Blog - Tobacco Reporter

Stronger Enforcement Urged of Violations

The U.S. Food and Drug Administration could take stronger enforcement action against tobacco retailers with histories of sales to youth and other violations, according to a report published by the Office of Inspector General (OIG) of the Department of Health and Human Services.

The authors analyzed the extent and nature of the FDA’s inspections of, and enforcement actions against, vendors occurring over nearly a decade through the agency’s tobacco retailer compliance check inspection program.

The OIG found the FDA conducted more than 1 million inspections from 2010 through 2019, by inspecting, at least once, 74 percent of tobacco retailers that were in business nationwide as of 2020. The FDA almost always returned to inspect retailers where it found violations within 12 months. In some States, inspection activities were correlated with neighborhoods’ socioeconomic conditions, raising questions about how FDA and its contractors select retailers to inspect.

Overall, FDA’s actions against retailers that violated tobacco laws and regulations were in accord with its policies.

However, retailers with histories of violations were often not subject to the strongest enforcement actions. FDA collected the full amount for only 9 percent of the civil money penalties (CMPs) it issued to retailers with histories of violations compared to 60 percent of CMPs it issued to retailers with fewer violations. Also, retailers in our sample that could have been subject to a no-tobacco-sale order usually did not receive one.

However, the OIG did not determine the extent to which FDA’s consideration of mitigating factors or actions by Administrative Law Judges played a role in these outcomes.

In its report, the OIG recommends that FDA give greater weight to retailers’ past noncompliance when taking enforcement actions against retailers with histories of violations, and determine whether variation in inspection activity on the basis of neighborhoods’ socioeconomic status is appropriate and the extent to which it is meeting FDA’s objective for protecting vulnerable populations.

November 8, 2023

Zimbabwean Farmers Bemoan Power Cuts

Power cuts in Zimbabwe are impacting irrigation and increasing tobacco farmers’ production costs, reports The Herald, citing Zimbabwe Tobacco Association (ZTA) CEO Rodney Ambrose.

“Power outages from about 0500 hours in the morning to as late as 2200 hours are a major concern in most growing areas at the moment,” Ambrose was quoted a saying. “Growers are struggling to complete their irrigation cycles and are relying on diesel powered generators, incurring huge costs.”

Ambrose said the crop quality, yield and grower viability would likely be compromised as the option of running generators for irrigation is not sustainable. With curing of the irrigated crop scheduled to start in early December power demand will increase further.

“We are engaging with the power utility to identify clusters where power supply can be prioritized just like they did for the wheat program. However, if power deficits persist nationally, the cluster solution may not entirely resolve the issue. The next option is to plead with the government to provide subsidized diesel or allow duty free imports of fuel primarily for powering generators,” said Ambrose.

Ambrose believes the long-term solution is for farmers to transition to solar power although this has a costly outlay that requires growers to have access to long term financing.

It will also require the government to permit duty-free and tax-free imports of solar equipment for farming activities, he added.

Tobacco farmers have planted 22,298 hectares this season, including 16,962 hectares of irrigated tobacco, according to the Tobacco Industry and Marketing Board.

The report said 105,805 growers had been registered so far compared to 133,724 registered growers during the same period last year, marking a 26 percent decline.

November 8, 2023

Track-and-Trace Honored in the Breach

Only two out of the more than 40 cigarette manufacturers in Pakistan have properly implemented the country’s track-and-trace system, according to British American Tobacco, reports The Nation.

Speaking during a media briefing organized by the Pakistan Tobacco Company (PTC) in Islamabad, BAT’s area head of legal and external affairs for the Asia Pacific, Middle East and Africa regions, Mona Iskandarani, stressed the importance of timely implementation and enforcement of the track-and-trace system.

“We acknowledge the recent enforcement initiatives undertaken by the Federal Board of Revenue in Pakistan but we need sustained enforcement efforts across the supply chain to curb the menace of illicit cigarette trade in Pakistan,” said Iskandarani.

PTC’s legal and external affairs director, Asad Shah, pointed out that while track-and-trace systems have been implemented in various countries, the system does not offer a silver bullet. Rather, it serves as a tool to facilitate law enforcement agencies to carry out raids and seizures of tax evaded products, he said.

Despite a lapse of 15 months since the implementation deadline, only two out of over 40 cigarette manufacturers have implemented the track-and-trace in true letter and spirit, Shah lamented. Instead of declining, tax evasion has grown in the tobacco sector since the system became mandatory, he said.

The share of illicit cigarette sales is projected to grow from 37 percent of the market in fiscal 2021-2022 to approximately 63 percent by the end of fiscal 2023-2024, potentially causing the government lose PKR310 billion ($1.08 billion) in tax revenues in fiscal 2023-2024.

November 8, 2023

Decro Installs Goebel Slitter-Rewinders

Goebel IMS installed two Monoslit 9000 slitter rewinders on Guangdong Decro’s high-speed BOPP film production lines.

Guangdong Decro Film New Materials Co. is one of the top manufacturers of BOPP film in China, featuring four subsidiaries—including Guangdong Decro Package Films Co.—and three manufacturing facilities that total more than 187,000 square meters. Currently, Decro runs seven international advanced BOPP lines, two functional coating lines and ten twin-screw extruders for functional Masterbatch.

The two Goebel machines have a 1,200 meters per minute speed and the newest design and technologies for processing special kinds of BOPP film.

“As one of the worldwide leading BOPP manufacturers for specialty films, we always require sophisticated high-end equipment to meet our customers’ demand,” said He Wenjun, vice president of Guangdong Decro Package Films Co.

“We are happy to have identified Goebel IMS as a trustworthy partner for our primary slitting and rewinding operations. The performance of the machines exceeds our expectations and especially the second line was installed and operating in record time. We are looking forward to continuing our positive working relationship with Goebel IMS.”

“We would like to thank Guangdong Decro for their trust in Goebel IMS and the good cooperation which enabled the very successful commissioning of the two primary slitters for their two new BOPP lines with a working width of 8.7 meters,” said Tobias Lanksweirt, managing director of Goebel Schneid- und Wickelsysteme.

November 8, 2023

Budget Office Urged to Ditch Flavored Cigar Ban

The Cigar Association of America (CAA) has asked the Office of Management and Budget (OMB) to withdraw the Food and Drug Administration flavored cigar product standard (FCPS) banning flavors in cigars, which it said would cost the industry nearly $4 billion in sales—up to 47 percent of industry sales—and destroy 16,000 jobs.

“We presented evidence to OMB that FDA’s proposed flavored cigar ban dramatically fails to meet the criteria necessary for such a ban under the Tobacco Control Act, offering little or no public health benefit while having a devastating economic impact on the industry,” said CAA President David Ozgo in a statement following the group’s Nov. 6 meeting with OMB officials.

“FDA claims the product standard will reduce youth usage of cigars and that prohibiting flavored cigars will address health disparities in minority adult subpopulations. CAA showed OMB government data demonstrating that neither of these claims is true.”

In order for FDA to impose a flavored cigar ban through a FCPS, the law requires that the Agency consider: whether the potential product standard is appropriate for the public health, taking into consideration scientific evidence concerning the risks and benefits to the population as a whole; the increased or decreased likelihood that existing users of tobacco products will stop using such products; and, the increased or decreased likelihood that those who do not use tobacco products will start using such products.

“FDA’s flavored cigar product standard fails on all three accounts,” Ozgo charged. “Youth usage rates of cigars, and of flavored cigars in particular, are at all-time lows and these low rates reflect a stable and sustained trend.”

There is little or no public health benefit from the proposed flavored cigar product standard, but huge negative economic consequences will result.

David Ozgo, president, CAA

The 2022 National Youth Tobacco Survey (NYTS) showed past 30‐day youth cigar use at 1.85 percent and past 30‐day youth flavored cigar use at 0.83 percent. The recently released 2023 NYTS data showed past 30‐day youth cigar use has declined to 1.6 percent. While the flavored cigar use data has not yet been released, it is expected to follow the trend at under 1 percent of use.

Other government surveys reflect similar trends. In fact, the most recent Population Assessment of Tobacco and Health Survey (PATH) showed that past 30-day youth usage of cigars was only 0.7 percent and past 30-day youth usage of flavored cigars was just 0.14 percent.

In addition to unsupported youth usage claims, the CAA contends that the FDA failed to show that adult subpopulation health disparities are associated with flavored cigar use or that banning flavored cigars would remedy these disparities among Black, Non-Hispanic Americans. The CAA did so despite the fact that FDA is required by law to base its decisions not on subpopulation impacts but on impacts to the population as a whole.

“FDA’s claims aside, there is simply not a pattern of use of these products that raises a concern of public health that can justify eliminating an entire category of products, while depriving adult consumers of the right to choose these products” Ozgo said.

While the public health case is non-existent, FDA’s proposal would have dramatically negative economic consequences. A recent study by the Policy Navigation Group showed the flavored cigar ban would reduce retail sales by nearly $4 billion, up to 47 percent of industry sales, causing some 16,000 people to lose their jobs.

The CAA and other industry groups recently convinced a court to reject the agency’s effort to regulate “premium” cigars. More particularly, the judge in the case ruled against the FDA, citing the agency for ignoring the scientific evidence. The proposed FCPS similarly ignores scientific evidence.

“Just as it did in 2016 and 2019, we urge OMB to again reject FDA’s flavored cigar proposal,” said Ozgo. “There is little or no public health benefit from the proposed FCPS, but huge negative economic consequences will result. This is as bad as public policy gets. Ultimately, FDA’s proposal is a solution in search of a problem.”

November 8, 2023

22nd Century Continues VLN Expansion

22nd Century Group has expanded its VLN retail presence with more than 500 additional locations across 11 U.S. states.

With these latest additions, 22nd Century Group’s FDA-authorized VLN reduced nicotine content cigarettes can now be found at more than 5,100 store locations spanning 23 states, including the addition of Washington, Oregon, Kentucky and Louisiana.

“The addition of over 500 new VLN sales locations has propelled us beyond the noteworthy milestone of 5,100 stores. Our VLN sales presence now extends to 23 states, making VLN available in many of the top markets where smokers reside,” said 22nd Century Group interim CEO John Miller in a statement.

“VLN is purposefully crafted to offer adult smokers a clinically documented tool to gradually reduce their smoking frequency and mitigate the associated health risks over time. We are pleased that an increasing number of adult smokers now have access to this important product if they are seeking new ways to reduce their smoking habit,” said Miller.

November 8, 2023

Policymakers Must Keep Up With Innovation: Poll

Policymakers must keep up with innovative breakthroughs to benefit public health, according to respondents to an international survey carried out by Povaddo and commissioned by Philip Morris International. Seventy-four percent of participants agreed that governments’ failure to act in a timely fashion has negative consequences for public health.

Fielded among 30,591 general population adults aged 21 or older in 15 countries, the survey included the following results:

63 percent of respondents support harm reduction as an appropriate approach to help move adult consumers who do not quit smoking away from cigarettes to less harmful alternatives such as e-cigarettes and heated tobacco.
Over half of respondents (56 percent) believe their governments need to consider the role that smoke-free alternatives can play in eradicating cigarette use in their country.
Respondents overwhelmingly agree that impacted people’s voices must be heard, with 81 percent stating that governments need to consider the views of adults who smoke or use other nicotine products when deciding how to regulate different nicotine products.

According to PMI, the results reinforce the call to put an end to inaction and accelerate progress on a smoke-free future.

“In a world that demands change, it is imperative that regulators and public health officials hear from those most impacted by a policy of inaction,” said Gregoire Verdeaux, senior vice president, external affairs at PMI, in a statement. “In the case of cigarettes, those paying the highest price are adult smokers in need of better options. Their voices, needs, and aspirations must be central to the strategies and policies crafted to create a better future.”

November 8, 2023

TPB Quarter In Line With Expectations

Turning Point Brands (TPB) reported net sales of $101.72 million in the three months that ended Sept. 30, down from $107.8 million in the comparable quarter of 2022. Net income was $10.83 million, compared with $11.54 million in the prior-year quarter.

“Our third quarter results were consistent with our expectations,” said TPB President and CEO Graham Purdy in a statement.

“The Zig-Zag segment was stable sequentially from the second quarter and notwithstanding some transitory headwinds posted its third-highest revenue quarter. Stoker’s had another solid quarter of performance led by double-digit growth year-over-year in Stoker’s MST. We further de-levered the balance sheet with an opportunistic purchase of $15 million in aggregate principal amount of our convertible notes during the third quarter.

“With a new $75 million ABL revolving credit facility, our strong cash balance and our free cash flow generation, we now have more than ample liquidity to address the remaining balance of convertible notes maturing next year.”

November 8, 2023

Online Shopping Spikes After Flavor Restrictions

Online shopping for cigarettes and vaping products increased significantly in the weeks following the implementation of a 2022 California law prohibiting the sale of flavored tobacco products.

Reporting in Tobacco Control, researchers at the Herbert Wertheim School of Public Health and Human Longevity Science at University of California San Diego assessed the impact of California’s statewide flavor restriction on online shopping behavior among consumers. Comparing observed rates of shopping queries with expected rates, researchers discovered that shopping queries were 194 percent higher than expected for cigarettes and 162 percent higher than expected for vape products.

“Retailer licensing programs have proven to be effective in enforcing tobacco control laws. However, the exclusion of e-commerce retailers from these programs can undermine their impact,” said principal investigator Eric Leas in a statement.

Despite the flavor restriction, analysis of the first 60 websites returned in the search queries presented at least two online retailers offered access to flavored vaping products or menthol cigarettes to consumers in California—with one query returning as many as 36 websites (60 percent of the search results).

The study authors recommend strengthening regulations to include e-commerce retailers within the scope of retailer licensing programs.

November 8, 2023

Panama’s Vapes Ban Heads to Supreme Court

The Supreme Court of Panama has decided to hear a lawsuit challenging the constitutionality of the country’s ban on e-cigarettes and heated tobacco products.

In early August, the Panamanian Tobacco Harm Reduction Association (ARDTP) filed a lawsuit with the Supreme Court, arguing that Law No. 315, which prohibits the use, sale, and import of e-cigarettes and heated tobacco in the country, is unconstitutional and should be repealed.

The Panama Association for Tobacco Damage Reduction (ARDTP) had its appeal case advanced by the Supreme Court on Sept. 21 following a lawsuit, according to media reports.

If the Supreme Court deems the unconstitutional statement valid, the 315 bill will return to the legislative body for modifications.

Once the bill is amended, it will be resubmitted to the Supreme Court to confirm its constitutionality. A proposed new law is being drafted to replace the current 315 bill, thereby supporting provisions based on “risk.”

Panama is one of several Latin American countries, including Mexico, Argentina, and Venezuela, that have implemented strict legislation since 2022 to restrict the use, sale, and import/export of vaping products.

Many harm reduction advocates argue that the enactment of such legislation has resulted in the creation of a black market for safer nicotine products within their respective countries.

The World Vapers Alliance (WVA) states that Panama’s Supreme Court’s decision to hear this lawsuit is a positive first step.

November 8, 2023