Category: Breaking

  • Wang: Global Trade Tariffs in Vaping

    Wang: Global Trade Tariffs in Vaping

    The vaping industry has always faced its share of challenges—from shifting regulatory landscapes to evolving consumer preferences. However, a few factors significantly threaten the industry’s future, such as the impact of global trade tariffs. With the United States set to increase tariffs on Chinese imports, companies that fail to adapt could face skyrocketing costs, disrupted supply chains, and a diminished ability to compete in one of the world’s largest markets.

    Trade tensions between the U.S. and China have been escalating for several years. The vaping industry, which relies heavily on hardware manufactured in China, is particularly vulnerable to these developments. Currently, vaping products imported from China face a 25% tariff, but there is a high likelihood that this could double or even increase to 100% under future U.S. administrations.

    For vaping companies, such tariff hikes mean the cost of importing devices could skyrocket. A 100% tariff would effectively double the cost of hardware produced in China, driving up retail prices for all such products in the U.S. market. This scenario threatens the financial viability of vaping companies and the availability of affordable, high-quality products for consumers.

    The Strategic Decision to Move Manufacturing to Malaysia

    Recognizing the potential for increasing tariffs and broader geopolitical challenges, some vaping manufacturers began shifting their operations from China to other countries. Such decisions were never made lightly. China has long been a global leader in manufacturing efficiency with a robust infrastructure and supply-chain network,, and moving away from such an established infrastructure posed significant logistical and operational challenges.

    Malaysia offered several key advantages to manufacturers. Firstly, Malaysia enjoys favorable trade agreements with the United States, the United Kingdom, and the European Union. For instance, starting in December 2024, a new free trade agreement between Malaysia and the U.K. took effect, eliminating tariffs on products moving between the two countries. Similar agreements are in place or in development with other major markets.

    Secondly, Malaysia’s robust manufacturing ecosystem and skilled workforce make it an ideal location for high-quality production. By establishing operations in Malaysia, companies can continue to deliver reliable, innovative hardware without the added burden of excessive tariffs.

    The Broader Impact on the Global Supply Chain

    The shift to Malaysia reflects a broader trend in global manufacturing. As trade barriers between the U.S. and China grow, a widespread redistribution of manufacturing operations is underway. Companies across industries—not just vaping—are reevaluating their supply chains to reduce dependence on any single country.

    This global redistribution of resources presents both challenges and opportunities. For manufacturers, the challenge lies in building new infrastructure, securing reliable suppliers, and maintaining quality control in unfamiliar territories. However, companies that successfully navigate these changes benefit from more resilient supply chains, reduced geopolitical risk, and greater flexibility in responding to market shifts.

    Maintaining Compliance and Quality Standards

    Shifting manufacturing bases also brings new compliance considerations. Regulatory bodies like the U.S. Food and Drug Administration (FDA) require Premarket Tobacco Product Applications (PMTAs) for vaping devices. These applications are tied to specific manufacturing facilities, meaning that changing production locations requires amendments to existing PMTAs or new submissions.

    Manufacturers must ensure that new facilities meet the highest quality and compliance standards. Proactively managing these regulatory requirements ensures that products remain market-ready even as production locations change.

    The Future of the Vaping Industry Amid Trade Challenges

    Looking ahead, it’s clear that trade tariffs and global manufacturing shifts are not short-term challenges. Regardless of who occupies the White House, protectionist trade policies are likely to persist or even intensify. The vaping industry must be prepared for this new reality.

    Companies that fail to diversify their manufacturing operations face mounting costs and increasing vulnerability to trade disruptions. On the other hand, those who invest in flexible, resilient supply chains will be well-positioned to thrive.

    The vaping industry is at a crossroads. Global trade tariffs pose a significant threat, but they also offer an opportunity for companies to rethink their supply chains and build more resilient operations. For manufacturers, shifting production from China to countries like Malaysia is not just a reactive measure—it’s a strategic move to secure long-term growth and competitiveness.

    As the industry moves forward, companies that adapt to these challenges will be the ones that lead the way. The ability to anticipate trade disruptions, embrace innovation and maintain rigorous quality standards will determine who succeeds in this ever-evolving market.

    As co-CEO of Ispire Technology Inc., Michael Wang is a leader in the development and commercialization of vaping technology and precision dosing. Previously, he served in executive roles at The Pharm/Sunday Goods, Onestop Commerce, Zazzle, and Honeywell.

  • KT&G Remains Committed to Ginseng Business

    KT&G Remains Committed to Ginseng Business

    Photo: KT&G

    The Ginseng business remains a key part of KT&G’s plan for growth, the South Korean cigarette manufacturer said after receiving a bid for its Korea Ginseng Corp. (KGC) unit.

    On Oct. 13, Singapore-based activist fund Flashlight Capital Partners offered nearly KRW2 trillion ($1.47 billion) for KGC, which is 50 percent higher than the enterprise value analyst estimates mentioned at KT&G’s 2023 investor day.

    Flashlight Capital Partners believes that KT&G significantly undervalues its ginseng business and that the ginseng-tobacco pairing does not work.

    According to The Korea Herald, KT&G called Flashlight’s bid a “unilateral” offer. “The acquisition offer was unilaterally released without any discussion with the company,” KT&G wrote in a statement on Oct. 14. “We will look into the letter of intent sufficiently.”

    In the announcement, however, KT&G also stressed that KGC is a key part of its plan to nurture future growth drivers. It said it will put in all efforts to achieve the goals set under a mid-term business plan released last year.

    The plan, announced in January 2023, involves bolstering its investment and sales in three key areas: next-generation nicotine products, overseas businesses and KGC health supplement products.

    The activist fund has been pressuring KT&G to spin off its ginseng unit since 2022, citing low performance and undervaluation. KT&G’s board has argued that a spinoff may lead to a loss of synergy for both KT&G and KGC.

  • FDA to Seize Illegal Vapes

    FDA to Seize Illegal Vapes

    Photo: N Felix

    The U.S. Food and Drug Administration has issued “Import Alert 98-06” that states the regulatory agency will detain new tobacco products such as e-cigarettes without marketing authorization at the border.

    The companies impacted would include all importers, manufacturers and transporters of vaping product brands such as ELFBAR, EBDESIGN, Eonsmoke, Esco Bar and Stik that are on the agency’s “Red List.”

    The alert covers China, South Korea and the United States.

    “Divisions may detain, without physical examination, the tobacco products identified on the Red List of this Import Alert. If the division is not sure whether a tobacco product is the same product as one identified on the Red List, the division should consult with the Center for Tobacco Products (CTP)” the alert states. “CTP concurrence is required to add a product to the Red List.”

    In order to remove a firm’s product from the Red List, companies must provide information to the FDA that adequately demonstrates that the firm has resolved the conditions that gave rise to the appearance of the violation.

    “The purpose of this is so that the Agency will have confidence that future shipments/entries will be in compliance with the Federal Food Drug and Cosmetic Act (FD&C Act). For further guidance on removal from detention without physical examination, refer to FDAs Regulatory Procedures Manual (RPM), Chapter 9-8, ‘Detention without Physical Examination (DWPE),’” the alert states.

    The FDA states that the import alert is to prevent the sale of potentially illegal goods in America; Releasing agency resources to inspect other goods; provide uniform coverage across the country; shift the blame back to the importer to ensure that products imported into the United States comply with FDA laws and regulations, according to the agency.

    In June 2009, the Family Smoking Prevention and Tobacco Control Act gave the FDA the authority to regulate tobacco products, recognizing that it is the primary federal regulator for the manufacture, marketing, and distribution of cigarettes, cigarette tobacco, and smokeless tobacco.

    The designation rule, published in the Federal Register on May 10, 2016, and effective August 8, 2016, extends FDA’s authority to designated tobacco products, such as e-cigarettes, cigars, hookahs, and pipe tobacco, as well as their components and parts, but not their accessories.

  • CTP’s Matt Holman Joins PMI

    CTP’s Matt Holman Joins PMI

    Matt Holman

    Matt Holman, director of the U.S. Food and Drug Administration’s Center for Tobacco Products (CTP) Office of Science, is leaving the agency to join Philip Morris International effective immediately, reports The Hill, citing a memo from CTP Director Brian King. Holman has been director since 2017.

    “I know that he led the Office through a critical time, including preparing for and overseeing review for the bolus of PMTA [premarket tobacco product application] applications,” King said in the memo. “I’m grateful to Matt for his contributions to the Center and unwavering commitment to you all over the years, and I wish him well in his next chapter.”

    Holman’s departure comes after Mitch Zeller, the longtime CTP head, retired in April. King was appointed director earlier this month.

    According to King’s memo, Holman has been on leave and has recused himself from all CTP and FDA work while exploring career opportunities outside government.

    While free to pursue employment outside of the government, FDA employees are required to immediately disclose that they are exploring opportunities outside the government.

    In March, the FDA signed off on a third-generation version of PMI’s IQOS heat-not-burn product, which was first authorized for sale in 2019. In 2020, FDA authorized it as a Modified Risk Tobacco Product, allowing the company to legally claim that fully switching from regular cigarettes to IQOS can reduce a person’s exposure to harmful chemicals.

    Holman leaves the CTP as the agency faces series of major tobacco-related decisions, including a potential ban on menthol cigarettes, lowering nicotine levels, and the next step in its ongoing attempt to regulate Juul and other electronic cigarettes.

    A spokesperson for Philip Morris said Holman “is committed to helping existing adult smokers access scientifically substantiated smoke-free alternatives while protecting youth. We are looking forward to him joining our team as we continue to pursue a smoke free future.”

  • Poda Completes Asset Sale to Altria

    Poda Completes Asset Sale to Altria

    Photo: Poda Holdings

    Poda Holdings has completed the sale of substantially all of the assets and properties used in the company’s business to Altria Client Services for a total purchase price of $100.5 million, subject to certain adjustments and holdbacks, pursuant to a definitive agreement dated May 13, 2022.

    Pursuant to the Asset Purchase Agreement, Poda will change its name to Idle Lifestyle and its trading symbol to IDLE.X. The company expects to trade as an inactive issuer under the policies of the Canadian Stock Exchange.

    “The completion of this sale represents the culmination of a tremendous amount of effort from the entire Poda team, and I am extremely proud of what we have accomplished,” said Poda Director, CEO and Chairman Ryan Selby in a statement.

    I believe this transaction provides maximum value for the company and its shareholders, and I know our innovative technology is now in good hands with Altria.”

  • FDA Names New CTP Director

    FDA Names New CTP Director

    Photo courtesy of Robert Califf’s Twitter

    The U.S. Food and Drug Administration has named Brian A. King as the new Center for Tobacco Products (CTP) director.

    “After a robust executive search, I have selected Dr. Brian A. King as FDA’s new Center for Tobacco Products Director,” Robert Califf wrote on Twitter. “Dr. King brings extensive and impressive expertise in tobacco prevention and control and has broad familiarity with FDA from his more than 10-year tenure at CDC.”

    King is the deputy director for research translation in the Office on Smoking and Health (OSH) within the National Center for Chronic Disease Prevention and Health Promotion at the Centers for Disease Control and Prevention. In this capacity, he is responsible for providing scientific leadership and technical expertise to CDC/OSH, the lead federal agency for comprehensive tobacco prevention and control.

    King joined the CDC in 2010 as an epidemic intelligence service officer before which he worked as a research affiliate in the Division of Cancer Prevention and Population Sciences at Roswell Park Comprehensive Cancer Center in Buffalo, New York. During his time at Roswell Park, his primary research focus related to tobacco prevention and control.

    King has worked for over 15 years to provide sound scientific evidence to inform tobacco control policy and to effectively communicate this information to key stakeholders, including decision makers, the media and the general public. He has authored or co-authored over 200 peer-reviewed scientific articles pertaining to tobacco prevention and control, was a contributing author to the “50th Anniversary Surgeon General’s Report on Smoking and Health,” was the lead author of CDC’s 2014 update to the evidence-based state guide, “Best Practices for Comprehensive Tobacco Control Programs,” and was the senior associate editor of the 2016 Surgeon General’s report, “E-cigarette Use Among Youth and Young Adults” and the 2020 Surgeon General’s report, “Smoking Cessation.” He was also the renior official for the CDC’s emergency response to the 2019 outbreak of e-cigarette, or vaping, product use-associated lung injury.

    King holds a doctorate degree and a Master of Public Health degree in epidemiology from the State University of New York at Buffalo.

  • Critics Slam ‘Misguided’ Menthol Ban

    Critics Slam ‘Misguided’ Menthol Ban

    Photo: Esser

    By Timothy S. Donahue

    The ban on menthol cigarettes is closer to becoming a reality. After years of discussion, the U.S. Food and Drug Administration has instituted a proposed rule to place a ban on menthol combustible cigarettes and flavored cigars. Whether the menthol ban will also cover next-generation tobacco products, such as e-cigarettes, has not yet been clarified.

    “The authority to adopt tobacco product standards is one of the most powerful tools Congress gave the FDA and the actions we are proposing can help significantly reduce youth initiation and increase the chances that current smokers quit. It is clear that these efforts will help save lives,” said FDA Commissioner Robert M. Califf. “Through the rulemaking process, there’s an important opportunity for the public to make their voices heard and help shape the FDA’s ongoing efforts to improve public health.”

    When finalized, the FDA states that the proposed menthol product standard will:

    • reduce the appeal of cigarettes, particularly to youth and young adults, decreasing the likelihood that nonusers who would otherwise experiment with menthol cigarettes would progress to regular smoking; and
    • improve the health and reduce the mortality risk of current menthol cigarette smokers by decreasing cigarette consumption and increasing the likelihood of cessation. 

    According to the FDA, the proposed product standards are based on clear science and evidence establishing the addictiveness and harm of the products. Many organizations were quick to condemn the regulatory agency for proposing the rule that is opposed by all major law enforcement, civil rights and criminal justice reform organizations. Opponents of the menthol ban say that banning menthol products will do nothing to reduce combustible cigarette smoking rates but will lead to an increase in people purchasing products on the black market.

    “This misguided proposal will have disastrous impacts on public health and public safety. It will do nothing to reduce smoking rates and instead make the United States less safe.” said Tim Andrews, director of Consumer Issues for Americans for Tax Reform (ATR). “It is unfortunate that as violent crime rates rise across the country, the FDA chooses to divert valuable police resources to pursue an unnecessary ban on menthol products.”

    Andrews argues that a menthol ban exposes “vulnerable members of minority communities to conflict with law enforcement, and their purchases could also fund sophisticated international criminal syndicates.” According to the U.S. Department of State, illicit tobacco’s links to funding terrorist organizations already present a “serious threat” to national security. “This policy would worsen the problem while also depriving state governments of excise revenue, putting state government programs at risk,” says Andrews.

    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 that in many  markets, such as Asia, companies are creating products to make mentholated cigarettes, because those types of products are not covered by the rule.

    “They flavor packets you just slide into a pack of cigarettes. You buy your cigarettes, you put that in there and by the time you get home, the whole pack is mentholated. They also have these– it’s like a little Tic Tac box with a round, small, little mint … but what it does is you put it into the filter, shake, crush and now it’s a menthol cigarette,” said Marianos. “Are we eventually going to be asking border protection to now start looking for minty flavor packets or Tic Tac boxes when they have to concentrate on biological and nuclear threats? When you overlook public safety surrounding this matter, you’re creating an unhealthy situation, not just for smokers, but anybody who’s out there.”

    Marianos says that a menthol ban will create a greater level of diversion and criminal activity with high-value targets overseas, it’ll bring more organized crime into the United States. It’ll also create a greater market for border countries to begin manufacturing menthol and bring it into the United States.

    “There was one investigation in particular, I remember, where the individual said on a wire that once they banned menthol cigarettes in the United States, you can pave the roads in gold because of the boost in sales of black market and DIY menthol cigarettes,” he said. “Prohibition doesn’t work. Your quality of police work goes down; they can’t concentrate on violent crime as much and it creates a greater wedge between themselves and the community.”

    Guy Bentley

    Guy Bentley, director of Consumer Freedom Research for the Reason Foundation, said that similar bans have had minimal effects on tobacco consumption in other countries such as Canada and the U.K., adding that a menthol ban is likely to lead to more policing in minority communities, more incarceration, boost black market sales and undermine criminal justice reforms in the U.S.

    Bentley explained that a recent study funded by the Norwegian Cancer Society in partnership with the Polish Health Ministry found that in Poland – the EU state with the largest pre-ban menthol share – found “mixed evidence” that the ban is working as intended.

    Bentley argues the FDA and Biden administration should apply a harm reduction model, educating the public about safer alternatives to conventional cigarettes and the latest smoking cessation options. Andrews concurs with Bentley, adding that the proposed rulemaking will inevitably lead to further growth of illicit markets, put members of minority communities in danger and divert law enforcement resources away from real crime.

    “It ignores best practice expert recommendations on how to reduce smoking rates through proven harm reduction technologies, is a disaster for public health, and will make all Americans less safe,” Andrews said. “If the Biden Administration truly cared about the American people, they would junk this anti-science and genuinely harmful proposal immediately.”

    Beginning May 4, 2022, the public can provide comments on these proposed rules, which the FDA will review as it considers future action. The agency also will convene public listening sessions on June 13 and June 15 to expand direct engagement with the public, including affected communities.

    The public will have the opportunity to submit either electronic or written comments directly to the dockets on the proposed rules through July 5, 2022. Once all the comments have been reviewed and considered, the FDA will decide whether to issue final product standards. 

    The FDA also states that it cannot and will not enforce against individual consumers for possession or use of menthol cigarettes or flavored cigars. If the proposed rules are finalized and implemented, FDA enforcement will only address manufacturers, distributors, wholesalers, importers and retailers who violate the rules.