Los Angeles City Council voted unanimously Wednesday to make numerous changes to its once-flourishing marijuana market. The legislative body gave its initial approval to expand licensing and get more assistance to operators who endured the consequences of the nation’s war on drugs.
Broad legal sales kicked off in California in 2018, and at that time Los Angeles was expected to quickly establish itself as a world-leading cannabis economy, according to an article from the Associated Press. “But that never happened. Instead, robust illegal sales continue to outpace the up-and-down legal market, while businesses complain that hefty taxes and a cumbersome bureaucracy have slowed, rather than encouraged, growth,” the article states.
The new revisions are designed to provide a jump in licenses for so-called “social-equity” applicants. These include individuals, many of color, who were arrested or convicted of a marijuana-related offense, and lower-income residents who live, or have lived, in neighborhoods marked by high marijuana arrest rates.
Only applicants meeting those criteria would be eligible for new retail and delivery licenses through 2025.
The council also seeks to help businesses wanting licenses to quickly get temporary approval to begin operating once certain benchmarks are met. The rules would permit businesses to relocate while being licensed and streamline the application process, according to the article.
Credit: Manish Panghal
If the plan gets final approval by the council, Mayor Eric Garcetti is expected to sign it.
“This is a great opportunity for the city to focus on the expansion of the cannabis industry,” said dispensary owner Jerred Kiloh, who heads the United Cannabis Business Association, a Los Angeles-based industry group, according to the AP article.
Kiloh said the city is on target to eventually double the number of retail businesses, up from 187 now operating. In time, rules allow for as many as 537 dispensaries, he added, though there are also restrictions that limit the number of businesses that can operate in neighborhoods, according to the article.
More legal shops, linked with tougher enforcement, would help in the long-running fight to shut down illicit operators and delivery services that run in plain sight in the city, he added.
But the plan has also been criticized within the industry, with some saying the legal market remains flawed and could get worse.
Mountain Service Distributors owner says vapor product sales continue to rise in convenience stores.
By Timothy S. Donahue
Refrigerators didn’t exist when Mountain Service Distributors (MSD) began operating in 1929. Situated in the Catskill Mountains of upstate New York, USA, the family-owned distributing company started as an ice delivery service that added candy sales to its portfolio by pure happenstance. Located near where the famous Woodstock Music Festival was held in 1969, Stephen Altman’s—MSD’s current president—father was operating an ice delivery company when a candy manufacturer in Brooklyn, New York, asked the older Altman if he would sell candy along with the ice.
The business was doing well. Then refrigerators started appearing in homes, and no one needed ice deliveries. Candy became the company’s new cash cow. The company kept adding on more and more products such as chips and soft drinks. MSD’s history reads much like the history of convenience stores themselves. As cars became more reliable, gas stations were closing their repair shops, and MSD started using the empty space to sell supplies to travelers and the local community. As the c-store market grew, so did MSD. Stores needed greater varieties of product, so MSD began to increase the number of SKUs it could deliver.
Stephen Altman
“When I was a kid, we sold candy and tobacco and a lot of potato chips. We also had an ice cream business that when my father passed away, his brother, who was a junior partner, had to make a decision [about] because we had all these insulated iceboxes that we would sell ice cream and dry ice [from]. Now he had to replace 500 iceboxes, and he didn’t want to invest in compressor-driven refrigeration for ice cream. He sold the ice cream business,” says Altman. “Twenty or so years later, I became a Slush Puppie distributor. And now I had to buy hundreds and hundreds of machines that made slush. So, it was an interesting turnaround.”
During the TMA digital conference “Unsteady Ground: Shifting Landscapes,” Altman discussed the c-store industry today and how vapor products have become best sellers.
Vapor Voice: How has Mountain Service Distributors faired during the Covid-19 pandemic?
Steve Altman: We’re a convenience store supplier; the reason is not the tobacco element, but we’re able to stay open because we supply groceries to convenience stores. We have had a few issues. Some of the stores that are customers of ours are not allowed to be open, and we have an [accounts receivable] problem where they closed up and didn’t pay their bills. And we’re working through that issue as well.
What we find interesting is that the c-stores that are open—and most of them are open because they carry food—they’re doing very well because a lot of shoppers are afraid to have their bodies in crowded supermarkets. So, they’re buying a lot of groceries in convenience stores where they never did that before.
What has the growth of Mountain Service Distribution been like?
Well, when I started out here full time in 1962, we didn’t do a million dollars in sales a year … There’s only three ways for my kind of business to grow, and it’s probably [the same] for many other businesses. You either get your customers to sell more product, which is very difficult to do, or you obtain new customers. But the biggest growth comes from when you can buy out another distributor and hope to obtain 75 percent of the business. Over [a] period of years, nothing lately, I’ve bought out seven other distributors.
Looking back, was acquisition the proper way to go about your growth?
Oh, absolutely. Some of these were competitors of ours that we always had a high, I guess, business ethics with each other. We didn’t cut each other’s prices. I gained their trust through keeping to that way of doing business … I just bought their inventory, and I helped them collect their accounts receivable. I hired their people.
How large is the complex where MSD is headquartered?
The complex is, at this time, about 100,000 square feet, with 30-foot ceilings, with forklifts and driving around. When I started, it was an icehouse. The walls were a foot thick, filled with sawdust. It was 40 feet by 100 feet, so, that’s what? 4,000 square feet. Now, it’s 100,000 square feet. We [are now doing approximately over $100 million in sales]. It’s not a lot. I am a medium distributor, but we have … one of the highest percentages of bottom line profits there is in the industry. Most distributors’ bottom line isn’t even 1 percent, and ours is over 3 percent.
How many different types of products do you distribute? How many different pieces?
Well, I think we have about 12,000 SKUs. Cigarettes and tobacco, and confectionery, and health and beauty aids, and sundries, and frozen beverage products and coffee products. And we sure sell a lot of water, which I’m not a fan of because retaining and getting drivers with CDL licenses is very difficult. And I don’t like breaking their back with heavy products like water.
We’re really heavy in electronic cigarettes. We have customers all over the country that my son has created because he’s become an expert in the category. And they range from wholesalers and vape shops and even retail chains. Those chains who buy from mega distributors, they don’t pay attention to the category and help the retailer grow it.
Are you only servicing c-stores and other traditional-type brick-and-mortar retailers?
We do prisons. We do vape shops. We do gift shops. We do pizza parlors. We do beach stores when it comes to frozen beverage. And we have six or seven wholesalers that are steady customers. And as I mentioned earlier, we have some chains, and I try to stay away from chains. I can never figure out how to make a profit on them. But we have some chains. We also serve the four casinos that are in the state of New York, not the Indian casinos, but the casinos that were licensed by the state of New York.
What is the state of the tobacco business in c-stores from your experience?
Well, starting with cigarettes, it’s been declining for years, as you are aware. The electronic cigarettes helped the decline. Lately, in the last few months since the pandemic, we’re selling more cigarettes and less vape. But different [rules] of the states we do business with has precluded the vape business a little bit because of the elimination of flavors … Overall, our vape business is up. Our tobacco business started growing a few years ago [when] roll-your-own became popular as the taxes in the Northeast went up dramatically. That’s still alive and doing well. So, overall, in the last 10 years, tobacco was 80 percent of our business; 80 percent of sales, not 80 percent of the profit. Today, it’s about 70 percent.
What types of vapor products are you selling?
We do very little e-liquid. We were selling both open and closed [systems], but now the closed systems have come under the eyes of legislators, and you know what happened with that. In New York state, it’s about to kick in [a flavor ban] on the 17th of May that only allows tobacco flavors. We found that even when we lost the Juul flavors of creme brulee … I had it take them off the market. I guess the steadfast consumer just switched to those [tobacco flavors]. They didn’t give up Juul. They just switched.
Have you seen an increase in sales of other salt nicotine closed systems, such as Leap and Njoy?
We carry them all. Juul has lost some market clout so to speak, but our Juul business is up because my son has created new Juul customers across the country. So, sometimes something happens in the country that doesn’t affect me, such as the flavor ban.
What are the challenges with distributing vapor products?
We constantly debate with United Parcel Service (UPS) that doesn’t like us shipping these things. Of course, they talk about the suit they’ve lost … but that was about cigarette sales to consumers. We don’t ship to consumers. So, we always have an issue with UPS constantly beating us over the head that we can’t be doing this. And we keep telling them we’re not shipping to consumers and blah, blah, blah. We only ship to people that have licenses to carry and sell the product. We are also having supply chain issues with products coming from China.
What have you seen or what do you believe is the issue with the supply chain? Is it mostly shipping?
Well, I think it’s [because of] the [Covid-19 pandemic] that some of these factories had to close up. But, to tell you the truth, Tim, I don’t worry about it. There’s no lack of some kind of product or a plethora of different brand products in my customers’ stores. There’s no shortage at retail. If they’re out of one brand’s orange, then they could a buy something else orange.
Vapor products are starting to overtake your tobacco products business, is that correct?
Oh, oh, it has. Well, when it started out—when Altria and RJ Reynolds went to [a large distribution company] and said, “We’re coming out with these things. What do you need for margin?” that fixed the margin on their products for us [too]. Of course, [the large distribution company] doesn’t have the expenses of most of the distributors. They have no sales force. They don’t have the expense of taking returns from retailers. But [the profit margins on vapor products] were better than tobacco items.
What is the current state of sales growth for vapor products in c-stores?
Other than the customers we have that we ship [to via] UPS Freight or UPS Ground in other states, I think, in my core, where my salesmen call on customers, it’s flat. There’s no decline. There’s no growth. Listen, different consumers get their news in different sources. And this business that happened a number of months ago where vape gets accused of poisoning kids, [the] recent lung disease outbreak found [it] to be caused by black market THC products when it turned out to be illicit home-packed marijuana sticks. The public got turned off. You know what I mean? They read about the problem, but they didn’t read about what the real problem was. Now you have a lot of apprehensive, potential users of electronic cigarettes that won’t go near them because they still think they’re poison.
How are you looking at future growth?
We are also improving [our technology]. If you get the retailer to put his order in with our app on his phone, then the salesman has more time to consult with him, right? And that’s worked. Half our customers place their own orders on our app on their smartphone, and we’re able to show them how to make more money, and then we become more valuable to them.
Avail Vapor and its subsidiaries are returning to near-normal operations, but several challenges remain.
By Timothy S. Donahue
The challenges in the vapor industry are many. Anti-vaping rhetoric is at an all-time high. After an outbreak of lung disease wrongfully blamed on electronic nicotine-delivery systems (ENDS) coupled by the Covid-19 pandemic, the U.S. Food and Drug Administration (FDA) still wants its premarket tobacco product applications (PMTAs) submitted by Sept. 9, 2020. While the 90-day reprieve was welcomed, at least one industry expert says the industry will struggle to meet the deadline.
James Xu is the founder of Avail Vapor and chairman of two other businesses that recently grew out of Avail—Blackbriar Regulatory Service (BRS) and Blackship Technologies. Avail started out in 2014 as a retailer, and the company continues to concentrate on retail operation. Avail has 99 stores spread out in 12 different states from Detroit, Michigan, to Atlanta, Georgia. BRS centers around providing the FDA PMTA service, laboratory work and contract manufacturing mostly for the vapor industry, and Blackship Technologies provides research and development service for the next-generation vapor device.
With retail operations in several localities, Xu said that, as of March 14, only 49 Avail stores were still fully operating. In those environments, store employees have limited contact, practice social distancing, have less than 10 people in the store and follow all local rules relating to the pandemic. The stores have also implemented strict sanitizing protocols, according to Xu. “We have very detailed guidelines for our employees. And we were able to secure some of the [personal protective equipment] supply before everything ran out … I believe we are one of the very first few businesses that required all our employees to wear masks,” says Xu. “We also very, very early on stopped the sampling [of e-liquids] because that’s one of the areas we identified that could spread the disease … when a customer leaves, there will be a detailed cleaning procedure. And then every single hour, we’re going to do another deep clean.”
Avail has a combined 460 employees between its three entities with most concentrated in retail operations. During the TMA digital conference “Unsteady Ground: Shifting Landscapes” in May, Xu told attendees that he has been able to preserve most of his staff and has had limited layoffs. He also said that he believed vape shops should have been labeled as essential businesses in more communities.
“The safety of our employees is the number one concern. And the second one is our customer safety. We definitely try to put those things in the most important positions,” he said. “That’s how we evaluate whether to open stores or not to open stores [when local laws allow]. Questions and answers from the seminar have been edited for space.
Vapor Voice: How have sales been for the stores that are open; was there a huge uptick before the businesses closed?
James Xu: We are already at a half capacity right now. And for the business leading to the lockdown, yes, we did see an uptick with the business because everybody tried to [get] stocked up. And then, of course, with some of the store shutdowns, we definitely saw a major drop. But overall, I will say that the stores [that] remain open, it’s pretty consistent at the normal level right now.
What were your business goals for 2020 before the pandemic, and how have they changed?
Well, before the pandemic, of course, the number one biggest event for the industry is [the] PMTA … we were going to see what exactly [the] FDA is going to police to the industry to truly execute their vison after the PMTA. We do have a major expansion plan once the FDA’s PMTA [submission requirements] become clear. Right now, the PMTA date is delayed, but the focus hasn’t changed any. We’re still concentrating on submitting our PMTA before the deadline and then to see how everything works out.
How is the company going about gathering the required data? There are a lot of labs that are closed. I imagine that you have started to see complications.
Well, the delay on [the] PMTA is not surprising to anybody because most of the hardware to support the vapor industry is coming from China. And since [the] Chinese New Year, which is the end of January, and China was in a lockdown stage … that definitely complicated many of the abilities to have product shipped. And now with the U.S.-based lab and business in the lockdown stage, that definitely delayed everything. So, postponing the PMTA deadline to September, it’s not a surprise to any of us. And it definitely makes it more challenging because right now … we all know [the] PMTA deadline got shifted five or six times. And with all the shifting, we’re already working with a very, very tight deadline. Everything has to work perfectly to be on time. And now, even with China reopening, we are facing a lot of uncertainty here.
Are there other challenges related to the PMTA and the pandemic?
Well, mostly it’s the challenge in the lab, right? Lots of the labs shut down and also with the [slow shipping] back and forth, it becomes very, very challenging right now. So each CRO [contract research organization], it’s a unique case. It definitely makes a PMTA submission process very challenging to this point.
We know you are working with your own brand, Avail, as well as some other companies such as Charlie’s Chalk Dust. Is there enough time to be able to do these PMTAs? Do you think that the FDA is going to have to extend the deadline again?
We work with about 10 different companies to handle their PMTA work. We have a balanced approach between the cost versus the data … because [the] PMTA is very, very vague. How much material do you submit? We don’t have [an] unlimited budget like many of the other business, so luckily, at [BRS], we can still have the best combination for the cost and the scope of work. We do handle most of the very well-known brands, both from the manufacturing side to the hardware side and also the e-liquids.
Is [the] FDA going to extend it again? I don’t know. That totally depends on how this pandemic evolves. And at this point, everybody is kind of waiting to see. The bulk of the work is already completed. The added time will kind of give us a little bit more time to better review it. We absolutely can use the extra time that we got …. For us, we definitely are not going to wait for the September deadline. We are going to submit as soon as we are ready.
How close are you to being able to make a submission for one of the brands?
That depends. And again, that’s a moving target each day because, again, right now we’re working in a very unpredictable environment … each contractor is facing their unique challenges during this pandemic. So, for us to put all of those puzzle pieces together, it’s definitely challenging. The deadline is kind of like what we have to evaluate every day. But as soon as we are ready, again, we’re not going to wait until the last minute. We are going to submit very quickly.
When we talk about vapor products, we typically associate the idea that the PMTA is based on vapor products and their potential for harm reduction. How do you address this in stores with customers when you as the retailer or even the manufacturer cannot make any health claims?
Well, we are in a very tough spot because other people can make all kinds of claims against the industry, and many often could be false. But our hands are tied because we cannot make any health claims, right? Even if we endorse some customer’s testimony or refer to other studies, that also could be a gray area, right? So, it really put us—the whole industry—in a very compromised position.
What we usually tell our employees when customers come in is [to] try to use their personal experience instead of a statement [about] a company. That’s how we usually communicate. Then we will [also] point out all the resources available so the customer can get a balanced view [of] the pros and cons of vaping. It’s a very fine balance that we work. We wish the agency [the FDA] would just kind of like give us a clear guideline. I believe that the government, they have a huge role in this. Lots of misinformation was spread, especially during the vaping [lung disease] epidemic [from black market THC products]. A huge amount of damage was done to the industry.
A lot of people are under the impression right now that vaping is a lot more deadly than smoking. And that’s very dangerous. So, I believe the government has the responsibility to at least educate people where vaping is compared with cigarettes as a harm reduction product. For us, we face the customer every day. So, we should have more power to really be able to talk to a customer, and it needs to be scientifically based, but we need to be able to give the customer a balanced view.
James Xu
What are the conversion rates right now? Are most Avail customers smokers or former smokers?
Well, the rate continues to change, and right now, the conversion rate is still too low, and we calculate it to a little bit below 20 percent. This is because the product is still not user-friendly enough because … the vaping industry is still less than 10 years old … so there are a lot of those kinds of obstacles for people who [want to] stick with a vaping product. For example, taste. And leakage is another major issue.
There has been talk about supply chain disruptions and product not coming from China as quickly as it should. What’s going on with the Chinese vapor market?
We have constant contact with the Chinese manufacturers. Most of the U.S. distributors and the retailers bought about four weeks of supply to last the normal Chinese New Year [slowdown]. And then because China went into complete lockdown because of the coronavirus … [there was only] one month that most of the retailers or distributors didn’t prepare for. That caused a major disruption with the supply chain, but right now, everything in China is back to normal, but shipping still has issues.
Most of the hardware is being shipped from China, and when the commercial airlines stopped all their operations—commercial airlines account for about 45 percent of the cargo volume—half of that volume has disappeared. UPS and DHL, they just couldn’t catch up to ship the product fast enough. That’s the bottleneck we’re facing right now. The Chinese factories are at full capacity—they’re back to work—but they [do] have a major problem actually delivering the product into our hands right now.
Yes, it’s bad. But, if you allow an extra 10 days then you shouldn’t have that problem. So instead of counting on product leaving the factory to get to your store in about a week, right now, I would count on two weeks or a little bit more.
Considering this pandemic and what’s going on with the PMTAs alongside flavor bans and other types of regulation being enacted differently in different U.S. states and countries, where do you see the future of the vapor industry?
In five years, no matter what, you cannot dial back the clock. We’re going to see more people vaping instead of smoking. We’re going to see that the truth eventually will come out. More smokers are going to convert to vaping. There is a lot of misinformation out there … and that’s why I wake up each morning and go to work … because I believe in this industry.
The FDA’s enforcement will be key because if no enforcement happens, like the first round [of guidelines], it’s going to be the Wild West again. It’s actually going to put the industry in an even more compromised position than ever. The good players are going to get punished—the good players that play by the book and waste all the money on PMTAs but have zero benefits. That’s the worst-case scenario. If PMTA enforcement is too strict, that definitely is going to limit the competition.
How is [the] FDA going to balance all that, allow better, safer product come to market? They also need to make sure the integrity of the product is there to ensure the safety of the customer. It’s a fine balance. Long term? We absolutely believe in a bright future. But how is everything going to play out? We have to wait and see.
The marijuana market took a big hit last year after consumers of black market THC vaping products started to become ill, often with fatal consequences. As a result, companies have been on high alert, making safety a priority when crafting both nicotine and cannabis vape products, according to an article on Forbes.com.
With Covid-19 still a reality, experts are foreseeing a boom in the vaping market this summer. So, what else do they see in their crystal ball post COVID-19? Find out below. Among those weighing in are Tom Brooksher, CEO of Clear Cannabis Inc; Cortney Smith, CEO and founder of DaVinci; Dan Gardenswartz, chief financial officer of Spherex; and Elizabeth Hogan, vice president of brands at GCH Inc (parent company of Willie’s Remedy and Willie’s Reserve).
The Forbes article expresses that the following Q&A has been edited for conciseness and clarity.
Iris Dorbian: Why do you think the vape market will see a boom in the summer?
Tom Brooksher: Traditionally, summer is a strong season for cannabis sales as people purchase our products to enhance their vacations and time spent outdoors. As restrictions are lifted, we expect a pent-up demand for cannabis products that can be conveniently used in conjunction with outdoor activities. We also expect the phased reopening of tourism in key tourist/cannabis markets, such as Nevada, California, Colorado and Florida, to positively impact vape product sales.
Cortney Smith: Even as we enter an uncertain economy amid a recession, I still believe the vaporizer market has been growing steadily over the past few months and will continue to flourish. If anything, the pandemic has opened more people up to the possibilities of cannabis during a stressful time, and we’ve seen an uptick in new consumers
Elizabeth Hogan: We’re seeing people return to their favorites and stock up on proven winners—vape products included. With the fear of spreading germs, vapes sales will continue to grow as consumers move away from shared joints or bowls. Vapes are less harsh on your throat and lungs than smoking and take effect more immediately than edibles. This summer, it’s going to be a good idea to be prepared and bring your own. We’re sharing in spirit only these days.
Brooksher: We’ve done very well, all things considered. Our sales would have been even stronger in Colorado and Nevada had the pandemic not hit. In general, we’re seeing strong brands – high quality products with name recognition – holding their own or even growing during the pandemic, and weaker brands struggling or potentially failing.
Gardenswartz: We definitely felt some pressure during April and May. We also engaged in aggressive social media messaging to maintain communication with our consumers, as well as daily contact with our dispensary partners in all jurisdictions to mitigate any downward pressure. For vaping specifically, our customers reported a notable shift from typical joints to vape pens, which was largely driven by health and sanitary concerns. They are also cleaner and longer lasting. We don’t see this trend changing anytime soon.
Dorbian: How is your company positioning its vape line in response to the anticipated boom in the vape market?
Brooksher: Perception of value on the part of consumers is always important for cannabis brands and we don’t see that changing. That doesn’t mean cannabis consumers are focused on the cheapest product. They’re willing to pay for a quality product, but only if they perceive that it’s a good value – specifically that it’s safe, will provide a good experience, and matches their needs and preferences.
Smith: We recognize the need for personal vaporizers, especially in a time when cannabis consumers are shifting from a culture of sharing devices to more individual consumption. My team and I also continue to dream up new innovations, because I never want us to rest on our laurels. We’ve spent the past three years developing a new limited-edition iteration of the IQ2, that allows for cooler temperatures, and we’re finally launching it this summer. There’s no time like the present to be innovative and bring new solutions to the public.
Gardenswartz: During the lockdown, we worked aggressively to fine-tune quality control and production efficiency across the company, and those initiatives will benefit us not only this summer, but over the long-term. We view our products as “accessible luxury” – premium products priced at accessible levels. With Spherex, consumers can have the best of both world: the best products out there at very accessible prices.
Hogan: Willie’s Reserve vape line product offering has been expanding over the last year, adding CBD:THC ratio products, collaborations with musicians (Nathaniel Rateliff and Margo Price) and introducing 1-gram cartridges for consumers looking for more value. We have also seen a growing consumer demand for different forms of concentrate in vape cartridges. The combination of distillate and cannabis-derived terpenes is becoming very popular. In response, we launched our new line of live resin craft cartridges in Colorado. The live resin cartridges offer an even more flavorful draw than distillate.
Dorbian: What precautionary measures is your company enacting to ensure the safety of its vape lines?
Brooksher: We were fortunate in that our products were very safe to begin with. We’ve never used vitamin E acetate or any other toxic fillers, and we eliminated the use of MCT oil prior to it becoming an issue. In addition, we only use CCELL ceramic heating cartridges and hardware that are made with food and medical-grade material of the highest quality. As a result, we’ve had zero problems with product safety.
Smith: We’ve always built safety into the very DNA of our devices from the start. Beyond the specific safety measures we’ve taken to protect our employees and maintain best practices throughout the pandemic, we haven’t changed a thing about the device itself. DaVinci devices are created responsibly with clean hardware, with medical-grade components like a zirconia air path and feature an array of safety certifications such as Rohs, FCC and CE.
Gardenswartz: Fortunately, Spherex didn’t experience a notable negative impact from last year’s crisis. Spherex has and will continue to use only the best material, run through the cleanest process, put into the best hardware and packaging, resulting in clean, potent and superior end products. We plan to keep most, if not all, of the precautionary measures we enacted around COVID, even beyond the point that the virus is under control, which could be never.
Hogan: Transparency and cooperation in every direction are the two most important ingredients in safe cannabis. At Willie’s Reserve, we have alway been cognizant of how some negatively view the cannabis industry and our goal is to combat their doubt with clean products and safe procedures. Since this has always been a focus of ours, we have not had to change in wake of last summer’s illicit market issues. Our motive and the motive of some of these illicit market manufacturers are very different and our product quality is a testament to that.
In a first for China, a store owner in Shenzhen has been fined 2,000 yuan ($280) for failing to display required warnings against smoking, according to local news outlet Yangcheng Evening News.
The report said the shop had flouted Shenzhen’s recently updated regulations banning vaping indoors and selling e-cigarettes on WeChat, China’s most widely used social app. In addition, two people who had been vaping inside the store were fined 50 yuan each, according to a story posted on sixthtone.com.
Xiong Jingfan, the manager of Shenzhen’s “smoke-free city” campaign, told Yangcheng Evening News that selling e-cigarettes on social platforms — despite being prevalent across the country — had become illegal under the recent ban.
In 2019, Shenzhen authorities amended the definition of a “cigarette” in the city’s smoking regulation to include e-cigarettes. Under the law’s new interpretation, shops selling such products were required to post two warning signs at visible locations: one stipulating that smoking is harmful to one’s health, and another noting that cigarettes cannot be sold to minors.
The regulation also forbids vaping indoors and in public places.
Despite the city’s stringent ban, Shenzhen is the world’s largest e-cigarette producer, accounting for around 90 percent of the global market share.
This is not the first time China has attempted to crack down on the domestic e-cigarette industry. Last November, the country’s state tobacco monopoly issued a nationwide e-cigarette ban, suspending the online sale and advertisement of such products. The ban, dubbed the “winter of e-cigarette merchants,” was aimed at keeping e-cigarettes out of the hands of minors. In 2018, China Tobacco had prohibited merchants from selling e-cigarettes — collectively referred to as Electronic Nicotine Delivery Systems, or ENDS — to minors.
Shenzhen’s restrictions on e-cigarettes attracted controversy online, however, after many netizens pointed out the authorities’ apparent double standard when it comes to smoking — namely, that regulations on cigarettes, which are sold by the government, are still relatively lax.
A recent report states that the global cannabis beverages market size is expected to reach $2.8 Billion by 2025 at a CAGR of 17.8 percent. The report by Grand View Research looked at alcoholic and non-alcoholic beverages using either Cannabidiol (CBD) and Tetrahydrocannabinol (THC).
“By component, the market is segmented into Cannabidiol (CBD) and Tetrahydrocannabinol (THC). The demand of THC infused cannabis beverages is majorly driven by rising product demand from adult consumers for recreational purposes,” the report states. “Rising demand for the therapeutic effects of the component along with the euphoria it provides is expected to bode well for the growth of the segment in the forthcoming years.”
I contrast, the CBD infused cannabis drinks are registered the fastest growth in (prior years). Also, the demand is expected to witness a surge over the forecasted period owing to the non-psychoactive properties of CBD, according to the report. Lack of psychoactive effect in the CBD drinks is widening its scope for usage of the drinks in medical purposes.
Many consumers are considering CBD drinks as a wellness and anti-inflammatory products, such as kombucha-a probiotic drink. This drink can potentially be used for treating chronic pain, anxiety, substance use disorders and central nervous system diseases. These factors are expected to boost the adoption of the product, resulting in the growth of the segment.”
The entrepreneurial spirit displayed by vape shops during the U.K. government’s 10-week coronavirus lockdown will help them bounce back after the economy reopens, according to the U.K. Vaping Industry Association (UKVIA).
On Monday, the government announced it would allow vape shops to reopen June 15.
The UKVIA said it is “immensely proud” of vaping businesses for the responsible approach they have taken during the lockdown.
John Dunne
“The response from the industry to the challenging conditions has been both staggering and exemplary,” said John Dunne, director at UKVIA. “I know that our members that make up a large share of the vaping market have been working around the clock to provide online and home delivery services to the 3.2 million vapers across the country.
Dunne believes that the industry will be well placed to more than meet the social distancing guidance when shops reopen.
“All our retail members have still been ‘open for business’ since the lockdown begun and have introduced social distancing measures that go well beyond the government guidance,” he said. “This should give vapers confidence when going to their local stores.”
A vapor tax increase will be included in the revised budget Gov. Gavin Newsom plans to submit Thursday. The tax would take effect January 1, 2021, and is projected to raise $32 million in revenue for fiscal 2021.
The new money would go toward administration, enforcement, youth prevention, and health care workforce programs, according to an article on thecentersquare.com.
The current tax on vapor products is 59.27 percent of the wholesale value. The new tax increases the rate to $2 for each 40 milligrams of nicotine per product. The governor’s budget summary also supports a statewide ban on all flavored nicotine products, including menthol cigarettes, which the Tax Foundation says would create unintended consequences.
Lung injury hospitalization cases linked to vaping in California totaled 199 as of Feb. 25, 2020, according to the Centers for Disease Control and Prevention. Among the 150 to 199 cases reported in California, four deaths were reported, according to the CDC.
According to a 2019 survey of high school students nationwide, 27.5 percent of students said they had vaped at least once 30 days prior to taking the survey; 10 percent said they considered themselves regular vapers.
A new analysis by Tax Foundation economist Ulrik Boesen points to unintended consequence if Newsom’s proposal is enacted. The price of the most popular vapor product, a JUUL 4-pack, would go up to $8.25, excluding the existing wholesale tax, more than quadruple the tax of $2.87 on a pack of cigarettes.
The tax increase could prompt users to switch from vaping to smoking, Boesen argues. The American Cancer Society Cancer Action Network Inc. is urging state legislators nationwide to increase tobacco taxes. Even if California did increase cigarette taxes, the hike would be less than that imposed on e-cigarettes.
“This inconsistency goes against the concept of harm reduction, which is the approach that it is more practical to reduce harm associated with use of certain goods than avoiding it completely through bans or punitive level taxation,” Boesen says. “In the context of vapor products and cigarettes, it is important because the risk profiles for the two products are wildly different. Public Health England, an agency of the English Ministry for Health, concludes that vapor products are 95 percent less harmful than cigarettes.”
RELX Technology announced the extension of the RELX “For You With Care” project to support its international partners during the COVID-19 crisis. RELX will initially send 78,200 masks and over 515 gallons of hand sanitizer to its global distributors, partners and store owners.
The supplies will be sent to countries in Asia, Europe, Canada and South America. RELX will continue to follow the developments of COVID-19 globally and will send essential supplies to its partners and employees that are in need.
“RELX is wholly committed to supporting the well-being of our employees, partners, and store owners during the COVID-19 pandemic. As a global startup, we are doing what we can to help our global community. We hope our modest donation will help them during these trying times,” said RELX founder and CEO Kate Wang.
In late
January, RELX kicked off the RELX For You With Care Project by donating RMB 1
million to the Institute of Psychology, China Academy of Science through the
Shanghai Soong Ching Ling Foundation to support a training program designed to
provide mental health support services.
