Blog - Tobacco Reporter

Congress to Close E-Cigarette Ad Loophole

The U.S. Congress wants to end a legislative provision that allows manufacturers to claim federal tax deductions for the cost of advertising for e-cigarettes and tobacco products. That includes the ads they buy on the radio.

Senators Jeanne Shaheen and Richard Blumenthal have reintroduced the No Tax Subsidies for E-Cigarette and Tobacco Ads Act (S. 464), which if passed would not make the direct-to-consumer ads illegal but would end the ability for companies to take tax deductions for advertising expenses related to vaping and other tobacco products, according to Insider Radio.

“Tax breaks for tobacco and e-cigarette giants allow the industry to profit from its manipulative marketing,” Blumenthal said. “Our legislation ends these write-offs to protect kids and other consumers from being lured into lifetimes of addiction.”

Radio and television advertising for traditional tobacco products has been banned under federal law since January 1971, and certain other forms of tobacco advertising are restricted under the 1998 Tobacco Master Settlement Agreement. However, none of these restrictions apply to e-cigarettes.

March 15, 2023

FDA: 99 Percent of Applications Decided

In an update, the U.S. Food and Drug Administration said it has made determinations on more than 99 percent of the nearly 26 million deemed products for which applications were submitted. To date, the agency has authorized 23 new e-cigarette products.

This includes determination on applications for nearly 6.7 million products received by the Sept. 9, 2020, deadline, more than 18 million products received after the Sept. 9 deadline, and applications for nearly 1 million nontobacco nicotine products submitted by May 14, 2022, in accordance with the new federal law passed in April 2022.

Under a federal court order, manufacturers of deemed new tobacco products that were on the market as of the deeming rule’s effective date (Aug. 8, 2016) were required to submit premarket review applications by Sept. 9, 2020.

On Feb. 21, 2023, the FDA issued a refuse-to-accept (RTA) letter to one applicant notifying the company that their premarket tobacco product applications, which are associated with approximately 17 million individual tobacco products, do not meet the acceptance requirements outlined in the FDA’s regulations. The applications were for a grouped submission of e-liquids in varying size, nicotine strength and flavor combinations, each of which was treated as an individual product application according to existing premarket review processes.

During the acceptance phase of application review, the FDA reviews applications to ensure they meet a minimum threshold for acceptability for FDA scientific review. If required contents for acceptance are missing, the FDA refuses to accept the application. This company was issued an RTA letter because the company’s applications for these products lacked required environmental assessments. The company may submit a new application for these products at any time; however, the products may not be marketed unless the FDA reviews the applications and determines that marketing of the products is appropriate for the protection of the public health.

The latest updates on actions taken on these applications can be viewed on the FDA’s tobacco products marketing orders page.

March 15, 2023

Hearing on FDA Manufacturing Rules

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

Distributor to Contest Cease-Operations Order

Trinidad and Tobago’s High Court has given North American Trading Co. (NATC) permission to challenge a decision by the Ministry of Health to declare its operation in breach of the country’s Tobacco Control Act, reports Trinidad & Tobago Newsday.

In November 2022, authorities raided NATC’s premises in the D’Abadie Free Zone Complex. Although there was no warrant, the company said its representative allowed the officers to enter its warehouse and cooperated fully with the inspection.

While nothing illegal was found during the search, according to NATC, the health ministry’s tobacco control unit on Feb. 9, 2023, instructed the company to cease operations immediately, arguing that the tobacco distributor did not have exemptions to engage in wholesale tobacco business in the free zone.

NATC maintains that it does not engage in real sale or distribute tobacco products in the local market. The free zone, it argues, is a jurisdiction separate and apart from the customs territory with its own rules on the movement of goods.

In a letter to the health ministry, NATC said the order to cease operations had resulted in extreme prejudice and economic loss, as the company had to stop approved exports and instead export from intercontinental business park free zones.

NATC also cited losses incurred by the delay in loading ships, which arrived in Trinidad and Tobago, and one of its major suppliers asking for a hold on clearing seven containers shipped to NATC out of concerns it would be barred from re-exporting the goods.

The matter is due for a hearing on April 24.

March 14, 2023

Water-Based Vaping Gains Traction

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

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

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

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

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

Call for Action Against Noncompliant Vapes

The Chartered Trading Standards Institute (CTSI) has called for stronger actions against noncompliant vape products in the U.K., reports Convenience Store.

Stating that the rise in noncompliant products is “getting out of hand,” the CTSI has asked for “clearer direction from government” and greater resources to fight the noncompliant trade.

The CTSI has also suggested that manufacturers publish batch numbers of noncompliant products and introduce restrictions to stop youth vaping, including prohibiting cartoon characters or light-up vapes, restrictions on packaging colors and the promotion of vapes on social media platforms such as TikTok. The group also suggested looking at where the products are positioned in stores and increasing the sanctions available for those producers, suppliers retailers who don’t comply with the law.

Vaping industry representatives applauded the CTSI’s position. “We share the CTSI’s concern over the growth in illicit and underage vape product sales and fully support their call for more resources,” the U.K. Vaping Industry Association said in a statement.

“We also agree wholeheartedly that restrictions need to be explored to address youth vaping without impacting on adult smokers who wish to switch to vaping in order to quit their habits.

“That’s why we are leading the way in forming a Youth Access Prevention Taskforce to develop detailed proposals to deal with the situation, and these include on-the-spot fines of up to £10,000 ($12,176.32) per instance for retailers who are found to be selling to minors and for selling illicit products; a national registration scheme for all retailers, meaning only those outlets that meet qualifying criteria can legally sell vapes; and a national test purchasing scheme that will ensure constant monitoring of retailers’ selling vapes to ensure that they are not turning a blind eye to purchases involving minors.

“Critical to the success of our proposals will be a ramping up of enforcement, and this requires major funding in resources on the ground.

“By Trading Standards’ own admission, resources are sadly lacking, and the government needs to step in and look at this situation as a matter of urgency. Our proposals are designed to support this funding need as monies will be raised from the fines and registration scheme.

“We will be presenting our proposals to government and parliamentarians at the end of March.”

March 13, 2023