Author: Staff Writer

  • Johnson Nonexecutive Director at Imperial

    Johnson Nonexecutive Director at Imperial

    Photo: Jakub Jirsák | Dreamstime

    Imperial Brands has appointed Alan Johnson to the board as a nonexecutive director with effect from Jan. 1, 2021.

    Johnson has a financial background in consumer goods and retail, having held a number of senior finance positions at Unilever during a 30-year career, including chief audit executive and chief financial officer of the Global Foods Division.

    He was previously chief financial officer and then a nonexecutive director at food retailer Jeronimo Martins until April 2016. Johnson is currently president and chair of the board of the International Federation of Accountants and a member of the board and chair of the audit committee of the International Valuation Standards Council.

    Johnson will also join Imperial Brands’ Succession and Nominations Committee and Audit Committee with effect from Jan. 1, 2021.

  • In Memoriam: William Maksymowicz

    In Memoriam: William Maksymowicz

    Photo: <a href="https://www.dreamstime.com/close-up-orange-candle-flame-lily-flowers-dark-background-image153705634" NetPix – Dreamstime.com

    Tobacco agronomist William “Bill Maks” Maksymowicz of White House, Tennessee, USA, died Nov. 27, 2020.

    Born Jan. 15, 1949, in Providence, Rhode Island, USA, Maksymowicz earned a bachelor of science degree in agronomy from Clemson University in 1971, a masters of science degree in agronomy from the University of Kentucky in 1973, and a PhD in plant physiology from Clemson University in 1988.

    Following completion of his PhD, he served on the faculty of the University of Kentucky for 13 years. He then joined the Vector Corp., where he worked for five years before joining Burley Stabilization Corp. where he worked until his death.

    He is survived by his wife, Melinda Maksymowicz; son and daughter-in-law, Gerald and Catharine Johnson; brother and sister-in-law, Dan and Alice Maksymowicz; and grandchildren, William and Richard Johnson.

  • Vype Has Cigarette Levels of Nicotine

    Vype Has Cigarette Levels of Nicotine

    Photo: BAT

     Vype ePen 3, British American Tobacco’s (BAT) flagship vapor product, can provide smokers with similar levels of nicotine as standard cigarettes, according to new research. If used exclusively, ePen3 could help smokers avoid many of the risks associated with smoking, BAT said in a statement.

    The Scientific Reports study compared both Vype ePen 3 and Vype ePen 2 to combustible cigarettes. It assessed a variety of e-liquids and nicotine strengths for each product and how nicotine concentration and delivery device combined to affect user preference.

    Results from the study show that Vype ePen 3 was superior to Vype ePen 2 for nicotine delivery and ranked significantly higher for user satisfaction, with the newer device scoring nearly double for likability compared to its predecessor.

    The study showed that the maximum concentration of nicotine in the blood after using the Vype ePen 3 (18 mg/mL protonated nicotine) was on average twice that achieved using Vype ePen 2 (18 mg/mL unprotonated nicotine). 

    David O’Reilly

    “We know that for many smokers, nicotine levels are an important factor in choosing a vaping product, particularly when initially switching,” said David O’Reilly, BAT’s director of scientific research.

    “They want it to work for them, delivering the nicotine they want in a device they like. We think we have achieved this with Vype ePen 3 and hope that through continued product innovation we can encourage and enable those who would otherwise continue to smoke to switch to a reduced-risk alternative which has been scientifically substantiated.”

    This study is a part of a comprehensive program of scientific research designed to assess and substantiate the reduced-risk potential of noncombustible products.

  • Uphill Struggle

    Uphill Struggle

    Image: KAC

    To break through globally, the concept of tobacco harm reduction must still overcome lots of challenges.

    By Stefanie Rossel

    The figures sound impressive: Globally, 98 million people have switched to safer nicotine products (SNP), according to the report Burning Issues: The Global State of Tobacco Harm Reduction (GSTHR) 2020, which was published by Knowledge Action Change (KAC) on Nov. 4.

    Yet the data look less glorious when put into perspective. With 1.1 billion smokers worldwide, there are only nine SNP users for every 100 smokers. And most of them are in high-income countries, with 68 million vapers living in the U.S., China, Russia, the U.K., France, Japan, Germany and Mexico. Around 20 million people, mainly in Japan, use heated-tobacco products (HTP) whereas 10 million are U.S. smokeless or snus users.

    Harry Shapiro

    “The two years since the last edition of this report have been a very difficult time for tobacco harm reduction [THR],” said lead author Harry Shapiro. “The estimated 1.1 billion smokers around the world deserve a better deal and better options. We need to hasten the demise of combustibles and encourage the use of safer noncombustible ways of using nicotine. Evidence from several countries shows that the availability of SNP helps people to switch from smoking.”

    There is an urgent need to scale up THR, the report insists. Despite billions spent by governments and the World Health Organization (WHO) on tobacco control, the number of smokers has not declined for the past two decades, and it is estimated to remain unchanged until the end of the century, which is a poor result for public health efforts. THR, the report claims, is a human right, and this is particularly disregarded in low-income and middle-income countries (LMIC), where tobacco control measures are often poorly or partially implemented. Eighty percent of tobacco users live in LMIC, with meager means to deal with tobacco-related consequences and the least access to affordable SNP.

    These countries also tend to have comparatively high levels of smoking, and poor and marginalized groups are disproportionately affected, with an estimated 8 million people dying due to smoking-related disease each year. In 22 LMIC, 30 percent or more of the overall adult population are smokers. While smoking prevalence in developed countries has decreased in recent years, the rates of decline in LMIC have slowed or smoking prevalence continues to grow, often due to population growth.

    While SNP clearly provides a solution at almost no cost for governments, many regulators have legislated against such products. Thirty-six countries have banned the sale of nicotine vapor products, among them Australia, India, Thailand and Turkey. Interestingly, Uruguay, which in 2013 became the first country to legalize cannabis, prohibits vapor products. Three countries have lifted their vapor product bans since the first GSTHR report was released in 2018, but this is offset by new restrictions, such as flavor bans, in several U.S. states in the wake of the 2019 EVALI crisis, which was mistakenly attributed to licit nicotine vapor products.

    Vapor products are currently regulated in 75 countries whereas 85 countries have no specific laws or regulations on nicotine vapor products (one country, Bhutan, prohibits the sale of all tobacco products, although it has suspended its ban for the duration of the coronavirus pandemic to deter illegal sales). HTPs are marketed in 51 countries but banned in 13 countries. Snus can be legally bought in 81 countries but is banned in 39 countries, including those of the EU, which permits snus only in Sweden for cultural reasons.

    Advertisement

    Vested interests

    Remarkably, the greatest obstacle to SNP is the WHO, according to the report, which meticulously investigated the health body’s funding sources.

    Billions of dollars come from well-funded anti-tobacco organizations, most notably those run by Bill Gates and Michael Bloomberg. Their networks of foundations, among them the University of Bath and the Bureau of Investigative Journalism, are actively supporting campaigns against THR, thus influencing decision-making at the WHO.

    They are aided by foundations supported by the pharmaceutical industry, which fears losing revenue from their nicotine-replacement therapies to SNP. Finally, among the WHO Framework Convention on Tobacco Control (FNTC) members are 17 signatories with vested interests in the continuation of combustible cigarette consumption: governments that own stakes of at least 10 percent in tobacco companies. Through its tobacco monopoly, China alone was responsible for 38 percent of the world’s cigarette volume in 2017.

    The spread of SNPs has also been slowed by the initial lack of scientific data. However, this has massively expanded to more than 6,300 scientific publications, mostly on vaping. In the meantime, misinformation has proliferated due to flawed science and a lack of knowledge about less-hazardous nicotine products among medical doctors. Politicians who don’t comprehend the technology and science behind THR have added to the problem while the consumer’s voice is often ignored in policymaking.

    Critical for LMIC

    David Nutt

    Assessing comparative harms of nicotine-delivery products has become the basis of THR science. In 2014, David J. Nutt, a British psychiatrist and psychopharmacologist, developed a test to define the harms of different nicotine products. Combustible tobacco products are the most harmful. “Apart from the health issues caused by consumption, cigarettes are responsible for most fires in the world,” said Nutt. “There is a high product-specific and a product-related morbidity as well as high economic cost. The impact beyond the user is enormous.” Snus, with its much lower impact overall, is at the other end of the scale, which has come to be known as the continuum of risk.

    Harm reduction has proven its value in other fields, such as alcohol and drug abuse, Nutt pointed out. He said opposing THR might well be the worst example of scientific denial since 1616 when the Catholic Church banned the works of Copernicus and denied ongoing research findings for 150 years. “If the WHO doesn’t accept the concept of THR, its credibility is at stake,” said Nutt.

    During the GSTHR launch event, three experts shared their firsthand experiences in LMICs. While Africa has applied the concept of harm reduction in many sectors, such as HIV prevention, SNPs continue to face an uphill battle, according to Chimwemwe Ngoma, a tobacco harm reduction advocate in Malawi.

    Many LMICs are insufficiently resourced to implement THR strategies. Besides, they rely on flawed public health information. In most LIMCs, SNP are banned or taxed so heavily that they become unaffordable. In Malawi, the cheapest e-cigarette costs $75 whereas combustible cigarettes sell from as little as $0.50 per pack, according to Ngoma. “Millions of people shouldn’t be denied access to products that can help them avoid poor quality of life, disease and premature death,” he said. An alternative to make THR more affordable in LIMCs, Ngoma added, would be snus.

    Mwawi Ng’Oma

    Mwawi Ng’Oma, program manager for St John of God Hospitaller Services in Malawi, also attributed the lack of progress to limited research, capacity and resources. “There is a lack of research concerning substance use and misuse, including tobacco and THR, in most LMICs,” she said. “Central systems for the collection of data don’t exist. There are also only inadequate addiction recovery services to support current smokers willing to switch.” Furthermore, tobacco smoking is socially accepted in some African cultures and commonly used in certain ceremonies, likely making it difficult for people to accept THR measures. Health priorities in the region, she concluded, are mainly on communicable diseases.

    Samrat Chowhery

    The situation is also dire in India, a country with 120 million smokers, second only to China in terms of tobacco consumption. Most combustible tobacco is consumed in the form of bidis, hand-rolled, inexpensive cigarettes that contain more nicotine, carbon monoxide and tar and present a greater risk of oral cancers than conventional cigarettes. In addition, India has about 200 million users of smokeless tobacco. Contrary to snus and modern oral products, Indian smokeless is very deadly. India’s oral cancer rate is the highest in the world.

    In 2019, India banned vapor products nationwide. Samrat Chowdhery, founder-director of the Association of Vapers India (AVI) and president of the International Network of Nicotine Consumer Organizations (INNCO), spoke about the ban’s impact on consumers and the economy. “Implementation of FCTC measures is generally low, but governments follow WHO guidance,” he said. “In most countries with a ban on vaping products, they are meant to ‘save the country’ but result in the emergence of black markets.”

    A decisive year

    Marina Foltea

    Although the FCTC aims to protect present and future generations from the damages of tobacco and smoke, it has largely ignored the potential of THR, according to Marina Foltea, founder and managing director at Trade Pacts, a Swiss-based trade and investment consultancy.

    “The FCTC has focused on supply and demand, on taxation, packaging, labeling, illicit trade, the prevention of sales to minors and alternative crops to tobacco rather than harm reduction,” she said. “The original wording of the treaty doesn’t mention SNP because these products arrived later on the market.”

    The Conference of the Parties (COP) started talking about SNP much later, basing its discussions on scientific reports commissioned by the WHO, such as a recent one that described banning SNPs as a legitimate regulatory approach despite findings that they are less harmful than cigarettes. The most recent COP session, which took place in 2018, only took stock of what member states do about THR and gave recommendations. Presently it seems that the WHO has expressed support for THR only in medical form. Consultations have been put on hold because of the pandemic.

    The next COP, scheduled for November 2021, is likely to be influenced by the recent SCHEER report, a scientific review on the health effects of e-cigarettes prepared for the European Commission in preparation for the 2021 revision of the EU Tobacco Products Directive (TPD). However, scientists have criticized the report as fundamentally flawed as it contradicts commonly acknowledged scientific evidence on vapor products.

    Other factors expected to influence the COP include Brexit—Public Health England appears to be more cautious now on their liberal approach to SNP—the 2019 U.S. EVALI crisis and the U.S. Food and Drug Administration’s (FDA) modified-risk approvals of Swedish Match’s General snus and Philip Morris International’s IQOS heat-not-burn product.

    Potential ways out

    Fiona Patten

    Although highly important, the consumer has been conspicuously absent as a voice in the THR debate. “The discussion seems to be dominated by two men [Bloomberg and Gates] who buy governments around the world and are driven by advisers who give them the wrong idea of what THR is,” lamented THR advocate Martin Cullip.

    By commissioning scientific studies with preconceived results that are widely published, the “philanthrocapitalists” create insecurity among consumers while misleading media reports lead to harmful policy, according to Cullip. “There is a massive imbalance in power and influence,” he said. “Consumers have to continue to stand up and raise their voices and fight against these people.”

    Politicians should start listening to unbiased scientists, said Fiona Patten, leader of the Australian Reason Party. In Australia, she noted, politicians had banned vapor products based on the wrong assumptions, including fear for children’s safety and the involvement of Big Tobacco. Instead, Patten said, politicians should ask where the products should be sold and to whom. “Instead of asking ‘Is it safe?’ they should ask ‘How can we reduce harm?’ and ‘What are the experiences of the people who have lived this?’” she said. “Those are the questions asked in all other areas of harm reduction efforts.”

    Jena Fetalino

    Clive Bates, director of The Counterfactual, called for a better understanding of how THR works. “We need more mindfulness of the pervertedness of disproportionate regulation and replace it with a story that is more helpful. We need to be less liberal on more-harmful and more liberal on less-harmful products regarding, for instance, taxation or advertising,” he said. “And we need a deep rethink of nicotine as a popular consumer drug that could have its place like caffeine.”

    Instead, everything is being done to degrade less-harmful products, to create barriers to the entry and to make the transition from smoking to vaping less attractive. “As a consequence, we will see more smoking, black markets, more home smoking and a lot more harm,” said Bates.  

    To counter misinformation, Philippine PR practitioner Jena Fetalino recommended getting the THR story shared as widely as possible. Scientific evidence, she said, is the best offense and the best defense because experts are more trustworthy than prohibitionists. “Consider media as an ally rather than an enemy,” she suggested. “Remember social media can magnify your voice, and consistency is the key.”

    A stony path

    Burning Issues says the primary aim of tobacco control should be to offer smokers suitable exit strategies. The WHO should encourage FCTC signatories to take a more balanced view of SNPs to help encourage a switch away from combustibles while consumer well-being should be at the center of international planning and policy. Governments should hasten that switch instead of preventing it, and no action should be taken that favors smoking over SNPs.

    Hurdles, however, remain high, especially with the philanthrocapitalists’ funding of anti-THR strategies. “This is not simply a question of equally valid differences in scientific interpretations,” Shapiro told Tobacco Reporter. “The evidence in favor of safer nicotine products is clear and consistent. These products are substantially safer than cigarettes; they offer a realistic off ramp for people who want to switch away from smoking while they are not a gateway to smoking for young people,” he said.

    “Unfortunately, this science is being contested by a public health narrative, which is morally based in a refusal to accept recreational use of nicotine and an entirely bogus claim that the whole SNP enterprise is literally a smokescreen by Big Tobacco to get kids hooked on nicotine to compensate for falling sales, at least in higher income countries,” Shapiro added. “It’s hard to see how you combat a belief system with actual evidence, but we have to keep trying and hope to push anti-tobacco harm reduction elements onto the wrong side of history.”

    While THR is specifically mentioned in the preamble of the FCTC, Shapiro sees little chance of forcing the organization to include THR in its strategy through legal measures. “The reason [THR] is there is that the architects of the FCTC back in the 1990s actually sat down with industry who were making some attempts at producing safer products. The problem was that they all involved combusting tobacco so were never going to work as safer products,” he said.

    “Even so, the idea of THR was written into the FCTC as there was another declaration that the FCTC would keep up with the scientific evidence. The implication was that should there be viable SNP developments, then they would become part of FCTC strategy,” Shapiro said.

    “However, once new products became available, the WHO completely reneged on this commitment and instead insists there are ‘irreconcilable differences’ between public health and the industry. I doubt there are any ways to force the WHO to change its stance—but bear in mind that the FCTC is only a framework convention, not a treaty. This allows signatories maximum latitude over regulation and control, unlike the EU TPD, which is legally binding.”

    THR’s prospects are also not great for the upcoming TPD revision, judging by the tone of the recent SCHEER report, according to Shapiro. “Negative comments by EU health officials on World No Tobacco Day earlier this year concerning SNP and the fact that the EU works hand-in-glove with the WHO based in Geneva all point to a hardening of approach in the next iteration of the TPD,” he said.

    Flavor bans proposed in the Netherlands, Denmark and Belgium would exacerbate the situation for THR, Shapiro explained. On the positive side, the FDA’s MRTP approvals for General snus and IQOS may set a precedent against which THR opponents will have to justify unwarranted regulation. “It opens the door to the idea that there is now some official acceptance that these products can be marketed as safer than cigarettes,” said Shapiro. “It is also a recognition that it is possible for industry science to successfully make the THR case.”

     

    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.
  • Change of the Guard

    Change of the Guard

    Photo: David Mark from Pixabay

    What might the new U.S. administration have in store for the vapor industry?

    By Patricia Kovacevic

    At the time of writing, the results of the U.S. elections are still contested by the presidential incumbent, a Republican, via various vote recount requests and litigation; however, it is a virtual certainty that the U.S. will have a new president, representing the Democratic Party, as of Jan. 20, 2021.

    The heads of departments, including the head of the Department of Health and Human Services (HHS), are appointed by the president, subject to confirmation by the Senate, and typically change with the administration. In turn, the Food and Drug Administration (FDA), which is the agency within the HHS with primary jurisdiction over tobacco products (including electronic nicotine-delivery systems, or ENDS) as well as drugs, foods and other products, will be led in the new administration by a new commissioner.

    Given the Covid-19 crisis, the new president will be under immense pressure to appoint a new FDA commissioner immediately. Interestingly and somewhat surprisingly, a former FDA commissioner, David Kessler, was recently named co-chair of the new administration’s Covid-19 task force, although Kessler resigned his commissioner role in November 1996 amid controversy for overbilling his travel expenses during his tenure.

    Also during Kessler’s tenure, the FDA attempted to regulate tobacco products as “delivery devices for the drug nicotine” to bring tobacco products under FDA jurisdiction. Tobacco companies challenged the rules all the way to the Supreme Court and won (FDA v. Brown and Williamson Tobacco Corp.). The Supreme Court ruled that “Congress has clearly precluded the FDA from asserting jurisdiction to regulate tobacco products. Such authority is inconsistent with the intent that Congress has expressed in the FDCA’s [Food, Drug and Cosmetic Act] overall regulatory scheme and in the tobacco-specific legislation that it has enacted subsequent to the FDCA. In light of this clear intent, the FDA’s assertion of jurisdiction is impermissible.”

    Kessler’s wish to see tobacco regulated by the FDA was eventually granted by Congress in June 2009 through the bipartisan passage of the Family Smoking Prevention and Tobacco Control Act. While some speculate that Kessler may be on the short list for HHS commissioner, it is likely that the administration will bring forward new faces. Still, Kessler’s life-long anti-tobacco stance and past working relationship with the current head of the Center for Tobacco Products might give an indication of the increased scrutiny of the tobacco sector in the years to come.

    The ENDS industry status quo, from a legislation point of view, while far from ideal, is by now familiar to the ENDS industry. The recent premarket tobacco product application (PMTA) filing deadline has come and gone, and, as expected, we have not seen a flurry of warning letters post-September 2020 ordering certain vapor manufacturers to stop selling their products because they did not submit a PMTA.

    The FDA is, however, expected to start enforcing this legislation sooner or later. For any dramatic change to occur, the governing legislation, the Food, Drug and Cosmetic Act, would have to be amended, which is not likely to be top of the list for the upcoming Congress given the priorities the new administration announced during the election campaign. Still, the House of Representatives, one of the chambers of the U.S. legislature, remains dominated by the Democrats, the same party whose representatives initiated several tobacco-related bills and called for confrontational hearings on vapor products. The most recent one, in February 2020, was relatively tame compared with the tone of the July 2019 Juul hearing and even with the June 2014 Senate hearing. 

    Senate races in Georgia will require runoff elections on Jan. 5, 2021. If Democrats gain both Senate seats in Georgia in January, there would be a 50-50 tie in the Senate, and the vice president would have the tie-breaking vote in case the Senate is deadlocked on a piece of legislation. When the House, Senate and White House are controlled by the same party, the chances of the current administration to pass laws in support of its agenda are greatly increased, though divisions exist within each party, and surprises always happen. Furthermore, 34 out of the 100 Senate seats are up for regular election in two years as well as all 435 House seats; these will be a trying two years for Americans in an economic crisis, and the public sentiment can swing in the other direction. Thus, the new president may have only two years, if even that long, to pass a flurry of laws, and there may be more urgent matters than revisiting the Tobacco Control Act, which, for better or for worse, has worked so far.

    The FDA already has broad powers to expand requirements and restrictions involving ENDS products, including the authority to impose product standards through notice-and-comment rulemaking. Ingredient caps and bans are among the standards the FDA has the authority to promulgate via regulation.

    The latest unified agenda of regulatory and deregulatory actions

    As of spring 2020, active regulatory actions include four potential future regulatory actions by the FDA, rolled over from previous agendas, with no clear deadline for publication of a proposed rule:

    • Requirements for Tobacco Product Manufacturing Practice (colloquially referred to as “Good Manufacturing Practices”)
    • Tobacco Product Standard for Characterizing Flavors in Cigars (follow-up to the 2018 Advance Notice of Proposed Rulemaking); this is unlikely to move into the final rule stage on account of recent courtroom successes by the cigar industry.
    • Modified-risk tobacco product applications; this future proposed rule would establish content and format requirements to ensure that modified-risk tobacco product applications contain sufficient information for the FDA to determine whether it should permit the marketing of a modified-risk tobacco product. Additionally, the proposed rule would set forth the basic procedures for modified-risk tobacco product application review and require applicants receiving authorization to market a modified-risk tobacco product to establish and maintain records, conduct post-market surveillance and studies, and submit annual reports to the FDA.
    • Premarket tobacco product applications and recordkeeping requirements, a 2019 proposed rule, which would have as a next step at some point in the future, likely in 2020, a final rule.

    Notably, ingredient bans and nicotine caps are not on the regulatory agenda. A first step toward an ingredient ban would likely be an Advance Notice of Proposed Rulemaking (ANPRM), although the FDA can in theory skip this step and move directly to a proposed rule, open a docket for comment, collect comments and consider whether it has sufficient information to finalize the rule. Given the complexity of the issue and the current research focusing on flavor ingredients in ENDS, if the FDA determines that an exploration of a flavor ban is desirable, the FDA will probably go through the ANPRM step.

    One would have to wonder, though, why engage in rulemaking when the FDA already reviews all relevant information about every ENDS product on the U.S. market, present and future, through the PMTA process—thus allowing the agency to make a case-by-case determination—and the FDA will no doubt pay considerable attention to certain flavored products. In the author’s personal opinion, the PMTA process is the FDA’s preferred avenue to make decisions on individual products rather than issuing rules on product categories, which can also be challenged—and the current Supreme Court might entertain challenges to the FDA’s behavior if it came to it down the road.

    Meanwhile, the majority of states by number still lean conservative, which likely means fewer developments in taxation, some scrutiny of ENDS but not necessary priority placed on shrinking the lawful ENDS market as there is no immediately quantifiable health benefit from doing so, and many potential harms. Of note are the California litigation and the potential referendum in California to overturn SB 793 (the flavor ban legislation). By the time this you read this article, we should know whether the bill opponents succeeded at collecting the necessary signatures to place the referendum on the November 2022 California elections ballot and suspend the application of the California flavor ban until then and pending the referendum’s outcome.

    The question we must also ask, given the political, public health and economic crisis context is whether ENDS are a threat to anyone and why any administration would, at this juncture, prioritize overregulating a harm reduction asset over the important, systemic changes Americans expect from the administration and drastically mitigating the Covid impact. The industry is likely to consolidate and survive.

    A global legal and compliance nicotine industry expert, Patricia I. Kovacevic has experience that includes general counsel and chief compliance officer roles at Nicopure Labs as well as leading senior legal and regulatory positions at Philip Morris International and Lorillard. Kovacevic served on the board of directors of the Vapor Technology Association and on the advisory board of the Global Tobacco & Nicotine Forum. She is the founder of RegulationStrategy, a global legal and compliance FDA-regulated industry consultancy.
  • Resilience in Adversity

    Resilience in Adversity

    Photo: PMI

    The Altria Group continues to deliver a strong 2020 performance despite a challenging economy.

    By Timothy S. Donahue

    Despite a challenging economic environment, Altria Group’s net revenues rose by 3.9 percent to $7.12 billion in the third quarter of 2020. Through the first nine months of the year, the tobacco giant’s net revenues grew by 3.9 percent to $19.85 billion. During its third-quarter conference call with investors, Altria CEO Billy Gifford said that the company demonstrated its resilience during the third quarter while continuing to navigate the adversity produced by the Covid-19 pandemic.

    Altria’s third-quarter adjusted diluted earnings per share (EPS) was unchanged at $1.19. Gifford explained that for the first nine months of the year, adjusted EPS grew 5.6 percent to $3.37, driven by the strong financial performance of Altria’s tobacco businesses. The smokable products segment delivered third-quarter adjusted other comprehensive income (OCI) of $2.8 billion, up nearly 10 percent from the same period last year. And for the first nine months, the smokable segment adjusted OCI increased 10.5 percent to $7.7 billion, according to Altria’s third-quarter report.

    “In the third quarter, our tobacco businesses delivered strong financial performance once again, and we made steady progress against our 10-year vision,” said Gifford. “At the same time, we’re pursuing our vision to responsibly lead the transition of smokers to a noncombustible future.”

    Smokeless and next-generation tobacco products continue grow in Altria’s portfolio. The company has made steady progress with expansion plans for its On! and IQOS brands. These products, alongside Altria’s moist smokeless business and its investment in Juul Labs, present significant opportunities for smoker conversion to noncombustible alternatives, according to Gifford. Altria subsidiary Helix Innovations is responsible for marketing, manufacturing and distribution of On! nicotine pouches globally.

    “We believe On! is a strong proposition and has been successful with both smokers and dippers. On! was sold in 56,000 stores at the end of the third quarter, up 40 percent from the second quarter and more than tripled the store count from the end of last year,” said Gifford. “In stores with distribution, On! achieved a retail share of 2.1 percentage points of the oral tobacco category in the first nine months of 2020. Helix continues to test different trial-generating promotions and has benefited from strong trade partnerships.”

    In the vapor category, Altria submitted its premarket tobacco product application (PMTA) to the U.S. Food and Drug Administration (FDA) for its Juul product and four flavors of pods. That application is currently under scientific review. Gifford believes that a sustainable vapor category is one that exists with solely FDA-authorized products.

    “We encouraged FDA enforcement against noncompliant manufacturers, including those who continue to sell e-vapor products without a PMTA submission,” he said. “We estimate the total e-vapor volumes decreased by 13 percent for both the third quarter and the first nine months of 2020. We believe the e-vapor category will continue to undergo a transition period over the next few years as [the] FDA makes market determinations on the thousands of PMTAs before the September [2021] deadline.”

    Altria’s valuation of Juul Labs dropped to less than $5 billion, down from $38 billion two years ago. In September, Juul Labs announced a strategic update, which included its plans for a significant global workforce reduction, evaluation of resource allocation and the possibility of exiting various international markets.

    “I think while we’re disappointed in the investment, we do believe that e-vapor will play an important role as we progress harm reduction, especially in the U.S. but even worldwide,” Gifford told investors. “In preparing our third-quarter financial statements, we performed a valuation analysis of our investment in Juul, which considered both its international prospects and current U.S. e-vapor category dynamics. As a result of this analysis, we’ve recorded a $2.6 billion impairment to our Juul investment, bringing its carrying value to $1.6 billion as of Sept. 30.”

    Pamela Kaufman, an analyst with Morgan Stanley, asked Gifford to explain the rationale behind the magnitude of the Juul Labs write-down, which implies a total value for the company of about $4.5 billion—well below Juul’s reported internal valuation of about $10 billion.

    “When we put together a valuation for the company, we do our best to make the best assumptions we can based on the future cash flows, how large we would expect [the industry] to become both on the domestic side and the international side,” said Gifford. “We highlighted for you that we believe the category is going to go through a two-[year] to three-year transition as all manufacturers in the e-vapor category navigate this FDA regulatory process. Certainly, we’ve seen a number of manufacturers get fairly competitive and step up their competitive activities in the marketplace. And we believe as the FDA makes decisions and products can remain and some products leave the category that there will be consumers at play. And so, all of those factors went into the valuation that we have, and we came forward with our best estimate.”

    Meanwhile, Altria subsidiary Philip Morris USA (PM USA) continues to expand the footprint of the IQOS heated-tobacco brand in the United States under an agreement with Philip Morris International. Gifford said that the FDA’s recent authorization of a reduced exposure claim for IQOS has allowed the tobacco company to use its “robust digital assets and tobacco consumer database” to communicate with smokers, including through websites, email and direct mail.

    “We believe that the combination of these modified-risk communications and PM USA’s more disruptive retail fixture will significantly enhance the quality of IQOS awareness among smokers. As smokers move along the journey to engagement and trial, PM USA is providing flexible options to learn about IQOS and purchase devices,” explained Gifford. “PM USA now offers a video chat option for age-verified smokers to use their mobile phones and connect directly with IQOS experts for product education and support.”

    PM USA is also expanding the availability of IQOS devices into the convenience store channel. Beginning next month, PM USA expects IQOS devices to be available in select convenience stores in Charlotte, North Carolina. Gifford said the company estimates the number of tobacco consumer trips to the store rebounded in the third quarter and that tobacco expenditures per trip remained elevated versus a year ago.

    “The IQOS team is looking at how we meet the consumer where they’re at and putting it in select convenience stores; it really is meeting the consumer where they make their point of purchase,” said Gifford. “It’s really an education process. But our IQOS team has done some excellent work. We’re also testing at-home delivery; once the consumer has gone through the tutorial and has been age verified, we could actually have at-home delivery of devices.”

    Altria’s fourth quarter is expected to follow the third-quarter’s and first nine month’s trends. Gifford says that Altria’s tobacco businesses have a track record of delivering strong and consistent financial performance in challenging environments. He said the company will continue to reward its shareholders by returning a significant amount of cash in the form of dividends. “We believe our tobacco business platform has the winning brands and is unmatched,” he said. “We’re excited to make further progress in achieving our vision of responsibly transitioning smokers to a noncombustible future.”

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • The Wrong Direction

    The Wrong Direction

    Photo: Ded Mityay |Dreamstime

    Current e-cigarette use in Great Britain has declined for the first time, most likely because of misinformation.

    By George Gay

    A number of countries are moving toward severely restricting the flavors that may be included in e-liquids, partly, they say, because certain flavors encourage vaping among young people—“young” being variously defined. Two of three countries that are going down this road and of which I am aware are, at the same time, moving toward bans on the sale of vapor products to young people, and one already has such a ban in place.

    This means that, in these three countries (Denmark, the Netherlands and the U.S.), the proposed bans on generally popular flavors are aimed at discouraging adult consumers from attempting to switch from smoking to vaping and, given that nicotine users are addicted, encouraging vapers to switch back to smoking.

    Nevertheless, these planned flavor bans are being put forward as health initiatives, so the only conclusion that can be drawn from what is going on in these countries is that those promoting the flavor bans believe that smoking is less risky than vaping.

    How did they get to this point? Well, I think that we can rule out that they have been led there by scientists. While there seems to be a band of scientists desperate to prove that vaping is as risky, if not riskier, than smoking, I think I am on safe ground in saying that most scientists well versed in such matters will tell you that vaping is less risky—many would say hugely less risky—than smoking.

    So if those promoting these flavor bans haven’t been led by the science, what has led them to this point? It can’t be politics because, in matters of public health, the politics would be guided by the need to protect people, which takes us back to the science. After all, what better proof could one have of this than the current situation where politicians are being led by the science in making decisions about fighting the coronavirus pandemic? Hmm.

    Advertisment

    Arbitrary choices

    Perhaps it would be wise to take a closer look, and here I move the focus of the story from the three countries mentioned above to Great Britain. At the start of an opinion piece published in The Guardian in October, David Runciman, professor of politics at Cambridge University, quoted the German sociologist, Max Weber, as arguing a century ago that politics can never really follow the science. Later in the piece, Runciman wrote that “[i]n politics, expecting the evidence to point the way does not reduce the arbitrariness of the outcome.” He added that “all political choices are arbitrary to a degree. Using statistics to justify difficult decisions just makes them appear more arbitrary for anyone who happens to disagree.”

    I can see what he is getting at, but this is not to say that politicians should flip a coin to decide policies, so I’m going to turn things around by using some statistics to challenge rather than justify what seem to me to be arbitrary decisions that are already on their way to being made in respect of e-liquid flavors. The reader will have to decide whether the statistics—evidence, science, call it what you will—make the decisions being taken more or less arbitrary.

    The statistics have been taken from a recently published report, “Use of e-cigarettes (vapes) among adults [those over 18] in Great Britain,” which was based on data taken from an annual survey, “Smokefree GB,” carried out for Action on Smoking and Health (ASH) by the market research company YouGov. The survey started to include e-cigarette use in 2010, and the current update includes the results of the 2020 survey carried out in February and March.

    These statistics concern Great Britain, which includes England, Scotland and Wales, but I imagine they would probably reflect, at least partly, the situation in many other countries.

    Let’s start off by looking at what the point of vaping is, viewed solely from the point of view of the smoker and vaper. According to the report, “[a]s in previous years, the main reason given by ex-smokers for vaping is to help them quit (41 percent) and prevent relapse (20 percent)” while “[t]he main reason given by current smokers for vaping is to cut down (24 percent) followed by to help them quit (14 percent) and to prevent relapse (14 percent).” Moreover, the report says that when, in 2019, current vapers were asked about their views on vaping, most e-cigarette users said that improving their health was their number one reason for vaping. “Among all vapers, 60 percent agree that ‘health is my number one reason for taking up e-cigarettes,’” the report said.

    It seems as though, under the current circumstances, these vapers and smokers are making rational decisions about their health, especially given that later in the report, it is noted that recent evidence from a randomized controlled trial showed that vaping was nearly twice as effective as nicotine-replacement therapy (NRT) in helping smokers quit in a Stop Smoking Service setting in England.

    And if the focus is shifted from individual smokers to the wider population, it is worth noting that the report describes how the use of electronic cigarettes is largely confined to current and ex-smokers, with use among never-smokers remaining low, something, I think, that is suggested by the age profile of vapers. “The peak ages for current e-cigarette use in 2019 are among 35 [year-olds to] 44 year-olds (9.5 percent) followed by 45 [year-olds to] 54 year-olds (9.3 percent) and then 25 [year-olds to] 34 year-olds (7.8 percent),” the report says. “The lowest vaping rates by age are 4.3 percent for young adults aged 18 [to] 24 followed by those over 55 at 5.6 percent.”

    John Dunne

    Rational decisions

    This all sounds very encouraging. Generally speaking, those who should have been taking up vaping—smokers—seem to have been doing so while those who shouldn’t have been—never-smokers—haven’t been. But there’s a fly in the ointment. The report says that for the first time (and at a time when there are still nearly 7 million smokers in the country), current e-cigarette use has declined year-on-year from 7.1 percent of the adult population in 2019 to 6.3 percent in 2020—from 3.6 million users to 3.2 million users.

    Unfortunately, this is not surprising. “Misinformation continues to be a huge challenge for the [vapor] industry despite its efforts to make consumers aware of the evidence-based facts, including Public Health England’s statement that vaping is at least 95 percent less harmful than smoking,” said John Dunne, director-general of the U.K. Vaping Industry Association (UKVIA), in reacting to the report’s findings. “Inaccurate and misleading reporting, together with highly questionable research, gives a negative view of vaping to smokers who may otherwise quit. Even worse, it could make current vapers reconsider whether they’ve made the right move by taking up e-cigarettes.”

    One result of the widespread dissemination of misinformation has been that the proportion of the adult population of Great Britain that thinks vaping is more or equally harmful than smoking is five times higher than it was in 2013, up from 7 percent in 2013 to 37 percent in 2020. But as the report suggests, the likely driver for the decline in e-cigarette use between 2019 and 2020 is the impact of the media coverage of an outbreak of serious lung injury among cannabis vapers in the U.S. “While the cause of this outbreak has since been identified as vitamin E acetate used to adulterate cannabis-containing e-liquids, the media coverage of the initial outbreak was far more prominent than the subsequent explanation or the fact that both vitamin E acetate and THC-containing liquids are banned under U.K. rules,” the report pointed out.

    While some of those opposed to vaping might take comfort from the fact that fewer people correctly identify that vaping is less risky than smoking, they would be wise to hold the celebrations. The report points out, too, that only 34 percent of people correctly identified nicotine-replacement therapy as being much less harmful than smoking.

    Advertisement

    Additional discouragement

    So what would happen if, on top of the above discouragements, the vaping environment was hit by significant reductions in the generally popular flavors that were allowed to be used in e-liquids? It seems to me that there would be two major effects—one of which would negatively affect vaping’s image.

    The second major effect was described in the report itself. In 2019, the researchers asked current e-cigarette users what they would do if flavors were no longer available. “Around one in four said they would still try to get flavors, and just under one in 10 said they would make their own e-liquid,” the report said. “The most popular option after continuing to try to get flavors was using unflavored e-liquids/cartridges. However, just under one in five said that they would either smoke more or revert to smoking, and around the same proportion said that they did not know what they would do. Less than one in 10 said that they would stop vaping.”

    There is some encouragement to be had from that last sentence, but I would worry that it masks some potential major problems. I would be concerned about where those replacement flavors would be sourced because we could be setting the seeds for a serious disease outbreak as happened in the U.S. in 2019. And the idea that people might be forced back to smoking is one that no responsible politician should contemplate. As the U.K. Member of Parliament (MP) Gareth Johnson, a member of the All-Party Parliamentary Group for Vaping, was quoted as saying in the UKVIA’s response to the report’s findings: “Vaping is significantly safer than smoking, and false information to the contrary is literally costing lives.”

    What flavors are we talking about? In 2015, the researchers started asking e-cigarette users what flavor they used most often. At that time, tobacco was most popular (38 percent) followed by fruit flavor (25 percent) and menthol (19 percent). Now, fruit flavors are said to be the most popular (32 percent) followed by tobacco (23 percent) and menthol (22 percent). Very few users are using products with no flavors.

    It cannot be denied that there is some conflict here given that fruit flavors are also the choice of many young vapers. One of the report’s references takes the reader to a 2019 report, “Use of e-cigarettes among young people [11–18] in Great Britain,” which states that the most frequently used e-cigarette flavorings for young people have consistently been fruit flavors, the choice of 45 percent of users in 2017, the last time this question was asked. But this has to be set against the fact that, with age restrictions in place, the number of young people vaping is low and should remain low no matter what flavors are available. Under their key findings, the researchers say that data from the 2019 ASH YouGov Smokefree youth GB survey suggest that while some young people, particularly those who have tried smoking, experiment with e-cigarettes, regular use remains low.

    In fact, in reading the 2019 report, I was left with the feeling that young people are not particularly interested in e-cigarettes. I think this was summed up well in a section on brand awareness, which contained the comment, “Unsurprisingly, given the low levels of regular use, 55 percent of those who had ever tried e-cigarettes said they didn’t know what brand they used.”

    Vaping seems to be approaching a watershed at which it cannot afford to be hit by further unnecessary setbacks, such as the withdrawal of some of the most popular e-liquid flavors. “There are still 3.2 million vapers out there who have made the successful switch, but there are also 6.9 million smokers—of which nearly a third have not tried vape products,” said Dunne. “These smokers can still turn to vaping to quit cigarettes and benefit from harm reduction.”

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
  • The Next Level

    The Next Level

    Photos: Hauni

    Hauni has entered the hemp cigarette market with three machines for cylindrical pre-roll manufacture.

    By Stefanie Rossel

    In the past years, cannabis has rapidly transited out of its dirty corner, turning into one of the world’s fastest growing industries. Business intelligence companies outbid each other with forecasts for the category. According to a 2019 report by Arcview Market Research and BDS Analytics, for example, global licensed store sales are expected to reach $40.6 billion by 2024, and that estimate does not even take into account general retailers selling cannabidiol (CBD) products and cannabinoid-based drug developers selling marijuana-derived pharmaceuticals.

    The U.S. is projected to remain the world’s largest market with a forecast $30.1 billion in marijuana spending by 2024, the report says. Canada, which legalized recreational cannabis in October 2018, is expected to experience similar growth rates. Despite slower growth, the total cannabis market, including medical use, is forecast to generate up to $7 billion in sales in 2020 with $2 billion to $4 billion in the legal recreational market, according to cannabisbusinessplans.com.

    While recreational cannabis remains prohibited at the U.S. federal level, 11 states have legalized the substance since 2012. Medicinal use is legal in 33 states. According to New Frontier Data, 223 million Americans, or 68 percent of the population, now live in a state that has expanded access to CBD, medical cannabis or full adult use. The organization lists related investments of $13.8 billion and $11 billion in 2018 and 2019, respectively.

    The 2018 Farm Bill has turbocharged the boom: Among other things, it removed hemp’s low amounts of THC from the Controlled Substances Act. Furthermore, the bill allows hemp production in all 50 states for any use, including flower production and CBD or other cannabinoid extraction, as well as interstate commerce. The U.S. defines hemp as cannabis that contains 0.3 percent or less tetrahydrocannabinol (THC), the psychoactive substance in cannabis that produces the “high” people experience when they smoke marijuana or eat foods containing it. Legally, “marijuana” refers to cannabis that has more than 0.3 percent THC by dry weight. For an intoxicating effect, a THC content of 5 percent to 10 percent is required. The nonpsychoactive component in cannabis, CBD, is believed to provide health and wellness benefits.

    While Research and Markets expects the overall U.S. market for cannabis derivatives to increase at a compound annual growth rate of 23 percent by 2027, Nielsen has singled out smokable hemp as one of the fastest growing and most lucrative segments in the CBD and hemp industry. For 2020, the firm projects U.S. sales of smokable hemp to reach up to $80 million. By 2025, it is expected to stand at $300 million to $400 million, representing about 5 percent of the hemp-derived CBD consumer products category in the U.S., which Nielsen expects to increase from $1.7 billion to $2 billion in 2020 to $6 billion to $7 billion in the next five years.

    Opportunity for technological progress

    The considerable potential of the legal smokable hemp category suggests opportunity for suppliers of machinery designed for tobacco products. Almost two years ago, a U.S. provider of tobacco processing equipment already ventured into this field with dedicated cannabis drying and processing machinery. Now German tobacco machinery manufacturer Hauni Maschinenbau is entering the market. At the open house event of its Hauni Richmond subsidiary in October, the company launched three machines for cylindrical pre-roll making as well as a range of accompanying equipment.

    Thomas Gruss

    To efficiently increase production levels in the smokable hemp industry, technological advances are the next logical step, according to Thomas Gruss, head of business development for hemp/cannabis projects at Hauni. “Typically, the hemp cigarette industry consists of small-scale manufacturers that produce pre-rolls manually or semi-automatically,” he says. “To produce THC-containing pre-rolls made from processed cannabis flowers, the cones or tubes are stacked vertically into a tray. A so-called ‘knock box’ containing the ground cannabis flowers is put on top. By shaking the knock box, the blossom material is fed into the cones or tubes. Even some larger companies mainly work with knock boxes, which involves a lot of manual labor and is rather inefficient, resulting in an output of approximately 2,000 pre-rolls per day per operator.

    “There are other manufacturers that use machinery, but this allows only for a typical manufacturing speed of 30 to 40 pre-rolls a minute,” Gruss continues. “A third group manufactures ‘king-size’ hemp cigarettes that are made from biomass and resemble regular tobacco cigarettes. Those companies produce on old cigarette-making equipment. Overall, there is a clear trend within the industry toward machine-made production, and it is toward cylindrical tubes as hemp cigarettes become more of a mainstream product. With our machine models, we want to address all three manufacturer groups.”

    For tobacco cigarette manufacturing, the Hauni group of companies offers a range with a variety of production speeds. However, a one-to-one transfer of its tobacco manufacturing technology to the new category proved impossible. Cannabis is a more complex raw material than tobacco. The latter is consumed primarily for its main active substance, nicotine. The lion’s share of the world’s tobacco harvest ends up in combustible cigarettes, the dominant nicotine-delivery device. Farmers cure tobacco leaves—as opposed to blossoms—and manufacturers thresh it into a relatively dry, string-line mass that is comparatively easy to process.

    By contrast, cannabis contains more than 100 different chemicals, called cannabinoids, each of which has a different effect on the body. The various plant parts fetch greatly differing prices on the market. The dried blossoms, which contain THC in the shape of small resinous beads, are the most valuable, selling for about $2,000 per pound. This means they cannot be damaged during the pre-roll manufacturing process. Processing the blossoms is also challenging because they are sticky, thus requiring frequent machinery cleanings. The finished joints sell for $12 to $20 per piece; unlike tobacco cigarettes, THC-containing pre-rolls are sold in batches of seven units at most.

    To produce more affordable CBD-containing hemp cigarettes, which usually retail at $13 for a pack of 20, manufacturers use cannabis biomass, which consists of leaves, stems and blossom parts. This shredded hemp makes a crumbly filling, requiring the tube or cone to be twisted or closed at the end.

    In addition to the mechanical challenges of manufacturing cannabis products, most players lack the financial resources of their tobacco counterparts. “The cannabis market is quite sensitive when it comes to large investments,” says Gruss. “Players in the U.S. are not willing to invest millions of dollars in a higher speed maker as tobacco companies would, as most of them have to finance their equipment from their own resources. Besides, the market is still small compared to the cigarette market. Our objective, hence, was to offer machinery that costs well below the million-dollar figure benchmark.”

    For varying requirements

    To cater to the cannabis sector’s varying needs, Hauni has developed three different solutions. The company’s tube-filling TFM is an entry-level model with an output of 85 pre-rolls per minute. The machine automatically fills cylindrical, standard pre-manufactured hemp filter tubes and closes their ends with a folding motion rather than a twisting motion.

    Hemp or biomass is fed horizontally into the open tube, thereby avoiding any human contact with the raw material. The maker creates a homogeneous filling, which is compressed to make the material less likely to trickle out of the finished cigarette. Its careful handling of the filling material also makes the TFM suitable for larger companies manufacturing pre-rolls containing expensive flowers, according to Gruss. The machine layout has been kept simple, avoiding the need for a skilled operator. The TFM runs on household power, is easy to handle and to clean and allows for easy weight change.

    Cantos is a semi-automatic maker that can process hemp biomass as well as pure flower material. The machine is based on the company’s tobacco cigarette rod maker technology and coupled with a flexible filter assembler. The maker allows for cylindrical rod formation with or without a filter, running at speeds of up to 150 pre-rolls a minute. The plug-and-play machine enables flexible format settings with only a small amount of format parts required for diameter changes and no parts required for length changes. It can handle small batch sizes, has an online weight control system and allows for the attachment of different filter types.

    “For the TFM and Cantos, the stipulation was to design machines that require as little external infrastructure as possible,” says Gruss. “Unlike in the tobacco industry, there are few trained operators in the cannabis sector. The larger a machine, the more complicated and time-consuming the operating and cleaning process. We developed the Cantos in such a way that it is mostly cleaning resistant. The parts that need to be cleaned can be reached easily.”

    Nano-H is the company’s premium model—a fully automatic maker for industrial production that can manufacture up to 5,000 pre-rolls a minute and has been optimized for shredded hemp blends and processed paper. Heavy particles such as stems and seeds are separated, and a microwave system with closed-loop weight control allows for highly accurate rod formation for a homogeneous hemp rod with minimized waste. Manufacture is batch compliant. Hauni provides full operator training and technical support.

    Advertisement

    Full-service

    To handle the sticky raw material, Hauni deployed technology it had developed for other tricky products, such as kreteks. The cannabis machines are also capable of processing thin papers because cannabis consumers tend to prefer papers with gauges between 16 grams per square meter and 18 grams per square meter, which is thinner than papers typically used for commercial tobacco cigarettes. The construction of the filter in hemp cigarettes is equally important. Like the other components, it is supposed to be “natural” with low draw resistance and minimal taste adulteration. For many cannabis consumers, the primary purpose of a filter is not smoke filtration but to prevent particles from falling out of their cigarette.

    In response to such preferences, Hauni has developed a “crutch-type” filter maker that manufactures biodegradable filters typically made from natural fleece or paper bobbins

    To further support customers in their development of pre-roll products, Hauni also offers a hemp flavor collection and is testing a reconstituted hemp paper at its new pilot recon plant in Hamburg, Germany. “There is a lot of interest in the market to manufacture tobacco-heated products that contain hemp. Once the raw material has been processed into a reconstituted sheet, it can be used much more conveniently in a blend,” notes Gruss.

    For the time being, cannabis cigarette products remain largely unregulated. Gruss expects this to change soon. “Tar and carbon monoxide limits will become relevant as well as hemp-specific alkaloids,” he says. Anticipating such developments, Hauni has adapted its quality control, emission testing and smoke analysis equipment for cannabis smoking products. Completing its offerings, the company has added a hemp recovery unit. Increased automation, he insists, will contribute to both the quality of hemp cigarettes and the growth of the sector.

    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.
  • Changing the Narrative

    Changing the Narrative

    George Cassels-Smith
    (Photo: TTI)

    George Cassels-Smith hopes ELiquiTech’s new synthetic nicotine will help change the debate between the nicotine industry and regulators.

    By George Gay

    After reading a recent story by Timothy Donahue about SyNic, a synthesized form of nicotine that is said to be as pure as ultrapure, tobacco-derived nicotine, I had the opportunity of asking George Cassels-Smith, the CEO of eLiquiTech, the company with sole distribution rights for SyNic to the tobacco and electronic nicotine-delivery system industries, what the point of this new product was. Of course, I didn’t put it as bluntly as that, but I was interested in understanding why it was deemed necessary to launch a purer version of nicotine when tobacco-derived nicotine was available that already met the presumably exacting standards of the regulators overseeing the pharmaceutical industry and its various nicotine-replacement therapy products.

    His answer could be summed up as “Why not?” Of course, he didn’t put it as bluntly as that. After all, it had taken five years to develop SyNic in a program requiring the input of people with 40 years’ experience in synthesizing drugs and 30-plus patents to their names, working with sophisticated equipment under highly controlled conditions.

    Nevertheless, “Why not?” is a persuasively simple response, and it comes in a range of expanded forms. At one end of the range, it has to do with the nicotine consumer. Cassels-Smith said that, today, just about everybody has lived in environments in which we were exposed to toxic pollution over which we had little or no control; so the smart thing to do was to reduce our exposure to toxins wherever we did have such control. For instance, if you were going to consume nicotine, why not consume the purest form available?

    Meanwhile, at the other end of the range, you become caught up in something more complex: in the politics of tobacco—which, by the way, Cassels-Smith dislikes intensely but in which, inevitably, he finds himself entangled. He believes—perhaps “hopes” is a more accurate description—that SyNic might form part of a campaign to change the debate between the tobacco and nicotine industries on the one hand and regulators on the other. At the moment, regulators see tobacco and nicotine users only from the point of view of the harm they cause to themselves and the people around them, which leads those regulators to have as their ultimate goal the elimination of tobacco and nicotine consumption.

    But as Cassels-Smith says, if that is the position taken by regulators, there has to be room for a debate about the use of tobacco and nicotine products that don’t expose people to toxins and harm. All the concerns that regulators had could be removed by providing scientific proof that the user was not harming himself and that there was no secondhand exposure, said Cassels-Smith. An example might be where a consumer used a nicotine pouch manufactured with SyNic nicotine.

    A product with potential—on multiple levels

    Skewed playing field

    This sounds persuasive, but one obstacle to such a debate’s getting started is the lack of a level regulatory playing field when it comes to the different products offered by the pharmaceutical and tobacco industries as a means of meeting the needs of those with nicotine cravings. Cassels-Smith said that, over the years, the advice for the use of pharmaceutical-industry-produced nicotine gum had gone from specifying occasional use and then quitting to, if necessary, chewing it all the time, anytime; and there was no reason why this latest advice for nicotine gum should not apply to nicotine pouches. “I believe in a clean nicotine-delivery future,” he said during a telephone conversation in October. “All the stimulation without any baggage.”

    At this point I asked whether Cassels-Smith was talking about a very limited range of tobacco- and nicotine-industry products, but he assured me that the ability of SyNic to deliver cleaner products was not as limited as might first be thought. He sees the opportunity and possibility, given the right regulatory framework, for the development of, for instance, many products based on the heat-not-burn principle whereby thermal processes applied to tobacco using temperatures below that needed for combustion was able to deliver the same taste and nicotine satisfaction as a traditional cigarette but without the tar. And he spoke enthusiastically of vapor devices based on SyNic that also were thermally regulated.

    Cassels-Smith conceded, however, that SyNic’s impact on traditional cigarettes would be limited only to providing for a delivery that was a little cleaner with higher levels of nicotine, which was what people smoked for, limiting the intake of other compounds. But in almost every other type of tobacco and nicotine product, it could be used almost exclusively to create a much more compelling argument with regulators—an argument that said the consumers of this product were healthy people who were not being made unhealthy by consistently using this product.

    Political minefield

    The trouble is, as things stand, there is no level playing field, something that was being reflected in the reaction to SyNic, which, when I spoke with Cassels-Smith, was due for launch within a couple of weeks. Whereas the pharmaceutical industry was looking at the new product secure in the knowledge that it could substitute SyNic for whatever nicotine it was then using without having to resubmit its consumer products for fresh regulatory approval (the synthesized nicotine molecule is identical to the tobacco-derived nicotine molecule), the mood within the tobacco and nicotine industries was different. Although, in theory, tobacco and nicotine companies could also make a straight substitution of the nicotine used in products with premarket tobacco authorization or premarket tobacco product applications (PMTAs) before the U.S. Food and Drug Administration, they were wary of doing so in case they were seen to be making medical claims for those products, which would put them on the wrong side of the regulations and might lead to the FDA categorizing those products as drugs.

    And this concern about the interpretation that might be put on the inclusion of SyNic in tobacco and nicotine products was at the base of one of the major issues that was clearly of concern to Cassels-Smith. Given that SyNic is a nicotine that offers the very highest level of purity, it would seem that the ethical thing to do would be to make it as widely available as quickly as possible so that the maximum good was delivered to the maximum number of people. But this is not going to happen—at least not immediately. SyNic will not be made available in the U.S. to consumers or to companies without premarket tobacco authorization or PMTAs under review by the FDA; and outside the U.S., it will be made available only to companies working within the regulations of the countries in which they sell their products.

    Why is this? Alas, we are back in Cassels-Smith’s least favorite world—the world of politics. He readily acknowledges the important work that a lot of independent, medium-sized and smaller-sized companies have put into creating products that effectively wean people from cigarette use, and he anguishes over the fact that because many of these companies do not have the resources to submit PMTAs, in effect, they are now being “thrown under the bus.” “Somewhere in the sensibilities of this American, that is anti-capitalist and anti-health,” he said. “I would vastly prefer a published set of standards to guide the industry.”

    But Cassels-Smith finds himself in one of those “we are where we are” situations. If he allowed sales of SyNic to individuals and companies without premarket tobacco authorization or PMTAs under review, the FDA, given its definition of a “tobacco” product, might take the view that eLiquiTech was using a nontobacco-derived nicotine to try to circumvent the agency’s authority. At the same time, in the U.S., a state could quickly ban SyNic if the authorities there decided, for whatever reason, that this product might undermine their ultimate goal of creating a smoke-free, nicotine-free world. Add to that the fact that selling SyNic to companies without premarket tobacco authorization or PMTAs under review might not go down well with those companies that have gone through the costly process of creating a PMTA, and it is easy to see how Cassels-Smith finds himself having to tiptoe through a political minefield.

    “In my heart of hearts, I want to sell it to everybody because a high tide raises all ships,” said Cassels-Smith. “But my problem is that it is too political an issue right now in the U.S. And rather than having the whole technology killed, I want to sell it to responsible manufacturers, get it widely accepted and then maybe there will be a chance for everybody else. But the product needs to survive to allow nicotine users to take it to the next dimension.”

    Advertisement

    Changing the narrative

    As we came to the end of our conversation, Cassels-Smith said he wanted people to know that he wasn’t against natural nicotine, which he had described earlier as having an impurity profile that was “still quite safe.” But he added that he was very much in support of a new alternative that could change the narrative with regulators worldwide.

    I would guess, however, that making such a change is not going to be easy, in part because of something Cassels-Smith alluded to above: the fact that the tobacco/nicotine debate largely concerns the regulators and the pharmaceutical industry while all but excluding the tobacco and nicotine industries.

    While reading up on nicotine before my conversation with Cassels-Smith, I was taken with the following sentence in a scientific paper: “This review aims to summarize literature on various modes of nicotine-replacement therapy methods currently used to treat nicotine dependence and to give an overview about future possible approaches to treat tobacco use disorder.” This is another example of the medicalization of tobacco and nicotine use, which often has it that tobacco and nicotine users are “patients” who have to be treated by doctors prescribing pharmaceutical products—often nicotine-based products.

    There is some truth in the idea that a consumer is a patient if she goes to a doctor seeking help to quit her habit, but I’m sure that those who don’t would not consider themselves to be suffering from a “tobacco use disorder,” whatever that might be. Take Cassels-Smith, for instance. He is an ex-smoker who now uses nicotine pouches, which he has in his mouth almost constantly; and this is what he told me about his habit: “Do I think I’m doing myself harm?” he asked. “No, because I’m taking the cleanest forms of nicotine that I can. Do I think it [tobacco/nicotine] is much maligned? Absolutely. Do I try and speak out as much as possible? Absolutely. But sometimes I believe I am talking to people who don’t want to find a solution; they just want to call it a problem and get rid of it.”

    Despite all this, Cassels-Smith ended on a positive note, saying that SyNic was a tool that could change the narrative. And partly, his positive outlook might be down to the fact that these are early days. One important nontobacco application for SyNic might turn out to be its use in nicotine patches. These patches could be used long-term by people trying to ameliorate the symptoms of Alzheimer’s disease, but long-term use can cause skin irritation among the older people who typically suffer from this disease. SyNic is said to be smoother on the skin and therefore allows for the necessary long-term use. As Cassels-Smith said, there are many different ways in which SyNic could be used, and there are “other unique things that I cannot mention right now because they are still in the process of being patented.”

    George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.
  • Going Natural

    Going Natural

    Photos: Zig-Zag

    As consumer interest in untreated products increases, Zig-Zag has expanded its unbleached and hemp papers segment.

    By Stefanie Rossel

    Although a niche of the tobacco market, hand-rolled cigarettes have always had their fan base. Compared to factory-made cigarettes, they represent a less expensive way of smoking, especially in tax-heavy environments. As the Covid-19 pandemic continues to depress the disposable incomes of many people, the popularity of roll-your-own and make-your-own tobacco products is likely to increase. Affordability aside, hand-rolled cigarettes have another advantage: They allow their users to create a custom-made smoke. The right paper is key to the smoking experience.

    In recent years, unbleached and “natural” papers have become more popular. “Over the long history of rolling papers, there have been numerous evolutions of preference for consumers,” explains Curtis Berry, brand director of Zig-Zag, a leading brand of rolling papers that originated in France 140 years ago. “At one point in this evolution, smokers wanted a consistent and cleaner looking paper, hence our whitening process that eliminates imperfections and provides a consistent look and performance, which is still preferred by many today.

    “Recently, there has been a growing consumer interest in products with natural attributes, including rolling papers, so we introduced the Zig-Zag Organic Hemp and Zig-Zag Unbleached products to satisfy that need. In addition, there is also interest in the pre-rolled cone form factor, which provides convenience with a perfect smoke every time. With the addition of our new products, we feel we are providing the widest range of premium papers that meet the diverse preferences within the marketplace.”

    The company’s first unbleached paper was the Organic Hemp Paper, which it introduced in the U.S. at the start of 2018. Zig-Zag unbleached paper, made from a different blend of fibers, was created and first released in Canada in late 2018 followed by the U.S. launch in early 2019. The products are available in an extra thin and ultra thin quality as thinner papers tamper less with the flavor profile of tobacco.

    “Out of the gate, we’ve had very positive feedback,” says Berry. “Consumers love the natural hue, ease of rolling and smoking characteristics. We feel like we really created a great product that adds to our well-rounded portfolio of Zig-Zag paper. From that feedback, we decided to add an unbleached version of our Classic Ultra-Thin Cones.”

    Zig-Zag’s unbleached offerings cater to growing consumer interest in products with natural attributes.

    What’s left out

    The manufacturing process of unbleached rolling paper is basically the same as that for regular rolling paper and has a centuries-long artisan tradition. “Paper is essentially a mixture of fibers from various sources,” says Berry. “The creation of every Zig-Zag rolling paper begins with the sourcing and selection of the finest 100 percent natural plant fibers. The manufacturing process has two key phases, pulping and sheeting.”

    In the pulping phase, the raw vegetal matter is broken down into small fibers. These ground fibers are further refined using a high temperature and pressure-washing process. For its classic white papers, Zig-Zag uses a proprietary “whitening” process, which is skipped for the production of unbleached papers thus allowing the finished paper to reflect the natural hue of the fibers. “Some uninformed people have claimed that ‘unbleached’ means that white papers are made with household bleach or something like it,” Berry points out. “That is simply ridiculous. The bleaching step for white papers utilizes an oxygenation process, with no residue of any kind on the paper. There is no ‘bleach’ or chlorine used in the whitening process. ‘Unbleached’ merely refers to the absence of the oxygenation process in making the paper, which means the paper has that natural hue of the fibers versus a classic white look.”

    The washed fibers are then suspended in a solution of pure water. This solution only contains a few ounces of fibers per gallon and is around 99.5 percent water. This fibrous solution is sprayed onto a large canvas “forming table” where the fibers naturally interweave, and water is drained away. The material goes through a series of presses and heated cylinders to compress and finish drying the sheet. These sheets are then rolled up and cut into reels of paper to be ready for a complex watermarking operation, natural gum application and packaged in interleaved booklets originally invented by the founders of Zig-Zag as Berry points out. All Zig-Zag papers are vegan, genetically unmodified, bleach-free, dye-free and cruelty-free.

    Since all papers the company manufactures are made in the same process, little conversion was required to produce unbleached and hemp papers. “The investment came in developing the right blend of fibers and then skipping the ‘whitening’ process of the pulping stage to allow the natural characteristics of the fibers to be present in the final paper.”

    Here to stay

    While a large variety of materials, including more unusual inputs such as rice or esparto (a harsh needle grass), can be used to manufacture rolling papers, Zig-Zag uses only four types of fibers within its blend: hemp, flax, soft wood and hard wood. “Each of our papers uses a unique blend of fibers from various plants that are sustainably harvested,” says Berry. “The fiber blend of a paper will change how the final dried sheet comes out. Different combinations of long and short fibers from these various plants will change the paper’s strength, feel, thickness, porosity and burn rate. Unbleached paper has its own unique blend of these fibers.” Consumer preferences are varied, he adds. “Some consumers prefer the classic white look. Others prefer a natural hue. Still others prefer all hemp fibers over any other blend. Either way, we have them covered.”

    Berry says he sees nothing but upside for the unbleached paper and cone segment: “We are excited to continue to explore other opportunities within this category. We believe the unbleached category is here to stay and will continue to grow.”

    The company has witnessed increasing demand for its accessories. “We’ve had rollers for many years, and our trays were launched around the same time as our organic hemp papers. Just like with our paper portfolio, we want to be able to cater to the wide range of smokers, and we know this involves providing the right tools and accessories that assist in the different rolling rituals each one of us has.”

     

    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.