Month: March 2024

  • Hong Kong Seizes $26.6 Million in Illegal Cigs

    Hong Kong Seizes $26.6 Million in Illegal Cigs

    Credit: Timothy Donahue

    Customs officers in Hong Kong seized illegal cigarettes worth more than HK$208 million ($26.6 million) in the first 15 days after a tobacco tax increase came into force as part of last month’s budget.

    Superintendent Jeff Lau Leung-chi of the Customs Revenue Crimes Investigation Bureau said on Monday that if the tobacco had been legally imported, the contraband products would have generated about HK$147 million in tax.

    Lau attributed the increase in cigarette seizures to enhanced enforcement action at all levels to combat the trade in illegal tobacco products and the operation’s longer duration in the second phase, according to media reports.

    “We also believe that crime syndicates anticipated the possibility of an increase in tobacco tax, so they stockpiled a larger quantity of illicit cigarettes ahead of time to supply the market after the tax hike,” he said.

    The untaxed cigarettes were discovered over the second phase of a citywide operation code-named “Tempest”, which involved the arrest of 776 people between February 29 and March 14.

    During the first round of the operation, which took place between February 19 and 28, Customs detained 538 people and seized HK$62 million worth of illegal tobacco products in 10 days.

  • BAT Moving Listing Would be ‘Distraction’

    BAT Moving Listing Would be ‘Distraction’

    BAT CEO Tadeu Marroco dismissed the idea of moving the company’s listing to New York from London, stating that it “would create a lot of distraction internally,” according to the Financial Times. Marroco also noted that he wasn’t sure “the benefit would be as evident as some suggest.”        

    In 2023, Rajiv Jain, chair and chief investment officer of U.S. investment group GQG Partners, which at its peak owned 4 percent of BAT stock, urged BAT to switch its primary listing to the U.S. Jain argued that Philip Morris International, which GQG Partners also owns a stake in, trades at a much higher earnings multiple.     

    GQG Partners sold out of BAT in July 2023 due to BAT’s refusal to move its listing.

    Marroco said in regards to the possibility of moving the company’s listing, “I don’t think that in this period of time, we should be focused on this.” He noted that he has “many other things” he needs to do and that “There is nothing to suggest that … it’s a no-brainer to go to the U.S.”

    While Marroco acknowledged that London’s capital markets are struggling to attract and retain listings, he noted that there are advantages to staying in the U.K.

    “If you have a shareholding of a U.K. [listed company] and you are located outside, you don’t pay withholding tax on your dividends, which is different from the U.S.,” he said.

    “Hopefully, we can see that in 10 years’ time, we don’t have this type of discussion. Today, there’s a lot of emotion that relates to it because of the frustration of some that are leaving.”

    BAT recently announced a sale of part of its stake in ITC to restart BAT’s share buyback program. “What’s most important for me is that having restarted the buyback, this should be a consistent feature in terms of our capital allocation,” said Marroco.

    “We have a massive business in the U.S. that we can use to sell [new products],” he said. BAT’s U.S. cigarette sales have fallen, driven by consumers switching to cheaper brands and cigarette alternatives such as heated-tobacco products. By 2035, BAT aims to have 50 percent revenue from alternative products.

  • BAT Share Buyback Begins

    BAT Share Buyback Begins

    Image: maurice norbert

    BAT’s program to buyback BAT ordinary shares using proceeds from its sale of shares in ITC Limited begins Monday, March 18, 2024. The final net proceeds received by the BAT Group from the sale were £1.57 billion ($1.99 billion), and the program will buy back £1.60 billion of BAT ordinary shares starting with £700 million in 2024 and the remaining £900 million in 2025. The program will end no later than Dec. 31, 2025.

    The purpose of the program is to reduce the issued share capital of the company. The purchased shares will be canceled. The company has entered into an agreement with UBS AG London Brance to enable the purchase of ordinary shares for the initial stage of the program. UBS will purchase the company’s ordinary shares as principal, and the company will purchase such number of ordinary shares form UBS in accordance with the terms of the engagement.

    The number of ordinary shares permitted to be purchased by the company is 223,590,721 ordinary shares. The program will be carried out on Recognized Investment Exchanges within the U.K. For the avoidance of doubt, no repurchases will be made in respect of the company’s American Depositary Receipts.

  • Flava Pulled From Philippine Shelves

    Flava Pulled From Philippine Shelves

    Flava brand vaping products have been pulled from store shelves in the Philippines amid allegations of illegal marketing to minors and tax evasion, the Department of Trade and Industry has said.

    The DTI’s Fair Trade Enforcement Bureau (FTEB) on March 15 ordered Flava Corporation, Lilac’s Vape Shop, and social media influencer Lilac Sison Tayaban, CEO of Flava, to refrain from manufacturing, importing, selling, packaging and distributing imported Flava vapes, according to media reports.

    Once the Sampaloc, Manila-based business receives the preliminary order issued by DTI-FTEB, all of Flava’s commercial activities must immediately stop.

    Flava was the respondent to formal charges alleging violations of Republic Act No. 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act, filed before the DTI-FTEB on March 14.

    In turn, the DTI-FTEB gave the preliminary order to confiscate Flava products that violate RA 11900, to prevent the disposition or tampering of evidence and the continuation of the acts being complained of.

    The DTI is the lead implementing and enforcement agency of RA 11900, the landmark law aimed at protecting minors from vaping. The House Ways and Means Committee earlier estimated as much as P728 million ($1.3 million) in foregone tax revenues from the alleged technical smuggling of P1.4 billion worth of illicit Flava devices last year.

    After laboratory testing, The House panel discovered that Flava had not declared the vapes it imported from China. Flava allegedly mislabeled its ingredient as freebase nicotine, which has a lower excise tax than nicotine salt — the nicotine used in Flava products.

    Also, the House committee discovered Flava’s aggressive marketing of its flavored vapes to minors, most especially on social media—a violation of RA 11900. Last week, Bureau of Internal Revenue commissioner Romeo Lumagui Jr. disclosed that the taxman seized 1,029 master boxes of Flava vapes from a warehouse in San Pablo City, Laguna, with tax deficiencies totaling P75.7 million.

    The BIR raid conducted together with the Laguna provincial field unit of the Philippine National Police’s Criminal Investigation and Detection Group (PNP-CIDG) also led to the arrest of two individuals manning the warehouse.

    As such, the BIR will file criminal tax evasion charges against Flava.

    “This successful raid of a vape warehouse containing 102,900 bottles of Flava vape products will be one of many. The BIR supports the whole of the government’s approach to eradicating illicit vape products. We have warned you as early as 2022. Our raids are successful. We won the criminal cases. You already have pending warrants of arrest. Register and pay your proper taxes, or suffer the consequences,” Lumagui said.

    Meanwhile, Consumer Protection Group spokesperson, Trade Assistant Secretary Amanda Nograles said they will check the report of the Philippine Drug Enforcement Agency that marijuana-laced electronic cigarettes or vapes are now proliferating in the market.

    “That report alarms us, especially when these will be sold to minors. Since the information was just new, then we will get additional information. But the DTI will continue to confiscate vape products with flavor descriptors and have cartoon characters that are appealing to minors, and products that use influencers,” Nograles said in a radio interview.

    She said if the DTI encountered or confiscated vapes with marijuana oil, then they would refer it to the PDEA.

    On Thursday PDEA operatives seized cannabis oil and ‘kush’, and assorted vaping devices, with an estimated total value of P842,000 in simultaneous raids in Taguig City.

  • U.K. Group: Harsh Fines for Selling Illegal Vapes

    U.K. Group: Harsh Fines for Selling Illegal Vapes

    U.K. firms flouting the proposed ban on disposable vapes should face harsher fines to deter unscrupulous businesses, according to the Local Government Association (LGA).

    Under the government’s plans, businesses caught selling disposable vapes once the ban is in place could be given a fixed-penalty notice of £100 by their local council.

    The LGA has said the proposed fine is too low and might let businesses off the hook. However, a minority could see the fine as a price worth paying to continue selling the products, it said.

    “We’re delighted that the government is taking decisive action to ban disposable vapes,” Kaya Comer-Schwartz, the leader of Islington Council and public health spokesperson for the LGA, said, according to media reports. “However, proposed penalties will be a drop in the ocean to a minority of unscrupulous businesses looking to make a quick buck after the ban comes into place.”

    Firms flouting the proposed ban on disposable vapes should face harsher fines to deter unscrupulous businesses, the Local Government Association (LGA) has said.

    Under the government’s plans, businesses caught selling disposable vapes once the ban is in place could be given a fixed-penalty notice of £100 by their local council.

    The LGA has said the proposed fine is too low and might let businesses off the hook. A minority could see the fine as a price worth paying to continue to sell the products, it said.

    Kaya Comer-Schwartz, the leader of Islington Council and public health spokesperson for the LGA, said: “We’re delighted that the government is taking decisive action to ban disposable vapes. However, proposed penalties will be a drop in the ocean to a minority of unscrupulous businesses looking to make a quick buck after the ban comes into place.”

    According to LGA analysis, councils can impose larger penalties for other offenses, including up to £500 for littering, £500 for excessive noise from licensed premises, £200 for a business failing to put up “no smoking” signs, and up to £150 for unauthorized distribution of free leaflets on public land.

    The LGA, representing councils in England and Wales, calls for the government to amend the tobacco and vaping bill to allow councils to impose more severe fines.

  • Lawmakers Send Flavor Ban to Vermont Senate

    Lawmakers Send Flavor Ban to Vermont Senate

    Vermont lawmakers Friday approved a ban on flavored vaping and other flavored tobacco products.

    S.18 would end retail sales of all flavored e-cigarettes, e-liquids, and oral nicotine pouches. The bill would also end the sale of all menthol-flavored tobacco products, including cigarettes, cigars, pipe tobacco, and smokeless tobacco, by January 1st, 2026.

    The legislation, which has been debated for at least six years, faced a fierce lobbying campaign from retailers who said it would put many out of business. Some lawmakers have also balked at the loss of millions in tax revenue, according to media reports.

    But supporters say the adverse health impacts on young people who get hooked on the products are just too great. Lawmakers spoke on the House floor Thursday about the extensive testimony from medical professionals, educators, parents, and members of the BIPOC community in support of the bill.

    The bill will now return to the Senate, which passed a different version of the bill last year. The governor has not yet indicated if he will sign it.

  • UKVIA Discusses Vape Waste Management

    UKVIA Discusses Vape Waste Management

    Image: bennyrobo

    The U.K. Vaping Industry Association (UKVIA) will host a webinar on the “Future of Vape Waste Management Post-Disposables,” according to the organization’s website.

    The Waste Electrical and Electronic Equipment (WEEE) Directive consultation period ended at the beginning of March. This consultation period has implications for the vaping sector, according to the UKVIA, including: policy makers potentially introducing a dedicated category under the WEEE directive; responsibility for collection and treatment of vape waste possibly moving completely to producers; and a potential new curbside household collection service for electronics, potentially including vape devices.

    The WEEE consultation section that relates to vaping was designed to review current regulations due to the environmental challenges associated with single use vapes. However, disposables are now about to be banned in the U.K., raising questions about how the WEEE regulatory reform would affect the vapor industry.

    The webinar will discuss these issues and take place on Monday, April 15, 2024.

    Despite these reforms, a UKVIA investigation showed that there is a lack of interest in vape recycling in the U.K.

    The investigation showed that 80 percent of major U.K. city councils and London borough councils surveyed had “no plans” to invest in new vape collection solutions in the next year.  

    As part of the investigation, Freedom of Information requests were issued by the UKVIA prior to the single-use vape ban to 10 major provincial city councils and 10 central London councils, including Birmingham, Manchester, Cardiff, Glasgow and Westminster.

    Of those surveyed, 60 percent said they offer vape was disposal at civic amenity sites (or designated collection facilities). One in 10 have introduced vape waste containers in public places while about one-third do not offer vape waste disposal containers or drop-off points of any kind. Only one of the councils has introduced curbside or household vape collection to date.

    “Councils are not anti-vapes, which are shown to be less harmful than smoking and have a place as a tool to use in smoking cessation,” said a spokesperson for the Local Government Association, which represents all the authorities contacted as part of the investigation and is one of the organizations that called for a disposable ban. “However, disposable vapes are fundamentally flawed in their design and inherently unsustainable products, meaning an outright ban will prove more effective than attempts to recycle more vapes.”

    Research by Material Focus showed that 70 percent of people throw away their single-use vapes because “they didn’t know they could recycle them.” Of those surveyed, 44 percent of vapers said they would recycle their single-use vapes if there were recycling points on a street or in a park while half said they would be likely to recycle if curbside recycling was available.

    “Advocating a ban on disposable vapes on environmental grounds while not committing any investment to vape waste collection, despite the need for such facilities in public places—which are controlled by local government—is a cast of the pot calling the kettle black,” said John Dunne, director general of the UKVIA, in a statement. “Even when single-use vapes are no longer available in retail outlets, there will still be millions of rechargeable and refillable vapes sold every year, not to mention a rise in black market products that will arise from the ban on disposables. So, the lack of investment in collection facilities and foresight around the need to make the disposable of vapes as convenient as possible is startling and extremely concerning.

    “We are under no illusions as to what the industry needs to do to ensure it is environmentally responsible, which is why the sector has invested in producing more sustainable products, providing recycling education for consumers, rolling out recycling initiatives and innovations and ensuring it is compliant with regulations. The UKVIA is also involved in the development of a vape licensing scheme, which has just presented to parliamentarians, and, if adopted, will require retailers to provide take-back facilities in-store before being allowed to sell vapes.

    “We can, and will, do much more to ensure environmental compliance across the sector, but that doesn’t mean local government can simply offload its responsibility for providing vape waste collection facilities in public places. The industry pays its business rates like any other sector, and this makes up one of the largest sources of income for local authorities—a percentage of which is earmarked for waste management. If local authorities can provide public waste disposal facilities for all types of waste, why not used vapes?

    “Whilst I am sure vaping manufacturers and retailers could be encouraged to partner with local authorities to create more public collection points for vape waste, the industry can’t just put such facilities on streets and in parks, as is required. We need all the players in the vape waste ecosystem to be joined up if we are to protect both the environment and the health of former smokers.”

    “Currently, a significant volume of used vaping products are being wrongfully disposed of in the general waste bin and ultimately end up at landfill,” said Steward Price, head of producer responsibility services with Waste Experts. “This powerful data demonstrates that much more needs to be done to educate consumers on the correct disposal of their waste vapes and reinforces the need for a much stronger collection and recycling infrastructure for this challenging waste stream.”

  • Altria Loses Juul Appeal in British Columbia

    Altria Loses Juul Appeal in British Columbia

    Image: StandbildCA

    Altria Group has lost an appeal to challenge the territorial jurisdiction of the British Columbia courts in a Juul class action lawsuit, reports Victoria Now.

    “The plaintiffs allege the e-cigarette devices are hazardous products but were falsely marketed as a desirable, safe and healthier alternative to smoking,” the civil claim states. “The plaintiffs additionally allege that the defendants conspired together to addict a new generation to nicotine or, alternatively, conspired to maintain and expand the market for Juul products using unlawful means knowing that addiction and other injuries were likely to result.”

    Altria was brought into the litigation with Juul Labs Canada and Juul Labs USA in September 2020, a year after the original civil claim was filed, following Altria acquiring a 35 percent stake in Juul in 2018 for $12.8 billion.

    According to the litigation, Juul and Altria allegedly “conspired” to “employ strategies perfected in the cigarette industry” to advertise and market Juul products to youth.

    “It is alleged that the defendants exploited regulatory loopholes and relied on social media and other viral advertising methods to hook young people on Juul, despite the defendants’ knowledge of the dangers associated with vaping. Altria is alleged to have provided strategies, analyses and services to the defendants in furtherance of the conspiracy,” a judgment reads.

    Altria’s claim that the British Columbia courts did not have jurisdiction over the action was dismissed in 2022. Altria then appealed the decision, claiming the judge “failed to address evidence that was materially relevant.”

    Altria argued that the judge ignored or misconceived evidence that Altria did not ship Juul products to Canada or send Juul marketing materials to Canadian addresses, among other things.

    The appeal decision found that there is not a real and substantial connection because class members may have “hopped the border and been influenced by Altria’s activities in the United States.”

    “Rather,” the appeal decision reads, “the judge found that the respondents established a good arguable case that Altria was a party to a conspiracy to advertise and market Juul e-cigarettes to young people in a manner that was misleading about the health risks, including the risk of addiction.”

  • Federal Judge OKs Altria, Juul Class Action

    Federal Judge OKs Altria, Juul Class Action

    Image: H_Ko

    A federal judge approved the final part of a class action settlement with the e-cigarette company Juul Labs and its parent company Altria, bringing the settlement total to just over $300 million.

    In 2018, the plaintiffs charged Juul Labs with misleading the public about the addictiveness of Juul and the risk of the e-cigarettes and its nicotine cartridges.

    The plaintiffs also said Juul had targeted teenagers with candy-flavored Juul pods and “multimillion-dollar ad campaigns and social media blitzes using alluring imagery.”

    The case survived a number of hurdles: The judge denied multiple motions to dismiss the suit and agreed to certify four different classes of plaintiffs (a nationwide class, a nationwide youth class, a California class and a California youth class).

    In January, the judge gave preliminary approval to a $255 million settlement between Juul Labs and the plaintiffs, according to Courthouse news. Friday’s ruling grants approval to Altria’s payment of $45,531,250. The sides have yet to reach an agreement on attorneys fees.

    “Court finds that this monetary recovery is fair, reasonable, and adequate given the risks of proceeding to trial and the maximum recovery potentially available to Settlement Class Members if the Class Representatives had prevailed at trial,” wrote U.S. District Judge William Orrick in his order.

    Last year, Juul agreed to pay six states $462 million to settle claims that it had marketed its vaping products to teenagers. The year before that, it agreed to pay $438.5 million to 33 different states and Puerto Rico.

    Altria Group exchanged its entire investment in Juul Labs in 2023 for a non-exclusive, irrevocable global license to certain of Juul’s heated tobacco intellectual property.

  • Hong Kong: Increase in Quit-Smoking Requests

    Hong Kong: Increase in Quit-Smoking Requests

    Image: chrisdorney

    Hong Kong has seen an increase in calls to its smoking cessation hotline following the tobacco tax increase to 70 percent. Legislative Council member Rebecca Chan Hoi-yan has asked the government to enhance assistance to people who wish to quit smoking, according to The Standard.   

    Cigarettes in Hong Kong now cost at least HKD94 ($12.01).

    Following the announcement of the tax hike, the weekly average number of people calling the quit-smoking hotline increased by four times.

    Chan has expressed concern that the government may not follow up on the cases and determine how many people are successful in quitting smoking or how many people eventually resume smoking. According to Chan, there is a need for continuous efforts to understand the reasons behind successful quitting and the challenges of those who resume smoking.

    She also called for comprehensive tobacco control policies by “focusing on target groups, such as teenagers, and implementing measures to track families in order to prevent teenagers from smoking.”

    “The government should focus on better education and promotional efforts instead of solely relying on increasing tobacco duty,” said Peter Shiu Ka-fai of the wholesale and retail sector. He argued that it is important to inform smokers of the harmful effects of cigarettes and respect their choices.