacco products for people born after 2009.
While ditching the generational tobacco ban, the new government vowed to get tough on vaping by banning disposable e-cigarettes and increasing penalties for illegal sales to those aged under 18.
Meanwhile, 2,000 miles to the north is another world—“a newly industrialized country with a rapidly growing economy and political stability,” per the Indonesian press.
Most shops are basic in their appearance, as is their product supply.
The government has mostly ignored the vape market, and aside from an excise tax on e-liquids, there are few regulations on physical or online shops. For a decade, the government has stated its intention to address vape products, but for now, it has settled on a tax rate of 57 percent on vape products versus 40 percent on tobacco.
In September, the Indonesian Parliament passed Health Law No. 17 of 2023, which categorizes e-cigarettes as addictive substances. Teguh Basuki A. Wibowo, chairman of the Indonesian Electronic Nicotine Industry Alliance, told the media that including e-cigarettes in the legal framework for solid and liquid tobacco products legalizes industry participants and allows smokers to find alternative products.
The law puts Indonesia on equal footing with countries like the Philippines and the U.K., which have similar legislative frameworks for e-cigarettes, Wibowo said.
With almost 65 million smokers, Indonesia trails only China and India in terms of prevalence. Tobacco is heavily advertised through television and other media, which has traditionally been one of the first targets of restrictions.
In the city of Ubud, Bali, a favorite base for expats from all over the world, I visited Nyali Vapes, and the shop’s owners confirmed the same trends I heard about elsewhere: Disposables are the largest sellers. The people at Gaya Vapes, my next stop, said likewise, and when I asked about surprise visits from regulators, counterman Genoa admitted that these visits are frequent.
He also spoke about the differences between the locals and the tourists: “Most of the tourists come in for refills and [fewer for] disposables,” he said. “They ask for their flavors, and we usually do not have their exact brand, but we do have a similar flavor, which they are fine with.”
One of the largest groups of visitors to Indonesia, and Bali in particular, are Australians, home to the world’s most expensive cigarettes, at more than $25 a pack. Over the course of my time in Bali, I asked some Aussies if they stocked up on smokes while they were visiting, and unanimously, they all said, “hell, yes!”
Even though all countries are different, some vapers’ patterns are standard, including that of Genoa, the front desk guy at Gaya Vapes, age 25, who stopped smoking in 2017 and started vaping instead. But he did confess that sometimes money is tight, in which case he goes with a cigarette instead of a vape.
Vaping is much cheaper, but liquid prices can be off-putting for consumers with Indonesian wages. Regardless, Genoa’s passion for vaping is what motivated him to work at Gaya, one of several shops in the area with that same name.
For those earning foreign salaries, life is cheap in Indonesia, a condition that also applies to tobacco and vape products. A standard pack of cigarettes costs about IDR24,000, which equates to just under $1.60. A name brand like Marlboro will set you back about $2.25 per pack, which is still a bargain for those accustomed to foreign prices. Indonesia is not the world’s cheapest country for smokers—that honor goes to Vietnam—but it is in the lowest percentile.
My new friend William at Glory Vapes confessed that he was a dual user, and because vaping was so much cheaper (even at those insanely low cigarette prices), he was able to make his disposables last up to three weeks. Add in his love for all the fruit flavors, and he remains biased toward the liquids, so he smokes cigarettes only when socializing with friends.
He also shared that local police officers regularly visit the shop, but he suspected they came in more to alleviate boredom than to look for anything illegal.
Norm Bour is the founder of VapeMentors and works with vape businesses worldwide. He can be reached at norm@VapeMentors.com.
A new tax will hit vapers in the United Kingdom despite warnings it will punish people who have switched to e-cigarettes after quitting smoking.
The plans for the levy, which will likely increase the cost of vaping liquid by at least a quarter, will be unveiled in the Budget in March.
A government source told The Mirror it was now almost inevitable that a tax on vaping will be introduced as part of the Spring Budget, which Chancellor Jeremy Hunt will announce on March 6.
Ministers are looking to copy European countries such as Germany and Italy that already have levies on vapes.
A 10ml bottle of e-liquid, which a typical vaper would get through in a week, costs around £4 at present. In Germany, a £1.40 vape tax is slapped on 10ml bottles, with plans to double this to £2.80 in 2026.
Italy, which in 2014 became the first country to tax e-cigarette fluid, charges a £1.10 levy on 10ml bottles.
Regulatory challenges and misinformation continued to test the vaping industry in 2023.
By VV staff
It remains a frustrating business environment. The vaping segment has survived despite setbacks in 2023 and continues growing as a global market. However, divergent regulatory perspectives on vaping’s harm reduction potential continue to hinder its uptake by cigarette smokers. The past 12 months could also be labeled the year of the great exodus as several vaping retailers and manufacturers went out of business. Despite the challenges, more and more former smokers continue to switch.
While several countries banned, enacted regulations or continued heavily regulating vaping products, the United States’ denials of numerous premarket tobacco product applications (PMTAs) had the greatest impact on the industry this year. The U.S. Food and Drug Administration’s ban on most products has allowed a black market of disposable vapes to become a multibillion-dollar industry. Disposable e-cigarettes account for almost 40 percent of the global vape sector, according to ECigIntelligence.
Critics have accused the industry of avoiding responsibility for the environmental damage caused by disposable vaping products while federal regulators have failed to pass measures that would make vaping components easier to recycle or more eco-friendly. Some regulations have been proposed to lessen the products’ environmental impact. For example, standards could be put in place requiring them to be reusable or mandating that manufacturers fund collection and recycling programs.
Disposable e-cigarettes currently account for about 53 percent of the multibillion-dollar U.S. vaping market, according to the Centers for Disease Control and Prevention, more than doubling in size since 2020. Several states, including New York and California, have extended product responsibility laws in place for computers and other electronics, but those rules don’t apply to vaping products. At the federal level, there are no regulations specifically for the disposal of vaping products. Without action, some experts say the devastating environmental impact could last for centuries.
Misinformation surrounding the vaping industry also continued to spread in 2023. Nearly half of cigarette smokers and young adult nonsmokers think that nicotine-based e-cigarettes have the same amount or even more harmful chemicals than regular tobacco-based cigarettes, according to a Rutgers study.
Another study found that there are also a lot of exaggerations and misinformation about vaping on social media. Some tweets exaggerate or distort claims about nicotine and addiction while others misinterpret scientific studies to promote vaping. There are also tweets that downplay the harmful effects of nicotine and promote its benefits, which are potentially problematic. Below is a month-by-month recap of the vaping industry’s biggest headlines in 2023.
January
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The upscale U.K.-based grocer Waitrose halts sales of single-use vaping products due to environmental concerns. The FDA says it will “decide within months” how to regulate legal cannabis (it still hasn’t). Vaporesso becomes the first open-system vaping device brand to obtain the ability to sell in the United Arab Emirates. The Netherlands bans flavors, and Belgium says it plans to restrict flavor names and vape devices. A 2022 article that claimed e-cigarette users faced the same cancer risk as combustible cigarette smokers is retracted by the World Journal of Oncology. Lawmakers in Taiwan ban vaping products. A U.S. district judge preliminary approves a $255 million settlement resolving consumer claims that Juul Labs deceptively marketed e-cigarettes.
February
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Hong Kong begins enforcing its ban on CBD, labeling it as a “dangerous drug” and imposing harsh penalties for its possession. Bloomberg Philanthropies commits $420 million over four years to the Bloomberg Initiative to Reduce Tobacco Use. Australia reschedules the psychedelics psilocybin and MDMA to provide access to people with post-traumatic stress disorder. Connecticut sues five companies for selling delta-8 products. Alex Norcia resigns from Filter for a job at Altria. RAI Services Co. submits a citizen petition asking the FDA to adopt a new enforcement policy directed at “illegally marketed disposable electronic nicotine-delivery system [ENDS]” products. Matthew Farrelly, former chief scientist and director of the Center for Health Analytics at RTI International, is named director of the FDA’s Center for Tobacco Products’ (CTP) Office of Science. The FDA files the first civil money penalties for illicit sales of ENDS products.
March
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Altria Group exchanges its entire investment in Juul Labs for a nonexclusive, irrevocable global license to certain of Juul’s heated-tobacco intellectual property. Altria also agrees to acquire Njoy Holdings for approximately $2.75 billion and asks the U.S. Federal Trade Commission (FTC) to drop its 2020 challenge to the company’s 2018 acquisition of a 35 percent share in Juul Labs. The FDA proposes new requirements for tobacco product manufacturers regarding the manufacture, design, packing and storage of vaping and other tobacco products. RLX Technology reveals that its 2022 financial performance was heavily impacted by new industry regulations and e-cigarette taxes, along with Covid-related disruptions, in China. A U.S. federal judge throws out a tobacco industry lawsuit against California’s statewide ban on the sale of flavored vaping and other tobacco products. The FDA updates its definition of “tobacco products” to include nontobacco nicotine products. Two menthol Vuse flavors that received a marketing denial order (MDO) can continue to be marketed by R.J. Reynolds Vapor Co. after the federal 5th Circuit Court of Appeals issues a stay. Argentina bans imports and sales of ENDS products. Former CTP Director Mitch Zeller joins the advisory board of Qnovia, a “platform pharmaceutical” company that is developing a prescription inhaled smoking cessation therapy.
April
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Malaysia removes e-liquid containing nicotine used in e-cigarettes and other vaping products from the country’s Poisons List of controlled substances. Greentank Technologies closes a Series B financing round worth $16.5 million with a “strategic investor group” that includes BAT-funded Canadian cannabis producer Organigram Holdings. Vuse’s U.S. market share rises from 41.5 percent while Juul’s declines to 26.1 percent. Altria’s youth marketing suit in California begins. The U.K. announces plans to give 1 million smokers free vaping starter kits to encourage them to give up tobacco products. Juul Labs settles youth marketing lawsuits with six states, bringing the total of state settlements to 45 states, with a combined price tag of more than $1 billion. Panama rejects a proposal to regulate vaping products. The High Court of Justice in London rules that Philip Morris Products’ patents protecting its tobacco-heating technology are valid. Delaware becomes the 22nd U.S. state to pass a recreational marijuana bill. Altria’s youth marketing suit in California begins.
May
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Australia announces that it will ban the importation of all nonprescription vaping products, including those that do not contain nicotine. R.J. Reynolds sends letters to several small vape shops threatening to sue them if the shops do not stop selling flavored vaping products. A U.K. report shows inmates are spending more than £7 million ($8.5 million) a year on e-cigarettes. Logic Technology challenges the FDA’s marketing denial of its menthol vape products. Altria strikes a $235 million deal to end a California lawsuit alleging that the company marketed vaping products to youth. Flonq launches the world’s first fully recyclable vape device—the Flonq Plus-E. Yolonda Richardson succeeds Matthew Myers as president of Tobacco-Free Kids. The FDA issues “Import Alert 98-06” detaining new tobacco products such as e-cigarettes without marketing authorization at the border. Altria completes its purchase of Njoy.
June
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Hawaiian law makes shipping of vaping and other tobacco products valued at more than $10,000 a misdemeanor. ANDS launches Slix, a disposable vape that it says is 99.29 percent recyclable.
Bidi Vapor sends the initial shipment of Bidi Sticks to over 900 Kwik Trip and Mapco locations.
A federal appeals court rules that the FDA acted reasonably in denying Magellan Technology’s application to market flavored vaping products.
The FDA issues warning letters to 189 retailers for selling unauthorized tobacco products, specifically Elf Bar and Esco Bars brands. Zanzibar bans the use and imports of vape products. The CTP announces that it has made significant strides in putting its Reagan-Udall Foundation recommendation-based plan for improvement into action.
July
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Juul Labs asks the U.S. International Trade Commission (ITC) to block sales and imports of the Njoy Ace vapor device, claiming that the product infringes several Juul patents. The FTC dismissed the complaint against Njoy parent Altria Group for its purchase of a 35 percent stake in Juul Labs after Altria’s pullout. New York City accuses Magellan Technology Inc., Ecto World LLC (Demand Vape), Mahant Krupa 56 LLC (Empire Vape Distributors) and Star Vape Corp. of racketeering for selling illegal flavored vapes. Jason Carignan moves to Chemular. The FDA gives the Ohio State University Comprehensive Cancer Center a $3.9 million grant to evaluate the effects of e-cigarette flavors on the smoking behaviors of current adult smokers. Philip Morris International acquires Syqe Medical, an Israeli company, for an estimated $650 million. Juul Labs submits a PMTA to the U.S. FDA for the Juul2 system. China’s State Tobacco Monopoly Administration releases the guidelines for vape exports. A study linking nicotine vapes to liver disease was retracted from Gastroenterology Research. The FDA sends more warning letters for Esco Bars and Elf Bar sales. China vape exports top $3.36 billion for the first half of 2023.
August
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Ukraine imposes a consumption tax on disposable vapes. Venezuela bans all vaping products. The Philippines passes a law forcing importers of raw materials for vaping products to seek special clearances to release shipments. High Light Vape, which sells a vape pen disguised as a highlighter, is lambasted by the media. Njoy asks the ITC to ban the import and sale of certain Juul products. New Zealand imposes new regulations to limit youth vaping. The Coalition of Asia Pacific Tobacco Harm Reduction Advocates launches its shadow report on the World Health Organization’s failing tobacco harm reduction strategy. Juul Labs announces a company restructuring aimed at reducing operating costs. Romania bans flavors for heated-tobacco products. Suriname bans the sale of all vaping products. The U.S. Court of Appeals for the D.C. Circuit sides with Fontem U.S. in a ruling that the FDA failed to conduct a proper analysis before rejecting some vaping product marketing applications.
September
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The U.K. Vaping Industry Association announces that it will exclude tobacco companies from its membership. Indonesia legalizes vaping. Esco Bars’ manufacturer files a lawsuit challenging the FDA’s import ban of its products. Vaporesso becomes the first licensed company to sell open systems in the UAE. New York opens state cannabis licensing to the public. The FDA sends warning letters to 15 companies that market products under the brand names Elf Bar, EB Design, Lava, Cali, Bang and Kangertech. A massive fire destroys U.K. e-liquid and hardware brand Dinner Lady’s factory. Ispire announces that its fiscal year 2023 saw a 100.4 percent and a 10.9 percent surge in cannabis and tobacco vaping product revenues, respectively. Healthier Choices Management Corp. sues R.J. Reynolds Vapor Co. seeking royalties from sales of its Vuse Alto vape pens, chargers and pre-filled liquid pods, alleging the products infringe a patent. The FDA imposes civil money penalties on 22 retailers for the illegal sale of Elf Bar/EB Design products.
October
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Philip Morris International unveils LEVIA, a zero-tobacco stick for use with its IQOS heat-not-burn device. A new study, E-Cigarette Flavor Restrictions’ Effects on Tobacco Product Sales, finds that flavor bans boost sales of traditional combustible cigarettes. U.K. Prime Minister Rishi Sunak proposes a tobacco endgame plan. The U.S. Supreme Court declines to hear Avail Vapor’s arguments against the FDA’s regulatory authorization process. ECigintelligence reports that disposable e-cigarettes account for almost 40 percent of the global vape sector. The American Vaping Association ends operations; Greg Conley joins the American Vaping Manufacturers Association. The FDA declines to issue a marketing order for flavored Vuse Alto pods. Elf Bar changes its name to defy a U.S. import ban. Njoy files lawsuits against 34 foreign and domestic manufacturers, distributors and online retailers of illicit disposable vaping products. Logic Technology Development loses a court appeal to halt the FDA’s ban on the company’s menthol-flavored pods. Czechia bans flavors for heated-tobacco products. Altria says a booming illegal disposable flavored vape market is causing a major decline in the sales of its authorized vaping products.
November
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Italy’s Regional Administrative Court of Lazio (TAR) suspends a decree that would make CBD oil a narcotic substance until Jan. 16, 2024. The global vaping market will reach $93.94 billion in value by 2030, registering a CAGR of 16.27 percent from 2022 to 2030, according to Straits Research. BAT announces a $90.5 million investment in Organigram. Ohio becomes the 24th U.S. state to allow adult marijuana use for nonmedical purposes. Research from the United Nations suggests that toys are a much larger contributor to electronic waste than vaping products. The FDA again sends warning letters to online retailers for selling disposable products marketed under the brand names Elf Bar, EB Design, Bang, Cali Bars and Lava. The 10th Conference of the Parties (COP10) to the World Health Organization Framework Convention on Tobacco Control is postponed, officially due to unrest in the host nation, Panama.
Louisiana’s state Office of Alcohol and Tobacco Control releases a list of nearly 400 approved vape products for legal sale in the state. Juul Labs raises an estimated $1.3 billion in funding. Ispire Technology reports revenue of $42.9 million and gross profit of $6.9 million in the quarter that ended Sept. 30. The FDA increases the penalties for violations of federal nicotine product laws. PMI expands IQOS Iluma in the Middle East. New Zealand’s new coalition government announces a cancelation of the country’s controversial generational tobacco ban. The Foundation for a Smoke-Free World, which was originally funded by PMI, says it will no longer accept any monetary support from the nicotine industry. The WHO announces the dates for the resumed in-person sessions of COP10 for February 2024. Australia will ban imports of disposable vapes beginning Jan. 1, 2024. France plans to ban disposables by 2025.
December
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(Editor’s Note: This magazine went to press in December, so the month may be incomplete.) The FDA announces that it is now estimating that completion of PMTA reviews may be delayed as the agency considers the D.C. Circuit’s opinion in Fontem U.S. v. FDA, affirming in part and vacating and remanding in part MDOs for certain vaping products. U.S. House lawmakers demand information from federal officials on what they are doing to stop the influx of kid-appealing electronic cigarettes from China. Mexico’s Supreme Court of Justice rules that the presidential decree banning the sale of e-cigarettes is unconstitutional. The FDA announces that it has filed civil money penalty complaints against 25 brick-and-mortar and online retailers for selling unauthorized Elf Bar, EB Design and other e-cigarette products. France’s National Assembly unanimously approves a bill to ban single-use electronic cigarettes. Vuse’s market share rose from 41.5 percent to 42 percent, surpassing No. 2 Juul which dropped from 24.7 percent to 24.3 percent. Guam proposes rules to stiffen the fees and penalties for vape sales to minors.
Looking ahead
It’s impossible to predict what the vaping industry will look like by the end of 2024. Industry insiders expect regulators to crack down on disposable vaping products, and misinformation will likely continue to run wild.
The U.S. will probably see a decline in product variety because the FDA is unlikely to approve many devices. However, globally, especially in the EU and the U.K., the industry should continue to thrive and expand. More importantly, innovation should continue to thrive outside the U.S.
Gregory Conley, director of legislative and external affairs for the American Vapor Manufacturers Association, predicted at the end of 2022 that the FDA’s policy on vaping products would continue to be characterized by regulatory paralysis and the search for the least politically controversial regulatory option, and the industry wouldn’t hear rulings on many PMTAs until 2024 or later. He was correct on both counts.
Looking forward to 2024, Conley told Vapor Voice that the vaping industry should expect a turbulent ride, particularly in the United States. He predicts that the most significant hurdle remains the FDA’s CTP.
“Under the current leadership of Brian King, the agency’s stance toward vaping products has become even more antagonistic despite a drop in youth vaping to its lowest levels in a decade,” said Conley. “This tension is heightened by ongoing court cases that might force reforms within the CTP, but these changes are likely to be met with considerable internal resistance and intransigence.
“Those in the industry should not be naive. The regulatory landscape in the U.S. for vaping businesses, regardless of their size, is likely to get worse before it gets better. This is a hard truth we need to brace for.”
Beyond the federal level, a critical challenge will continue to come from state governments and major tobacco companies like Altria and R.J. Reynolds. The rise of synthetic nicotine-containing disposable vaping products, which are impacting cigarette sales and the vapor market shares of the major tobacco companies, is leading to a push for state-level PMTA registries, according to Conley.
“In essence, these bills seek to deputize state regulatory agencies to behave as mini-PMTA enforcement divisions. The true effect of these registries is to ban all products that submitted their PMTAs after September of 2020. In plain English, this means nearly every disposable vaping product on the market becomes illegal to sell,” Conley explains. “Such measures have already been implemented in Alabama, Oklahoma and Louisiana, leading to a disruption in the market dynamics. Law-abiding retailers and average adult consumers are suffering as a result.”
Globally, Conley predicts that the vaping industry will continue to go up against well-funded prohibitionist campaigns spearheaded by organizations bankrolled by Michael Bloomberg. However, there’s a silver lining: The evidence supporting regulation over outright bans continues to grow.
“I’m cautiously optimistic that we’ll see countries in Latin America and Southeast Asia begin to revisit their previous, misguided policies. Regrettably, however, the anti-disposable furor is likely to get even more heated in Europe,” said Conley. “For adult consumers looking for hassle-free nicotine consumption, there’s never been a better time than now. The market has evolved tremendously in terms of product quality and variety. However, the picture is starkly different for businesses in the vaping industry. Until there is real reform that regulates the products adults want, like flavored disposables, being successful in this industry may require risking your livelihood and potentially your freedom.”
Conley said the industry must remain vigilant because regulatory challenges, particularly in the U.S., coupled with global policy shifts and market dynamics suggest that the industry’s path will be rocky in the short term. “The hope is for a future where nicotine control policies are grounded in harm reduction principles rather than mirroring a drug war,” he said. “However, we’re currently seeing a trend that veers toward the latter.”
The U.S. Food and Drug Administration is considering court opinions before finalizing PMTA reviews.
VV staff
The U.S. Food and Drug Administration stated in prior status reports for its premarket tobacco product applications (PMTAs) that the agency would complete a review of 100 percent of the applications by the end of 2023.
The agency is now estimating that completion of the reviews may be delayed as the regulatory agency considers the D.C. Circuit’s opinion in Fontem US v. FDA, affirming in part and vacating and remanding in part marketing denial orders for certain vaping products. Fontem US, a subsidiary of Imperial Brands PLC and parent to Fontem U.S., owns the global e-cigarette brand blu. In August, the court found that the FDA failed to justify its denial of Fontem U.S.’ unflavored vape products on public health grounds.
“As to Fontem’s flavored products, the FDA reasonably found a lack of evidence that the benefits of such products to adult smokers sufficiently outweighed the potential risks to young nonsmokers. As to Fontem’s unflavored products, however, the FDA acted unlawfully by failing to engage in the holistic public health analysis required by the statute,” the opinion states. “The agency did not take into account the potential benefits of unflavored products or weigh those benefits against risks to the public health.”
The original PMTA completion date was Sept. 9, 2021; however, the FDA stated it was unable to meet that goal due to the extremely large number of PMTAs filed by manufacturers.
The FDA is under a Maryland Federal District Court order to file regular status reports on the agency’s review of PMTAs. The court case that ended in a court-imposed deadline for the FDA was filed by health groups seeking a timeline for the review of the PMTAs that were filed with the agency by Sept. 9, 2020.
The court order stems from litigation filed by health groups against the FDA seeking a court-imposed deadline for finalizing the review of the PMTAs that were filed with the agency by Sept. 9, 2020.
The court-imposed deadline to complete the agency’s review was originally Sept. 9, 2021, which the FDA was unable to meet due to the extremely large number of PMTAs filed by manufacturers.
The most recent and the FDA’s seventh status report was filed on Oct. 23, 2023, according to media reports. Specifically, in these reports, the FDA provides an update on the progress of finalizing the agency’s review of pending PMTA “covered applications.”
In the order requiring the FDA to submit status reports, the Maryland court stated that “covered applications” are limited to applications for products that are sold under the brand names Juul, Vuse, Njoy, Logic, blu, Smok, Suorin or Puff Bar. Additionally, any product with a reach of 2 percent or more of total “Retail Dollar Sales” in Nielsen’s Total E-Cig Market and Players or Disposable E-Cig Market and Players’ reports.
For such new tobacco products to be lawfully marketed in the United States, the Family Smoking Prevention and Tobacco Control Act requires the FDA to complete a substantive review of the PMTA for each new tobacco product and issue a marketing granted order authorizing the sale of the product. According to the FDA’s Oct. 23 status report, the agency has completed its review of 69 percent of the 186 pending covered applications.
The FDA states that it will file the next status report with the court by Jan. 22.
Control of the U.S. cannabinoid market will be fueled by lobbying and lawsuits in 2024.
By Rod Kight
During the past six months, I have repeatedly been asked to predict what will happen with the U.S. Farm Bill. This is because the Agriculture Improvement Act of 2018, better known as the “2018 Farm Bill,” expired at the end of September. “Will it change?” “Will hemp be outlawed?” “Will I still be able to sell [insert THCa, delta-8 THC, D9 gummies, etc.]?” “What can we do to ensure that hemp remains legal?” Although I routinely discuss this with lobbyists and associations, the fact is that no one knows what will happen with the next Farm Bill.
Fortunately, that issue will not be decided for almost another year, which is plenty of time for the rapidly expanding hemp industry to grow even bigger.
(a) Extension.—Except as otherwise provided in this section and the amendments made by this section, notwithstanding any other provision of law, the authorities (including any limitations on the authorities) provided by each provision of the Agriculture Improvement Act of 2018 (Public Law 115–334; 132 Stat. 4490) and each provision of law amended by that act (and for mandatory programs at such funding levels), as in effect on Sept. 30, 2023, shall continue, and the authorities shall be carried out, until the later of—(1) Sept. 30, 2024; or (2) the date specified in the provision of that act or the provision of law amended by that act.
President Biden is expected to sign the act.
This means that we will not likely have a new Farm Bill until the fall of 2024. Given that the 2018 Farm Bill is the basis for the hemp cannabinoid market, which Whitney Economics recently reported has a demand of $28.4 billion (more than the marijuana industry and on par with the craft beer industry), maintaining status quo for another year is a good thing for the industry.
Rod Kight
In addition to an additional window of time to continue its progress of bringing cannabis to people in the U.S., the extension will allow hemp companies to expand their sales and operations internationally. This is because hemp can cross borders, and many current hemp products meet the emerging standards set by countries who are creating cannabis programs.
This does not mean that the hemp industry will take a break from politics. In fact, the reality is quite the opposite. There is a growing dispute, known as the “Cannabis Civil War,” between the hemp and marijuana industries. At stake is control over the rapidly expanding and lucrative market in cannabinoids and cannabis products. I use the term “cannabis” in this context as a generic botanical term to encompass both federally legal hemp and federally illegal marijuana. In addition to intensive lobbying efforts by both sides of the cannabis industry, there have been a number of important decisions in recent lawsuits.
For this reason, I will spend the rest of this article discussing important rulings in four recent lawsuits filed by hemp companies and hemp organizations against various states regarding laws and rules that they contend violate state and/or federal law. My firm has worked with the hemp plaintiffs in some of these lawsuits.
Additionally, I will discuss the landmark ruling in a trademark dispute between two private parties that addressed the legal status of delta-8 tetrahydrocannabinol (D8 THC) and a decision by the Georgia Court of Appeals regarding D8 THC in the context of a criminal seizure. These cases appear to be the tip of the proverbial iceberg in the Cannabis Civil War, and I anticipate several more to follow.
BioGen v. State of Arkansas. In this case, several Arkansas hemp companies filed a lawsuit against the state, seeking an injunction prohibiting enforcement of Senate Bill 358, enacted on April 11, 2023, as “Act 629” (the Act). This bill criminalized all hemp products “produced as a result of a synthetic chemical process” and “[a]ny other psychoactive substance derived therein.”
The hemp companies argued that the Act is preempted (i.e., superseded) by the federal 2018 Farm Bill and that its provisions are unconstitutionally vague and thus void. The U.S. District Court agreed and entered an injunction barring enforcement of the Act. In its ruling, the court made three important findings: (1) the Act is preempted by federal law under the principle of “conflict preemption,” (2) the Act is preempted by federal law under the principle of “express preemption,” and (3) the Act is unconstitutionally vague and thus void.
Maryland Hemp Coalition Inc. v. Moore. The Maryland hemp industry sought an injunction prohibiting the enforcement of Maryland Code Ann. Alc. Bev. §36-1102, known as the Cannabis Reform Act (CRA), “against any person who was already lawfully in the business of selling hemp-derived products prior to July 1, 2023.”
In an expansive ruling in favor of the Maryland hemp industry, the Washington County Circuit Court found that “the interests of [the hemp industry] plaintiffs are not ‘merely academic, hypothetical or colorable,’ but rather, they are interests of survival, prosperity and, indeed, of life, liberty and property.”
In its ruling, the court addressed the issue of “whether the strict and exclusive licensing scheme under the CRA and as applied to the hemp industry is a valid exercise of legislative prerogative.” In finding it is not a valid exercise, and thus prohibiting enforcement of the CRA against the state’s hemp industry, the court ruled that the CRA “creates a monopoly that unfairly excludes many from their right to continue, or enter, a profession of their choosing, all to the detriment of the public.”
The Washington County Circuit Court went on to state that “[b]ased on the evidence and argument offered thus far, the court cannot find a rational basis to support the exclusive and exclusionary licensing scheme that has put plaintiffs out of their legitimate businesses.”
In short, the court found that the CRA creates an illegal monopoly, it unlawfully puts legitimate hemp companies out of business, and it is a “severe” and “Draconian” licensing scheme that fails to “actually benefit the communities found to have been impacted.” It also noted that the plaintiffs were not challenging the health and safety portions of the CRA.
Northern Virginia Hemp and Agriculture LLC v. the Commonwealth of Virginia. Several Virginia hemp companies sought an injunction prohibiting enforcement of SB 903, which state lawmakers enacted “in response to the growing concerns regarding delta-8 and other adulterated hemp products on the market.” The restrictions placed on hemp products by SB 903 are dramatic enough to destroy most of the state’s hemp industry.
The hemp company plaintiffs argued that SB 903 was preempted by federal law, namely the 2018 Farm Bill. The hemp companies made two preemption arguments. The first was based on federal and state definitions of hemp, and the second was related to the ability of Virginia hemp processors to ship or transport hemp through the commonwealth. The U.S. District Court found that these arguments failed, and the court denied the request for an injunction. Consequently, SB 903 is currently in effect.
The Travis County District Court ordered the DSHS to “remove from its currently published Schedule of Controlled Substances the most recent modifications of the definitions to the following terms: ‘*(31) tetrahydrocannabinols’ and ‘*(58) marihuana extract’ and any subsequent publications of the same (if any) until further order of this court.”The court further “enjoin[ed] the effectiveness going forward of the rule stated on DSHS’s website that delta-8 THC in any concentration is considered a Schedule I controlled substance.” Consequently, D8 THC is not a controlled substance in Texas.
AK Futures LLC v. Boyd Street Distro LLC.Unlike the cases summarized above, this case did not arise from a lawsuit filed by hemp companies. Rather, it arose in the context of an intellectual property dispute between the two private parties. The plaintiff, AK Futures (AK), makes vaping products. It sued Boyd Street Distro (Boyd) for infringing on its trademark and copyright rights by selling a fake version of its “Cake”-branded vaping products that contain D8 THC.
In an unusual defense, Boyd argued that AK’s case should be dismissed because its trademark rights were unenforceable based on its position that D8 THC is illegal under federal law. In ruling for AK, the U.S. Court of Appeals for the 9th Circuit upheld the injunction issued by the lower court, ruling the 2018 Farm Bill legalized the D8 THC products. Specifically, the 9th Circuit held that D8 THC is not a controlled substance under the plain and unambiguous text of the 2018 Farm Bill and that it fits within the legal definition of “hemp.”
The court also found that the method of manufacture is irrelevant. Since most D8 THC is produced through an isomerization of cannabidiol rather than an extraction from the plant, this portion of the ruling is particularly notable.
Elements Distribution v. State of Georgia. This case arose out of a criminal seizure in which the plaintiff, Elements Distribution LLC (Elements), sought the return of business records, money and products from law enforcement. In February 2022, Gwinnett County, Georgia, law enforcement officers executed a search warrant upon a warehouse owned by Elements and seized business records, currency and edible and nonedible products containing D8 THC and D10 THC.
The warrant was issued based on the affidavit of a law enforcement officer that Elements had violated OCGA §16-13-30(b), which prohibits the possession of a controlled substance with the intent to distribute by possessing and selling products containing D8 THC and D10 THC. In ruling that Elements was entitled to a return of the seized items, the Georgia Court of Appeals found that the warrant authorizing the seizure was not supported by probable cause.
The state argued that even though D8 THC and D10 THC are not themselves controlled substances, edible products containing them are controlled substances unless those products also meet the definition of “hemp products” under OCGA §2-23-3 of the Georgia Hemp Farming Act. The court found the state’s argument to have “no merit” and ordered the state to return the items it seized from Elements.
As the cases above demonstrate, there is a growing body of case law regarding the legal status of hemp and hemp products, particularly D8 THC. Of note is an emerging trend by hemp companies to sue state agencies regarding laws and regulations that severely restrict distribution of the products they sell.
The 2018 Farm Bill, which is the foundational federal law regarding the legal status of hemp, has just been extended to Sept. 30, 2024. Meanwhile, the Whitney Economics report discussed at the beginning of this article found that total demand for hemp-derived cannabinoid products exceeds that of the marijuana industry and is on par with the craft beer industry.
The latter report and extension of the 2018 Farm Bill means we can expect to see the Cannabis Civil War—and lawsuits regarding hemp products—continue in 2024.
Based in Asheville, North Carolina, USA, Rod Kight is a world-renowned attorney in the cannabis industry.
The UKVIA forum offered insight into the most significant threats to the U.K. vaping industry.
By George Gay
The U.K. vaping industry, which has benefited from some progressive government policies in the past, nevertheless found itself with the sword of Damocles hanging over its head as participants met in London for the annual forum of the U.K. Vaping Industry Association (UKVIA) on Nov. 10. And I am not being overly dramatic here.
As part of his forum presentation, the Conservative Member of Parliament Adam Afriyie warned attendees that the U.K. “could go the way of Australia in the blink of an eye”—and he wasn’t talking galahs and wombats; he was referring, I assume, to a generally very restrictive vaping environment, though not necessarily to the specific prescription-based medicalization of vaping in that country.
What was at the back of everybody’s mind on Nov. 10 was a government consultation on smoking and vaping issued in October and due to end on Dec. 6, which made the theme of the forum, “Accelerating action: Securing a world without smoking,” something of an object lesson in being careful what you wish for.
The consultation includes a proposal to make it an offense to sell any product containing tobacco to those born on or after Jan. 1, 2009, which would raise the legal smoking age by a year annually until it applies to the whole population. The government claims this has the potential to almost completely phase out tobacco smoking among young people by 2040.
Worryingly for the vaping industry, some might suggest this policy would be a way of single-handedly ensuring a U.K. without tobacco smoking, eliminating the need for products that can substitute for combustible cigarettes, such as vapes. And for those wedded to the idea that vapers should be drawn only from the ranks of smokers, it would mean the vaping industry had a limited future, one where, within a predictable timeframe, it would simply be managing decline.
On the other hand, some might argue that with one of the UKVIA’s goals being to support the government in reaching its 2030 smoke-free target, and given the government’s claims about the damage caused by tobacco smoking being so alarming, timing is of the essence and that vaping can help things along, though the idea that it is necessary to act speedily is perhaps undermined by the facts that the risk of cigarette smoking has been known about for more than half a century, and substitute products have been around for even longer.
Credit: Fotolia Premium
On the other hand, if I haven’t run out of hands, the future might not look this bleak because there is the usually unspoken argument, with which I would agree, that vapers need not be recruited only from the ranks of smokers. We must be grown up and realize that some people will, for the foreseeable future, seek recreational drugs, and nicotine delivered through vaping must be a better, less risky candidate than many others on offer, especially alcohol, which surely must be the subject of the next government consultation.
But I digress. There are proposals in the consultation that forum participants will likely have considered to be more directly threatening than a creeping tobacco smoking ban. “The U.K. government and devolved administrations [those in Northern Ireland, Scotland and Wales] have a duty to protect our children from the potential harms associated with underage vaping while their lungs and brains are still developing,” the consultation says in part. “So, the U.K. government and devolved administrations are consulting on several proposals on youth vaping, including restricting flavors, regulating point-of-sale displays, regulating packaging and presentation, considering restricting the supply and sale of disposable vapes, whether regulations should extend to non-nicotine vapes and taking action on the affordability of vapes.
What I find a little concerning about the above is that, unless the consultation document was put together by people who started messing with nicotine before their brains had fully developed, it seems to have been written in something of a rush. The fourth proposal is apparently about “consulting on … considering restricting,” which seems a mite convoluted. And the fifth proposal goes into passive mode whereby the regulations might extend, seemingly of their own accord. That is creepy.
These might seem to be minor semantic matters, but I’m not sure they are because they reflect on how much time and effort went into producing the consultation document and, more worryingly perhaps, suggest that not enough time will go into examining the submissions. Afriyie, who is the vice-chair of the All-party Parliamentary Group for Vaping, suggested the U.K.’s civil servants were well informed and committed to the U.K.’s principle of harm reduction and would make a good job of reviewing the consultation, ensuring submissions were evidence based and making pragmatic recommendations to ministers. I wish I were so confident.
Civil servants presumably wrote the consultation, which is not in my view objective but comes with an agenda. The sixth paragraph kicks off with an almost meaningless statement: “No other consumer product kills up to two-thirds of its users.”
Glossing over the fact that no “product” had been identified by this stage of the text and that, therefore, to refer to “no other product” was meaningless, it is the case that “up to two-thirds” could mean none, which was perhaps not what the writers had in mind. And the word “kills,” though almost universally used, is clearly misleading. This is not to denigrate civil servants, just to point out that they are probably too few in numbers fully to perform the tasks assigned to them.
Credit: WavebreakMediaMicro
I worry the government believes that what it is dealing with here is not a health matter but a political one, especially given that a general election is likely to be called next year. Addressing the attendees about vaping by those underage, Afriyie, who is not standing at the next election, said, “… if any of your products, I mean any of them, have fancy colors or have packaging or have names or have flavors with names that would even vaguely appeal to young people, can I just say, just stop.
Because if next year I come to this conference and we’ve gone the route of Australia, do you know, it will be your fault. It will be your fault for not policing the industry and ensuring that you are absolutely responsible in your new role of healthcare.”
Of course, the UKVIA has no powers to police the industry. The association can encourage and cajole its members to ensure their products do not specifically appeal to those underage, but then it is unlikely that its members will be the ones to step out of line.
There is no doubt that vapes are getting into the hands of those who are too young legally to buy them, but, for a long time, the UKVIA has been telling the government about this trend and suggesting remedial actions that could be taken, including the licensing of retailers and heavy fines for those who recklessly sell vapes to those underage. Not only have such suggestions fallen on deaf ears, but successive Conservative governments have run a ruthless and reckless decade-long program of austerity that has, in part, decimated the organizations charged with policing retail activities.
According to a press note issued by Arcus Compliance on Nov. 9, the day before the forum was held, a leading academic at Imperial College London had reported that the budgets of one of those organizations, Trading Standards, had been halved: cut by an estimated £200 million ($254.04 million) since 2010.
Data gathered through Freedom of Information requests by Arcus Compliance reportedly showed that across 11 major provincial U.K. cities, which have a shared population of more than 5.5 million people, just 21 successful prosecutions had been made against retailers for underage/illicit sales between 2021 and early 2023. Further, the total amount of fines handed down across these cities over the same period was £2,188.
The managing director of Arcus Compliance, Robert Sidebottom, who was co-chair of the forum, said the concerning lack of enforcement in the form of prosecutions and penalties demonstrated the system was in serious distress.
“The government has now pledged £30 million to help intercept illegal tobacco and vaping goods at the border and to tackle youth access,” he was quoted in the press note as saying. “While this is a welcome development, we can’t just slap a multimillion-pound Band-Aid on the issue of underage and illicit vape sales and call it a day—especially if parliamentarians move on considerations to restrict the sale of disposable vapes.”
This was a theme addressed by John Dunne, the UKVIA’s director general, in his forum presentation. While acknowledging that it was necessary to urgently address what he described as the unintended consequences of sales to those underage, the sale of illicit products and the environmental damage caused by vapes, he pointed out that while current regulations were not being enforced, it made no sense to add further punitive regulations to the industry’s operations.
John Dunne
Dunne, whose job must have been made hugely more difficult in recent times by the almost constant churning within ministerial departments caused by the unstable, almost unhinged, turmoil within the ruling Conservative Party, expressed concern that the contents of the vaping consultation had been swayed by the court of public opinion, driven in turn by click-bait journalism, and therefore threatened “to undo all of the good work that our sector has done in being the most disruptive force in history in addressing the most preventable cause of death, which is smoking.”
The forum, which apparently is now the biggest business-to-business event in the U.K., was well organized and held within a comfortable, well-run venue, the QEII Centre in Westminster, London. There was a program of practical panel discussions and presentations, which included an address by Weinuo Ao, the secretary general of the China Electronic Chamber of Commerce, which, in cooperation with the UKVIA, organized the first trade delegation of Chinese companies to attend a UKVIA forum.
There was a panel session on the thorny, seemingly unresolvable, problem of trying to change public perceptions about vaping for the better and one on the equally thorny and divisive subject of addressing the environmental impact of vapes. It is almost painful to see how both of these issues, like the enforcement issue, are largely out of the industry’s hands.
Enforcement is in the hands of the government, and changing perceptions would require those currently spreading misleading information about vaping to stop what they are doing, while it is consumers who should, in their own interests, take the environmental issue in hand by not carelessly discarding their vapes.
One panel discussed the future of vaping, another looked at the future of retailing and yet another examined whether in the future it would be possible or even desirable to take harm reduction to a new level—perhaps beyond the 95 percent less risky figure normally quoted in the U.K.
Alongside the forum was a mini-exhibition, and an awards dinner followed, co-compared by Marina Murphy, senior director of scientific and medical affairs at ANDS, and Sairah Salim-Sartoni, founder of Salim-Sartoni Associates. Sixteen awards were up for grabs, including one for most supportive parliamentarian, which went to Afriyie.
Finally, whereas my take on the forum was that the most significant threats to the vaping industry in the U.K. were being caused by a lack of enforcement of current regulations, there was hope. For instance, from my observations, the government could take its enforcement activities to a new level simply by taking some lessons from Sidebottom and his co-chair, Jeannie Cameron, the CEO of JCIC International and the first woman to chair a UKVIA forum.
Sidebottom, who is ex-military, and Cameron ran the show like a military operation, and I don’t mean a retreat. Presentation timings were policed strictly with Sidebottom threatening stragglers with being grasped in a headlock and dragged from the stage and Cameron saying something about a whip. Unless I was mistaken, at least one participant was stopped mid-sentence …
Indonesia will start imposing a tax on e-cigarettes from the start of 2024.
The additional levy is on top of the existing excise levy as the country steps up efforts to limit consumption in Southeast Asia’s largest economy.
E-cigarettes will be taxed at 10% of the prevailing excise rate, according to a finance ministry regulation, according to media reports.
In Indonesia, tobacco products are subject to two levies — at central and local government levels — of which 50% of the revenue is earmarked for public health services.
“Long term consumption of electronic cigarettes has been shown to affect people’s health,” the finance ministry said, adding the tax on e-cigarettes is also needed to level the playing field with conventional cigarettes.
A group of e-cigarette producers and customers (PAVENAS) criticized the lack of discussion and the timing of the implementation of the tax, considering excise tariffs for the product will increase next year.
The group said in a statement it may consider going to court to challenge the tax if the government goes ahead with it.
The largest county in Oregon, the 27th largest U.S. state, will ban all flavored nicotine products other than tobacco beginning January 1. Multnomah County will go into effect after surviving a court challenge.
Last week, Multnomah County Circuit Court Judge Benjamin Souede denied a request by the tobacco industry to halt enforcement of the county ordinance.
The decision paves the way for Oregon’s largest county to become the first in the state to ban flavored tobacco, according to media reports.
Earlier this year in Salem, state lawmakers considered House Bill 3090, which would have enacted a similar ban statewide. It had the support of one Republican lawmaker, Sen. Bill Hansell of Athena, and two Portland physicians, Rep. Lisa Reynolds and Sen. Elizabeth Steiner.
It passed out of the House health care committee on a party-line vote, with Democrats in favor and Republicans against, but died in the Joint Ways and Means Committee.
California has filed lawsuits against two online retailers of vaping products.
Attorney General Rob Bonta alleges that the California companies violated state and federal laws governing tobacco sales and the state’s Unfair Competition Law, in part by failing to properly verify the ages of consumers before selling them tobacco products and by selling tobacco products through remote sales transactions.
The complaints against the company and its CEO (together, “Ejuicesteals”) as well as E-Juice Vapor, Inc. along with an affiliated entity and individuals (collectively, “E-Juice Vapor”) allege multiple violations of California tobacco sale laws, including failing to comply with age verification requirements and with various shipping and delivery requirements, according to JD Supra.
The AG’s office requests injunctive and equitable relief, civil penalties, damages, and costs.
One of the largest groups of visitors to Indonesia, and Bali in particular, are Australians, home to the world’s most expensive cigarettes, at more than $25 a pack. Over the course of my time in Bali, I asked some Aussies if they stocked up on smokes while they were visiting, and unanimously, they all said, “hell, yes!”
