Tag: regulations

  • China Vows to Regulate Vapor, RLX Stock Tumbles

    China Vows to Regulate Vapor, RLX Stock Tumbles

    China’s Ministry of Industry and Information Technology (MIIT) and the State Tobacco Monopoly Administration announced today the Chinese government’s intent to overhaul rules governing the vapor and electronic nicotine-delivery systems (ENDS) market. The news started a swift downfall of shares of RLX Technology, parent to RELX, China’s largest e-cigarette brand, on the New York Stock Exchange. At 2:45pm today, RLX was down nearly 45 percent to $10.69 per share after recent high of $19.46 per share on March 19.

    RELX vaporizer
    Credit: RLX Technology

    Draft regulations posted online by MIIT suggest it will seek to regulate these products similarly to ordinary cigarettes. The ministry is seeking public comments on the draft regulations until April 22. The implications of the draft regulations could be wide-ranging as, with an estimated 300 million smokers, China is considered the world’s largest market for tobacco product.

    “In order to implement the decision-making and deployment of the CPC Central Committee and the State Council, further strengthen the supervision of new tobacco products such as e-cigarettes, and safeguard the legitimate rights and interests of consumers, we have drafted the Decision on Amending the Regulations on the Implementation of the Tobacco Monopoly Law of the People’s Republic of China,” the rule states. “The amendment is mainly to implement the requirements of the CPC Central Committee and the State Council on promoting the rule of law in the supervision of e-cigarettes , to clarify the legal basis for the supervision of new tobacco products such as e-cigarettes , and to do a good job in connecting with laws and regulations such as the Law of the People’s Republic of China on the Protection of Minors, so as to play an important role in strengthening the rule of law , stabilizing expectations and promoting the long-term.”

    RLX Technology raised $1.4 billion during its initial public offering (IPO) in January this year. It sold 116.5 million shares with a target price of between US$8 and US$10 a share. Its successful market debut turned its 39-year-old founder, Wang Ying, into a billionaire overnight with an estimated net worth of $24.8 billion.

    In its prospectus, RLX stated that vaping products only have a 1.2 percent penetration rate in China, compared with 32.4 percent in the U.S. According to the China-based Electronic Cigarette Industry Committee, China’s 2020 e-cigarette sales were an estimated 14.5 billion RMB yuan ($2.2 billion), an increase of 30 percent from 2019 (11.2 billion RMB yuan). According to Grandview Research, the US e-cigarette market in 2019 and was valued at $5.34 billion and is expected to reach $6.50 billion in 2020.

    RELX recently announced its partnership with 110 authorized distributors to supply its products to over 5,000 RELX-branded partner stores, and over 100,000 other retail outlets nationwide, covering over 250 cities in China, according to its prospectus. Revenue for the company nearly doubled in the nine months ended September 30, 2020 to $324 million, with a net income of $16 million, the latest figures available at the time of this writing.

    But tobacco companies are increasingly facing scrutiny from regulators in China. Currently, the only regulatory actions taken by Chinese authorities are in 2018, the country made it a crime to sell a vapor product to anyone under 18 years of age and then, in November 2019, an online sales ban was implemented in order to further prevent youth initiation. In 2020, the country passed the Law of the People’s Republic of China on the Protection of Minors. That law is aimed at preventing parents or other guardians from “indulging or instigating minors” to smoke or vape.

    CNTC is a source of major funding for the Chinese government. Its contribution accounted for an estimated 5.45 percent of the country’s tax revenue in 2018. That amounts to 10.8 trillion yuan ($1.5 trillion), according to media reports. If CNTC were to enter the vapor market, the monopoly’s existing 5 million domestic retail outlets could present a major challenge for private vape shop owners.

    Wang told Reuters in a recent news article that she’s “not worried” about the government’s impact on the sector. The products will continue to remain available, she said, “as long as there’s proof that this is a good solution for smokers.”

  • Public Comment Begins for USPS ENDS Mail Rules

    Public Comment Begins for USPS ENDS Mail Rules

    Interested parties will have 30 days to comment on the U.S. Postal Service rules for mailing electronic nicotine-delivery systems (ENDS). The USPS posted the rules on Wednesday and they were published in the Federal Register today. Comments must be submitted by March 22. The rules will presumably go into effect on March 27.

    mailboxes
    Credit:USPS

    “The Postal Service proposes to revise Publication 52, Hazardous, Restricted, and Perishable Mail, to incorporate new statutory restrictions on the mailing of electronic nicotine delivery systems,” the listing reads. “Such items would be subject to the same prohibition as cigarettes and smokeless tobacco, subject to many of the same exceptions.”

    The Preventing Online Sales of E-Cigarettes to Children Act, which placed ENDS under the PACT Act, was enacted on December 27, 2020 and becomes effective 90 days after enactment (March 27, 2021). The USPO rule states that the agency will only mail ENDS products under narrowly defined circumstances:

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

    Many business were unsure if B2B mailing would be allowed. The unpublished rules say they will be allowed. According to Azim Chowdhury, a partner at Keller and Heckman, the PACT Act has historically exempted businesses-to-business deliveries from the USPS ban.

    Specifically, the USPS ban does not extend to tobacco products mailed only for business purposes between legally operating businesses that have all applicable state and federal government licenses or permits and are engaged in tobacco product manufacturing, distribution, wholesale, export, import, testing, investigation, or research.

    “Companies seeking to use USPS for business-to-business deliveries must first submit an application to the USPS Pricing and Classification Service Center and comply with several other shipping, labeling, and delivery requirements,” said Chowdhury.

    Email comments, containing the name and address of the commenter, may be sent to: PCFederalRegister@usps.gov, with a subject line of “E-Cigarette Restrictions.” Faxed comments are not accepted. 

  • Ampol Willing to ‘Train’ Staff to Promote E-Cig Benefits

    Ampol Willing to ‘Train’ Staff to Promote E-Cig Benefits

    Credit: Caltex

    Ampol, a major Australian convenience store retailer, says it wants to train employees to suggest e-cigarettes as an alternative to combustible cigarettes in a bid to help reduce the smoking rate.

    Ampol, the parent Caltex and Foodary outlets across the country, urged the government to allow nicotine-based vaping products to be sold in the same way as cigarettes in its submission to a Senate inquiry, according to an article in The Sydney Morning Herald.

    Ampol’s head of government affairs, Todd Loydell, wrote that the company was well positioned to help cigarette smokers transition to “less harmful products” and was willing to trial selling e-cigarette products through its large network of convenience stores. “For example, our retail staff could provide a verbal cue to customers who ask to purchase cigarettes, encouraging them to consider the alternative options available to them in store,” he wrote.

    Australia’s Senate select committee on tobacco harm reduction will hold its first public hearing today into nicotine vaping products, which currently can be legally purchased only with a doctor’s prescription.

    Committee chair Hollie Hughes said the more than 8000 submissions had been overwhelmingly supportive of vaping and “overwhelmingly not in favor of a script model”.

    “I would like to see recommendations around very serious regulation,” she said. “I don’t think anyone is going to be a non-smoker and take it up. I think it’s an incredibly powerful cessation tool and part of [the] discussion of further reducing smoking rates in Australia.”

    The National Retailers Association, which represents 28,000 retailers across the country, also advocated for a consumer model for vaping regulation.

    This is the second recent inquiry into tobacco harm reduction and nicotine vaping. After a year-long inquiry, the standing committee on health, aged care and sport recommended in 2018 that the TGA should continue to have oversight of nicotine products.