Lease on life

Industry leaders respond to the U.S. Food and Drug Administration’s new attitude toward vapor products.

By Maria Verven

It was a day to celebrate. When the U.S. Food and Drug Administration announced in late July that it had revised its plan and timeline to regulate e-cigarettes, you could almost hear the vapor industry breathe a huge sigh of relief.

Though the FDA extended the premarket tobacco product application (PMTA) deadline to Aug. 8, 2022, several key deadlines are still looming, according to Rob Burton, head of consultancy and compliance with Nerudia. Based in the U.K, Nerudia recently opened an office in Washington, D.C., to help the U.S. vapor industry comply with European and FDA guidelines.

“Vapor product manufacturers and importers selling products made on or before Aug. 8, 2016, must submit a listing of all ingredients to the FDA by Nov. 8, 2017,” Burton said. “However, if you’re a ‘small-scale tobacco product manufacturer’—with 150 or fewer full-time employees and annual revenues of $5,000,000 or less—you have until May 8, 2018 to submit your ingredient listing. And if your products entered the market after August 8, 2016, you must submit your ingredient listings 90 days prior to marketing.”

Three vapor industry leaders shared their thoughts with Vapor Voice on the FDA’s revised guidelines. We spoke with Lorenzo De Plano, co-founder of Solace Vapor; Nick Molina, CEO of VaporFi; and Rodney Jerabek of Five Pawns.

Vapor Voice: Has your company’s outlook changed with this announcement? Please explain.

De Plano: Absolutely! Our business has tripled since the release of the announcement. We were doing very well prior, but the shift in policy has been a driver of growth and new business as shop owners are more comfortable spending on new products and brands. We always felt optimistic that there would be some kind of reprieve on policy; there was just too much disorganization overall in the initial deeming regulations.

Molina: We haven’t made any significant adjustments because not much has really changed with the regulations, and they’re still coming in. We have some more time regarding PMTA submissions and feel we have a very good plan in place that will ensure we are within compliance.

The biggest takeaway from the FDA announcement is that they’re coming around to the fact that vapor is a viable solution to the smoking epidemic. This is significant because special interest influence tried to argue that vaping was the problem and a conduit to smoking. We applaud the FDA for seeing through the smoke.

Jerabek: My biggest takeaway from the announcement is the fact that the FDA is starting to recognize vapor products rather than demonize them. Our outlook has definitely changed. We see an even greater opportunity to leave a legacy within this newly recognized tobacco harm reduction category. It’s a lot easier to do that when you have regulatory support. But there’s clearly still a lot of work to be done.

Five Pawns has been preparing for FDA regulation since the day we first incorporated in 2012. From proper manufacturing practices to responsible and adult targeted branding, we are going to stay our course and lead by example. There’s no more important time than now for this industry to grow up and legitimize itself by not introducing new products after the 8/8/16 date, peddling copyright infringement and promoting products clearly designed to target underage users. This makes us all appear juvenile and could be seen as a slap in the face to those that just gave us some needed relief.

Although our industry appears to have been thrown a lifeline, I fear what will now happen on state and local levels. The FDA’s new timelines could be throwing fuel on the fire for those looking to impose bans and implement higher taxation. I’m afraid we’re going to be fighting more fierce battles across the country.

Will this affect any key business decisions regarding staffing, compliance and regulatory counsel, budgets, or marketing? If so, how?

De Plano: With the policy reprieve, we have increased investment and spending on our own business across the board and hired seven new staff members in the last month alone. The ease on immediate regulatory compliance needs has made it substantially easier to allocate funds toward different, more growth-focused aspects of our enterprise.

In terms of compliance and regulatory counsel, we will be always striving to evaluate and improve our products. Our objective is to constantly improve the quality of our products for our end consumers.

Molina: It’s too soon to tell, but we will likely be more aggressive with staffing as we continue to grow to meet demand. In fact, prior to this announcement, we feared the industry would stall. But the reality today is that there’s an opportunity to accelerate and continue earning market share as the landscape and players continue to thin out.

Since we now have a bigger window to incur costs, this will allow us to build our reserves to fund future needs. Marketing has always been an important piece in our business plan, and it will continue to be.

Jerabek: We’re in growth mode, and the FDA announcement has only strengthened that commitment. Marketing budgets have already been increased, and we’ve brought on a number of new hires to assist with marketing. Future marketing efforts are designed to get more people to adopt vapor products and should translate into increased sales. More sales means more production, and the trickle-down effect should mean more staffing across all channels.

As an industry, we’ve only scratched the surface in terms of the number of people who have converted to vapor products. Higher adoption rates are key to future business and continued success. We need to continue telling the story about responsible tobacco harm reduction to an even greater audience. Although we love—and call them family—the 2 to 4 percent of converts that make up the vapor industry and its customers, there is no better time than now to get in front of the remaining 96 to 98 percent.

We are currently developing many different marketing strategies intended to legitimize responsibly marketed vapor products. I don’t envision Five Pawns participating in many—if any—trade shows in the U.S. this year until show organizers do a better job of policing whom they allow to exhibit. Five Pawns has always chosen paths less traveled and will continue to pursue other forms of marketing.

Have you hired compliance and regulatory staff? Have you hired outside compliance and regulatory counsel?

De Plano: We work with a number of labs to manage compliance and regulatory issues. Our biggest objective is to properly represent our products to the general public. Our product registrations were mostly executed in-house, but we do use external consultants for more sophisticated and technical endeavors.

Molina: We have compliance and regulatory counsel in place. We plan to make a few more hires so we have a diverse, experienced and dedicated regulatory team guiding us along the way.

Jerabek: Five Pawns has had regulatory counsel and compliance specialists on our team for quite some time. We began working with them long ago in preparing our PMTA pathway. With this new breathing room, they’re shifting efforts to ensure we are meeting all upcoming filing requirements and making sure we’re buttoned up from a paperwork and registration standpoint. PMTA efforts will soon commence after this well-needed respite. We’ve been ready and are more than prepared for when it’s time to press on.

Have you met with the FDA? Have you prepared a strategy for complying with the FDA regulations? What steps have you taken so far in preparation for submitting PMTAs?
De Plano: We tried to reach out to the FDA leading up to product registrations and following the policy shift; however, we have yet to hear back from them. In terms of FDA compliance and regulations, we have registered our product SKUs and are waiting to hear more information about the new regulations.

Molina: We requested a meeting with the FDA and look forward to this initial meeting later this year. We know we’ll likely have to meet with them again as they revamp the initial regulations to eliminate a lot of the ambiguity that exists in the current ones. The industry is starved for clear directives, so brands like VaporFi, Direct Vapor and South Beach Smoke—all part of International Vapor Group—can continue to plan and operate successfully.

We have always had a well-thought-out strategy while understanding that we would need to make constant adjustments. This strategy has served us well, set a good standard and allowed us to proactively expand while others are reacting.

Jerabek: Yes, I personally had the privilege—with a number of others—to sit at an FDA table with Mitch Zeller and his staff years ago, helping educate him on the vapor products industry. The agency was surprisingly warm, engaged and grateful for our industry insights. Recently, our compliance and regulatory team met with the FDA on several occasions in preparation for our PMTA filings. We hope the FDA will eventually come out with a more defined set of guidelines, eased restrictions and a reduction in PMTA filing costs that will allow for even more players to responsibly define our category.

Long-term, what is your vision for your company as it relates to the regulatory environment and the competitive landscape?

De Plano: Our vision for the company is to continue as the market leader of the nicotine salt category we invented and offer great products that comply with the FDA regulations. There will always be competition, but over the last few months, the brands that were serious about their long-term prospects grew, while the rest got left behind.

Molina: We have never changed our long-term vision. While we haven’t been able to proceed as quickly as we would like to due to the regulatory ambiguity, our foresight and steadfastness will ensure our company is one of the few remaining in an already thinning field. We are industry innovators with a strong reputation for quality products, consumer loyalty and outstanding service. That’s brand recognition that garners respect in the vape community now and into the future.

Jerabek: Five Pawns is going to continue to stay the course, play by the rules and do our best to lead by example. It absolutely kills me that new product innovation has been stifled. This is what I do and what I love. Innovation was what put Five Pawns on the map in 2012. We will continue to explore new product offerings in both flavor and technology in the not-so-distant future. We’ll continue to be the best we can be within the confines of the current regulatory framework.

I’m all for fair competition. However, today the landscape appears to “punish the ethical and reward the criminal.” New products have been introduced daily since Aug. 8, 2016, and until the FDA starts enforcing noncompliant products, the wild, Wild West will unfortunately continue. A low barrier to entry allows new players to enter the market with misbranded products that do an injustice to our category.

On a positive note, more time from the FDA should promote a healthier retail landscape, allowing more store owners to renew leases and open additional locations. The future looks far brighter than it did just a mere six months ago!