Author: Taco Tuinstra

Kaival Reports First-Quarter Results

Photo: Bidi Vapor
Kaival Brands Innovations Group, distributor of Bidi Vapor products, reported revenues of approximately $2.5 million for the first quarter of fiscal year 2023 compared to revenues of approximately $2.8 million in the same period of the prior fiscal year.
Gross profit was approximately $500,000 compared to approximately a $700,000 gross loss for the first quarter of fiscal year 2022. The net loss for the first quarter of fiscal year 2023 was approximately $3 million compared to a net loss of approximately $2.8 million for the first quarter of fiscal year 2022.
“Despite a slight decrease in revenues versus the comparable quarter last year and our fiscal fourth quarter, primarily due to an unusually large amounts of credits, discounts and rebates to customers, which we do not expect to continue, we are continuing to focus on broadening distribution channels and driving revenue, all with the goal of materially expanding our business and increasing shareholder value,” said Eric Mosser, president and chief operating officer of Kaival Brands, in a statement.
On March 9, 2023, Kaival announced it had signed an agreement with a prominent national broker, increasing distribution by upward of 40,000 retail stores.
On March 7, 2023, the company announced it entered into new retail distribution agreements representing potential new distribution to approximately 13,500 locations.
March 20, 2023
Modified-Risk Orders for Copenhagen Snuff

Photo: Altria Group
The U.S. Food and Drug Administration has authorized U.S. Smokeless Tobacco Co.’s (UST) Copenhagen Classic Snuff, a loose moist snuff smokeless tobacco product, to be marketed as a modified-risk tobacco product (MRTP). Copenhagen’s moist snuff smokeless tobacco product has been marketed in the U.S. for years without modified-risk information.
The FDA’s action now allows UST to market the product as a modified-risk product with the claim: “If you smoke, consider this: Switching completely to this product from cigarettes reduces risk of lung cancer.”
After a rigorous review of the available evidence, including recommendations from the Tobacco Products Scientific Advisory Committee, public comments and other available scientific information, the FDA says it concluded that the specific claim related to lung cancer risk is scientifically accurate with respect to Copenhagen Classic Snuff. The review also found the public health gains are unlikely to be offset by nonusers starting to use the product.
UST will be required to conduct post-market surveillance and studies that include an assessment of product users’ behavior, understanding and any previous use of cigarettes as well as a scientific model to assess continued impact on population health.
This modified-risk granted order will expire in five years.
March 16, 2023
BAT Urged to List in New York

Photo: kmiragaya
GQG Partners is pressuring BAT to move its primary listing to New York, according to the Financial Times. The shareholder reportedly believes it “makes no sense” for the cigarette manufacturer to remain on the U.K. stock market.
A BAT spokesperson said that the company does not comment on engagement with shareholders when contacted by Reuters while GQG did not respond to a request for comment on the report.
March 16, 2023
Court Rejects Challenge to California’s Flavor Ban

Photo: mehaniq41
A U.S. federal judge has thrown out a tobacco industry lawsuit against California’s statewide ban on the sale of flavored tobacco products, reports Law360.
On March 15, Judge Cathy Ann Bencivengo rejected the plaintiffs’ claim that the measure would unfairly discriminate against out-of-state businesses. Bencivengo argued that the contested law applies to sales only; manufacturers are still permitted to manufacture flavored tobacco products in California. Most manufacturers of flavored tobacco products are located outside California.
R.J. Reynolds and other tobacco companies sued California after voters approved the ban in a November referendum, claiming the law violates the federal Tobacco Control Act (TCA) as well as the U.S. Constitution’s commerce clause.
The law was originally passed by the state legislature but didn’t take effect after industry opponents gathered enough signatures to put the issue on the November ballot.
In rejecting the TCA claim, Bencivengo cited a 9th Circuit ruling in March 2022 that upheld a Los Angeles County ban on flavored tobacco products. The tobacco industry lawsuit also doesn’t meet the standards for arguing a state law discriminates against or unduly burdens interstate commerce, she argued.
The court also rejected the tobacco companies’ claim that out-of-state manufacturers of flavored tobacco products would be forced to change their operations to the tune of “tens of billions of dollars” to comply with the law’s new standards for tobacco products, an undue burden on interstate commerce.
California’s flavor ban doesn’t set new standards for the manufacture or marketing of tobacco products that depart from federal regulations, Bencivengo said. And financial losses for the tobacco industry alone are “not excessive enough for the court to find that the ban substantially burdens interstate commerce,” she added, citing the law’s aims to protect public health.
The TCA also gives states the authority to “opt out of the market for flavored tobacco products,” Bencivengo said in the ruling, which does not allow the tobacco companies to file an amended complaint.
March 16, 2023
Hearing on FDA Manufacturing Rules

Photo: BAT
Registration is open for U.S. Food and Drug Administration’s upcoming public oral hearing on April 12, 2023, from 9:30 a.m. to 5 p.m.
The hearing is an opportunity for the public to verbally comment on the agency’s proposed rule Requirements for Tobacco Product Manufacturing Practice. The FDA is proposing new requirements for tobacco product manufacturers regarding the manufacture, design, packing and storage of their products. Registration also includes a “listen-only” option for those who want to attend the session but do not want to request to speak.
Speaking spots are limited, and the FDA says it cannot guarantee that it will be able to accommodate all requests. Groups and organizations should select a single spokesperson to help the agency hear as many different perspectives as possible. While speaking spots are limited, listening spots are unlimited. Registration to provide oral comments will close on March 31, 2023.
The oral session will be recorded, and a transcript will be added to the docket of the proposed rule.
March 14, 2023
Water-Based Vaping Gains Traction

Photo: willyam
Aquios Labs and Innokin have launched a commercial product based on Aquios Labs’ water-based vaping technology, Innokin announced in a press release.
Unlike traditional vapes, AQ30 vape liquid comprises 30 percent water. This was made possible through a specialized formulation process developed by Aquios Labs and a new hardware design developed by Innokin. Research and development took more than two years.
According to Innokin, the AQ30 technology produces smoother vapor, delivers nicotine to the bloodstream more efficiently and significantly reduces the dehydration associated with vaping. Because water acts as a neutral flavor carrier, the liquid provides a more balanced and natural flavor than previously possible, the company says.
Furthermore, water-based technology may minimize any harm to health associated with vaping. With a boiling point of 119 degrees Celsius—significantly lower than that of existing technologies—vapes using AQ30 technology were found to produce 92 percent less acetaldehyde and 81 percent less formaldehyde than traditional vapes, according to Innokin.
The initial lineup of water-based vaping products, including Aquios Bar and Esco Bar 6000, debuted in the first quarter of 2022. Positive feedback from consumers and the trade press led to adoption of the water-based technology by leading vapor and fast-moving consumer goods retail channels, such as Eco Vape, JM Wholesale, Best One and Nisa.
Innokin launched Innobar C1 in November 2022, including a lineup of disposable devices and the reusable Innobar C1 pod system, all of which rely on AQ30 water-based technology. The Innobar C1 has been particularly successful and strongly contributed to business growth as the replaceable prefilled pods can be easily tailored to the desired specifications of the vaper, according to Innokin.
Innokin and Aquios Labs’ water-based vaping venture was recognized in September 2022 with a Golden Leaf Award during the GTNF in Washington, D.C.
With water-based vaping technology poised to gain a significant share of the market in 2023, Innokin and Aquios Labs aim to launch the products in more markets over the coming year.
March 14, 2023
Sweden Approaching ‘Smoke-Free’ Status
Photo: sezerozger
Smoking prevalence is poised to drop below 5 percent in the coming months in Sweden—a level that would make the country “smoke-free,” according to a commonly used definition.
No other country in the European Union is even close to replicating this achievement and none are currently on track to even achieve it by the EU’s target of 2040, in 17 years’ time.
Sweden’s groundbreaking strategy to minimize the harmful effects of tobacco smoking and save lives is detailed in a new report titled “The Swedish Experience: A roadmap for a smoke-free society,” presented March 14 at an international research seminar in Stockholm.
According to the report’s authors, Sweden’s approach, which combines tobacco control methods with harm minimization strategies, could save 3.5 million lives in the next decade if other EU countries adopt similar measures.
“Quitting smoking like Sweden saves lives,” said Anders Milton, one of the report’s authors, in a statement. “It has annually saved more than 3,400 lives in Sweden. If all other EU countries did as Sweden did, 3.5 million lives could be saved in the coming decade in the EU alone.”
The Swedish model combines recommendations in the WHO Framework Convention for Tobacco Control, including reducing the supply and demand of tobacco, banning smoking in certain places, but it adds an important element: accepting smoke-free products as less harmful alternatives.

Sweden has a very successful tobacco strategy that should be exported.
Karl Fagerström, co-author, “The Swedish Experience: A roadmap for a smoke-free society”
“It’s about combining tobacco control with harm minimization,” explained Delon Human, another of the report’s authors. “There are no risk-free tobacco products, but e-cigarettes, for example, are 95 percent less harmful than cigarettes. It is far better for a smoker to switch from regular cigarettes to e-cigarettes or nicotine pouches than to continue smoking.”
The benefits of Sweden’s strategy are enormous, with the country having the lowest percentage of tobacco-related diseases in the EU and a 41 percent lower incidence of cancer than other European countries. The report also describes how the percentage of smokers in Sweden has dropped from 15 percent to 5.6 percent of the population in 15 years, putting it on track to achieve smoke-free status 17 years ahead of the EU’s 2040 target.
“Sweden has a very successful tobacco strategy that should be exported,” said Karl Fagerström, who also authored the report.
“It would be of enormous benefit to the world if more countries did as Sweden did with measures that reduce supply and demand while having differentiated tax rates that give smokers financial incentives to switch from cigarettes to less harmful alternatives,” Fagerström added.
The report was commissioned by Health Diplomats, an international organization working to improve access to healthcare, encourage innovation and the use of harm reduction to minimize the negative impact of alcohol, food, nicotine and drugs.
For countries looking to replicate the Swedish experience, the report offers the following recommendation:
Recognize smoke-free products as less harmful and that they pose significantly less risk than smoking. Encourage smokers to switch from cigarettes to less harmful alternatives.
Provide fact-based information. It is clear that there are no risk-free tobacco products. But, for example, e-cigarettes are 95 percent less harmful than cigarettes. Of course, it is better for a smoker to switch from regular cigarettes to e-cigarettes, although it is not without risk.
Implement policy decisions that make smoke-free alternatives more accessible than cigarettes; for example, differentiated taxes that give smokers financial incentives to switch from cigarettes to less harmful alternatives.
The full report is available here: smokefreesweden.com/report_en.
March 14, 2023
Tobacco Use Down in Cambodia

Image: Zeybart
The youth cigarette smoking rate in Cambodia dropped from 32 percent in 2014 to 28 percent in 2022, reports the Phnom Penh Post, citing new Ministry of Health research. Despite the research showing a 4 percent decrease in cigarette smokers, the overall number of cigarette smokers has not decreased because the population grows annually, according to Mom Kong, Cambodia Movement for Health executive director.
“I think that the most effective measure we can take would be to raise taxes on the tobacco products so that the rate is similar to our neighboring countries in order to reduce the number of Cambodian deaths from tobacco smoking,” Kong stated.
“We hail what the government has done so far, but the government should strengthen the implementation of the laws more than this,” said Lim Sophoan, project coordinator of the Cambodian Coalition to Fight Infectious Diseases. “That’s good. In addition, we also want to tighten laws and continue to educate people from relevant ministries.”
March 14, 2023
Republic Dials Down Damages Push in Fake Papers Case

Photo: md3d
Republic Brands rescinded its push for $18 million in statutory damages each against Star and ZCell, two Georgia wholesalers accused of trading counterfeit versions of Republic tobacco rolling papers, reports Law360. Acknowledging that the initially sought penalty was “high,” Republic’s counsel told jurors to instead use their common sense when determining damages.
Under the U.S. Lanham Act, intentional trading of counterfeit products can be punished by up to $2 million per mark at issue. Inadvertent infringement elicits statutory damages of between $1,000 and $200,000 per mark.
U.S. District Judge Michael L. Brown ruled before trial that Star and ZCell had bought and sold counterfeit rolling papers.
In a May 2019 raid, authorities seized around 70,000 rolling paper booklets from Star’s Atlanta-area warehouse. If authentic, they would have been worth more than $110,000, according to Republic. From ZCell’s nearby warehouse, law enforcement confiscated around 180,000 booklets, worth more than $260,000 if authentic.
Republic attorney Maia T. Woodhouse said each of the defendants either knew they were dealing in counterfeit rolling papers or recklessly disregarded obvious red flags that revealed as much.
The defendants contended they were unaware that some of the papers they traded were knockoffs.
Star is one of the largest wholesalers of its kind in the American Southeast with around $100 million in annual sales. ZCell does around $16 million in annual sales.
March 14, 2023
Black Activists Split on Menthol Ban

Photo: New Africa
Black activists in New York are split on whether a menthol ban will be beneficial or harmful to the community, reports Gothamist.
One group, consisting of family members of those killed by police, including George Floyd’s brother and sister-in-law and Eric Garner’s mother, Gwen Carr. Garner was killed by police on Staten Island who were enforcing cigarette regulations.
“My son was a victim because allegedly he was selling ‘loosie’ cigarettes,” Carr said. “That’s what they’re going to do when they ban these cigarettes.”
“No more victims and no more violence,” she said, “and no ban on the menthol cigarettes.”
Another group gathered 30 minutes later and a block away supporting the ban. The group consisted of 40 clergy leaders and activists as well as Hazel Dukes, president of the NAACP New York State Conference and former president of the National NAACP.
“Our children are dying. Our kids think menthol is great. They think it’s bubblegum,” Dukes said. “Big Tobacco, you are getting out of our community.”
The proposed ban would expand current measures to include menthol-flavored products; a city council bill has been sponsored by 20 members and a state proposal from Governor Kathy Hochul is up for a vote.
According to New York public health officials, half of all adult smokers use menthol cigarettes, 86 percent of Black smokers smoke only menthol cigarettes, and 72 percent of Hispanic smokers smoke only menthol cigarettes. Black and Hispanic smokers make up a disproportionate number of smoking deaths in New York, according to state and federal data.
“Prohibition doesn’t work,” said Sylvia Miranda, executive director of the National Latino Officers Association. “The best way is through a medical model, not a criminal model.”
Supporters of the ban say it would specifically target retail sales and not personal consumption while critics fear the ban would ramp up policing in Black communities.
“Contrary to what the opposition is saying, read my lips: NYPD will not be involved,” said Council Member Rita Joseph, the main sponsor of the city council bill banning menthol-flavored tobacco products.
March 13, 2023