Author: Taco Tuinstra

  • Multinationals Continue to Monitor Situation in Ukraine

    Multinationals Continue to Monitor Situation in Ukraine

    Photo: JTI

    Multinational tobacco manufacturers have not stopped their operations in Russia but have done so in Ukraine.

    In the wake of Russia’s invasion of Ukraine and the stance taken by companies such as Apple and Stora Enso in halting sales in Russia, Tobacco Reporter asked the multinationals whether they had stopped sales of their products in Russia or when, if ever, they intended to do so. They were further asked why they had not stopped sales, given that this was the case. 

    “Our priority is our employees, and we are taking the necessary measures to ensure their safety,” said a spokesperson for Japan Tobacco International. “Our operations in Russia are fully functional and we have contingency plans in place to ensure business continuity if the situation were to change. As a responsible international company, we are fully committed to complying with all applicable national and international sanctions.

    “We are closely monitoring the situation and cannot comment any further.”

    Meanwhile, a spokesperson for Imperial Brands said: “We are monitoring the situation in both Ukraine and Russia very closely. Our prime concern remains for the welfare of our people in Ukraine, where we have suspended our operations for safety reasons. We will continue to update our plans as necessary.”

    And a spokesperson for British American Tobacco said: “We are deeply concerned about the conflict in Ukraine. The safety and wellbeing of our people in Ukraine and across the region is our first priority.

    “We have suspended all business and manufacturing operations in Ukraine and are providing all the assistance we can to our colleagues, including relocation and temporary accommodation.

     “In Russia, our wholly owned subsidiary has been in operation for more than 30 years. BAT always complies with relevant regulation and legislation wherever we operate, and we are aligned with all international sanctions.’

    “We continue to closely monitor the situation as it evolves.”

    Philip Morris International had not responded by the deadline. 

  • Egypt Increases Prices Of Popular Cigarettes

    Egypt Increases Prices Of Popular Cigarettes

    Photo: Jose

    Eastern Co. of Egypt has increased prices for 10 types of cigarettes, reports Egypt Independent

    The retail price of Cleopatra Box (10 cigarettes) rises to EGP11.50 ($0.73), Cleopatra King Size (20 cigarettes) rises to EGP18.50 and Cleopatra Soft Queen (20 cigarettes) rises to EGP19.

    In January 2018, the Egyptian House of Representatives approved an increase in cigarette prices to finance comprehensive health insurance by EGP0.75 per pack of 20 cigarettes, and an increase of EGP0.25 piasters every three years until the increase reaches EGP1.5 at the end of the period.

    Eastern Co. is the largest producer of tobacco in Egypt. The company was established on July 12, 1920, by a decree from Sultan Ahmed Fouad.

  • Stora Enso Suspends Operations in Russia

    Stora Enso Suspends Operations in Russia

    Photo: Stora Enso

    Stora Enso will stop all production and sales in Russia until further notice due to the ongoing invasion in Ukraine. Stora Enso has three corrugated packaging plants and two wood products sawmills in Russia, employing around 1,100 people. The company will also stop all export and import to and from Russia. A mitigation plan has been activated to secure availability of input materials from other sources.
     
    “The war in Ukraine is unacceptable, and we are fully behind all sanctions. We will now focus all our attention on supporting our customers and the well-being of our employees,” said Annica Bresky, president and CEO of Stora Enso, in a statement.
     
    Stora Enso’s sales in Russia are approximately 3 percent of total group revenues. The impact on Stora Enso’s sales and earnings before interest and taxes is not material.

  • Record Tobacco Income Boosts Vector’s Results

    Record Tobacco Income Boosts Vector’s Results

    Photo: Wirestock

    Vector Group reported consolidated revenues of $1.22 billion in 2021, down 1 percent from the previous year. Reported net income of $219.5 million was up $126.5 million over 2020. Adjusted net income from continuing operations was $174.8 million, up $44.9 million compared to the prior year period. Reported operating income increased $26 million to $320.4 million while tobacco segment operating income was $360.3 million, up 13 percent over 2020.

    For the fourth quarter of 2021, Vector Group reported consolidated revenues of $313.7 million, up 9 percent compared to the prior year period. Reported net income was $45.3 million, up $13.1 million. Adjusted net income from continuing operations totaled $41.4 million, $19.3 million higher than in 2020. Reported operating income of $68.6 million was down $5.5 million compared to the prior year.

    “Vector Group had another outstanding quarter, achieving all-time high annual tobacco segment operating income,” said Howard M. Lorber, president and CEO of Vector Group, in a statement.

    “We are excited by the continued strong performance of our tobacco business, which validates our market strategy and reflects the competitive advantages we have in the highly attractive deep discount segment. With the spin-off of Douglas Elliman complete, we are laser focused on continuing to capitalize on opportunities in the growing deep discount segment while leveraging our value-focused brand portfolio and broad national distribution to meet evolving market demands.”

  • Tobacco Technology Appoints New President

    Tobacco Technology Appoints New President

    Photo: Jacub Jirsak

    Tobacco Technology has appointed David Johnson as president and chief scientific officer of the company and its wholly owned subsidiaries, E-LiquiTech and Emerald Green Technology. He will be replacing Richard Howell, who retired earlier this month after 43 years of service.

    Johnson joined Tobacco Technology as the director of regulatory affairs in 2021. He brings more than 30 years of scientific, regulatory and management experience, including over 20 years in the tobacco industry, to the Tobacco Technology family of companies.

    He received his Ph.D. in chemistry from the University of Mississippi, specializing in physical analytical chemistry. In addition, he completed postdoctoral training at the University of North Carolina in Chapel Hill in the mass spectrometry group of Maurice Bursey.

    Johnson acquired much of his tobacco experience at Swedish Match North America, where he was the director of analytical, and at Turning Point Brands, where he was the senior director of scientific and regulatory affairs. Johnson also has a wealth of sales, marketing and Six Sigma experience from his years working with DuPont.

  • 22nd Century Reports Results

    22nd Century Reports Results

    Photo: MIND AND I

    22nd Century Group reported net sales of $30.9 million for 2021, up 10.1 percent from 2020. The increase was due to an increase in contract manufacturing sales. Gross profit for 2021 was $2.1 million compared to $1.4 million in the prior year. Gross margin in 2021 increased to 6.7 percent from 5.1 percent in the prior year.

    Net sales for the fourth quarter of 2021 were $8 million, an increase of 8.9 percent over the prior year period. The increase was due to an increase in contract manufacturing sales. Gross profit for the fourth quarter of 2021 was $387,000 compared to $588,000 in the prior year period due to the favorable effect of a large customer order that benefitted the previous year’s fourth quarter.

    “The past several months were incredible as 22nd Century transforms from a pure science and contract manufacturing company into a company selling branded VLN cigarettes, licensing valuable biotechnology IP and supplying highly specialized plant lines in large and dynamic global end markets,” said James A. Mish, CEO of 22nd Century Group, in a statement.

    “We secured our highly anticipated FDA MRTP [modified-risk tobacco product] designation on Dec. 23, and immediately moved to launch our VLN pilot program by the end of March. The first VLN cigarettes packaged with the FDA’s added claim of ‘Helps You Smoke Less’ rolled off our manufacturing lines in late January.

    “Additionally, we have finalized our point-of-sale materials to educate adult smokers about how to use VLN to change their relationship with highly addictive nicotine cigarettes, and we have worked alongside Circle K to prepare for our first launch in more than 150 metro Chicago stores before rolling VLN out nationwide. Our mission is to get this product as quickly as possible into the hands of adult smokers, 70 percent of whom want to quit and are looking for new and innovative products to help them smoke less.”

    On Feb. 28, 22nd Century announced its VLN cigarettes would make their international debut in South Korea.

  • FDA Submits Menthol Ban for Review

    FDA Submits Menthol Ban for Review

    Photo: chocolatefather

    The U.S. Food and Drug Administration is a step closer to a complete ban on menthol-flavored cigarettes and cigars.

    The ban is not expected to impact vaping products, although many experts predict a menthol combustible ban could possibly transition some menthol smokers to e-cigarettes. It is predicted to be similar to what happened in the U.K. when it banned menthol cigarettes in 2020.

    Thursday, the agency submitted its proposal to the White House’s Office of Management and Budget (OMB), according to news reports.

    In 2020, the regulatory agency enacted a “flavor ban” on e-cigarettes because they targeted middle and high school students. Now, public health officials argue banning menthol, the last allowable nontobacco flavor in cigarettes, will save lives.

    In its proposal, the FDA provides evidence that menthol tobacco products are heavily marketed to racial minorities. The U.S. Centers for Disease Control and Prevention reports more than 85 percent of menthol smokers are Black, taking a disproportionate toll on their health.

  • Watch Your Mouth

    Watch Your Mouth

    Image: martialred

    What the industry can’t (and could) say about harm reduction

    By Cheryl K. Olson

    Surveys show that the public perceives nicotine as the devil behind most of the cancer and heart disease caused by smoking. E-cigarettes and nicotine-replacement therapies alike are misperceived as relatively risky by many smokers. Even physicians are likely to believe nicotine is dangerous. The now entrenched view of nicotine as public health villain is the predictable result of years of emotion-based anti-vaping campaigns from government and advocacy groups and a steady drip of media reports on the latest perceived danger or deception from the nicotine industry. This includes coverage of the e-cigarette or vaping use-associated lung injury crisis that wrongly linked deaths from THC vaping to nicotine vapes.

    The hundreds of thousands of deaths from smoking take place out of sight; they’re old news, not worth mentioning. When I was a public health graduate student in the 1990s, there was much conversation about how to make those deaths newsworthy. Advocacy groups looked for vivid imagery and metaphors to make their case: Hey, deaths from smoking are like a jumbo jet crashing in flames every day! Those deaths are still happening; the campaigns are not.

    The Real Cost media campaign, run by the U.S. Food and Drug Administration since 2014, now targets vaping instead of smoking. Creativity in advertising is now focused on fanciful brain worms and similarly unsupported high-fear imagery.

    Over drinks at the 2021 London GTNF meeting, I heard conversations bemoaning the passing of those government antismoking efforts and wondering how the FDA or Centers for Disease Control (CDC) could be persuaded to target nicotine misperceptions. In the “before times” (pre-FDA regulation and pre-Tobacco Control Act of 2009), as an academic who consulted to the industry, I headed a multi-year stop-smoking campaign funded by Philip Morris USA. QuitAssist was created to expand upon and encourage the use of existing smoking cessation materials from government and nonprofit organizations. This naturally made me wonder whether, even in this changed regulatory environment, the industry could find a way to pick up the dropped baton and lead a new communications effort.

    What stops nicotine product companies from pushing back against this tide of misinformation and misperceptions? You’d think there would be a strong incentive for companies to educate the public. After all, if everyone believes that the health danger in cigarettes comes from the nicotine instead of the byproducts of combustion, why would smokers who can’t or won’t quit even consider switching to vastly less dangerous alternative nicotine products?

    Since the GTNF meeting, I’ve talked with people from legacy and upstart nicotine product companies working with these issues from various corporate communications, regulatory and legal angles to try to understand the “carrots and sticks” that shape how the industry responds.

    Companies reflexively blame the FDA regulations for their inaction. This has merit. To prevent new outbreaks of old Big Tobacco deceptive practices, the wording of the law can block companies from speaking obvious truths. But there are also surprising hidden disincentives to educate the public about nicotine. Will it upset shareholders? Will it upset regulators? Is it worth the money? Will it create litigation risk?

    What makes nicotine product makers watch their mouths when it comes to public education? It’s complicated. If we envision the forces blocking industry communication as an iceberg, let’s start with the visible tip: what the law says that you can’t say.

    The Rules

    The most commonly cited roadblock to correcting misperceptions about nicotine harm reduction is Section 911 of the Family Smoking Prevention and Tobacco Control Act of 2009.

    Without a specific modified-risk claim pre-authorized by the FDA, a product’s label or advertising can’t state or imply it carries lower risk of disease or harm than another commercially marketed tobacco product. That’s pretty straightforward. But what’s next is not: you can’t even say the product “or its smoke contains a reduced level of a substance or presents a reduced exposure of a substance” or that the product “does not contain or is free of a substance” even when those statements are empirically true.

    Based on this language, a company could not repeat facts from published research. It could not share the grudging admission from the CDC’s website that “E-cigarette aerosol generally contains fewer toxic chemicals than the deadly mix of 7,000 chemicals in smoke from regular cigarettes.”

    This seemingly outrageous restriction on factual speech should be understood in historical context. The Act initially only covered cigarettes, cigarette tobacco, roll-your-own tobacco and traditional smokeless tobacco. With the language about advertising and communications, its authors were thinking about “light” cigarettes and similarly implied health claims that were misleading or taken out of context—not novel nicotine products that might be truly and even massively less risky. The FDA was empowered to issue regulations deeming other tobacco products to be covered by the Act, adding e-cigarettes in 2016.

    The Risk/Benefit Calculation

    Now, let’s look at the larger underwater part of that iceberg: the less visible factors that block companies from taking action.

    Shareholders. Legacy tobacco companies like to focus publicly on their novel nicotine products and the transition away from combustibles. But there’s no denying that traditional tobacco products, especially cigarettes, are where the money is. Shareholders expect companies to act conservatively when it comes to their primary source of income. And some of the profits from combustibles support the massive R&D costs of transitioning to less dangerous products. However desirable the transition to the future world of reduced consumer harm and reduced litigation risk … as one person told me, it’s a good ESG (environmental, social and governance) story, but the incentives aren’t there.

    Litigation risk. Despite the 1998 Master Settlement Agreement and FDA regulation, multinational tobacco companies remain in near-constant litigation on the cigarette front. Today’s tobacco industry is stuck with the legacy of decades of bad behavior; every action is scrutinized for intent to addict and harm fresh generations of users. So, an attempt to partner with a physician for public education conjures up images of 1930s Lucky Strike ads with smiling white-coated pitchmen. And as one insider explained, it becomes a cost to the business if it gets interpreted in court as evidence of further bad acting.

    Cost. Section 911 of the Tobacco Control Act does allow the option of seeking authorization through the modified-risk tobacco product (MRTP) pathway to make a modified-risk claim. In 2019, Swedish Match was first to earn this status, allowing claims of lower risk of mouth cancer and five other ills if used instead of cigarettes to appear on eight General Snus products.

    Unlike Europe, which takes a category approach to regulation, the U.S. regulates products one by one, even for very similar products with low youth use, such as vaping liquids. One person estimated that the cost of research to support an MRTP claim would be equivalent to what their company spent to support that product’s PMTA for marketing authorization: millions of dollars for claims that may not even be relevant or understandable to the average smoker.

    Regulator pushback. Especially in the current regulatory environment of low trust, confusing guidance, pending legal cases and thousands of products in regulatory limbo, few companies want to risk further antagonizing the FDA. When I raised hypotheticals of education efforts that could be undertaken by nicotine product makers, I heard stories of wonderful might-have-been campaigns nixed by lawyers. A collaboration between the industry and respected researchers and their university, based on extensive focus group testing with smokers? Add a catchy slogan and creative messaging plus incentives and prizes to encourage smokers to try reduced-risk products and to stay off cigarettes? The FDA is lukewarm on the plan. Big Tobacco dollars that could have supported a huge smoking cessation effort go unspent.

    The Right Audience and the Best Messenger

    A final concern among industry insiders is a frank understanding of their own lack of credibility. Does it make sense to spend money on messages that won’t be believed? They point to research showing that government agencies and health professionals are the most trusted sources of information.

    It’s noteworthy that recent research suggests that government agencies are less trusted by groups that disproportionately suffer from smoking, such as racial/ethnic minorities and lower income persons. And the FDA’s actions speak loudly: When smokers see their favorite vaping products removed from websites or store shelves while very low-nicotine cigarettes are authorized, what message does that send to consumers?

    The industry’s best hope for correcting nicotine misperceptions likely comes from indirect public education, through health professionals and consumer advocacy organizations. But industry folks might also consider how to educate regulators, who may not know many or even any smokers, about the realities of their lives and needs.

    Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors via McKinney Regulatory Science Associates. She spent 15 years on the faculty of Harvard Medical School.
  • Kicking up Dust

    Kicking up Dust

    Photo: Roman

    Where should smokers turn for sound advice on quitting? That question is surprisingly difficult to answer.

    By George Gay

    Often, some of the most interesting aspects of conferences are thrown up by questions posed from the floor. And this was the case at the September 2021 GTNF in London where, from memory, a participant asked how a smoker could know who to approach for sound advice on using vaping devices to help her quit tobacco smoking. At first hearing, the answer seemed fairly obvious, but the more I thought about it, the more I realized how difficult it was to respond usefully to this important and insightful question. But to come to this realization, it was necessary for me to walk a little way in somebody else’s shoes: to examine the question not from the point of view of a person steeped in the information garnered from many vaping conferences but from the point of view of the smoker in the street struggling through a blizzard of contradictory messages.  

    So how can our smoker know who to approach for sound advice on using vaping devices to help her quit tobacco smoking?

    It would be good to be able to answer this question by pointing to official government agencies in whatever country the smoker lives, but this is problematic. If I look around the world, it seems to me that the number of people who live in countries whose governments I would call reasonably trustworthy is small, and I suspect that many smokers would agree with me. And this is the vitally important point here. Remember, most smokers will have no inside information about the benefits or otherwise of smoking and vaping, so they will be able to base their judgements about these habits only on whether, in general, they trust the source of the information being provided.

    Since I live in the U.K. and know a little about the workings of this country, let me expand on what I mean. Some might say with justification that the U.K. government has consistently put out messages that, in effect, encourage smokers wanting but previously unable to quit smoking to try switching to vaping devices. But our smoker can be expected to accept this advice only if, as a general thing, she trusts the government.

    Is this likely? I would suggest not. There are many stories doing the rounds at the moment that point to the untrustworthiness of the U.K. government in both its national and international dealings, but let me mention just one that I feel is relevant. The high court recently ruled that the government’s operation of a VIP lane for suppliers of personal protective equipment (PPE) during the Covid-19 pandemic was illegal. No prizes for guessing who were some of the big beneficiaries of this scheme, which didn’t always provide satisfactory items of PPE. Given this, it would not be unreasonable, I believe, for our smoker to question whether vaping devices were not being recommended by the government for reasons other than those to do with her welfare and that of other smokers.

    The question under consideration concerns “sound” advice, and so I should declare an interest. What is written above about lack of trust stands, to my way of thinking, whatever is your definition of “sound” advice about smoking and vaping. Some of what appears below, however, is about what I would call “sound” advice: advice that encourages smokers to try switching to vaping if they want to quit smoking and if they are unable to quit using other methods.

    There are, of course, some people who, according to this definition, could provide a smoker with sound advice and who would do so without fear or favor. There were a number of such people who sat on various GTNF21 panels or who participated in the conference in other ways, people of integrity who are experts in their fields. This is all very well, of course, but the genius of the question posed was that it got behind all of this to ask how the smoker in the street can get to know of these people and how our smoker can know for certain that these people are giving out sound messages. After all, everybody who is reading this magazine will be aware of the huge number of counter messages out there, sometimes published in respected journals under the names of people with qualifications that stretch around the block. Some of the people who I would regard as being experts acting with integrity have been maligned and had their work misrepresented in “good” journals. And messages from governments are often counter; those from the U.S. Food and Drug Administration are confusing while those from the World Health Organization appear to be both confusing and counter, which is quite an achievement.

    Learning from the Private Sector

    None of this is reassuring. But, as somebody once said, when you ask questions, you kick up dust, and it’s no good then complaining that you cannot see. So, let our smoker press on to discover what she might learn from the private sector.

    Well, let’s see. At one end of the scale are those companies that really don’t give a damn about the smoker or vaper and that are in the vaping business for a fast buck. Then there are companies intent on making a profit out of tobacco or nicotine, but that would be happier doing good than doing harm while making that profit. Of course, they are always going to be trying to sell the brands they offer, which they probably believe are the best, but about which others may have different opinions, and they are often going to be seen trying to put a spoke into the wheel of their competitors, no matter how potentially beneficial their competitors’ brands might be.

    And then there are companies that probably start out from the position that they want to do good but realize that to do so they have to stay in business, which means turning at least a modest profit. I think it is probably fairly obvious that if you’re looking for sound advice, it would be best to stay away from the first group, assuming that, as in the case of the other groups, you can identify its members. Members of the second group might offer a lot of sound scientific and technical information but, in listening to them, you would need to know how to split that information off from the commercial messages. Those of the third group, meanwhile, especially those among it that comprise vape stores, might give you the best objective advice, though it has to be kept in mind that objective isn’t always right or sound.

    Tobacco Control

    What about turning to tobacco control? As is suggested above, there are those in the tobacco control community who want to do good and who are embracing harm reduction; there are those who want to do good but cannot bring themselves to recommend products whose efficacy relies on their mimicking combustible cigarettes; and there are those who want to do good but haven’t got much of a clue, who believe that nicotine ingested during vaping causes cancer. And, unfortunately, there are those in tobacco control who seem to be interested only in keeping their jobs open until they retire, which means attempting to put a spanner into the works of tobacco harm reduction. To those of us imbued with the definition of “sound” advice given above, it doesn’t take too long to work out who it would be best for the smoker to listen to, but, again, you come back to the question: How can the smoker know?

    Other Considerations

    Everything that is written above looks at this debate from the point of view of the smoker who is thinking of quitting tobacco smoking so as to become healthier. But there might be other reasons. The smoker in question might also want to save money and/or the environment. At this point, things get easier and more difficult. For instance, the smoker wanting to save money doesn’t have to rely on outside advice; she can do the math for herself. The cost of cigarettes and vaping devices and consumables is information available in the public domain, so costing the two habits roughly is fairly easy on the basis of puffs, as advertised in the case of vaping devices. There is a difficulty in the form of a big unknown, however. What will be the future tax strategy of our smoker’s government as it is applied to vaping devices? And probably nobody could provide sound advice in this case, especially as the hue of the government might change if our smoker is lucky enough to live in a functioning democracy.

    Looking at environmental issues is even more difficult up to a point. How you compare the discarding of toxin-containing acetate filters with that of batteries and plastics would test most people, but it seems reasonable to assume that, since vaping devices are relatively new and upcoming while combustible cigarettes are old and on their way out, more development is going to be applied to the former than to the latter. Well, at least that is the case in those jurisdictions that encourage rather than disallow development.

    It is necessary, I think, also to say something about choice, which is seen as the great emancipator of consumers, at least by those who believe in the notion that the free market is the answer to everything. Smokers, such people may argue, are fortunate because they are able to choose between the wide-ranging information available across all media. But of course, this is not choice, it is simply confusion for most nonspecialists.

    So all is lost? Perhaps, though, then again, maybe there is something that can guide the smoker through: questions. Peter Abelard said that the only means we have of judging between apparently conflicting authorities is reason. “Through doubting, we come to questioning, and through questions, we perceive the truth,” he said.

    In other words, the answer to the question lies in asking—lots of—questions. Yeah, I’d go along with that.

    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.
  • Unintended Consequences

    Unintended Consequences

    Photo: Manatee County Sheriff’s Office

    The number of crimes committed at specialty retail outlets has grown dramatically over the past few years.

    By Timothy S. Donahue

    Every year, hundreds if not thousands of cannabis dispensaries, vape shops and tobacco outlets are robbed or burglarized in the U.S. On July 10, in Lincoln, Nebraska, between 2 a.m. and 5 a.m., the police department responded to alarms at two vape shops where officers found shattered storefront glass at both locations. The thieves targeted CBD (cannabidiol) and Delta-8 THC (tetrahydrocannabinol) products. The pair of break-ins happened two days after another similar burglary, totaling three in as many days. The businesses lost tens of thousands of dollars in merchandise.

    Timothy Goodman, a manager at the Lincoln Vapor location, said that break-in was just the latest in a string of six incidents in approximately the last two years, according to news reports. Goodman, who has worked at Lincoln Vapor for nearly four years, said it’s his understanding that every break-in can be linked back to the same group.

    The burglars stole $2,000–$3,000 worth of merchandise in May 2021 and have lifted around $16,000 in products from the business through the last year and a half, according to Goodman. Most products were hardware and cannabis products, such as CBD and Delta-8 THC. “It’s frustrating beyond belief,” he said. “I wake up most nights in the middle of the night and check the cameras to make sure nobody got in.”

    The rise in vape shop crimes may be an unintended consequence of recent regulatory actions, such as tax increases, flavor bans and raising the age to purchase vaping and tobacco products to 21, according to many industry experts. Richard Marianos, a senior law enforcement consultant who has served more than 27 years at the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and who is now a consultant and adjunct lecturer at Georgetown University, says crime is often an unintended and overlooked consequence of regulatory constraints on the marketplace that encourage the growth of black markets.

    Marianos said that taxes and flavor bans bring prohibition, and prohibition brings crime. “These regulatory actions mean a dramatic increase in street sales to kids, and that is what we have seen all over the United States,” said Marianos. “If you have any form of tobacco harm reduction in your state, just throw that completely out the window [if you are going to implement flavor bans and raise taxes exorbitantly] because it forces young adults and people who can’t afford these products into a growing black market. In terms of law enforcement, the issue is that there has been 150 percent increase in smash-and-grabs because of the difficulty of purchasing these products.”

    Sam Salaymeh, president and CEO of AMV Holdings, parent to a chain of 113 Kure CBD & Vape shops across the U.S., said that his stores have seen a major increase in crime over the past two years. During Covid-19 lockdowns in 2020 through early 2021, AMV stores had over 20 burglaries combined. “There is a myriad of stories that come with these break-ins, but the main theme is criminals are trying to get to high-value items that are small in size—and that would be the CBD/cannabis products … etc.,” explains Salaymeh. “This is happening more and more across the country.”

    During a one-hour period on Dec. 20, five separate retail locations—three vape shops and two tobacco/vape outlets—suffered a string of robberies by three men wearing masks that crossed the Southeast region of Los Angeles County. A shop owner said the criminals pretended to be customers when one pulled a gun and demanded money while two others snatched merchandise from the store’s shelves, according to news reports.

    “We now have organized crews that go out and hit multiple stores like convenience stores, gas stations, vape shops in a single night or a weekend … they don’t go for cash registers; they want the tobacco products because they can sell it on the street cheaper than what it’s being sold for with these high taxes and these prohibitions,” says Marianos. “They’re making a fortune in the black market the same way the dope dealers are selling cocaine and heroin because the taxes on vaping and tobacco products are going through the roof.”

    Phoito: Lexington Police Department

    Crimes of Convenience

    In 2020, there were 102,677 robbery incidents and 102,677 offenses reported in the U.S. by 9,991 law enforcement agencies that submitted National Incident-Based Reporting System (NIBRS) data. Nearly 25 percent of those incidents were committed at convenience stores (13,721), gas stations (7,006) and specialty stores, where vape shops are lumped into (5,372) combined. If criminals are looking for quick cash, then robbing convenience stores or small specialty retail shops is one of the best ways to do it, according to the FBI.

    John Cavanaugh, owner of California-based Vaping Industries, says that thieves have broken into his stores numerous times. Typically, thieves try to take what’s immediately available. “They broke in after hours … broke the glass, popped open the register, grabbed the cash, broke into my office, got the petty cash and then rolled out,” he said. “I think we are starting to see more robberies than burglaries lately, and I think that it’s an easier target to hit a vape shop or a smoke shop with guns because the layout is small, there’s only typically one or two employees and—especially with cannabis dispensaries—there’s a lot of cash on hand.”

    The terms “burglary” and “robbery” are not interchangeable. They have meaningful differences. Burglary involves a person illegally entering a building to commit a crime while inside. Robbery is typically when someone takes something of value directly from another person using force or fear. There is a far greater chance that someone committing a robbery will do so armed compared to burglaries, which typically occur after hours. Convenience stores accounted for nearly 13 percent of all violent crimes suffered in 2020, and gas stations accounted for about 12 percent.

    Across North America, crimes involving vapor, tobacco or cannabis shops are getting more violent. On Dec. 3, in Calgary, Canada, officials said a “number of people” entered Jerry’s Smoke and Vape just after 6:30 p.m. According to a police report, one of the suspects pointed a gun at the clerk, and the bandits made off with cash and merchandise.

    On Sept. 12, in British Columbia, a suspect entered a vape shop alone armed with a shotgun. After threatening an employee, the suspect took an undisclosed amount of cash and product before escaping on foot. Over the weekend of May 29 to June 1, 2020, thieves burglarized several cannabis dispensaries, distribution centers and cultivation in Los Angeles, Oakland, San Francisco and other cities, stealing legal commercial cannabis products and cash. On Sept. 11, 2021, in Calgary, Canada, three masked men entered a dispensary armed, held off staff and got away with a quantity of cannabis products.

    Cavanaugh said robberies are more common at cannabis dispensaries than vape shops because cannabis dispensaries have a lot of cash on hand, especially in the U.S. where very few banks will work with marijuana businesses. There are also numerous illegal cannabis dispensaries, which perpetrators know are less likely to notify law enforcement.

    “Before all of this started happening over the last few years, I didn’t really believe in upping my security. Now, I have to make sure that there are panic buttons, that my staff are properly trained for when somebody comes in with guns blazing,” he says. “They need to know to just give it all up. Give them the cash and whatever they want. It’s OK. It isn’t worth your life. I’m also now spending extra money for high-end security cameras and security systems. It’s frustrating.”

    Photo: UK Vapers

    Crime Prevention

    According to Marianos, there are several reasons why thieves target convenience stores and gas stations and now vape shops and dispensaries: operating hours and low numbers of staff on site, and these types of stores have smaller layouts, so it’s easier to find the expensive/high demand products and there is the potential for large amounts of cash on-site.

    “You don’t want it to make product accessible where somebody can just take a trash can, throw it through the window and get into your shop and take all your stuff,” says Marianos. “More cameras, limiting the amount of people that are coming in like they do at jewelry stores—these businesses need a similar model that retailers with high-end products have. In some higher crime areas, you may even have to hire a security guard.”

    Vandalism, from smash-and-grab types of crimes, has occurred so often at AMV stores in recent years that Salaymeh says he has a toolkit in his garage ready to go at a moment’s notice with everything needed to board up a store. He says he involuntarily became an expert at it. Salaymeh says that while it is rare for AMV stores to alter operating hours, it is a tactic they have used in the past. He says that having at least two staff members at all times in some locations, installing security cameras and other security measures are the primary tools store owners have in their arsenal to help deter crime.

    “Security cameras help us at least get the story behind what happened and potentially pictures of the thieves. We also try to limit the access potential thieves have to valuable product … and we’ve tried to keep the lights on after hours so that people can actually see that these products aren’t lying around or in display cases,” he says. “We leave the register drawer open so that people, when they walk up, they see there’s no cash.”

    Another unintended consequence of overzealous taxation and regulation is the impact it has on local law enforcement, according to Marianos. He says enacting some of these rules are, in effect, giving police more work to do in terms of harassment violations that have no teeth instead of fighting real crime. “Instead of being able to work on what they should be working on—to serve and protect—are we going to be calling the police because someone is vaping a flavor?” he asks. “What is law enforcement going to do with all this nonsense? What are they going to charge the guy with? What is the crime? Do you know what I mean? It becomes an hour and a half just sitting around trying to figure out what we’re going to do here.”

    During his interview with Vapor Voice, Salaymeh’s phone rang. It was the security firm ADT. One of the AMV stores had an alarm going off. He said it happens multiple times a week. There is insurance available for specialty shops, but both Cavanaugh and Salaymeh say it is expensive. The deductible is often higher than the amount of damage suffered during a crime. Both say they rarely, if ever, claim any damages with their insurance companies.

    Another overlooked result of rising crimes in these specialty sectors is the impact on the economy and the lives of employees. Cavanaugh said that crime has forced him to shutter two stores, and he now struggles to keep the doors open in his remaining location. Increases in crime, overregulation and misinformation concerning the health and safety of vaping, and the causes (illegal THC vaping products) of e-cigarette or vaping use-associated lung injury have been too much to bear. “We are doing our best to deal with the reality of today’s vaping industry,” Cavanaugh said. “I want to keep my doors open, and people depend on us; that’s important.”

    Salaymeh says he had to close some stores during the Covid-19 pandemic, some of which were temporary. The closures weren’t all crime-related, he explains, but most of them were. There was a period when stores were not allowed to be open, so burglaries were happening, and stores couldn’t sell anything to try to recover losses. “We’re trying to keep people employed. The height of the pandemic was a very, very, very difficult time for our company and many companies like us. The primary victims of these senseless crimes are the people who don’t have a job to go back to because I shut down 18 stores during that time,” he says. “Think about that.” 

    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.