Category: News This Week

Vape Tax Collections Less than Envisioned
Photo: Fitri Ridzuan
The total tax revenue collected by U.S. states and local governments from the vaping sector remains only a fraction of that extracted from traditional tobacco products, according to a new report published by KBRA.
Vaping devices have gained popularity in recent years, largely due to health concerns around traditional cigarettes, smoking cessation initiatives and rising youth consumption. U.S. product sales for e-cigarettes are estimated at $7.4 billion annually. Capitalizing on this trend, many states and local governments have implemented taxes on these tobacco alternatives.
Despite high expectations, the total tax revenue from these products remains small relative to tobacco taxes—and even smaller as a percentage of budget. This KBRA report provides an overview of the e-cigarette/vape market, examines different forms of taxation by state, and assesses the limitations of these taxes in bolstering state budgets, as well as the possibility for future federal regulation.
Key findings of the report include:
While the number of states that have implemented e-cigarette and vape device taxes has grown, these tax revenues represent only a small fraction of the traditional cigarette market size. Vaping tax collections still contribute a negligible percentage of current governmental revenues for U.S. states.
Taxation methods vary among states and localities due to the uniqueness of vaping and tobacco alternative products.
While a vapor excise tax regime could provide additional sources of revenue for states and localities, there are concerns surrounding states relying on these revenues as long-term solutions to close their budget gaps.
Increased federal regulations on vapor products, as well as the implementation of a federal excise tax, are probable in the years to come, which could potentially curb usage and associated tax revenue collections at the state level.
March 21, 2023
Republic Awarded $2.3 Million

Federal jurors in Atlanta awarded Republic Brands $2.3 million in statutory damages in a case about counterfeit tobacco rolling papers.
The company had accused Star Importers & Wholesalers and ZCell & Novelties of selling fake versions of its Top and Job rolling papers in the United States. Amin S. Hudda and Samadali Lakhani, the respective owners of the distribution companies, will also be held personally responsible for the counterfeiting activities.
According to Law360, the jury found that Republic hadn’t proven that the wholesalers willfully bought and sold fake rolling papers bearing Top and Job trademarks.
Had the jurors found the companies’ infringement willful, each could have faced up to $18 million in statutory damages under the Lanham Act, as well as treble damages under federal law.
The case marks Republic Brands’ latest victory in its fight against brand piracy. Over the past two years, the company obtained judgments against four wholesale companies operating in Georgia and their respective owners, personally, for engaging in illegal infringing activities and selling counterfeit goods, according to Adams and Reese, which represented Republic Brands.
In 2022, Republic won an $11 million judgement against another Georgia wholesaler and its owner.

March 21, 2023
Kaival Appoints New Board Members
Kaival Brands Innovations Group, the distributor of Bidi Vapor products, has appointed Barry Hopkins, David Worner and Mark Thoenes to its board of directors.
The appointments coincide with the retirement of Paul Reuter as chairman of Kaival Brands’ board of directors. Existing independent directors Roger Brooks and George Chaung will continue to serve on Kaival Brand’s board.
“We are excited to welcome new independent directors Barry Hopkins and David Worner to our board,” said Kaival President and Chief Operating Officer Eric Mosser in a statement. “With their combined backgrounds and expertise as established senior executive leaders within the tobacco and public company accounting and finance sectors, we believe they will make an immediate impact on our company as we execute on both current and future growth initiatives.”
“I am also excited to announce that Mark Thoenes, our interim chief financial officer, has also joined our board. In his current role, Mark has proven invaluable in assisting with key decisions as our company navigated an exceptionally difficult regulatory environment. Finally, on behalf of our board and company, we would like to thank Paul Reuter for his service to our board and shareholders through several milestone moments. We wish him the best in retirement.”
Hopkins brings decades of senior executive experience within the traditional tobacco vape and CBD spaces. He spent most of his decades-long career primarily in senior sales and marketing roles for Turning Point Brands and Altria.
Worner brings a diverse combination of finance, fundraising, mergers and acquisitions, technical accounting and operational experience gained over nearly 20 years. He is currently the CEO and founder of GrowthPath Partners, a transactional accounting and advisory firm.
Thoenes has more than 35 years of diverse financial and operational leadership. He has been a licensed Certified Public Accountant since 1984 and began his career with Ernst & Young Global Limited. For the past eleven years, Thoenes has been the President of MLT Consulting Services, LLC, a full-service business/financial consulting firm.
March 21, 2023
FDA Updates Nicotine Definition in Docs

Image: Tobacco Reporter archive
The U.S. Food and Drug Administration has updated its definition of “tobacco products” to include nontobacco nicotine products.
In response to the increase of nontobacco nicotine in popular tobacco products, Congress passed a federal law that went into effect on April 14, 2022, granting the FDA authority to regulate tobacco products containing nicotine from any source, including synthetic nicotine. This new law extended the tobacco product requirements in the Federal Food, Drug and Cosmetic Act to manufacturers, importers, retailers and distributors of nontobacco nicotine products. Previously, the FDA’s tobacco product authority only extended to tobacco products that contain nicotine made or derived from tobacco.
Under this legislation, the definition of “tobacco product” in the FDA’s regulations and guidances has been considered to be amended since April 14, 2022. The FDA has now issued two notices in the Federal Register updating the definition of “tobacco product” in its existing regulations and guidances.
In addition, the agency has also posted the following nine revised guidances to the FDA’s website: Civil Money Penalties and No-Tobacco-Sale Orders for Tobacco Retailers (Revised); Determination of the Period Covered by a No-Tobacco-Sale Order and Compliance With an Order (Revised); Further Amendments to General Regulations of the Food and Drug Administration to Incorporate Tobacco Products (Revised); Interpretation of and Compliance Policy for Certain Label Requirement; Applicability of Certain Federal Food, Drug and Cosmetic Act Requirements to Vape Shops (Revised); Listing of Ingredients in Tobacco Products (Revised); Premarket Tobacco Product Applications for Electronic Nicotine-Delivery Systems (Revised); The Prohibition of Distributing Free Samples of Tobacco Products (Revised); FDA Deems Certain Tobacco Products Subject to FDA Authority, Sales and Distribution Restrictions, and Health Warning Requirements for Packages and Advertisements (Revised); and Demonstrating the Substantial Equivalence of a New Tobacco Product: Responses to Frequently Asked Questions (Edition 3).
March 20, 2023
Illegal Levels of Liquid in U.K. Disposables

Photo: YarikL
Nearly all major disposable vaping brands on the U.K. market that are not produced by a major tobacco manufacturer contain illegal levels of e-liquid, reports Better Retailing, citing BAT testing data shared by senior wholesale sources.
In a letter sent to wholesalers seen by Better Retailing, BAT said it had commissioned an independent accredited laboratory to test Elf Bar 600 products purchased from supermarkets and independent retailers between Sept. 6, 2021, and March 7, 2023.
The evidence reportedly revealed that the tested products contained significantly more than the U.K. legal limit of 2 mL of nicotine-containing e-liquid from 2.76 mL to 3.88 mL, with an average overfill of 58 percent.
Tests performed on Lost Mary, Found Mary, IVG Bar, Klik Klak, SKE Crystal, Smok Mbar Pro and Solo disposable vapes also showed illegal levels of e-liquid, according to the report.
Together, the brands account for nearly all disposable vaping sales in independent shops by both revenue and volume.
Senior wholesale sources welcomed BAT’s efforts to “clean up” the disposable vaping market but also challenged the claims made, stating they would wait on independent testing and regulatory guidance before taking action. The sources noted that BAT would likely see its market share of the disposable vaping market increase significantly if regulators took action against its rivals.
BAT stated that the results of tests have been shared with the Medicines and Healthcare products Regulatory Authority.
March 20, 2023
COP Delegations Urged to Include Consumers

Photo: Oleg
Country delegations to the 10th Conference of the Parties (COP10) to the World Health Organization’s Framework Convention on Tobacco Control (FCTC) should include at least one consumer of safer nicotine products, according to the Coalition of Asia Pacific Tobacco Harm Reduction Advocates (CAPHRA).
In a letter to their respective countries’ FCTC delegations, CAPHRA member organizations stressed the importance of listening to consumers. “Consumers are an untapped experience and knowledge base who are not represented inclusively in the FCTC process,” the letter states. “Delegates to COP10 should be representing the rights and aspirations of the citizens.”
CAPHRA insists that adults have the right to make choices that help them avoid adverse health outcomes, and people who smoke have the right to access less harmful nicotine products as alternatives to combustible and unsafe tobacco. What’s more, they have the right to participate in the policymaking process that directly impacts their right to health and well-being, the letter notes.
CAPHRA Executive Director Nancy Loucas said that exclusion of consumer voices has contributed to misinformation, disinformation and failures of tobacco control policy.
“Millions have successfully used vaping to move away from combustibles and unsafe oral nicotine products, yet the FCTC looks set to bury its head in the sand again at COP10. CAPHRA believes visiting delegations must include a consumer voice to give at least some balance to all the misinformation,” says Loucas.
COP10 will be held in Panama in November.
March 20, 2023
Kaival Reports First-Quarter Results

Photo: Bidi Vapor
Kaival Brands Innovations Group, distributor of Bidi Vapor products, reported revenues of approximately $2.5 million for the first quarter of fiscal year 2023 compared to revenues of approximately $2.8 million in the same period of the prior fiscal year.
Gross profit was approximately $500,000 compared to approximately a $700,000 gross loss for the first quarter of fiscal year 2022. The net loss for the first quarter of fiscal year 2023 was approximately $3 million compared to a net loss of approximately $2.8 million for the first quarter of fiscal year 2022.
“Despite a slight decrease in revenues versus the comparable quarter last year and our fiscal fourth quarter, primarily due to an unusually large amounts of credits, discounts and rebates to customers, which we do not expect to continue, we are continuing to focus on broadening distribution channels and driving revenue, all with the goal of materially expanding our business and increasing shareholder value,” said Eric Mosser, president and chief operating officer of Kaival Brands, in a statement.
On March 9, 2023, Kaival announced it had signed an agreement with a prominent national broker, increasing distribution by upward of 40,000 retail stores.
On March 7, 2023, the company announced it entered into new retail distribution agreements representing potential new distribution to approximately 13,500 locations.
March 20, 2023
Holography Trade Body Adds General Secretary

Micaal Sidorov | Image courtesy of the IHMA
The International Hologram Manufacturers Association (IHMA) has appointed Micaal Sidorov as its new general secretary.
Sidorov brings experience in business development, sales and marketing, market research and intellectual property management, working widely across the ID document and security printing sectors.
He will work to develop and expand the membership base of the IHMA, in particular to include more nontraditional members coming from outside the security and brand protection industries. Developing collaborative initiatives with the Counterfeit Intelligence Bureau, which includes expanding the Hologram Image Register to include images for other optically variable devices besides holograms, Secure Identification Union in China and Intergraf, the security printers trade association, will also be priorities. Other plans include a series of workshops, with the first one to be held in Abu Dhabi this spring.
“The IHMA board looks forward to working with Micaal to continue to promote the best interests of holography, which is an important and growing sector, across the world,” said Paul Dunn, chair of the IHMA. “Despite the economic, social and global supply chain challenges, we continue to see strong activity for holography with brand manufacturers and countries bringing forward their anti-counterfeiting plans. Micaal will help the industry to continue to grow and innovate, which remains the mission of the IHMA as well as supporting the sector [to] meet the challenges it faces.”
March 17, 2023
Elf Bar Avoids Recall Notice

Image: Veranika | Adobe Stock
Authorities are satisfied with Elf Bar’s response to the controversy over the company’s products that did not meet legal requirements, reports ECigIntelligence, and there was no need for a mandatory recall.
Elf Bar worked quickly to recall the product with retailers, and the company has confirmed that it was not subject to any formal recall or withdrawal notice issued by regulators.
The products in question cannot be legally sold, however.
March 17, 2023
Modified-Risk Orders for Copenhagen Snuff

Photo: Altria Group
The U.S. Food and Drug Administration has authorized U.S. Smokeless Tobacco Co.’s (UST) Copenhagen Classic Snuff, a loose moist snuff smokeless tobacco product, to be marketed as a modified-risk tobacco product (MRTP). Copenhagen’s moist snuff smokeless tobacco product has been marketed in the U.S. for years without modified-risk information.
The FDA’s action now allows UST to market the product as a modified-risk product with the claim: “If you smoke, consider this: Switching completely to this product from cigarettes reduces risk of lung cancer.”
After a rigorous review of the available evidence, including recommendations from the Tobacco Products Scientific Advisory Committee, public comments and other available scientific information, the FDA says it concluded that the specific claim related to lung cancer risk is scientifically accurate with respect to Copenhagen Classic Snuff. The review also found the public health gains are unlikely to be offset by nonusers starting to use the product.
UST will be required to conduct post-market surveillance and studies that include an assessment of product users’ behavior, understanding and any previous use of cigarettes as well as a scientific model to assess continued impact on population health.
This modified-risk granted order will expire in five years.
March 16, 2023