Category: News This Week

BAT Settles Investigation

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BAT has reached an agreement with the U.S. Department of Justice (DOJ) and the Office of Foreign Assets Control (OFAC) to resolve investigations into suspicions of sanctions breaches concerning business activities relating to the Democratic People’s Republic of Korea between 2007 and 2017.
BAT has entered into a deferred prosecution agreement with the DOJ and a civil settlement agreement with the OFAC, and an indirect BAT subsidiary in Singapore has entered into a plea agreement with the DOJ. The total amount payable to the U.S. authorities is $635.24 million plus interest.
Under the agreement, BAT cannot comment on the documentation published by the investigating authorities or on related factual matters.
As announced in its half-year report of 27 July 2022, BAT recognized a provision of £450 million ($540 million) in line with the International Accounting Standards 37 requirements. its full year 2023 group guidance is unaffected by this announcement.
“On behalf of BAT, we deeply regret the misconduct arising from historical business activities that led to these settlements and acknowledge that we fell short of the highest standards rightly expected of us,” said BAT CEO Jack Bowles in a statement.”
“Adhering to rigorous compliance and ethics standards has been, and remains, a top priority for BAT. In recent years, we have transformed our compliance and ethics program, which encompasses sanctions, anti-bribery, anti-corruption and anti-money laundering. The significant steps already taken, as well as the continued refinements to the program that will be made as part of these settlements, will leave us even better equipped to lead a responsible and sustainable business.”
April 26, 2023
Altria’s ‘Juul Trial’ Begins

Image: Tobacco Reporter archive
The trial of San Francisco’s public school system against Altria Group began on Monday, with Thomas Cartmell, a lawyer for the San Francisco Unified School District, stating to jurors, “This case is about Altria, the largest cigarette company in our country, who helped hook a whole new generation of our young people on nicotine, causing a vaping crisis, a youth epidemic,” reports Reuters.
Beth Wilkinson, a lawyer for Altria, told the jury in her opening statement that the company had aimed to boost sales among cigarette smokers seeking a less harmful option, not among teens. “You can’t forget about those smokers,” she said. “If you can get smokers away from cigarettes, it’s a worthy cause.”
The school district also sued Juul, which settled that lawsuit last year. Cartmell told jurors that Altria, which was Juul’s largest investor from 2018 until earlier this year, when it exchanged its stake for a license to certain Juul intellectual properties, was “at the heart” of Juul’s strategy to grow its business by appealing to teenagers with sweet flavors and flashy advertising.
According to Cartmell, Altria made its large investment in Juul after being unsuccessful with its own e-cigarette, and the company knew Juul’s success was driven by youth usage, according to Bloomberg. Juul’s device was “marketed to appeal to the young, cool, popular crowd” and was “packed with nicotine,” Cartmell said.
Wilkinson argued that evidence would not support this. Juul sales fell after Altria’s investment, and Altria’s investment occurred after Juul pulled most of its flavored products off the market, according to Wilkinson, reports Law.com.
The San Francisco schools’ lawsuit was chosen to go to trial as a test case.
April 25, 2023
Insurance Agent Sued for Excluding Batteries

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Four vapor companies have sued Kinsale Insurance Co. in U.S. federal court, claiming the insurer dropped coverage for batteries but failed to fully inform the policyholders before denying a claim.
If the case goes to trial and appeal, it could potentially help clarify insurers’ and insureds’ responsibilities when policy wording is changed or exclusions are added.
“Defendant owed a fiduciary duty to plaintiffs based on trust and good faith that required defendant to act in the best interest of plaintiffs, its customers,” reads the lawsuit complaint, filed last week in U.S. District Court in Nashville. “It is reasonable for the insured to assume the policies provided the requested coverage.”
Based in Richmond, Virginia, Kinsale Insurance offers casualty and specialty casualty insurance for cannabis, transportation and other industries. It has not yet filed an answer to the complaint, according to the Insurance Journal.
Industry experts, however, said that the practice of changing coverage without fully notifying customers is not uncommon and is rarely challenged. And Tennessee law may be unclear on how far an insurer must go in notifying policyholders of changes and how specific notifications should be.
Battery fires from nicotine and cannabis vape devices are relatively uncommon but have become a worldwide concern for consumers, fire departments and insurers. In October 2022, Michael and Elisha Schmidt suffered a fire, reportedly from a vape pen battery, and sued four vape companies over the damage.
The companies, Isabella Industries, Maelynn Industries, Sancia Industries and Illumivaption, all had umbrella and general liability policies with Kinsale for seven years. But when the vape sellers renewed their policies in October 2022, Kinsale excluded batteries and battery fire claims from the policies while raising premiums, the suit claims.
“Defendant led plaintiffs to believe that the batteries were covered after the renewal,” the complaint reads. “Defendant did not inform plaintiffs that it had removed batteries from the coverage and did not ask Plaintiffs prior to doing so.”
The plaintiffs also argue that the policy wording was ambiguous and illusory and thus unenforceable under Tennessee law. The companies had always paid their premiums on time and had been loyal customers to Kinsale, they noted.
When the Schmidts filed their lawsuit, the vape companies filed claims with Kinsale. But the insurer denied the claims, arguing that the policies did not cover batteries. Kinsale would not provide a legal defense for the insureds.
The vape sellers argue that Kinsale’s refusal amounted to bad faith and unfair trade practices and has cost the companies damages and attorney fees. They are asking for compensatory damages, punitive damages, legal fees and a declaration that the insurer must provide coverage and a defense.
April 25, 2023
Singapore: Smoking Cost Up

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The cost of cigarettes and alcoholic beverages in Singapore has increased by 11 percent from the previous year, according to the latest data from the Singapore Department of Statistics, reports The Star.
The price increase follows a 15 percent excise duty increase for tobacco products included in the government’s 2023 budget.
Singapore’s key consumer price gauge rose 5 percent in March, slightly lower than the forecast 5.1 percent increase.
The Monetary Authority of Singapore said that core inflation will remain elevated in the next few months but should progressively ease in the second half of 2023 and end the year significantly lower.
April 25, 2023
Excitement at First Shisha Tobacco Sales

Photo: Cavendish Lloyd
Sales of shisha tobacco, which opened for the first time at the tobacco sales floor in Harare on April 21, were met with excitement by farmers and buyers, reports The Herald.
Shisha tobacco is proving to be popular in Zimbabwe, and the Tobacco Industry and Marketing Board (TIMB) has licensed one company, Cavendish Lloyd Tobacco, to support shisha tobacco production in the country.
The first bale of shisha tobacco sold for $5, and the highest price was $5.30.
“Today, I delivered 15 bales,” said Moses Machine, a Mutorashanga farmer who expects to deliver 400 bales to the sales floors. “There are several advantages associated with growing this type of crop. Plant population will double the Virginia tobacco. Shisha uses less fertilizer. Since it is the first year, we are not sure where the viability is, but with time, we are going to have a proper analysis. There is use of less labor and fertilizers. In terms of costs of production, there is a difference compared to the Virginia one. There are plenty of good points, but, yes, we may encounter challenges since it is the beginning..
“I recommend farmers to grow this type of tobacco; no curing using firewood, hence it is cheap to cure. Farmers need to maximize production; air is the major source of the energy. Shisha tobacco production is a welcome development.”
“The tobacco needs very special attention because the plant or the leaf is very thin, so if you don’t carefully handle it, the leaf itself breaks,” said Jayson Scott, a Marondera farmer. “I have delivered 15 bales, and if everything goes well, l will increase hectarage.”
TIMB Sales Supervisor Pelagia Marumahoko said the regulator is expecting about 100 hectares for shisha production this season, and markets are readily available in Africa.
“We have licensed Cavendish Lloyd Tobacco to contract growers growing shisha at the present moment. It doesn’t only contract our farmers, but it also processes this tobacco locally. So far, we have 12 farmers who grow shisha tobacco throughout all the tobacco growing regions,” said Marumahoko.
Chemical applications for pest and insect control and growth period are the same as other tobacco cultivars such as Virginia tobacco. The crop is reaped when the leaves have completely lost all the nitrogen and have fully ripened. It is cured using the same flue-curing barns, temperature and humidity regimes for the Virginia flue-cured tobacco, and it takes four days to five days to complete curing.
The cured leaf has to have low nicotine content to protect the smoker from inhaling huge amounts of nicotine since shisha tobacco is about constant smoke inhalation in huge quantities.
April 24, 2023
Dutch Minister: Ban Filters to Reduce Litter

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The best way to prevent cigarette filter litter is a ban, the Netherland’s junior infrastructure minister, Vivianne Heijnen, said in a briefing to Members of Parliament.
An outright ban on filters is the most effective option to achieve the government’s target of reducing filter litter by 70 percent, according to Heijnen. The current model of discouraging smoking and littering, she says, will result in only a 15 percent reduction by 2026.
Cigarette filters contain chemicals and microplastics, which take years to break down. take years to break down.
A filter ban would have to be Europe-wide, Heijnen told Dutch News, because a uniquely Dutch ban would be in contravention of the European free trade agreement. She suggested a ban be included in the 2026 renewal of the European guideline on single-use plastics.
More local bans on smoking at beaches and more smoke-free festivals and smoke-free zones in public spaces are also among the measures Heijnen proposed.
April 24, 2023
Activists Urge Thailand to Lift E-cigarette Ban

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End Cigarette Smoke Thailand (ECST) is urging Thailand to legalize vaping, citing the U.K. progressive approach to e-cigarettes as an example, reports Thaiger.
In Thailand, the sale and use of e-cigarettes are illegal, creating an unregulated black market and increased access for minors, according to ECST.
“E-cigarettes are legal in England, allowing its government to impose measures and effectively enforce the regulations to protect minors,” said Asa Saligupta, a representative of the ECST and the Facebook page “What are e-cigarettes?” “The U.K. government is set to allow £45 million [$56.05 million] to reduce the country’s smoking rate and another £3 million for clamping down on shops selling vapes to youths under the age of 18.”
“The ban [in Thailand] is claimed to protect minors, but the sales and use of e-cigarettes are overt and commonplace. Children can easily access e-cigarettes through online channels without any regulations or inspections,” said Saligupta.
Following the U.K.’s example could be the solution to Thailand’s e-cigarette policy issues, according to Maris Karanyawat. “The subcommittee for studying factors affecting the health system and monitoring the enforcement of public health laws issued a report, which is based on a comprehensive study and opinions of all groups involved in the e-cigarette issue. The report suggests that Thailand should lift the ban on e-cigarettes so that they can be appropriately controlled through the 2017 Tobacco Products Control Act.”
In preparation for the upcoming tenth session of the Conference of the Parties to the World Health Organization Framework Convention on Tobacco Control, scheduled to take place in Panama in November, Karanyawat said, “We hope that the Thai delegates will take into account the public health committee’s report, which recommends that a tobacco harm reduction approach be developed based on new scientific evidence which shows that e-cigarettes should be controlled differently from combustible cigarettes because they have different harmful effects.”
April 24, 2023
Bosnia and Herzegovina Tax Collections Plunge

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Income from excise taxes on domestic tobacco and tobacco products in Bosnia and Herzegovina (BiH) has decreased one hundredfold in six years, reports The Sarajevo Times, citing data from the BiH Indirect Taxation Administration (ITA).
According to the data, during the last year, BiH received about BAM2 million ($1.13 million) from excise taxes on tobacco and tobacco products compared to hundreds of millions in previous years.
“Thus, in 2009, based on these excise taxes, BAM171 million was earned; in 2010, BAM216 million; in 2011, BAM240 million; in 2012, BAM231 million; in 2013, BAM207 million; in 2014, BAM203 million; in 2015, BAM233 million; in 2016, BAM207 million; in 2017, BAM190 million,” the ITA data states.
The shutdown of tobacco factories in Banja Luka, Sarajevo and Mostar contributed most to the decrease.
Tobacco cultivation has slowly declined. “My wish is to maintain tobacco production, to gradually, in agreement with the relevant ministry and local self-government, try to return that production to some values that were in previous years,” said Svetozar Mihajlovic, owner of Duvan, one of the few remaining companies purchasing leaf.
“So, we see that domestic industry is practically shut down, and that is the best explanation of this indicator,” said economist Slavisa Rakovic. “If domestic industry had been maintained, not only would we have revenues from excise taxes at a much higher level, but the level of added value through processing would have been much higher, and taxes and contributions from employees’ salaries would have been significant. But what can be done …. It can be expected that with such policies, we will wait for the day when it is not worth doing anything here but to deal with politics.”
April 24, 2023
Scandinavian Tobacco Group Acquires XQS
Scandinavian Tobacco Group is acquiring substantially all assets of XQS International in Sweden The transaction value consists of an upfront payment as well as an earnout agreement, STG announced in a press note.
Assuming all targets are met, the total purchase price will be about DKK150 million ($22.19 million), and it will be fully financed by cash at hand and debt.
XQS is active in smoke-free products, and its products are primarily sold in Sweden. In 2022, XQS’ reported net sales were about DKK50 million with a low single-digit EBITDA margin and a total volume of 3 million cans.
April 24, 2023
Malawi Growers Encouraged by Prices

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Tobacco growers in Malawi have been pleased with prices as the 2023 selling season progresses, according to an article by Xinhua
The tobacco market opened on April 12. According to Auction Holdings Limited (AHL), which runs the tobacco sales floors in Lilongwe, the average sales price rose from $1.8 per kilo to $1.88 per kg during the first sales days.
Farmers at the Limbe Auction Floors in Blantyre, the country’s commercial hub, said they would do very well if the trend persists. “I’m very excited with the prices, and going like this, I’m optimistic that I’ll make more gains than I’ve ever anticipated,” tobacco grower Ben Sakwi was quoted as saying by Xinhua on April 18.
Tobacco Association of Malawi Trust President Abel Masache Kalima Banda said the good prices would help offset the significantly increased cost of production during the recent growing season.
Tobacco is Malawi’s leading foreign exchange earner, accounting for more than half of the country’s exports.
The Tobacco Commission expects 126 million kilos of tobacco to be sold this season, up from 85 million kilos produced last season.
The high prices are a result of strong demand for Malawi leaf, which is estimated at 170 million kilos, according to the AHL.
April 21, 2023