Author: Taco Tuinstra

California Shelves Endgame Bill

Photo: Kit Leong
California lawmakers have quietly shelved a proposal to ban people born after Jan. 1, 2007, from buying tobacco products, reports Jefferson Public Radio.
In February, assembly member Damon Connolly introduced a bill that would make it illegal for anyone in California who is presently 16 years old or younger to ever buy a tobacco product in that state. Vendors caught selling would risk fines of up to $6,000 and a loss of their tobacco license. The minimum age to buy tobacco products in California is presently 21, as it has been in every U.S. state since the law was changed in 2019. The proposed legislation is similar to laws passed in New Zealand and considered elsewhere, including Hong Kong and Malaysia.
Connolly’s bill struggled to attract backing, however. By mid-April, only 10 organizations, including the California chapter of the American Academy of Pediatrics, had sent letters of support to the Assembly Health Committee, where it was first set to be considered, according to an analysis prepared by the committee.
The committee reportedly suggested that phasing out tobacco sales in California was less urgent because adult and youth smoking rates are only slightly higher than half the national average. “The legislature may want to consider whether it would be more effective to focus on enforcing the flavored tobacco ban rather than engaging on a new front and attempting to prevent a product that is legal in 49 other states, as well as on sovereign tribal lands, from entering the state,” the committee wrote.
At the Assembly Health Committee hearing on April 11, Connolly accepted amendments from the committee that changed the focus of his bill. It will now authorize the California Department of Public Health and the state attorney general’s office to enforce the recently enacted flavored tobacco ban, in addition to local agencies.
April 17, 2023
Dutch Institute Urges Darker Cigarettes

Photo: zoommer
Changing the color of cigarettes from white to a darker hue would make them less attractive to (potential) smokers, reports Dutch News, citing the National Institute for Public Health and the Environment (RIVM).
Darker colors suggest a stronger taste and more damage to health, RIVM researchers noted. White, by contrast, is associated with a safer product. Selling cigarettes in darker colors would help the government achieve its aims of zero children smoking and only 5 percent of over 18s smoking by 2040, as stated in the national prevention agreement, the RIVM said.
Changing the color of cigarettes would require a change in Dutch law, however, which states that cigarettes should be white. Another option to discourage smoking would be printing health warnings both on the packaging and the cigarettes, according to the RIVM.
The RIVM opposes a ban on filters, which contain plastics and harmful chemicals, because it may create the impression that filterless cigarettes are less unhealthy. The RIVM is compiling a list of ingredients in tobacco and vaping capsules that may be banned by law, including vitamins.
The results of the RIVM research will be used in policy to discourage smoking, Junior Health Minister Maarten van Ooijen said, although some recommendations, such as lowering nicotine content, would have to be decided on a European level.
April 17, 2023
Pakistan To Miss Tax Target Due To Illicit Sales

Photo: Piotr Pawinski
Pakistan is unlikely to achieve its tax collection targets due to the rapid growth of illicit cigarette sales, reports Geo News, citing Philip Morris Pakistan Chief Financial Officer Muhammad Zeeshan.
In February, the government increased the Federal Excise Duty on cigarettes in an attempt to boost revenues in line with the conditions for financial support from the International Monetary Fund.
Following the tax hike, the duty on locally produced cigarettes retailing for more than PKR9,000 ($32.02) per 1,000 sticks is PKR16,500 while the duty on locally produced cigarettes retailing for less than PKR9,000 per 1,000 sticks is PKR5,050. The government aims to fetch an additional PKR11 billion ($39.13 million) in revenue with the measure.
The excise duty increase has doubled the price difference between legal and illegal cigarettes. As a result, illicit cigarette sales have skyrocketed. In the first quarter of 2023, the sale of legal cigarettes has declined by 50 percent. Pakistan now has the second-largest illicit cigarette market in Southeast Asia after Malaysia.
Due to the declining legal sales, analysts expect the government to collect only PKR170 billion from the tobacco industry—well short of its collection target of PRK260 billion.
April 17, 2023
RAI Workforce Down 11 Percent in 2022

Photo: RAI
Reynolds American Inc. reduced its workforce by 10.7 percent, reports the Winston-Salem Journal, citing the 2022 annual report from parent company British American Tobacco.
In July 2017, BAT purchased the 57.8 percent of Reynolds it did not already own for $54.5 billion. Legacy Reynolds shareholders own 19 percent of BAT.
Reynolds had 4,921 U.S. employees in 2020 and 4,789 employees in 2021, according to the company’s annual reports.
The workforce is down 22.3 percent from about 5,500 on Dec. 31, 2016, when Reynolds published its last corporate annual report.
In March 2021, Reynolds announced its largest workforce reduction in a decade—350 full-time positions—as part of consolidating more of its manufacturing production into the Tobaccoville plant. The consolidation began in April and will take through 2024 to complete.
BAT’s overall workforce decreased by 5.9 percent to 77,951.
In January, BAT announced a major restructuring of its global operations. As part of the plan, the company will reduce the number of regions from four to three, and the number of business units from 16 to 12.
After the restructuring, the company’s regions will be USA (RAI), Americas & Europe (AME) and Asia Pacific, Middle East & Africa (APMEA)
March 21, 2023
Court Won’t Hear At-Home Smoking Ban Challenge

Photo: marjan4782
The U.S. Supreme Court on March 20 declined to hear a challenge to the federal government’s ban on smoking in public housing, reports Law360.
A New York group advocating for residents’ right to smoke in their apartments, sued the U.S. Department of Housing and Urban Development (HUD) for imposing the ban in 2016. The no-smoking rule applies within public housing apartments and in common areas, as well as within 25 feet outside apartment buildings.
NYC CLASH argued the ban violates tenants’ rights to due process and against unconstitutional seizures.
In August 2022, the D.C. circuit upheld the ban, arguing the 1937 Housing Act gave HUD the power to regulate smoking to improve air quality and maintain “safe and habitable” living quarters.
NYC CLASH’s founder Audrey Silk said his group’s legal challenge was about more than just tobacco smoking. “It is about the right to be left alone in your private home to use a legal product and by keeping government in check,” she said. “So the more ominous question now is ‘what’s next?’”
March 21, 2023
Vape Tax Collections Less than Envisioned
Photo: Fitri Ridzuan
The total tax revenue collected by U.S. states and local governments from the vaping sector remains only a fraction of that extracted from traditional tobacco products, according to a new report published by KBRA.
Vaping devices have gained popularity in recent years, largely due to health concerns around traditional cigarettes, smoking cessation initiatives and rising youth consumption. U.S. product sales for e-cigarettes are estimated at $7.4 billion annually. Capitalizing on this trend, many states and local governments have implemented taxes on these tobacco alternatives.
Despite high expectations, the total tax revenue from these products remains small relative to tobacco taxes—and even smaller as a percentage of budget. This KBRA report provides an overview of the e-cigarette/vape market, examines different forms of taxation by state, and assesses the limitations of these taxes in bolstering state budgets, as well as the possibility for future federal regulation.
Key findings of the report include:
While the number of states that have implemented e-cigarette and vape device taxes has grown, these tax revenues represent only a small fraction of the traditional cigarette market size. Vaping tax collections still contribute a negligible percentage of current governmental revenues for U.S. states.
Taxation methods vary among states and localities due to the uniqueness of vaping and tobacco alternative products.
While a vapor excise tax regime could provide additional sources of revenue for states and localities, there are concerns surrounding states relying on these revenues as long-term solutions to close their budget gaps.
Increased federal regulations on vapor products, as well as the implementation of a federal excise tax, are probable in the years to come, which could potentially curb usage and associated tax revenue collections at the state level.
March 21, 2023
Republic Awarded $2.3 Million

Federal jurors in Atlanta awarded Republic Brands $2.3 million in statutory damages in a case about counterfeit tobacco rolling papers.
The company had accused Star Importers & Wholesalers and ZCell & Novelties of selling fake versions of its Top and Job rolling papers in the United States. Amin S. Hudda and Samadali Lakhani, the respective owners of the distribution companies, will also be held personally responsible for the counterfeiting activities.
According to Law360, the jury found that Republic hadn’t proven that the wholesalers willfully bought and sold fake rolling papers bearing Top and Job trademarks.
Had the jurors found the companies’ infringement willful, each could have faced up to $18 million in statutory damages under the Lanham Act, as well as treble damages under federal law.
The case marks Republic Brands’ latest victory in its fight against brand piracy. Over the past two years, the company obtained judgments against four wholesale companies operating in Georgia and their respective owners, personally, for engaging in illegal infringing activities and selling counterfeit goods, according to Adams and Reese, which represented Republic Brands.
In 2022, Republic won an $11 million judgement against another Georgia wholesaler and its owner.

March 21, 2023
Kaival Appoints New Board Members
Kaival Brands Innovations Group, the distributor of Bidi Vapor products, has appointed Barry Hopkins, David Worner and Mark Thoenes to its board of directors.
The appointments coincide with the retirement of Paul Reuter as chairman of Kaival Brands’ board of directors. Existing independent directors Roger Brooks and George Chaung will continue to serve on Kaival Brand’s board.
“We are excited to welcome new independent directors Barry Hopkins and David Worner to our board,” said Kaival President and Chief Operating Officer Eric Mosser in a statement. “With their combined backgrounds and expertise as established senior executive leaders within the tobacco and public company accounting and finance sectors, we believe they will make an immediate impact on our company as we execute on both current and future growth initiatives.”
“I am also excited to announce that Mark Thoenes, our interim chief financial officer, has also joined our board. In his current role, Mark has proven invaluable in assisting with key decisions as our company navigated an exceptionally difficult regulatory environment. Finally, on behalf of our board and company, we would like to thank Paul Reuter for his service to our board and shareholders through several milestone moments. We wish him the best in retirement.”
Hopkins brings decades of senior executive experience within the traditional tobacco vape and CBD spaces. He spent most of his decades-long career primarily in senior sales and marketing roles for Turning Point Brands and Altria.
Worner brings a diverse combination of finance, fundraising, mergers and acquisitions, technical accounting and operational experience gained over nearly 20 years. He is currently the CEO and founder of GrowthPath Partners, a transactional accounting and advisory firm.
Thoenes has more than 35 years of diverse financial and operational leadership. He has been a licensed Certified Public Accountant since 1984 and began his career with Ernst & Young Global Limited. For the past eleven years, Thoenes has been the President of MLT Consulting Services, LLC, a full-service business/financial consulting firm.
March 21, 2023
Illegal Levels of Liquid in U.K. Disposables

Photo: YarikL
Nearly all major disposable vaping brands on the U.K. market that are not produced by a major tobacco manufacturer contain illegal levels of e-liquid, reports Better Retailing, citing BAT testing data shared by senior wholesale sources.
In a letter sent to wholesalers seen by Better Retailing, BAT said it had commissioned an independent accredited laboratory to test Elf Bar 600 products purchased from supermarkets and independent retailers between Sept. 6, 2021, and March 7, 2023.
The evidence reportedly revealed that the tested products contained significantly more than the U.K. legal limit of 2 mL of nicotine-containing e-liquid from 2.76 mL to 3.88 mL, with an average overfill of 58 percent.
Tests performed on Lost Mary, Found Mary, IVG Bar, Klik Klak, SKE Crystal, Smok Mbar Pro and Solo disposable vapes also showed illegal levels of e-liquid, according to the report.
Together, the brands account for nearly all disposable vaping sales in independent shops by both revenue and volume.
Senior wholesale sources welcomed BAT’s efforts to “clean up” the disposable vaping market but also challenged the claims made, stating they would wait on independent testing and regulatory guidance before taking action. The sources noted that BAT would likely see its market share of the disposable vaping market increase significantly if regulators took action against its rivals.
BAT stated that the results of tests have been shared with the Medicines and Healthcare products Regulatory Authority.
March 20, 2023
COP Delegations Urged to Include Consumers

Photo: Oleg
Country delegations to the 10th Conference of the Parties (COP10) to the World Health Organization’s Framework Convention on Tobacco Control (FCTC) should include at least one consumer of safer nicotine products, according to the Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA).
In a letter to their respective countries’ FCTC delegations, CAPHRA member organizations stressed the importance of listening to consumers. “Consumers are an untapped experience and knowledge base who are not represented inclusively in the FCTC process,” the letter states. “Delegates to COP10 should be representing the rights and aspirations of the citizens.”
CAPHRA insists that adults have the right to make choices that help them avoid adverse health outcomes, and people who smoke have the right to access less harmful nicotine products as alternatives to combustible and unsafe tobacco. What’s more, they have the right to participate in the policymaking process that directly impacts their right to health and well-being, the letter notes.
CAPHRA Executive Director Nancy Loucas said that exclusion of consumer voices has contributed to misinformation, disinformation and failures of tobacco control policy.
“Millions have successfully used vaping to move away from combustibles and unsafe oral nicotine products, yet the FCTC looks set to bury its head in the sand again at COP10. CAPHRA believes visiting delegations must include a consumer voice to give at least some balance to all the misinformation,” says Loucas.
COP10 will be held in Panama in November.
March 20, 2023