Author: Staff Writer

Women in Tobacco to Celebrate Women’s Day

Women in Tobacco (WIT) will celebrate International Women’s Day on March 8 with a virtual meeting starting at 16:30 U.K. time.
During the meeting, WIT will highlight the work of two female authors—Karen Blakeley and Katherine Graham.
Blakeley, who previously published a book on change management, will offer a sneak preview of her latest work, Leading with Love, which is scheduled for release in July. Graham, previously with Japan Tobacco International in Geneva and London, will share excerpts from her debut novel, Salt Sisters, which will be published on March 11.
Participants in the WIT meeting will have an opportunity to win a signed copy of each book.
Click here for more information about the meeting and the authors. To register, please contact Kathryn Kyle.
March 2, 2021
Call for Crackdown on Illicit Cigarettes

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Philippine Representative Joey Salceda has called for a crackdown on the illicit cigarette trade, reports The Inquirer.
The lawmaker, who chairs the ways and means committee, estimates the Philippines loses at least PHP30 billion ($618.29 million) annually due to cigarette smuggling. He attributes the problem to lax law enforcement.
Salceda said the Bureau of Internal Revenue should reverse a rule from 2015 that exempts cigarette manufacturers from tax stamps for exports and instead requires them to have unique identification codes (UIC). Because the rule relies on self-declaration, it is prone to abuse, according to Salceda.
“Stricter enforcement is absolutely critical, so the policy fix will involve closing the loopholes that lighten enforcement,” he added.
Cigarettes top the Philippines’ Bureau of Customs’ (BOC) list of most smuggled products.
According to the Department of Finance (DOF), more than half of contraband seized by the BOC in 2020 was illegal cigarettes.
The DOF said that out of the PHP9.75 billion in smuggled goods that the BOC seized in 2020, 53.5 percent in terms of value, or PHP5.22-billion worth, were tobacco and cigarettes.
March 1, 2021
Philip Morris Korea Wins Trademark Fee Battle

Photo: Tobacco Reporter archive
Philip Morris Korea (PMK) has won a legal battle against South Korea’s tax authority over trademark usage fees, reports The Korea Herald, citing legal sources.
The Seoul Administrative Court on March 1 ruled in favor PMK, ordering Seoul Main Customs to cancel a KRW9.82 billion ($8.7 million) tax.
The ruling comes four years after the Korea Customs Service ordered the company to pay KRW3.4 billion in customs duties, KRW3.7 billion in value added tax and KRW2.6 billion in penalty tax over royalties paid to its headquarters.
PMK appealed the decision.
PMK has been producing tobacco products in Korea with raw materials exported from its headquarters since 2012. The tax authorities moved against the firm, believing the Korean unit had been paying royalties to use the company’s trade secrets.
According to Korea’s Customs Act, companies are subject to a levy when importers pay their business partners a low price and make the rest of the payment in royalties to evade taxation.
The March 1 ruling dismissed the argument by the tax authorities, saying that the royalties paid by PMK include trademark fees as well as tobacco leaves and business secrets and that the tax needs to be recalculated.
March 1, 2021
BAT Highlights Environmental, Social and Governance Goals

Photo: BAT
British American Tobacco (BAT) is highlighting its goals and achievements around its enhanced environment, social and governance (ESG) ambitions this week. Across its digital channels, the company will share its sustainability story with the outside world.
In 2020, the company announced its new corporate purpose to deliver “A Better Tomorrow” by reducing the health impact of its business, putting sustainability front and center. Since March last year, BAT has launched the industry’s first ever human rights report; was the only tobacco company to be included in the Dow Jones Sustainability World Index, its 19th consecutive year in the index series; was awarded an ‘A’ score for climate change by the Carbon Disclosure Project (CDP); and was named as a Diversity Leader by the Financial Times in its inaugural Diversity Leaders report.
The company announced its latest ambitions, including increasing BAT consumers of noncombustible products to 50 million by 2030, achieving carbon neutrality by 2030 and accelerating other existing environmental targets to 2025, and eliminating unnecessary single-use plastic and making all plastic packaging recyclable by 2025.
In December 2020, BAT announced its Covid-19 vaccine candidate had progressed to human trials, further demonstrating its commitment to innovation and science. BAT also announced last week that it is on track in its ambition to increase the number of consumers of noncombustible products, doubling the rate of consumer adoption in the second half of 2020.
Kingsley Wheaton
“One of the core commitments we made in 2020 was to continually track and report on our sustainability progress,” said Kingsley Wheaton, chief marketing officer. “This new BAT ESG week gives us the chance to share our continued progress with the outside world, given our purpose-led ambition to reduce the health impact of our business.”
ESG Week will be followed by the launch on March 9 of BAT’s Annual ESG Report, which will provide details on all the company’s sustainability initiatives and progress.
March 1, 2021
FDA Sends Fresh Round of Warning Letters

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The U.S. Food and Drug Administration issued warning letters to 18 manufacturers selling unauthorized e-liquids. The companies did not submit premarket tobacco product applications (PMTAs) by the Sept. 9, 2020, deadline.
The companies that received warning letters include Square Vape Labs, The Vapor Emporium, Tally Ho Vapor Tonic, The Vape Corner., Dripco d/b/a Dripco Vape Co., VaporIce, Vapor Maven E-Juice, Vapor City Plus, Vapor Invasion, Vaporatory, Chuckin’ Clouds Vape Shop, Black Dog Reserve, California Vaping Company, The Chubby Baker, Smooth, Bulldog Vapor, Adore eLiquid and E-Cig Outlet.
While each warning letter issued cites specific products as examples, collectively these companies have listed a combined total of more than 234,000 products with the FDA.
Per a court order, applications for premarket review for certain deemed new tobacco products on the market as of Aug. 8, 2016—including e-liquids—were required to be submitted to the FDA by Sept. 9, 2020. For companies that submitted applications by that deadline, the FDA generally intends to continue to defer enforcement for up to one year pending review unless there is a negative action taken by the FDA on the application.
The FDA recently published an update on its progress on the processing and review of the applications received by Sept. 9, including a list of companies that submitted timely applications.
March 1, 2021
Kaival Expands Distribution
Kaival Brands has three new distribution partners for its Bidi Vapor products: Smoker Friendly International, Avail Vapor and Hilmes Distributing. These three additional distributors push the potential U.S. store count for Bidi Vapor products above 46,000, up from 10,000 in 2020.
According to Bidi Vapor, distributor interest in its products has increased greatly following its receipt of a premarket tobacco product application filing letter from the Food and Drug Administration. As the company’s product moves into the substantive review phase, Bidi Vapor anticipates it will continue to update investors on additional new distribution agreements.
“These new partners will become a large new revenue stream for Bidi and Kaival,” said Niraj Patel, CEO of Kaival Brands, in a statement. “It is important to note our 2020 sales of just under $100 million were achieved with a distribution network of 10,000 stores and in less than 10 months of operation.
“Today’s new distribution partner announcements bring our network to over 46,000 store locations. The strength and breadth of these partnerships fuels our confidence in our ability to meet or exceed our 2021 projection of $400 [million] to 450 million in sales.”
March 1, 2021
JTI Boosts Philippines’ Tax Collections

Illustration: Tobacco Reporter archive
The Philippines’ tobacco tax receipts have been substantially boosted by Japan Tobacco International’s (JTI) recent expansion in the country, reports Business World.
As of Feb. 18, the Bureau of Internal Revenue (BIR) had collected PHP29.1 billion ($598.43 million), up 73.5 percent from a year earlier.
The BIR was also above target for the month by about 4.3 percent. According to the Department of Finance, the bureau had collected PHP17.57 billion from excise taxes on tobacco products, exceeding the target for the month of PHP16.85 billion.
The tax take was 110 percent higher than the total collected in the equivalent period from the previous year.
BIR Deputy Commissioner Arnel Guballa said the bureau collected more taxes from JTI, which had expanded its Batangas factory.
“Noticeably, we have a big increase in the collection of tobacco excises because JTI opened its plant in Batangas. So it’s in full operation … That’s also why we have quite a collection in tobacco for this month,” Guballa said.
JTI Philippines established a manufacturing plant in Batangas City in 2017 and expanded last year.
JTI Philippines also acquired the tobacco business of Mighty Corp. in August 2017 for PHP46.8 billion, adding the Mighty and Marvels brands to its lineup.
Bulacan-based Mighty shut down in July 2017 after a series of tax evasion complaints before the Justice Department due to its use of fake tax stamps. Its total tax settlement with the government amounted to PHP30 billion.
According to the Department of Finance, tax collections from Mighty surged immediately after the takeover.
Recent laws raised the excise taxes on tobacco products along with other “sin” products, such as alcohol and electronic cigarettes.
The BIR is tasked to collect PHP2.081 trillion this year, which if achieved would be up 7 percent on its actual collections in 2020.
March 1, 2021
Mitt Romney Calls For Nationwide Flavor Ban

Photo: Office of Mitt Romney
Utah Senator Mitt Romney has called for flavored vaping products to be pulled from shelves across the United States, reports 2KUTTV. Romney introduced legislation in September 2019 that would have banned the sale of all flavored vapor products except tobacco flavors, but it was never taken up for a vote.
“The analysis shows that nearly one-fourth of high school kids are vaping on a regular basis—tobacco products—and in many cases marijuana as well,” Romney said, adding that the government needs to do everything it can to stop the sale of flavored vaping products and implement a robust public education campaign to warn kids about the dangers of vaping.
In October 2019, the Utah Department of Health issued an emergency order banning the sale of flavored vapor products in Utah, which was met swiftly with a lawsuit from tobacco retailers. The products remain available for sale today.
In 2019, the legal age to purchase tobacco products in the U.S. was raised from 18 to 21.
March 1, 2021
Gold Nuggets

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Gaining insights from the FDA’s final PMTA rule
By Willie McKinney and Cheryl K. Olson
On Jan. 19, the U.S. Food and Drug Administration finalized a “foundational rule” about the “minimum requirements for the content, format and review of premarket tobacco product applications (PMTAs).” Within days, before many of us had a chance to download the 516-page document, let alone read it, the rule disappeared. The link says, “page not found.”
Don’t worry. This is part of a normal review by the incoming Biden administration of recent rules from the old regime. Given that little FDA staff turnover is expected, their thinking, and the rule, will probably stay the same. The document will be back, nicely formatted.
What to do while we wait for the final-final rule to appear on the FDA’s site? Well, the bulk of the document addresses “about 1,000 comments” (!) the FDA received on the proposed rule issued in 2019, including many questions from industry folks confused about PMTAs.
Understanding the subtleties and subtext of the FDA’s responses to comments can dramatically increase your chances of getting a marketing granted order. Ignoring them can lead to a significant waste of time and money.
Let’s wade into the FDA’s responses and see what gold nuggets of insight we can pan. What fuzzy areas affecting your strategy are now clear? What costly studies or paperwork might be trimmed or skipped?

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A PMTA is not a box-ticking exercise
We can begin with how the FDA thinks and what that means for PMTA strategy. Remember, interacting with tobacco product makers and sellers is still relatively new for the FDA’s staff and consultants. As they read comments, held conversations and began reviewing the recent flood of PMTAs, they realized that companies couldn’t figure out what the FDA was asking for. We know this because the PMTA rule lays out, much more clearly than in previous documents, what the FDA needs from companies. There are details on required content and format. The rule contains dozens of “musts”—must list, must include, must state and so on.
The FDA also says what can happen if you don’t meet minimal requirements: Do this, and we won’t accept or file. Or: This will slow the review process. Think of it as a series of red lights (“FDA will refuse to accept a PMTA … where it lacks constituent testing information required by § 1114.7(i)(1)(v)”) and yellow lights (“FDA may refuse to accept or file an incomplete application for review”). All of this is welcome clarity.
That doesn’t mean, as we’ve heard it described, that having a PMTA accepted and filed is a check-the-box exercise. Parts of a PMTA are like that, but the substantive review of data definitely is not.
Many of the comments to the FDA hint at frustration. “Why can’t they just tell me what studies to do so I can market my product?” The short answer is that a PMTA is partly a checklist of required information, but it’s also a narrative. You’re telling a story about why your product is appropriate for the protection of public health (APPH), illustrated by data. An effective PMTA is driven by story—explaining why your product on balance is likely to benefit public health—and merely organized by the PMTA format.
If you try to follow the rule document like a cookbook recipe—add a cup of pharmacokinetics (PK) studies and a tablespoon of label comprehension, and it’s baked—you will likely fail. That’s because the rule is descriptive but not prescriptive; it doesn’t tell you how to deliver. Why? First, because each product is different, with its own particular characteristics and target customers and therefore a distinctive set of potential public health benefits and risks that need to be demonstrated or mitigated. Second, a how-to list would tie the FDA’s hands as they make and rethink decisions about what is APPH. In Response 105, the agency notes that “Due to the nature of the Federal rulemaking process … FDA may not be able to update such standards in a timely manner.”

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Expect APPH to evolve
APPH is about relative health risks; it’s about “net benefit to the health of the population as a whole.” A definition like that, based on comparing ever-evolving tobacco products, will create a moving target. See FDA’s Response 123: “Because market conditions will change over time, what might be APPH at one point in time may no longer be APPH in the future.”
A static approach for granting marketing orders means the FDA couldn’t keep riskier products off the market, “thus undermining its core statutory mandate to reduce the harm caused by tobacco product use.” Basically, if you can show that your novel tobacco product is less risky than today’s cigarettes, that’s great. But as more tobacco users move to reduced-risk products, both the comparators and the risk equation will change. And if your tobacco product has, say, slightly more of a potentially harmful chemical than others in its category, adding your product to (or keeping it among) consumers’ options is not reducing harm.
Save with bridging, bundling and master files
Another reason the FDA “declines to require that an applicant conduct a list of new studies as part of every application” (Response 59) is that shortcuts are allowed. Applicants can also “provide scientific data to inform FDA’s review” through bridging. Rather than generating all new data on your product, you can sometimes leverage the research literature to show your product is APPH. Just a little new data connects you to more.
Suppose you show from chemistry that your product releases nicotine in the same way and has the same nicotine concentration as another product already tested in published literature. That may let you bridge to their PK and abuse liability studies, saving you hundreds of thousands or even millions of dollars. In Response 62, the FDA “declines to define” bridging but instead gives useful examples of how to do it.
Another cost-saving and time-saving shortcut is bundling or combining applications. Let’s say that you have four flavors or two nicotine strengths. The FDA sees them as separate products. But the FDA allows you to submit one PMTA for all of them. A bundled PMTA includes “a single, combined cover letter and table of contents across all products” (Response 19).
You still need to provide unique information about each product, but you can collect and present it more efficiently. For example, you might conduct and present one bundled perception and intention survey that asks noncustomers about perceptions of the labeling of each of your four flavors in turn. But be aware that the FDA will break up your bundle for review, so list in tables which parts of the PMTA apply to which products.
Bundling isn’t always best. Are your harm reduction story and target audiences the same across products? A high nicotine vape may appeal to a heavily addicted smoker, but it has different health implications than a lower nicotine sister product. Combining the two into one PMTA might muddy your case for APPH status.
A third PMTA shortcut to know about is called a tobacco product master file (TPMF). A master file contains information you can reference again and again for multiple applications. In Response 17, the FDA defines a TPMF as “contain[ing] trade secret and/or confidential commercial information about a tobacco product or component that the owner [e.g., manufacturer, ingredient supplier] does not want to share with other persons” but is willing to share with the FDA. That’s useful if your new tobacco product uses an e-liquid made by a manufacturer who doesn’t want to share their formulation but who will give you a letter of authorization to cite their master file in your PMTA.
There are other TPMF options. “When companies want to rely on the same pool of data, FDA encourages the use of shared resources, such as tobacco product master files, where appropriate” (Response 18). This might be the fruits of a thorough literature review on a particular topic. Rather than cite and submit 150 articles over and over, you can reference the master file.
More information is not always better
PMTA applicants now need to provide “only high-level marketing plan information” (Response 30) rather than detailed consumer research. The FDA’s main concern is youth exposure. It emphasizes descriptions of intended audiences and how they’ll be targeted. Note, however, that if you have already done consumer research, “the results of such research will be required” to go to the FDA.
As Comment 14 notes, “the tobacco industry has a history of marketing its products to … vulnerable populations,” which may include low-income communities, racial/ethnic minority group members, rural residents and youth, among others. Your PMTA story should include how your product might improve (or not worsen) the well-being of some of these vulnerable populations. Harm and benefit to subgroups that are more likely to start, less likely to stop and/or more likely to get sick from using tobacco products “are an important part” of the FDA’s APPH calculations. Groups of interest “will vary depending on type of tobacco product and may change over time.”
However, the FDA does not clearly state that conducting research with some of these subgroups is unethical or unsafe. This includes people under the age of 21 and women “who are pregnant or trying to become pregnant.” (The document mentions the need for special attention to vulnerable populations, including children and incarcerated persons, when discussing FDA plans to issue future regulations concerning use of Institutional Review Boards for tobacco product clinical studies.)
In Response 79, the FDA allows for “studies using individuals under the minimum age of sale” with extra protections and parental consent but “does not require it [or] anticipate that it will be necessary.” Don’t go there. Instead, over-sample young adults in your studies as a proxy for youth. Report, for example, whether intentions to use your product were different for people under age 25 compared to the rest.

Cheryl K. Olson is a California-based public health researcher and consultant who specializes in behavioral health issues. She spent 15 years on the faculty of Harvard Medical School.

Willie McKinney is the founder of McKinney Regulatory Science Advisors. He’s held senior regulatory roles at major tobacco product companies and served for three years as the industry representative on the FDA’s Tobacco Products Scientific Advisory Committee.

March 1, 2021
Blueprint for Exit

Photo: Tobacco Reporter archive
Following the exit of two leading cigarette manufacturers, Colombian tobacco farmers had to find alternative livelihoods overnight. Their experience offers lessons for growers elsewhere.
By Stefanie Rossel
From smallholder tobacco farming to organized large-scale tobacco cultivation to alternative crops in a short time—Colombia’s leaf tobacco sector has experienced a remarkable development in the past 16 years. Its most recent change toward farmer livelihoods independent of tobacco might become a blueprint for other leaf origins facing declining demand for tobacco.
The takeover of Colombia’s domestic tobacco industry by multinationals was a turning point for the country’s leaf sector. Philip Morris International (PMI) acquired Coltabaco in 2005, and British American Tobacco (BAT) bought Protabaco in 2011.
“The technological package that had been implemented by the national companies before was very different from the one brought by the multinationals, and this meant radical adaptations for growers,” explains Heliodoro Campos Castillo, founder and general secretary of the National Tobacco Fund in Colombia (Fedetabaco).
“To give some examples, tobacco farming in Colombia, like almost everywhere in the world, has always been a family business, with everyone from granddads to youngsters participating actively. With multinationals’ child labor policies, this was ended and translated into a reduction in areas cultivated. Other measures that brought about a hard adaptation for growers were the security procedures that did not exist before. Growers accepted them as part of the evolution needed in the sector to improve agricultural practices and did their best to adapt to them. However, these were abrupt changes with very little time for implementation, and the sector suffered with them.”
Years before the multinationals entered the market, Fedetabaco initiated an investment package of $64 million in Colombia’s tobacco sector, which was co-financed by municipalities, the tobacco industry and institutions and stretched over almost 25 years.
“Fedetabaco understood the challenges ahead and went beyond the improvements in production to better growers’ livelihoods through different sustainable programs, such as rainfall water collection and reservoirs, housing projects, improvement of curing methods through modernization and, most importantly, promoting sustainability through diversification to grant growers food security and endow them with resources to cover their basic consumption needs,” says Campos Castillo.
“The improvement of the production system as a whole was an important factor to contribute to this self-sufficient strategy. We are working with the International Tobacco Growers’ Association (ITGA) to make sure the example of Colombia will help growers in other parts of the world.”

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Local crop alternatives
Tobacco cultivation in Colombia dates to the 18th century, but the plant plays a minor role in the country’s agriculture. According to the World Health Organization, only 0.03 percent of Colombia’s agricultural land was devoted to tobacco cultivation in 2014. The area used for tobacco cultivation has decreased drastically in the past decade, from 9,589 ha in 2011 to 3,550 ha in 2019, notes Fedetabaco. In line with global trends, annual cigarette consumption in the country declined from 18.4 billion units a year in 2010 to 12.2 billion pieces in 2019, according to USDA estimates. With a market share of 51.4 percent in 2019, PMI contract-purchased about half of the domestic leaf tobacco crop, which corresponded to a planted area of 1,850 ha per year, from 2,300 farmers. BAT, which held the remaining 48.6 percent of the market in 2019, bought tobacco grown on 1,300 ha.
However, PMI closed its manufacturing operations in Colombia in 2019, citing a rise in contraband and a global trend away from tobacco products. One year later, BAT followed suit.

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The two companies’ sudden withdrawal left farmers with little time to find viable alternative crops. It directly affected around 2,000 families and 9,000 people whose main source of income was tobacco, says Campos Castillo.
“Fedetabaco immediately took action to try to mitigate this negative impact in these people’s livelihoods,” he says. “Working closely with the ministry of agriculture and all the sector’s national organizations and institutions, we were able to build up a strategic reconversion program based on a thorough analysis of the situation.
“As the priority line of action, we took into account the experience and expertise of the farmers and the important contribution their knowledge could bring to the program as well as the ecological and agricultural characteristics to make sure we will act on the right location with the right crop with minimum waste.
“This program includes maize, yuca and other crops well known by farmers. The investment will cover 3,500 hectares, and its estimated cost is around $10 million. So far, as a shock plan, we have been able to advance, in coordination with the ministry of agriculture, $900,000 to provide seeds and $400,000 to plant maize, but we reached out to ITGA because this will only cover a very small part of the problem.”

Colombia continues to cultivate limited amounts of cigar tobacco for domestic consumption and exports.
Cannabis pilot
To help their farmers find alternative crops after their exit, PMI and BAT commissioned studies from two national nongovernmental organizations (NGOs). While Proterritorio finished its study last year, the Fundes research will be concluded this May. “We hope [the results] will add value to solve the problem,” says Campos Castillo. “Nevertheless, growers feel confident in the program developed by Fedetabaco with the ministry of agriculture, mainly because it has identified viable crops well known by them, such as yuca, Tahiti lemon and maize. We tend to think that there is a similar line of strategy between what we are proposing from Fedetabaco and the ministry of agriculture and the NGOs hired by the companies, but we will have to wait and see when the figures are out.”
Of the 18 departments that historically grew tobacco, only two will continue. One of them, in Colombia’s north, produces a dark cigar tobacco exclusively for export. The other, in Santander, cultivates Criollo, a tobacco used primarily for domestic cigars.
Cannabis, too, could become an alternative for tobacco growers. Colombia legalized the growth, sale and smoking of medicinal cannabis in 2015. After Coltobaco’s closure, Fedetabaco immediately started exploring the potential of cannabis for medicinal, nonpsychoactive purposes. “We are carefully handling this pilot project and expect to have the result of the analysis in terms of cost of production, productivity and quality by the end of 2021.” It is an exciting project because cannabis is cultivated in small areas of around 1,000 square meters to 2,000 square meters—a scale that is familiar to smallholder tobacco farmers. What’s more, the soil and weather conditions in the target regions appear to be suitable for cannabis cultivation.
Campos Castillo insists that his organization has not stopped working with the government trying to find solutions for tobacco farmers since the departure of PMI and BAT. “The government of Colombia cannot commit to granting the total amount of the funding. Tobacco is a small agriculture share in Colombia, and investment is needed in other rural commodities. Fedetabaco is experienced and has been developing programs for more than 30 years in rural areas in Colombia, so a holistic approach would be to gather all the resources available from companies, [the] government, institutions and our global platform, ITGA, all working together with a single purpose to safeguard the livelihood of these 2,000 families. We remain hopeful that this will happen in the near future.”
The author would like to thank Mercedes Vazquez for her assistance with this article.
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

March 1, 2021