Category: News This Week

Ex-President Scrutinized Over Cigarette Shipment

Photo: Taco Tuinstra
The U.S. government has blacklisted former Paraguayan President Horacio Cartes for his role in “significant corruption,” a move that prevents Cartes from entering the United States, reports The Wall Street Journal.
The decision follows revelations that an aircraft formerly owned by an Iranian carrier that is blacklisted by the U.S. Treasury for alleged arms trafficking transported cigarettes from a company owned by the former president.
Earlier this year, Paraguay’s then interior minister, Arnaldo Giuzzio, accused Cartes of laundering money and illicit enrichment tied to the alleged sale of contraband cigarettes from the former president’s tobacco company, Tabacalera del Este, known as Tabesa. The assertions didn’t lead to charges.
Last month, Paraguay’s top anti-corruption official, Rene Fernandez, called for a probe into allegations that Tabesa was linked to a group of Venezuelan and Iranian men who traveled through Paraguay in May. Paraguayan prosecutors are now investigating the men for alleged links to terrorism, though they have not been charged, government documents show.
The plane and its crew were grounded in Argentina last month, with authorities there saying they are investigating alleged terrorism ties.
Flight logs show that the jet reported carrying $754,000 worth of cigarettes sourced from Tabesa when it flew out from Paraguay to Aruba on May 16, according to the anti-corruption office. Listed as the recipient of the cargo was Tabacos USA, a Pennsylvania-registered company also owned by Cartes.
Paraguay, which borders Brazil and Argentina, has long been at the center of the illegal trade of contraband goods and drugs, according to security experts in the U.S. and Latin America.
July 25, 2022
RLX Obtains Chinese Manufacturing License

Photo: RLX Technology
China’s State Tobacco Monopoly Administration (STMA) has licensed RLX Technology to operate in the vapor business.
On Nov. 26, 2021, China’s State Council amended the country’s tobacco monopoly law to include vapor products, giving the STMA authority to regulate the sector.
The STMA license, which is valid until July 31, 2023, allows RLX Technology to manufacture 15.05 million rechargeable vaping devices, 328.7 million cartridges and 6.1 million disposable e-cigarettes per year.
Since the first quarter of 2022, Chinese authorities have issued a series of implementing rules and guiding opinions to strengthen oversight of e-cigarette products and regulate the e-cigarette industry. These rules and opinions set forth that all e-cigarette manufacturing enterprises must obtain a license from the STMA.
“This license represents an important milestone in our strategic roadmap as we strive to comply with the new regulatory requirements in a timely manner,” said Ying (Kate) Wang, co-founder, chairperson of the board of directors and CEO of RLX Technology, in a statement.
“We believe that we are well-positioned to achieve compliance in our operations according to schedule. To adapt to the new market dynamics and ensure business development, we will, and will urge our business partners to, continue making efforts to comply with all applicable regulatory requirements, including, but not limited to, obtaining requisite licenses and regulatory approvals, developing products that meet the mandatory national standards, and processing all transactions via the National E-cigarette Transaction Platform when it is implemented.
“We will remain committed to providing high-quality products that deliver superior performance and safety in strict compliance with legal and regulatory requirements, while exploring new growth opportunities in the industry.”
July 24, 2022
PMI Reports Second Quarter Results

Photo: PMI
Philip Morris International reported net revenues of $7.83 billion in the second quarter of 2022, up 3.1 percent over that reported in the comparable quarter of 2021. Operating income was $3.06 billion, compared with $3.13 billion during the prior-year quarter. Net revenues from smoke-free products accounted for 29.9 percent of total net revenues.
PMI shipped 157.69 billion cigarettes and 24.82 billion heated tobacco units in the second quarter of 2022, up 1 percent and 1.9 percent, respectively, over the volumes shipped in the comparable 2021 period.
Given uncertainty and volatility created by the war between Russia and Ukraine, PMI also provided financial figures on a pro forma basis, which exclude the company’s operations in those markets and thus provide a more comparable view of PMI’s business performance.
On a pro-forma basis, the company’s net revenues increased by 6.2 percent between the second quarter of 2021 and the second quarter of 2022, while its operating income grew by 1.6 percent. Net revenues from smoke-free products accounted for 29.9 percent of total net revenues on a pro forma basis.
The company has suspended its manufacturing operations in Kharkiv, Ukraine, and intends to exit the Russian market. In 2021, Ukraine accounted for around 2 percent of PMI’s total cigarette and heated tobacco unit shipment volume and under 2 percent of PMI’s total net revenues. Russia made up almost 10 percent of total shipment volumes and around 6 percent of PMI net revenues.
“First and foremost, the war in Ukraine continues to deeply affect the lives of our employees and families in the region,” said PMI CEO Jacek Olczak in a statement. “My first priority is to give them the help they need and as a company we are focused on doing our utmost to support them throughout this conflict.”
“Turning to our results, our strong underlying performance continued in the second quarter, with top- and bottom-line growth exceeding our initial expectations. This reflected excellent IQOS momentum, including accelerating growth in pro forma total IQOS users and heated tobacco unit in-market sales volume, as well as favorable cigarette category trends.
“We are raising our outlook for the full year and now expect to deliver pro forma adjusted growth in net revenues of 6 percent to 8 percent, on an organic basis, and diluted earnings per share of 10 percent to 12 percent, excluding currency, underpinned by pro forma heated tobacco unit shipment volume of 90 to 92 billion units.”
July 24, 2022
BAT Launches Glo Hyper X2

Photo: BAT
BAT unveiled its Glo Hyper X2 tobacco heating device in Tokyo on July 21.
Building on the technology of Glo Hyper+, which launched in 2020, the Hyper X2 incorporates advanced induction heating technology encased in a smaller, lighter weight device. A separate boost function for faster heating, battery status LED indicator, a protective iris-shaped shutter and bold new colors complete the new hyper X2 offer, according to BAT.
Hyper X2 works with existing consumables from the Glo Hyper series.
“The launch of Glo Hyper X2—our newest, state-of-the-art heated tobacco product—marks another key milestone in our transformation as we build the brands of our future,” said Kingsley Wheaton, chief marketing officer at BAT, in a statement. “Since launching our first Glo product in Japan in 2016, we have built Glo into a billion-dollar global brand through our deep consumer insights, science and innovation.
“Our multi-category portfolio offers the industry’s widest choice of scientifically substantiated, less risky and enjoyable products for adult smokers who are looking to switch. This is a further big step in accelerating our transformation into a consumer products business that defines itself by the consumer needs that we meet, rather than the products we sell.”
“In addition, final results from our landmark one-year clinical study of Glo have provided important new data that adds to evidence supporting Glo as a reduced-risk product. In the study, people switching completely to Glo achieved significant and sustained improvements across many exposure and potential harm measures compared to those who continued to smoke, with many indicators similar to quitting.”
Glo hyper X2 will be available in Glo stores across Japan and on the Glo and Velo official online store from July 25, 2022, and in convenience stores in Japan from August 2022.
Glo products are available in 25 countries. The global rollout of Glo Hyper X2 will take place over the coming months.
July 24, 2022
Study: Major Drop in Vaping by Under-20s

Use of e-cigarettes vaping devices dropped during the first year of the Covid-19 pandemic, according to a new study.
Researchers from Johns Hopkins University in Baltimore, Maryland, found that usage of vaping products dropped seven percent overall from 2018 to 2020 – including a 17 percent drop among people aged 18 to 20.
Researchers published their findings Friday on the JAMA Network Open after gathering data from the U.S. Centers for Disease Control (CDC) and Prevention’s Behavioral Risk Factor Surveillance System for the study, according to media reports.
The survey included a total of 994,307 respondents. In 2017, the CDC reported 4.4 percent of U.S. adults reported use of an e-cigarette. The figure climbed 25 percent to 5.5 percent in 2018.
‘This increase, primarily observed in younger age groups, was associated with the concurrent rise in the availability of flavored products and high nicotine–concentration pod mod devices (modular vaping devices with refillable or replaceable nicotine cartridges, or pods, such as JUUL brand devices),’ the researcher’s wrote in the study.
Data from 2019 was not gathered. In 2020, overall usage of e-cigarettes fell to 5.1 percent, a seven percent drop from two years earlier. The most dramatic shift was seen among people aged 18 to 20 years old – the youngest group included in the study.
July 23, 2022
Michigan Raises Tobacco Purchase Age

Credit: Vitalii Vodolazskyi
Michigan has raised the age to purchase tobacco and other products containing nicotine from 18 to 21.
“This legislative package brings Michigan in line with the federal Tobacco 21 legislation, raising the state age for tobacco sales from 18 to 21. The package amends several acts to raise the age of sale for retailers, prohibit anyone under 21 from entering a tobacco retail store, and prohibit tobacco sales through the mail to anyone under 21,” Gov. Gretchen Whitmer stated after signing the bill into law.
The package also revises the disbursement of proceeds from the tax on cigarettes and other tobacco products. Senate Bill 576 also amends a portion of the Michigan penal code to require agents who distribute tobacco through the mail to verify that the recipient is 21 years of age, revising the previous age limit of 18.
The legislation states that the act will not apply to the Youth Tobacco Act, which now prohibits tobacco use for those under 21, rather than 18.
“The Tobacco 21 package aligns Michigan with progress at the federal level, and is an important step in keeping tobacco products out of the wrong hands,” said Senator Paul Wojno. “Kudos to Governor Whitmer for working with the me and my colleagues in the legislature to protect our communities and public health across the state.”
July 22, 2022
Swedish Match Beat Estimates for Quarter

Swedish Match on Friday reported second-quarter operating profit just above market expectations, boosted by growth in the U.S. market.
The target of an agreed $16 billion bid by Philip Morris International Inc, Swedish Match’s operating profit rose to 2.23 billion Swedish crowns ($22.47 million) from 1.96 billion a year earlier, according to Reuters. Analysts polled by Refinitiv had on average forecast a profit of 2.19 billion crowns.
The company’s snus in Scandinavia, cigars in the U.S. and tobacco-free nicotine product ZYN, according to CEO Lars Dahlgren, had shown an “impressive volume trajectory” in terms of sales in the quarter.
Group sales increased 23 percent to 5.56 billion Swedish crowns.
Elliot Investment Management is building a stake in Swedish Match and plans to oppose the pending PMI takeover.
It’s unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own, according to Mads Rosendal, an analyst at Danske Bank.
July 22, 2022
Marijuana Legalization Bill Back in Senate

Credit: Vitalii Vodolazskyi
Leaders in the U.S. Thursday Senate introduced sweeping legislation that would end federal prohibitions on marijuana more than 50 years after Congress made the drug illegal.
Senate Majority Leader Chuck Schumer’s Cannabis Administration and Opportunity Act (CAOA) would decriminalize weed on the federal level and allow states to set their own marijuana laws without fear of punishment from Washington, according to media reports.
Just over a year after first unveiling a draft version of the cannabis reform legislation, Senate Majority Leader Chuck Schumer, Senate Finance Committee Chairman Ron Wyden and Sen. Cory Booker formally filed the CAOA. The legislation is expected to shape the conversation around cannabis legalization going forward and portions of it are likely to find their way into other bills that could pass before the end of the year, according to Marijuana Moment.
The legislation includes both Democratic and Republican priorities: It expunges federal cannabis-related records and creates funding for law enforcement departments to fight illegal cannabis cultivation. It also establishes grant programs for small business owners entering the industry who are from communities disproportionately hurt by past drug laws, requires the Department of Transportation to research and develop a nationwide standard for marijuana-impaired driving, and restricts the marketing of cannabis to minors.
While marijuana legalization has spread rapidly across the U.S. over the past decade, Capitol Hill has not transitioned as quickly. Nineteen states now allow anyone at least 21 years old to possess and use the drug, and 37 states have established medical marijuana programs. National polls have consistently shown that roughly two-thirds of Americans back marijuana legalization, and support is even higher among younger voters.
The U.S. House of Representatives has twice passed its own sweeping marijuana legalization package, known as the Marijuana Opportunity, Reinvestment and Expungement Act. That legislation does not include much of the regulatory structure that’s part of the Senate bill, and also has a different tax rate.
And even if a bill were somehow to pass, it is unclear if President Joe Biden would sign it. He has repeatedly said he does not support federal weed legalization.
July 22, 2022
Many Comments on EU Tobacco Changes

Credit: Savvapanf Photo
An overwhelming majority of EU citizens who responded to a European Commission initiative say they support tobacco harm reduction products.
The Commission’s “Call for Evidence” on the legislative framework for tobacco control received an unprecedented level of feedback, with consumers of alternatives to tobacco products – vaping, heated tobacco and oral nicotine pouches – making their voices heard in huge numbers, according to EU Political Report.
More than 24,000 EU citizens responded to the call, launched by the Commission as part of its ongoing evaluation of what future EU tobacco laws will look like through revision of the Tobacco Products Directive.
The massive interest in the issue may surprise some and may put the European Commission on the back foot as has been seen by some as having previously failed to support ‘tobacco harm reduction’.
The 4-week public consultation, from May 20 May to June 17, had one of the biggest ever responses to a consultation. On average, calls of this length receive around 354 submissions. In recent years, only the “call for evidence” for a digital euro for Europe received a similar scale of a response, but still fell short of the 20,000 submission mark despite taking place over a longer period of time (10 weeks).
Of the 24.000 submissions, more than 90 percent came from individual EU citizens, suggesting the extent to which this issue is a priority for the European public at large. Many submissions came from citizens in Germany, Italy and Romania.
It showed that the biggest issue for citizens across all member states is the regulation of reduced-risk products such as e-cigarettes. On this, it has been argued that the Commission it out of sync with public opinion.
The Commission has favored the introduction of new restrictions on reduced risk products, including flavor bans and sale restrictions but some in the industry hope the public response could now force it to reconsider these plans.
In June, the Commission announced plans to prohibit the sale of flavored heated tobacco products in the EU. The proposal came, it said, in response to the “significant increase” in the volumes of heated tobacco products sold across the EU.
A Commission report showed a 10 percent pick up in the sales volumes of heated tobacco products in more than five Member States and overall in the EU, heated tobacco products exceeded 2.5 % of total sales of tobacco products.
An overwhelming majority of submissions supported tobacco harm reduction products, including vaping and nicotine pouches, as “critical tools” that have helped smokers to quit. Respondents were nearly unanimous in opposing any plans to restrict access to such products for adults over the age of 18.
July 22, 2022
Bloomberg: Juul Revenues Down Sharply

Juul Labs Inc. had its first quarter revenues plummet 23% from the prior year, according to people with knowledge of the matter, according Bloomberg.
The company received $259 million of revenue for the quarter ended March 31, said the sources, who say they saw the company’s results as it seeks financing alternatives.
“As we continue to operate in the market and go through the FDA’s review process, we are in the early stages of exploring a variety of options including various potential financing alternatives to protect our business and to address the impact of the FDA’s now stayed order so we can continue offering our products to adult consumers who have or are looking to transition away from traditional cigarettes,” a spokesperson for Juul said in a statement when asked for comment by Bloomberg.
Juul Labs had a loss of $28 million in the period, compared with earnings of $29 million for the same period a year earlier, based on unadjusted results before interest, taxes, depreciation and amortization.
In June, the FDA banned Juul products on US shelves, citing a lack of evidence demonstrating the overall safety of the company’s products, and noting Juul’s “disproportionate role in the rise in youth vaping.” Then the company won an emergency court order temporarily blocking the decision, and the agency separately stayed its order, allowing the company to keep selling products.
As of the first quarter, Juul had $323 million of cash on hand, down from $428 million at the same point last year, according to people who asked not to be identified because results are confidential for closely held Juul, according to Bloomberg.
Its debt totaled approximately $2.15 billion, including a $394 million term loan due in August 2023 and around $1.7 billion of 7 percent notes due 2025 that “payment-in-kind securities,” allowing the company to delay interest payments.
July 22, 2022