Author: Staff Writer

Suit: RLX Downplayed Regulatory Risks

Photo: iQoncept
A group of investors is suing RLX Technology, claiming the Chinese vaping company overstated its financials and misrepresented potential regulatory risks when it filed the paperwork for its initial public offering in the U.S., reports The Wall Street Journal.
Submitted June 9 by shareholder Alex Garnett in the U.S. District Court for the Southern District of New York, the lawsuit alleges RLX’s registration statement from last October omitted the impact of ongoing efforts by Chinese regulators to tighten sales of electronic cigarettes.
Under rules established by the U.S. Securities and Exchange Commission, companies must disclose any known events or uncertainties.
Founded in 2018, Beijing-based RLX went public on the New York Stock Exchange in January. The offering raised $1.39 billion, according to data provider Dealogic. Its stock price fell sharply after Chinese regulators in March proposed treating vapor products like regular cigarettes.
The lawsuit alleges investors purchased RLX shares at artificially inflated prices in part because the company omitted and misrepresented information in the registration statement. As the stock price dropped, RLX investors lost hundreds of millions of dollars, the lawsuit said.
At least two other law firms in recent weeks said they are investigating on behalf of investors to determine whether RLX failed to disclose relevant information to investors. Rosen Law Firm and Bronstein, Gewirtz & Grossman, among others, are reportedly seeking RLX investors who want to join a class-action suit.
RLX on June 2 reported revenue of CNY2.4 billion ($366.1 million) for the quarter ended March 31, up from CNY368.6 million in the prior year period. The company booked a net loss of CNY267 million compared with a profit of CNY12.1 million during the prior year quarter.
The company’s financial statements in recent months have raised eyebrows among accounting experts, who have questioned RLX’s unusually high ratio of cash and securities to total assets, among other issues.
On June 1, Tobacco Reporter published an article explaining how tobacco regulations could change China’s vapor business.
June 11, 2021
Survey: Harm Reduction Gains Momentum

Photo: Тарас Нагирняк
The concept of tobacco harm reduction is gaining momentum in Europe, according to a new report by the European Tobacco Harm Reduction Advocates (ETHRA). On July 8, ETHRA published the results of its 2020 EU Nicotine Users Survey.
Launched online by ETHRA in the last quarter of 2020, the questionnaire addressed consumer use of nicotine products. Topics included smoking and the desire to quit, use of safer nicotine products and barriers to switching caused by European and national regulations. More than 37,000 people, including more than 35,000 EU residents, participated in the ETHRA survey.
According to ETHRA, more than 27,000 of the survey participants had completely quit smoking. Vapes, snus and nicotine pouches are the main harm reduction products used to quit. Among the respondents who had ever smoked, 83.5 percent of vapers and 73.7 percent of snus users had successfully stopped smoking.
Over 93 percent of vapers and 75 percent of snus users cited harm reduction and improvements to health as their reasons for adopting these products. The report shows that the reduced cost compared to smoking, the availability of flavors, the availability of products and the ability to adjust vaping products are other major factors for consumers when switching to harm reduction products.
The lack of availability of low-risk nicotine products presents a major obstacle to consumers wishing to quit smoking.
ETHRA
However, smoking remains the predominant way of consuming nicotine in Europe. More than 67 percent of the current smokers who responded to the survey want to quit, but the ETHRA report shows they face barriers in their desire to be smoke-free.
The lack of availability of low-risk nicotine products presents a major obstacle to consumers wishing to quit smoking. The EU ban on the sale of snus (which exempts Sweden), illustrates this barrier, with 31 percent of current smokers indicating that they would be interested in trying snus if its sale were legalized in the EU.
A quarter (24.3 percent) of those who smoke but who want to quit cited the high price of safer alternatives as a barrier to quitting smoking. This number rises to 44.7 percent in countries with a high tax on vaping products, such as Estonia, Finland and Portugal.

The EU Tobacco Products Directive (TPD) restrictions of a maximum nicotine concentration of 20 mg/mL and a maximum bottle volume of 10 mL have driven vapers to very low nicotine e-liquids. More than 30 percent of people who vape and smoke (“dual users”) believed they could completely quit smoking if the EU nicotine limit were increased.
Meanwhile, harm reduction advocates are anxiously awaiting pending amendments to the TPD. If the EU bans flavors, 28 percent of vapers are likely to restart smoking, and 71 percent would consider using the black market or other alternative sources, according to the survey. In the 16 EU countries without a vape tax, only 1 percent of vapers are currently using alternative sources.
If the EU repealed the 10 mL bottle limit, 89 percent of vapers said they would buy larger bottles of e-liquid to reduce plastic waste. Eighty-three percent of vapers are in favor of having access to an EU database on e-liquid ingredients.
Considering the results from the EU Nicotine Users Survey 2020, ETHRA recommends the lifting of the EU ban on the sale of snus, revising upward the 10 mL refill bottle and 20 mg/mL nicotine concentration limits and the publication of databases on vaping products.
The organization also urges a repeal of vaping taxes in 12 countries and the lifting of flavor bans in Estonia, Finland and Hungary to give European smokers the freedom to quit smoking using low-risk products.
June 10, 2021
FDA Asked to Extend PMTA Grace Period

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The U.S. Small Business Administration (SBA) has urged the FDA to allow nicotine products to remain on the market for another year while their premarket reviews are in progress, reports Vaping 360.
In a letter sent to the FDA on June 7, the SBA Office of Advocacy asked the agency to seek a court order extending for an additional year the current freeze on enforcement actions against small vape manufacturers who submitted premarket tobacco product applications (PMTAs) before last year’s Sept. 9 deadline.
In the current situation, manufacturers who submitted PMTAs on time may leave those products on the market until Sept. 9, 2021. The SBA advocacy office is asking the FDA to request that U.S. District Court Judge Paul Grimm allow the agency to extend the deadline until September 2022.
Considering the large volume of PMTAs submitted—the FDA says it received more than 6 million applications—It is unlikely that the agency will be able to process all submissions before manufacturers are required to pull their products off the market.
“Small ENDS manufacturers cannot afford to have their products pulled from store shelves while the FDA continues to review the timely submitted PMTAs for millions of ENDS products,” the SBA writes. “Most small ENDS manufacturers do not have the resources to absorb the losses from having their products pulled from the marketplace for several months or more. Once the FDA orders small ENDS manufacturers’ products removed from the market, those small businesses will close permanently.”
The letter also urges the FDA to end its current practice of processing PMTAs in order of manufacturer market share. By doing so, the FDA all but guarantees that small vaping companies will be unable to have their reviews completed in time to remain on the market, according to the SBA.
The SBA is a federal agency that represents the views of small businesses to the various branches of government.
June 10, 2021
Trade Body Slams German Vapor Tax

Photo: katatonia
The German association for the e-cigarette trade, VdeH, has sharply criticized the passage by the financial committee in Parliament of a tobacco tax reform bill that calls for significant tax hikes on vapor and tobacco-heating products, including nicotine-free variants.
Until now, e-cigarettes have been subject only to value-added tax. Tobacco-heating products will reportedly be taxed at the same level as combustible cigarettes.
The plans will not only boost the black market but also destroy numerous small and medium-sized businesses, according to VdeH.
“The mere fact that e-cigarette liquids are generally taxed more heavily than tobacco cigarettes and thus ignore the 95 percent lower potential for damage is insane health policy,” said VdeH Managing Director Michal Dobrajc in a German-language statement. Taxing nicotine-free products as well as cigarettes defies common sense, he added.

If you are serious about reducing the smoking rate, then you have to support the industry that is making a significant contribution to reducing it instead of destroying it.
Michal Dobrajc, managing director, VdeH
Dobrajc said Germany should learn from the experience of other countries that were forced to lower their vapor taxes as vapers returned to smoking and anticipated revenues failed to materialize.
“The Tobacco Tax Modernization Act is a disaster in both health and economic terms,” said Dobrajc. “If you are serious about reducing the smoking rate, then you have to support the industry that is making a significant contribution to reducing it instead of destroying it.”
June 10, 2021
U.K. Urged to End Tobacco ‘Epidemic’
Photo: Vladimir
The All Party Parliamentary Group (APPG) on Smoking and Health is urging the U.K. government to use the opportunity provided by Brexit to step up and take its place on the world stage as a global leader in tobacco control.
In its new report, Delivering a Smoke-Free 2030, the APPG makes several recommendations for the Tobacco Control Plan 2021, which the House of Commons was set to debate today.
The recommendations include:
Funding for tobacco control programs to be secured through a “polluter pays” amendment to the Health and Social Care Bill, forcing manufacturers to pay to deliver the end of smoking.
Targeted investment to provide additional support to help smokers quit in regions and communities where smoking does the most damage. This includes those in routine and manual jobs and the unemployed; those living in social housing; those with a mental health condition; and pregnant smokers.
Tougher tobacco regulations to protect children and young people from becoming smokers and help smokers quit, such as putting health warnings on cigarettes and raising the age of sale to 21.
“Our report sets out measures, which will put us on track to achieve the government’s ambition to end smoking by 2030, but they can’t be delivered without funding,” said MP Bob Blackman, chairman of the APPG, in a statement. “Tobacco manufacturers make extreme profits selling highly addictive, lethal products while government coffers are bare because of Covid-19. The manufacturers have the money; they should be made to pay to end the epidemic.”
APPG Vice Chair Mary Kelly Foy, who represents the City of Durham, said, “I’m an MP from the North East, the poorest region in the country where smoking rates have historically been high. That’s why, although we’ve made good progress in recent years, we still suffer disproportionately from disease, disability and death caused by smoking. The APPG report recommendations will sever the ‘iron chain’ linking smoking and disadvantage. They are essential if we are to build back fairer and level up communities like my own.”
“We all applauded when the government announced its ambition for a smoke-free 2030,” said Deborah Arnott, chief executive of Action on Smoking and Health. “But that was two years ago; the time has now come to deliver.”
June 10, 2021
BAT Recognized for Supply Chain Excellence

Photo: BAT
BAT has been ranked 19th in the Gartner Supply Chain Top 25 for 2021—marking the first time BAT has made the top 20.
In its second consecutive year in the Gartner rankings, BAT has moved up two places from 21st in 2020. The Gartner rankings recognize companies globally who have demonstrated excellence in supply chain management, effectively navigating through the Covid-19 landscape.
As BAT evolves into a multi-category consumer products and brands business, its transformation is being powered by digital technology. This allows BAT to respond with greater agility and resilience to the complexity of its growing new category portfolio supply chain. According to the company, this transformation is underpinned by BAT’s commitment to put ESG front and center of its operations, with sustainability firmly embedded into its supply chain management strategies.

To move up the ranks during a global pandemic is testament to the hard work and excellence of BAT’s operations teams across the world.
Zafar Khan, group operations director, BAT
“We are honored to have our supply chain operations recognized in the Gartner Supply Chain Top 25 rankings for the second year in a row,” said Zafar Khan, BAT’s group operations director, who joined the company in February, in a statement. “To move up the ranks during a global pandemic is testament to the hard work and excellence of BAT’s operations teams across the world.”
June 9, 2021
Revolutionary HnB Device Set for Launch

Photo: Podya Lifestyle and Wellness
After six years of development, Poda Lifestyle and Wellness is ready to bring its revolutionary heat-not-burn (HnB) product to the masses, according to company founder and CEO Ryan Selby. In a letter to shareholders, Selby detailed the company’s recent accomplishments and shared his plans.
Poda was founded in January 2015 with the vision of creating a superior HnB product. The company set out to address a major pain-point in all HnB systems: cleaning. After six years of designing and perfecting the technology, it came up with a product that delivers a robust, flavorful and consistent user experience, according to Selby. “Poda is now essentially the only company in the world that can make a closed-ended HnB cigarette,” he says. Its Beyond Burn pods have been patented in more than 65 countries.
In addition, the company developed a heat-tolerant biodegradable material made from the cell walls of sustainably harvested plants. “This naturally derived and low-cost material allows us to produce our patented Beyond Burn Poda Pods not only incredibly efficiently but also in an ethical and sustainable manner,” says Selby. Poda has filed for patent protection for the proprietary biodegradable plant cellulose materials used to make its closed-ended HnB cigarettes and the proprietary methods for manufacturing them.
The company’s tobacco-free Beyond Burn Poda Pods contain a proprietary blend of tea leaves and synthetic nicotine that delivers the satisfaction and sensory experience of ordinary smoking without the smoke and without the cleaning.
Recently, Poda executed a binding letter of intent with ESON with the intent of launching its products in China. Earlier this month, tobacco industry veteran Juan Manuel (“Jon”) Ruiz joined Poda’s strategic advisory board. A key top-level executive at Philip Morris International, Ruiz was around during the time when PMI was internally developing its heat-not-burn products. “The experience and expertise that Jon brings from the fast-moving consumer goods market is of exceptional value to Poda,” said Selby.

We are now ready to scale our production capacities to virtually any production volume.
Ryan Selby, CEO, Poda
Less than two months ago, Poda listed its shares on the Canadian Securities Exchange and the Frankfurt Securities Exchange, and the company is currently waiting for final approval to have its shares listed on the OTCQB exchange in the U.S. Down the road, the company aims to “uplist” to the NASDAQ and other major global exchanges, according to Selby.
Meanwhile, Poda’s pilot manufacturing plant is fully operational and is turning out over 400,000 closed-ended HnB cigarette units per month. “We built this pilot facility to prove out each of our manufacturing technologies, and I am pleased to report that we are now ready to scale our production capacities to virtually any production volume,” said Selby.
Over the coming months, Poda will be aggressively pursuing distribution and white-labelling opportunities with carefully selected partners in strategic locations around the globe.
“As CEO, it is my responsibility to lead Poda toward our goal of becoming a major player in the global heat-not-burn market,” said Selby. “I know we have a fantastic product, but that on its own is not enough. We must make smart choices and take calculated risks to grow the company as quickly and sustainably as possible.”
June 9, 2021
PMI Campaigns Against Black Market Trade

Photo: Tobacco Reporter archive
Philip Morris International (PMI) has launched a public education initiative titled United to Safeguard America from Illegal Trade to combat black market trade. Supported by a coalition of national and state private and public sector partners, the campaign will provide local officials, law enforcement and thought leaders with information and training programs to help tackle illegal trade and raise public awareness of the depth of the problem as well as the severe consequences inflicted on states and municipalities by black market profiteers.
The campaign will run through 2021 in eight states facing critical illegal trade issues: Arizona, California, Florida, Illinois, Louisiana, Michigan, Pennsylvania and Texas.
The coalition’s membership is made up of brand enforcement leaders and other organizations, including Levi Strauss & Co., Procter & Gamble Co. and the U.S. Chamber of Commerce.
“Illegal trade is a major problem that fuels serious organized criminal networks and damages our economy. No matter the commodity, these criminals will seize any opportunity to exploit markets and communities to bolster their nefarious activities,” said Martin King, CEO of PMI America. “PMI is pleased to be joined by so many cross-sector partners who are leading the fight against illegal trade and the black market criminals profiting at the expense of Americans’ security.”

Illegal trade is a major problem that fuels serious organized criminal networks and damages our economy.
Martin King, CEO, PMI America
Counterfeit and smuggled goods pose serious threats in many states, according to PMI. “The situation has only been exacerbated by the Covid-19 pandemic, with criminals seizing on opportunities to traffic all types of counterfeit and illegal products, including highly demanded personal protective equipment. Since January 2020, online counterfeited goods have jumped nearly 40 percent,” the company wrote in a press release.
“In today’s hyper-connected world, it’s only through open dialogue, cooperation and the sharing of best practices between parties in the public and private sectors as well as civil society that we can continuously improve and advance efforts against illegal trade and the criminal networks benefiting from it.”
June 9, 2021
PMI Solicits Ideas to Tackle Illegal Trade

Photo: Vitezslav Vylici
Philip Morris International (PMI) is calling for applications for the third funding round of PMI IMPACT, the global initiative supporting projects that aim to reduce or prevent illegal trade and counter its negative consequences for individuals, their families and communities. The third funding round will support a broad range of projects designed to tackle the multifaceted and multinational illicit trade—ranging from illicit tobacco products and other consumer goods to counterfeiting of pharmaceuticals and electronics—across different geographies. Now open for submissions, applicants from public, private or nonprofit organizations, including governmental organizations, international organizations, associations, academic institutions and private companies, are encouraged to submit their project proposals.
“Illicit trade knows no borders, and effective measures are needed to fight this international threat, which is a top priority for PMI as it undermines all our efforts toward delivering a smoke-free future—a future that can one day be without cigarettes,” said Alvise Giustiniani, vice president of illicit trade prevention, in a statement. “The pandemic has also impacted supply chains, border controls and cross-border interactions, and now, more than ever, we need programs like PMI IMPACT that exchange expertise and bring together organizations, ideas and solutions to eradicate illegal trade.”

The pandemic has impacted supply chains, border controls and cross-border interactions, and now, more than ever, we need programs like PMI IMPACT that exchange expertise and bring together organizations, ideas and solutions to eradicate illegal trade.
Alvise Giustiniani, vice president of illicit trade prevention, PMI
Applicants can be based anywhere; however, all proposals must address the funding round theme and focus on one of the following topics: border control; capacity building; restorative justice and victims’ protection; network engagements, awareness building and international cooperation; Covid-19 and the threat of illicit trade.
Bringing innovation and technological advancement in the fight against contraband and counterfeited goods is essential, especially in the midst of the Covid-19 pandemic, according to PMI. This is why PMI IMPACT will be open to projects aimed at limiting the threats of counterfeited and substandard vaccines, medicines, medical supplies and personal protective equipment.
Interested third parties can apply for the third funding round before one of the three deadlines for submission of applications: Sept. 15, 2021; Feb. 15, 2022; and Aug. 15, 2022.
“PMI IMPACT offers a platform for organizations to bring resolutions to tackle the problematic reality of illegal trade,” said Navi Pillay, human rights advocate and member of the PMI IMPACT expert council. “We are looking forward to evaluating the applications in the third funding round—the level of interest the initiative receives is truly remarkable. It is promising to see so many fantastic organizations working resolutely to fight illicit trade.”
June 9, 2021
FDA Tobacco Authority Deemed Constitutional

Photo: Tierney
A lawsuit challenging the constitutionality of the U.S. Food and Drug Administration’s (FDA) authority over vapor products has failed following the Supreme Court’s refusal to review a lower court’s ruling on the issue.
The suit was filed on Aug. 19, 2019, by Big Time Vapes and United States Vaping Association in the U.S. District Court for the Southern District of Mississippi.
The suit challenged the Tobacco Control Act, claiming that Congress unconstitutionally ceded its legislative authority to the FDA when it gave the agency the power to “deem” products as tobacco products that were not specified in the 2009 legislation.
The complaint was dismissed in December 2019 and failed on appeal in the Fifth Circuit Court of Appeals last year. On June 25, 2020, the Court of Appeals found that Congress’ delegation of authority to the Secretary of Health and Human Services to deem additional products subject to the Tobacco Control Act was constitutional, upholding the district court’s decision.
The Supreme Court referred the case back to a lower court. Since the court did not accept the petition, the lower court’s decision stands.
The petition is the first case involving e-cigarettes to be heard by the Supreme Court, which accepts only between 100–150 of the more than 7,000 cases that it is asked to review each year, according to its website.
June 8, 2021