Turning Point Brands has received a United States Postal Service (USPS) exemption to ship vapor products to thousands of age-restricted vape shops across the United States through VaporBeast and other websites.
Credit:USPS
“We remain focused on providing a positive experience for our customers,” said Marc Waxman, president of NewGen at Turning Point Brands, in a statement.
“As one of the first to apply for and receive an exemption from the USPS, we are now able to increase the number of shipping options we offer our customers. This will allow for optimized order processing, more accurate tracking data and faster overall shipping times. Our network of delivery choices is expanding every week to cover shipments to more and more businesses and adult consumers.”
In late December, former U.S. President Donald Trump signed into law a $2.3 trillion coronavirus relief and government funding bill that contains a provision banning the USPS from delivering vapor products. The USPS was already prohibited from delivering cigarettes and smokeless tobacco products to consumers under the PACT Act. The law passed in December extends the Act’s original definition of “cigarette” to include electronic nicotine delivery systems.
The USPS ban on mailing vapor products took effect Oct. 20.
Larry Wexler, the leader of Turning Point Brands, will retire as CEO in January. Former Liberty Media executive Yavor Efremov has been named as the company’s new CEO. Wexler will remain on the Board of Directors and serve as a consultant to the company following his retirement.
Wexler who has been with the company for more than 18 years and serving as president and CEO since 2009, transformed the company into a industry leader by embracing next-generation tobacco products and a growing legal cannabis market. Wexler was instrumental in helping Turning Point Brands create a high-cash generating engine, with iconic brands and extensive distribution capabilities that reach millions of consumers across more than 210,000 retail outlets and e-commerce platforms.
“It has been my sincere privilege to serve Turning Point Brands and its stakeholders during this period of significant growth as we increased EBITDA fivefold over the past 18 years,” said Wexler in a press note. “I want to thank both the Board for the opportunity to serve our shareholders, and my colleagues for their dedication, hard work and, most importantly, their resiliency during my tenure. Turning Point Brands is well-positioned with highly recognizable brands and a strong management team. I look forward to working with Yavor and the next generation of leaders to build upon the success we have achieved.”
Larry Wexler (Credit: TPB)
Prior to joining Turning Point Brands, Efremov served as the CEO of Motorsport Network, where he was responsible for upgrading the IT infrastructure, processes, and company strategy to support the integration of more than 30 businesses around the world. He also served as a senior executive at Liberty Media Corp., where he was instrumental in sourcing, financing, and growing Liberty’s investments in multibillion-dollar businesses, including Charter Communications and Formula 1. Prior to that, Efremov worked as an investment banker at Goldman Sachs & Co. and as a corporate lawyer at the law firm of Cleary, Gottlieb, Steen & Hamilton. Efremov holds a J.D. from Yale Law School and a Ph.D. in economics from Yale University. He also has a B.S. in mathematics and a B.A. in economics from Furman University.
“During my time as a board member, I have been impressed by the company’s prospects across all divisions,” said Efremov. “In my new role as CEO, I look forward to working alongside this dynamic team of industry leaders to tackle large, compelling opportunities in our existing business and adjacent categories as continued regulatory developments open new avenues for future growth. Our unique organizational infrastructure and strong financial position gives us the flexibility to pursue a variety of large organic and inorganic opportunities to increase shareholder value.”
ReCreation Marketing, a Canadian distribution company, has rebranded itself as Turning Point Brands Canada (TPB Canada). The name change will go into effect immediately and follows a transaction completed on July 30, 2021 that resulted in Turning Point Brands increasing its equity stake in ReCreation Marketing to a majority position,” according to a press release.
Credit: Turning Point Brands
“ReCreation Marketing changing its name to Turning Point Brands Canada reflects our commitment to our shared values with TPB and to expanding the exposure and reach of iconic core brands, such as Zig-Zag, in Canada,” said Mikail Fancy, Chief Operating Officer of TPB Canada. “TPB Canada is laser-focused on creating value directly with, and for, our partners, by offering a portfolio of recognized, differentiated, consumer-relevant brands and products.”
Turning Point Brands, Inc. (NYSE: TPB), a manufacturer, marketer and distributor of branded consumer products, including alternative smoking accessories and consumables with active ingredients. Turning Point Brands Canada continues to focus its resources on being a leader in the cannabis accessory category in Canada by fostering long-term, growth-oriented partnerships with manufacturers and retailers.
“The rebrand of ReCreation Marketing to TPB Canada is a testament to our confidence in the ReCreation management team and is a natural extension of our infrastructure and portfolio development that puts consumers and their evolving needs at the center of our strategy,” added Larry Wexler, CEO of TPB. “This change further demonstrates our commitment to positioning TPB as a leader in branded consumer products.”
Turning Point Brands reported net sales of $109.9 million in the third quarter of fiscal 2021, up 5.5 percent over that of the previous year’s third quarter. Gross profit increased 12.3 percent to $54.3 million and net income increased 49.3 percent to $13.4 million.
“Our third quarter performance fell within our expectations with sales growth of 11 percent in our core business despite facing the headwind of Covid-related consumption and other benefits we experienced in the prior year period,” said TPB President and CEO Larry Wexler in a statement.
“Zig-Zag had another robust quarter driven by our strategic initiatives and growth within our Canadian business. Stoker’s saw double-digit growth in our Moist Snuff Tobacco (MST) business which drove growth in the overall segment. Regarding capital deployment, we continued to repurchase our shares during the quarter and today announced an increased share repurchase authorization. We also maintain a strong balance sheet to pursue a healthy pipeline of investment opportunities. Overall, we remain optimistic about the growth prospects in our core business.”
NewGen Products gross profit increased 22.4 percent to $13.5 million for the quarter. The segment gross margin expanded 760 basis points to 36.2 percent with the improvement partially driven by industry pricing pressure ahead of the PMTA submission deadline in the previous year comparable period.
Wexler said he was encouraged by the U.S. Food and Drug Administrations recent decision to reconsider and place back into review the premarket tobacco product application for TPB’s proprietary vapor products, which the agency had earlier rejected.
“I am confident that we submitted a robust application and look forward to engaging with the FDA in its review,” he said. “We continue to believe that robust regulatory oversight is a positive for the industry and we believe we are favorably positioned to leverage our strong regulatory and logistics capabilities to capitalize on an attractive long-term opportunity.”
Turning Point Brands (TPB) has had its marketing denial orders (MDOs) rescinded by the U.S. Food and Drug Administration. The company will be allowed to continue marketing its vapor products while the FDA re-reviews the company’s premarket tobacco product application (PMTA).
“We are encouraged by the FDA’s decision to reconsider our product applications and look forward to engaging the agency as our PMTAs are reviewed,” said Larry Wexler, president and CEO, Turning Point Brands. “It is important that the PMTA process is transparent, purposeful, and evidence-based. Our organization dedicated significant time and resources in filing our applications in accordance with agency guidance. We remain hopeful that the depth and range of our studies and data will persuade the FDA that the continued marketing of our vapor products is appropriate for the protection of the public health and that the agency will ultimately preserve a diverse vapor market for the more than 30 million American adult smokers who may wish to transition from combustible cigarettes to lower risk alternatives.”
Credit: Momius
The FDA admitted it made an error in TPB’s PMTA review and TPB did in fact submit studies that the agency decided during the PMTA process were needed, after saying for years the studies were not required. “Upon further review of the administrative record, FDA found relevant information that was not adequately assessed,” reads the FDA letter to TPB. “Specifically your applications did contain randomized controlled trials comparing tobacco-flavored ENDS to flavored ENDS as well as several cross-sectional surveys evaluating patterns of use, likelihood of use, and perceptions in current smokers, current ENDS users, former tobacco users, and never users, which require further review.”
The letter comes after TPB filed a petition with the court that forced the FDA to provide an administrative record for its decisions on PMTAs. TPB sells various flavored e-liquids marketed under the Solace, VaporFi and Vapor Shark brands. TPB then filed a stay motion asking the the court to review the FDA order “on the grounds that it is arbitrary and capricious, an abuse of discretion, contrary to the Federal Food, Drug, and Cosmetic Act, as amended by the Family Smoking Prevention and Tobacco Control Act of 2009, and otherwise not in accordance with law.”
Avail Vapor and several other companies that received MDOs have also now filed petitions for information related to their PMTA reviews. After the FDA rescinded TPB’s MDOs, the company dropped its lawsuit against the regulatory agency.
“In light of the unusual circumstances,” the FDA’s Center for Tobacco Products (CTP) Director Matt Holman stated in the letter. “FDA has no intention of initiating an enforcement action” against TPB’s products that had previously received an MDO.
At least three suits stemming from marketing denial orders (MDOs) issued by the U.S. Food and Drug Administration in response to premarket tobacco product applications (PMTAs) have been filed in the 2nd, 6th and 11th circuits courts of appeals (possibly more) against the FDA. Turning Point Brands (TPB) filed first a petition for review (a statutory review) with the United States Court of Appeals for the Sixth Circuit. TPB then filed an emergency motion to stay the FDAs order to remove TPB’s products from the market. Bidi Vapor and at least one other company have filed similar suits.
Credit: Vitalii Vodolazskyi
The TPB petition forced the FDA to provide an administrative record for its decisions on PMTAs. TPB sells various flavored e-liquids marketed under the Solace, VaporFi and Vapor Shark brands. TPB is now asking the court to review the FDA order “on the grounds that it is arbitrary and capricious, an abuse of discretion, contrary to the Federal Food, Drug, and Cosmetic Act, as amended by the Family Smoking Prevention and Tobacco Control Act of 2009, and otherwise not in accordance with law.” The company requests the court “vacate or modify” the FDA order and asks that TPB be allowed to “continue to market the products subject to the challenged order.”
In an explanation for its actions, the FDA’s director for its Center for Tobacco Products (CTP), Mitch Zeller, stated in a release that many of the accepted applications ultimately received an RTF letter at the filing stage of the review process because the application did not include required information. “For example, companies received RTF letters for not including required content such as ingredient listings, labels for each product to be marketed, or adequate environmental assessments,” he wrote.
In a joint news release with Zeller and acting FDA commissioner Janet Woodcock, the FDA explained that the applications from many MDO recipients “lacked sufficient evidence that they have a benefit to adult smokers sufficient to overcome the public health threat posed by the levels of youth use” of electronic nicotine-delivery systems (ENDS) products.
The PMTAs submitted by TPB and denied by MDO included an in-depth toxicological review, a clinical study, and studies on patterns and likelihood of use, according to the motion to stay filed by TPB on Sept. 30. The stay contained responses from the FDA’s response to TPB’s petition for review. “TPB’s studies demonstrated that TPB’s products help adult smokers transition away from riskier traditional cigarettes. Those studies confirmed that youth users do not currently purchase TPB products and there is virtually zero likelihood that they will in the future,” the motion states.
TPB accuses the FDA of moving the goalposts for data needed to receive a marketing order based on what the agency “learned” from the “review [of] PMTAs for flavored ENDS so far,” according to the stay. TPB noted that the “North Star of administrative law” is that agencies cannot induce regulated parties to rely on “agency representations about regulatory requirements,” then penalize them using the previously unannounced criteria after-the-fact.
“But that is precisely what FDA did here,” the stay motion states. “[The] FDA reasoned that TPB failed to conduct ‘a randomized controlled trial and/or longitudinal cohort study’ or other studies performed ‘over time’ to show that TPB’s specific flavored products help adult users stop smoking more than tobacco-flavored products do. Yet FDA previously deemed these studies unnecessary.”
No company is safe. The U.S. Food and Drug Administration has now issued marketing denial orders (MDO) to some of the largest manufacturers in the vaping industry. Turning Point Brands announced today that on Sept. 14 it had received an MDO in response to TPB’s premarket tobacco product applications (PMTAs) covering many of the company’s vapor products. All MDOs were for flavored products other than tobacco.
Credit: Cursed Senses
“While we believe the FDA’s current conclusion is misguided, we will continue our dialogue with the agency in search of a path forward,” said Larry Wexler, president and CEO, Turning Point Brands. “As we explore options for appealing this decision, we are hopeful that the agency reaffirms its commitment to science-based decision making and to its announced Comprehensive Plan, which includes fully transitioning adult consumers down the continuum of risk in order to reduce the morbidity and mortality associated with combustible cigarette use by preserving the diverse vapor market.”
Numerous other major e-liquid manufacturers, including Avail Vapor, have confirmed to Vapor Voice that they have also received MDOs from the regulatory agency for e-liquid flavors other than tobacco. Other major manufacturers say they are expecting an MDO any day now.
TPB stated that its PMTA included an in-depth toxicological review, a clinical study, and studies on patterns and likelihood of use. The data demonstrated that TPB products “do not appeal to never users, youth, or former users and that a significant majority of users of TPB products had completely ceased use of combustible cigarettes. The scientific literature on lower-risk nicotine delivery systems shows that these products can significantly improve public health by providing alternatives that are much less harmful than combustible cigarettes.”
TPB’s press release stated that the company believed it had established that the products’ it had continued marketing would be “appropriate for the protection of public health,” the standard established by the Family Smoking Prevention and Tobacco Control Act of 2009. “These products are crucial to improving public health by helping adult smokers migrate to less harmful products,” the statement reads. “TPB will continue to engage with the FDA and other stakeholders as we consider options moving forward, including a formal appeal of the decision and potential legal relief.”
Many companies say they are readying lawsuits. TPB’s states that it continues to monitor regulatory developments and intends to take appropriate measures to manage and mitigate any risk exposure that may result from these and any future MDOs. “The FDA’s scorched earth policy towards the vaping industry will move on to the courts,” a source told Vapor Voice this morning. “This has become a political process instead of a scientific one and the FDA is only trying to save face.”
Some companies, such as Bidi Vapor, stated they will continue to sell products even after receiving an MDO. Many other companies state that they will be switching to synthetic nicotine, an area where the FDA’s authority may be limited or even not exist.
Bidi believes its particular decision to be a mistake on the FDA’s part, and is currently exploring next steps to address the situation, according to Filter.
“It looks like FDA is making a mistake in many, many cases,” said Azim Chowdhury, a partner at the law firm Keller and Heckman, where he advises Bidi and other clients on nicotine regulations. “I have a number of companies that have received MDOs, but those MDOs are also identifying their menthol products. It seems like FDA, in their rush to get all these out, they’re not doing a very thorough job.”
Turning Point Brands (TPB) has completed a $8 million strategic investment in Old Pal Holding Co. through a convertible note that includes follow-on investment rights.
Founded in 2018by Rusty Wilenkin and Jason Osni, Old Pal is a leading cannabis brand that operates a non-plant touching licensing model and sells its products to consumers across the U.S.
TPB’s investment will enable Old Pal to expand product offerings in existing states, which include California, Nevada, Michigan, Oklahoma, Ohio, Washington and Massachusetts, and will help create the infrastructure necessary to support continued territory and product expansion. As a result of Old Pal’s strong brand recognition and extensive network of licensed cultivation and production relationships, the company has the ability to scale its geographic footprint while continuing to offer consistent and readily available products, according to TPB.
“Turning Point has a proven track record of developing and growing brands and is capitalizing on this experience to identify highly recognizable, leading cannabis brands poised to experience significant growth,” said Larry Wexler, CEO, Turning Point Brands, in a statement. “Given Old Pal’s favorable market position, the awareness of its products outside its current geographies and its unique licensing model, we are confident the brand is well-positioned to further penetrate the market and capitalize on the growth potential of the cannabis industry.”
“Old Pal’s mission is to spread the shareable cannabis lifestyle to customers across the U.S. through accessible and high-quality products,” added Charlie Cangialosi, chief operating officer at Old Pal. “Turning Point Brands’ experience with iconic brands, like Zig-Zag, and success in adjacent and complementary industries will allow us to bring the Old Pal experience to a wider range of markets and consumers.”
Turning Point Brands (TPB) has announced an $8.7 million strategic investment in Docklight Brands, a pioneering consumer products company with brands including Marley Natural cannabis and Marley CBD. In addition, TPB has obtained exclusive U.S. distribution rights for Docklight’s Marley CBD topical products. The investment into Docklight Brands’ Series A offering comes with certain follow-on investment rights.
As a result of this transaction, Turning Point Brands now has access to two iconic names in cannabis: Bob Marley and Zig-Zag. The Marley CBD skincare line, which includes after-sun, hand cream, lip balm, balm and roll-on products, combines tropical botanicals with hemp-derived CBD and is currently available nationwide in the U.S. in over 12,000 stores including select 7-Eleven, Circle K, Safeway and Dollar General locations, with additional availability expected through TPB’s partner network.
The company’s investment into Docklight will also support the growth of the broader Marley CBD line, including Marley Mellow Mood teas, Marley wellness shots and Marley chocolate squares as well as Marley Natural THC products, which are produced and sold under license agreements in Canada, Jamaica and select U.S. states.
“Our goal is to build an expansive portfolio of the most innovative brands in the cannabis industry and to distribute these products across our vast partner network,” said Larry Wexler, CEO of Turning Point Brands, in a statement.
We are confident our strategic relationship with Turning Point Brands will greatly enhance both the visibility and availability of the Marley products across TPB’s extensive distribution network.
“We reach consumers where they are most comfortable, selling products to distributors, selling to stores directly and interfacing with consumers one-on-one via e-commerce. Adding Marley products to our portfolio alongside our legacy Zig-Zag brand marks yet another milestone as we continue to leverage our brands and expand our distribution infrastructure.”
“Given our shared focus on branded products, we are excited to expand the reach of the iconic Bob Marley brand. We are confident our strategic relationship with Turning Point Brands will greatly enhance both the visibility and availability of the Marley products across TPB’s extensive distribution network,” said Damian Marano, CEO of Docklight Brands.
Turning Point Brands has appointed Chief Business Development Officer Louie Reformina, as the company’s new chief financial officer, effective May 1, 2021. Reformina is replacing Bobby Lavan, who will step down after first quarter earnings to pursue a new opportunity. In addition, Brian Wigginton, Turning Point Brands’ chief accounting officer, has been promoted from vice president to senior vice president.
“I would like to thank Bobby for his unceasing commitment to the company,” said Larry Wexler, Turning Point Brands’ president and CEO, in a statement. “Bobby played a major role in improving Turning Point Brands’ capital structure, streamlining the business, making accretive acquisitions and investments and positioning the Company for the growth that we are experiencing today.
“I look forward to tracking his future progress. Additionally, Louie has played an important leadership role in the company by pivoting our focus to higher growth opportunities in cannabis-related and other branded consumer product industries. I am excited to see him expand his responsibilities as we accelerate our growth trajectory.”
“Turning Point Brands is one of the most innovative and well-capitalized companies in the high-growth cannabis-related accessories market,” said Reformina. “Our iconic brands and market-leading distribution platform set us apart in this rapidly evolving space. In addition, our New York Stock Exchange listing helps to provide deep access to the capital markets, which allows us to opportunistically take advantage of acquisition opportunities that are beyond the reach of many competitors.
I look forward to continuing to work with the team to reinvest our substantial free cash flow in high-growth branded consumer products, expand our distribution infrastructure and strengthen our capital position.
“As CFO, I look forward to continuing to work with the team to reinvest our substantial free cash flow in high-growth branded consumer products, expand our distribution infrastructure and strengthen our capital position.”
“I would like to thank Larry and the management team at Turning Point Brands for the opportunity to work with them on the Company’s continued evolution,” said. Lavan. “I have been working closely with Louie since he first joined the Company and am confident that his elevation to CFO will help to ensure a seamless transition, while continuing the Company’s focus on growth.”
Reformina joined Turning Point Brands in 2019 and has more than 20 years of financial experience. He previously served in investment roles at Point72 Asset Management, Waterfront Capital Partners, Perella Weinberg Partners and Vestar Capital Partners. He began his career as an investment banker at Goldman Sachs & Co. and received his MBA from the Stanford University Graduate School of Business, as well as his B.S. in electrical engineering from Cornell University, where he graduated summa cum laude.
Turning Point Brands estimates that net sales for the first quarter of 2021 will be at the high end or above the previous guidance of $97 million to $102 million provided during the presentation of its full-year and fourth-quarter 2020 results on Feb. 10, 2021.
Turning Point Brands reported net sales of $109.9 million in the third quarter of fiscal 2021, up 5.5 percent over that of the previous year’s third quarter. Gross profit increased 12.3 percent to $54.3 million and net income increased 49.3 percent to $13.4 million.
