Vaping product taxes and regulations in Louisiana may be taking a devastating toll on small businesses.
Unlimited Vapor, according to the Shreveport Times, stands with limited supply due to the recent increase in state taxes on nicotine vape products and e-cigarettes. On June 15, 2023, Louisiana Gov. John Bel Edwards signed into law the bill to increase the excise tax on vapes from 5 cents per milliliter of nicotine solution to 15 cents.
“We usually special order it for customers, if they know what flavor they want, what milligram they want, because of the excise tax going up as high as it is, we don’t want to order it and have it just sitting there,” said Selena Price, manager of Unlimited Vapor.
The tax increase went into effect on July 1, and is only impacting Louisiana. Border states such as Texas, Arkansas and Mississippi have no excise tax on vape and e-cigarette products.
Rep. Paul Hollis of Covington sponsored House Bill 635 Act 414 to discourage the use of vape and e-cigarette products through an increase in excise tax. The Shreveport Times reached out to Hollis for a statement, but did not receive a response.
Many are calling the new rules a de-facto flavor ban. It tripled the tax on vape liquid from 5 cents per milliliter to 15 cents per milliliter and earmarks the revenue the tax will generate for pay raises for state troopers. This has forced many products off of vape shop shelves. This is forcing most vape products off of store shelves.
The legislation, Act 414 by Rep. Paul Hollis, started out as a bill to increase the tax on vapes, with Hollis saying he wanted to discourage their use. But it quickly morphed into a broader law that dramatically scales back what vapes can be sold, after wholesalers, major tobacco companies and legislators concerned with youth use got involved.
The U.S. Food and Drug Administration is continuing its crackdown on illegal disposable vape devices. The regulatory agency has issued warning letters to 189 retailers for selling unauthorized tobacco products, specifically Elf Bar and Esco Bars brands.
“The FDA is prepared to use all of its authorities to ensure these, and other illegal and youth-appealing products, stay out of the hands of kids,” said FDA Commissioner Robert M. Califf. “We are committed to a multipronged approach using regulation, compliance and enforcement action and education to protect our nation’s youth.”
The warning letters are the result of a nationwide retailer inspection blitz over the past several weeks cracking down on the sale of these unauthorized e-cigarettes.
The FDA continuously monitors the marketplace and took these actions as emerging marketplace data led to concerns over their appeal and risks to young people, according to an FDA release. More specifically, the agency’s ongoing surveillance efforts helped FDA identify Elf Bar and Esco Bars as being among the most popular brands in the United States and having high youth appeal.
“All players in the supply chain—including retailers—have a role in keeping illegal e-cigarettes off the shelves,” said Brian King, director of the FDA’s Center for Tobacco Products (CTP). “This latest blitz should be a wake-up call for retailers of Elf Bar and Esco Bars products nationwide. If they’re waiting for a personal invitation to comply with the law, they might just get it in the form of a warning letter or other action from the FDA.”
Last month, the FDA issued import alerts for all products under both the Elf Bar and Esco Bars brands. An import alert places these tobacco products on the red list, which makes them subject to Detention Without Physical Examination and allows the FDA to detain a product without physically examining it at the time of entry.
Elf Bar and Esco Bars products do not have the required marketing authorization from the FDA.
Retail associations have asked the U.S. Food and Drug Administration to provide them with list of e-cigarettes and vape products that are legal to market, reports NACS.
In October 2021, NACS and five other retail associations sent a letter to the FDA asking the agency to publish the names of vapor products for which it has taken action. In their letters to FDA, the associations expressed the critical nature of this list for their retail members who need to know which products are legal to sell and which are not.
The FDA formally responded in January 2022, stating that it understands the retail groups’ request for specific names of products and that the agency is working on updating the list with final actions taken on individual products, including those that received marketing denial orders (MDOs).
“Given the large number of products involved, sharing this information requires additional time and resources so that the Agency does not disclose confidential commercial information (CCI) about products that are not yet marketed,” stated the agency.
In a more recent letter to the FDA, the associations said they “can appreciate the immense task of reviewing millions of applications. However, there remains widespread confusion in the marketplace as to which products can remain on shelves and which need to be removed.”
“While Director Zeller encouraged retailers to contact manufacturers with any questions about products in their inventory, this is not an adequate or fair solution. It places the burden on retailers to verify the marketing status of ENDS and vape products with the manufacturers. Many of our members are small operators who do not have the resources or bandwidth to contact the manufacturers,” wrote the associations.
“Moreover, manufacturers providing a list does not guarantee accuracy or give the assurance that a verified list from the agency would give. These retailers stand to face enforcement if they are out of compliance with the law and the only way to ensure they can comply is if they have a verified list from the agency.”
Renewed support for a list of legal products come after the FDA issued warning letters to 30 retailers, including one distributor, for illegally selling unauthorized Puff Bar and Hyde disposable vaping products. The FDA typically sends warning letters to manufacturers, however, now retailers are facing stiffer scrutiny.
FDA Commissioner Robert Califf said cracking down on disposable products most used by youth is a priority for the regulatory agency. “We’re committed to holding all players in the supply chain – not just manufacturers but also retailers and distributors – accountable to the law,” he said.
The Smoke-Free Alternatives Trade Association continues to help business owners navigate regulation.
By Timothy S. Donahue
In 2012, the Smoke-Free Alternatives Trade Association (SFATA), a trade association representing small and large vaping businesses, began when the industry was still in its infancy. The trade group has been a staple in the tobacco harm reduction circle for more than a decade fighting for balanced regulations in the United States. It hasn’t been easy. The U.S. Food and Drug Administration has nearly decimated the numerous small business owners who once made up most of the vaping industry.
While the industry has had to evolve, so have the trade industry groups that support it. The SFATA began as an advocacy group for states in its early stages. As federal regulation began to come into reality in 2016, the SFATA altered course and focused on getting balanced regulations on the federal level. In 2021, however, after the FDA either denied or failed to review over 8 million premarket tobacco product applications (PMTAs), it sent the industry scrambling, explains SFATA Board President and CEO April L. Meyers.
“In the winter of that year, it also sent the states scrambling, so we had to shift our focus from federal to state so that we could save as many small businesses as we could,” she says. “There were several battlefronts and issues, most notably, flavor bans.” The organization had success at the state level. The SFATA had stopped several flavor bans. It was around this time that the organization also introduced its Responsible Industry Network (RIN) program.
The RIN program helps retailers combat the problem of youth use. It’s a program that provides a postmarket surveillance pathway through data, training, accountability and corrective measures for vapor manufacturers, distributors and retailers as well as a method for law enforcement and regulatory authorities to ensure that significantly fewer vapor products end up in the hands of youth. The RIN program serves the interest of business owners navigating the complexity of a highly regulated market while also assisting enforcement agencies.
Additionally, authorities can confiscate products that do find their way into the hands of youth and conduct enforcement actions against the parties who are responsible, whether they are manufacturers, distributors, retailers or straw buyers, such as family members or friends. An added value for the industry is that curtailing youth access will lower the biased media attacks that the vapor industry targets children, creating a more stable regulatory environment that allows businesses to grow.
April Meyers, SFATA
“If you’re a small [-sized] to mid-sized manufacturer and you received a marketing order, you’d have to either hire somebody full-time to collect the data for postmarket surveillance or spend a lot of valuable time trying to do it yourself,” said Meyers. “That’s where we came up with a program that streamlines the process. Everybody’s got the same due dates and the same forms. And then the agency is looking at the same form coming in at the same time.”
To receive a marketing order, the FDA states that it “intends to consider how an applicant will target the marketing of its new tobacco product to reach its intended consumers of legal age and to assess the potential effect on nonusers.” The FDA will also consider how the applicant intends to minimize the extent to which youth can access the product and are exposed to its marketing.
“If the PMTA does not address youth access to the product, youth exposure to the product’s labeling, advertising, marketing and promotion, and youth initiation, such as describing how it proposes to restrict the sale or distribution of its product to limit potential youth access to the product, it’s going to be impossible to get a marketing order,” said Meyers. “[The] FDA may be unable to determine that the applicant has made a showing that permitting the marketing of the new tobacco product would be appropriate for the protection of public health. RIN can help provide that data. And that data can be useful in several meaningful ways.”
The RIN program will create a rich database that will expose useful sales and marketing insights for participants, according to Meyers. She said that the data can show aggregate buying and selling behaviors of vapor products, data that can also be useful when faced with federal and state flavor bans and taxation bills.
In order to further help its members, Meyers said the SFATA recently entered a “strategic alignment” with the United States Vaping Association (USVA). She said that teamwork is an important aspect of vapor advocacy and that businesses need to support each other. The partnership creates a more unified voice and prevents wasting valuable industry resources by multiple organizations doing the same work.
“You’d have to be a dual member to realize the full benefits of advocacy. We’re also trying to make it reasonably priced where a store that’s on its feet and planning to move forward can participate,” she explains. “And we wanted to keep it even across the board because we don’t want to tell a big company that you must pay more just because you’re bigger. Nor a small company [that] you have to pay so much, and then they get costed out.”
Currently, the USVA is focused on winning its lawsuit against the FDA. The USVA believes the regulatory agency didn’t consider the economic impact on small businesses that the PMTA process and subsequent denial orders would have. The USVA suit claims that the FDA acted as if vapor applicants would be able to substantially rely on public data or on 70 studies that the FDA itself was conducting at that time. However, the FDA instead wrote an impossibly burdensome PMTA rule that began putting people out of business.
The suit is hoping the courts declare the PMTA final rule in violation of the Regulatory Flexibility Act, an effort by the U.S. federal government to balance the social goals of federal regulations with the needs and capabilities of small businesses and other small entities. The USVA also hopes the judges remand the PMTA final rule to the FDA and enjoin the agency from enforcing the final rule against any members of the USVA. This would also include joint SFATA members.
The suit also criticizes the FDA for prioritizing manufacturers with the greatest market share, companies that were more well funded to tackle the PMTA process. Some of the larger companies were also allowed to make changes to issues with their PMTA submissions whereas smaller companies with the same issues received marketing denial orders for those issues.
Credit: Rafel
“If the courts hand down an emergency injunction for relief, it would mean that every member of the USVA, SFATA joint members and the named plaintiffs on the case go back into review. Where we found synergy between the organizations is if you go back into review, what happens? Are you better off? No. Do you have more time? Yes. Can you make more money in the extra time you’ve been given? Yes. But then what? If you don’t address the broken process, that is the PMTA, you have nothing,” said Meyers. “It affects every state, every business, every vapor product retailer.”
Meyers explained that joining the SFATA helps to safeguard that manufacturers are able to produce products and businesses are able to sell lifesaving vapor devices. The organization is currently laser-focused on the U.S. House of Representatives and is dedicated to trying to do its part to stamp out overzealous and overreaching legislation.
“We focus on the House because that’s where the oversight is of FDA, and that’s where most bills also get introduced. So that’s where we’ve put our focus and where most of our meetings will be concentrated on at the federal level for this year’s session,” she said. “The FDA’s rules are the problem. The members of the House we have spoken to understand that the process is broken. We are presenting science-based solutions and innovation to show that it can be fixed.” While legal action safeguards against the lack of guidance and transparency from the FDA, the SFATA is working with lawmakers to ensure that its “commonsense solutions for American smokers” are understood and communicated to the FDA and Congress, which oversees the agency, according to Meyers.
“The recent report from the Reagan-Udall Foundation found numerous wide-ranging problems at CTP,” she said. “Now Congress is asking the FDA to answer those same questions the Reagan-Udall report asked … SFATA is asking those questions too. What is your strategy? What is your plan? What are you going to do? There’s a lot of pressure on FDA to do something and be clear about it. [The] FDA can’t come up with that plan by themselves. They need industry insight and support. Our goal is to come up with that input. That’s why you would support SFATA. You want to be a part of that conversation and get that information. We are here to help.”
Sellers of e-cigarettes and other tobacco products will be fined around €430 ($469) for selling to minors, according to a recent amendment to the Law on Consumer Protection.
In Serbia, minors can purchase e-cigarettes and other products such as vapes in local markets, kiosks, and even in coffee shops, though sellers will now be fined for selling them, according to EurActive.
“In the legislative system of the Republic of Serbia, this issue is not regulated. There is no definition of electronic cigarettes and other products with or without nicotine, as well as a ban on selling them to minors. This is precisely why the urgent need for regulatory action, which is being implemented now, is emphasized,” Serbia’s Internal and Foreign Trade Ministry stated.
The relevant ministry announced that it is starting to work on amendments to the Law on Consumer Protection in this part because it believes that this is the solution to a major national problem.
“The main goal is to ban the sale of electronic cigarettes and other products to minors, as a particularly sensitive category. In this way, sanctions will also be enabled in the case of the sale, service and gifting of these products,” the Ministry stated.
With the new decision, a merchant will be fined 50,000 dinars (around €430) if they sell to a minor, the Ministry said.
The popularity of e-cigarettes and other electronic nicotine delivery systems among non-smoking youth and adults represents a significant public health problem, as they encourage nicotine addiction and expose users to carcinogenic substances.
They also increase the likelihood that individuals will start using other tobacco products, such as cigarettes, according to the Ministry.
“The conclusion of all conducted research is that by consuming an electronic cigarette, with or without nicotine filling, not only water vapor is sent into the air, but also a number of chemicals. The harmful effects of these products reflect on the health of individuals and intensively spread to all components of the environment,” it added.
The change in the law will prohibit the sale, service and gifting of electronic cigarettes with or without nicotine as well as other products intended for smoking, snorting, sucking, chewing, or inhaling vapor to persons under 18. It is also prohibited for persons under 18 to sell them.
A vape shop in Vladikavkaz, Russia in 2019. (Credit: irinabal18)
The withdrawal of European and American tobacco manufacturers and the gradual reduction of foreign e-cigarette brands doing business in Russia due to its war with Ukraine has allowed for the growth of Chinese e-cigarettes in Russia.
As Russia’s tobacco industry relies heavily on the support and investment of foreign brands, the withdrawal of international tobacco companies will cause a large shortage in the Russian tobacco market, which will lead to a sharp increase in the price of tobacco products sold in Russia, according to iGeekPhone.
By the end of 2021, there were more than 5,000 stores selling e-cigarettes in Russia, including more than 1,100 in the Moscow region.
According to real estate platform DNA REALTY, the number of tobacco shops in Russia grew by at least 20 percent in 2022, with the bulk of their profits coming from e-cigarette sales.
BAT announced it will withdraw from the Russian and Belarusian tobacco markets in 2023. Philip Morris International (PMI) and its subsidiary Fimo International, are also considering retaining their business in Russia because Russia is the seventh-largest tobacco market for PMI.
Japan Tobacco suspended investments in Russia and Imperial Brands transferred its Russian operations to a successor in Russia.
“E-cigarettes have great potential as alternatives to the tobacco market in Russia, where e-cigarette consumers account for 6.8 percent of the total number of smokers,” the article states. “After the United States and Europe, Russia is the world’s third-largest importer of electronic nicotine delivery systems (ENDS).
“China accounts for 90 percent of the global market. In 2021, China’s exports to Russia reached 82.5 billion rubles. This year it could increase by 35 percent to 111 billion rubles.”
Media outlets are reporting that BAT sent vaping wholesalers testing results that claim that nearly all major disposable vaping brands in the UK not produced by a major tobacco manufacturer contain illegal volumes of e-liquid.
Senior wholesaler sources leaked nearly 50 pages of BAT product testing data to betterRetailing, along with a letter from BAT urging wholesalers to stop selling products it claims are failing to comply with the 2ml e-liquid limit. A distributor of many of the brands named denied the claims.
In a letter sent to wholesalers by BAT UK managing director Fredrik Svensson, seen by betterRetailing, the supplier said it had commissioned “independently accredited laboratory” testing on Elf Bar 600 products purchased from supermarkets and independent retailers between 6 September 2021 and 7 March 2023.
The evidence revealed that the tested products “contained significantly more than the legal limit of 2ml of nicotine-containing e-liquid from 2.76ml to 3.88ml, with an average overfill of 58 percent.”
Testing was also conducted at the same lab on Lost Mary, Found Mary, IVG Bar, Klik Klak, SKE Crystal, Smok Mbar Pro and Solo disposable vapes. Test results for all these brands showed illegal levels of e-liquid.
Together, the brands account for nearly all disposable vaping sales in independent shops by both revenue and volume.
BAT’s letter urged: “As a responsible trading partner, we trust that you are taking appropriate steps to ensure that you are not supplying non-compliant products and that you will be urgently reviewing the supply of any products you stock, particularly those which our testing demonstrates do not comply with the TRPR [The Tobacco and Related Products Regulations 2016].”
Elfbar voluntarily pulled its products from UK shelves after finding its products did not meet legal requirements.
Recently, another Elfbar brand was pulled from UK store shelves after finding the products surpassed the legal limit for e-liquid volumes.
VPZ says it plans to have opened 20 additional stores by the end of the year as its expansion plans continue.
The Scottish vaping group’s director Doug Mutter is calling on the U.K. Government to follow the lead of New Zealand and increase regulation of the vaping market.
Edinburgh-headquartered VPZ plans to grow to 170 stores by the end of the year, according to insider.co.UK.
The chain has this year already opened stores in Hexham, Sheffield, Nottingham, Derby and Newquay.
It says Falkirk and seven “major shopping center sites” are going through the acquisition process and that further growth is planned in the North East of England and Yorkshire.
Mutter also called for tighter controls and licensing for selling vaping products.
“At VPZ, we are firmly focused on helping adult smokers quit and have helped over 700,000 people quit smoking since we were established in 2012,” he said.
BAT Rothmans has released the Glo Hyper X2 heat-not-burn device to the South Korean market, reports The Korea Times.
“Glo Hyper X2 is a next-generation e-cigarette device that will lead the BAT Group’s smoke-free product business,” said Kim Eun-ji, BAT Rothmans’ country manager for South Korea. “We have not only increased the users’ convenience of the platform but also improved its design and portability.”
Glo Hyper X2 device adopts more slim design than its previous Glo series models, while allowing to smoke tobacco sticks that contain 30 percent more tobacco content.
It is the first platform to offer two separate “boost mode” and “standard mode” buttons. Users can choose the former to smoke quickly after 15 seconds of preheating or the latter to preheat 20 seconds and smoke non-stop for four minutes.
The new device also adopts a shutter system to protect from dust and foreign substances. There are LED indicators to show the remaining battery power and preheating status.
The illicit marijuana market in New York City is thriving. In a renewed push to snuff out the city’s growing illegal cannabis market, Mayor Eric Adams and Manhattan’s top prosecutor announced last week that they would go after landlords who allow hundreds of illicit shops to operate.
During a news conference with the mayor, Manhattan District Attorney Alvin Bragg said his office has sent notices to more than 400 smoke shops that illegally sell cannabis, warning them of potential eviction proceedings. If shop owners do not cease operation, his office would seek to force property owners to evict the shops, reports the Associated Press.
It was the latest effort by authorities to force the closure of illegal dispensaries that could undermine the state’s nascent legal cannabis market, which began rolling out in recent months and is expected to quickly grow as more state-sanctioned shops open.
When the state legalized recreational marijuana two years ago, “many people took it that you can just open up a location any way you want,” Adams said.
Unauthorized pot shops have cropped up in droves, operating out in the open — and offering cheaper prices than the legal stores, where the products are highly taxed. The number of illegal shops across New York’s five boroughs could exceed 1,200, according to some estimates.
