Category: News This Week

China OKs Synthetic Nicotine Patent

Photo: Michal Jarmoluk from Pixabay
The China Patent Office has approved Next Generation Labs’ (NGL) patent application covering the process for the preparation of R-S [synthetic] nicotine, issue number 201580069647.2.
The approval will give NGL the ability to better enforce its intellectual property rights. NGL is the world’s largest manufacturer of S-isomer, R-S isomer and R-isomer synthetic nicotine sold under the registered brand name TFN.
According to NGL, the U.S. and Korean markets have been inundated with dozens of fake synthetic nicotine products and brands, and many manufacturers have misleadingly labeled bulk pure nicotine, bulk vape liquid mixtures, and vaping and oral nicotine products as made with TFN. In many instances, the nicotine contained in these products is not synthetic, tobacco-free or nontobacco but is in fact derived from tobacco sources.
For almost a decade, NGL has spent considerable effort establishing a strong global intellectual property portfolio that has become distinctive of the company’s goodwill and of the high quality adult consumers expect of TFN-branded nicotine.
NGL now intends to fully enforce its rights against many of these so-called synthetic nicotine brands.
Next Generation Labs
NGL has been taking direct action in the United States and through its sole South Korean distribution partner NextEra to limit the misleading claims of unscrupulous sellers of pseudo-synthetic nicotine and against manufacturers and brand owners who misrepresent that their product contains TFN-branded synthetic nontobacco nicotine.
“With the assistance of the Chinese authorities, NGL now intends to fully enforce its rights against many of these so-called synthetic nicotine brands at their point of manufacture and will take the lead with national customs agencies to limit the flow of fake synthetic nicotine products at trade exit and entry points in China, the U.S., EU, U.K., South Korea, India, Canada and Australia,” the company wrote in a press release.
March 23, 2021
China Wants to Regulate ENDS Like Tobacco

Photo: Taco Tuinstra
The Chinese government wants to overhaul the rules governing the market for electronic nicotine-delivery systems (ENDS), according to the South China Morning Post.
Draft regulations posted online by the Ministry of Industry and Information Technology (MIIT) suggest it will seek to regulate these products like traditional cigarettes. The ministry is seeking public comments on the draft regulations until April 22. With an estimated 300 million smokers, China is the world’s largest market for tobacco products and the largest potential market for ENDS.
The news caused the share price of RELX, China’s largest e-cigarette brand, to plunge. At 2:45 p.m. today, its value on the New York Stock Exchange was down nearly 45 percent to $10.69 per share after a recent high of $19.46 per share on March 19.
RLX Technology raised $1.4 billion during its initial public offering (IPO) in January this year. It sold 116.5 million shares with a target price of between $8 and $10 a share. Its market debut turned its 39-year-old founder, Wang Ying, into a billionaire overnight with an estimated net worth of $24.8 billion.
In its prospectus, RLX stated that vaping products only have a 1.2 percent penetration rate in China compared with 32.4 percent in the U.S. According to the China-based Electronic Cigarette Industry Committee, China’s 2020 e-cigarette sales were an estimated CNY14.5 billion ($2.2 billion), an increase of 30 percent from 2019. The U.S. e-cigarette market in 2019 was worth $5.34 billion, according to Grandview Research, which expects the U.S. market to reach $6.50 billion in 2020.
RELX recently announced a partnership with 110 authorized distributors to supply its products to more than 5,000 RELX-branded partner stores and more than 100,000 other retail outlets nationwide, covering over 250 cities in China, according to its prospectus. Revenue for the company nearly doubled in the nine months ended Sept. 30, 2020, to $324 million, with a net income of $16 million, the latest figures available at the time of this writing.
Under scrutiny
Vapor companies are increasingly facing scrutiny from regulators in China. In 2018, the country made it a crime to sell a vapor product to anyone under 18 years of age. In November 2019, an online sales ban was implemented in order to further prevent youth initiation. In 2020, the country passed the Law of the People’s Republic of China on the Protection of Minors. That law is aimed at preventing parents or other guardians from “indulging or instigating minors” to smoke or vape.
The China National Tobacco Corp. (CNTC), which holds a monopoly of tobacco manufacturing in China, is a major source of funding for the Chinese government. Its contribution accounted for an estimated 5.45 percent of the country’s tax revenue in 2018. That amounts to CNY10.8 trillion, according to media reports. The vapor industry in China, by contrast, remains largely in private hands. If CNTC were to enter the vapor market, the monopoly’s existing 5 million domestic retail outlets could present a major challenge for private vape shop owners.
Until today’s announcement, the vapor industry seemed to shrug off the impact of stricter regulations, continuing to perform well even in the face of the coronavirus pandemic.
Tobacco Reporter covered the trials and tribulations of China’s vapor industry in-depth in its April 2020 print edition (see “Double Whammy”).
March 22, 2021
FDA Sends its 69th PMTA Warning Letter

Photo: Pixabay
The U.S. Food and Drug Administration (FDA) issued three more warning letters to vapor companies on March 19. The latest announcement brings the count to 69 letters this year for companies selling vapor products without gaining regulatory approval through the agency’s premarket tobacco product application (PMTA) process.
The latest letters were issued to Arizona-based Vapor Outlet, Vapor Tech Hawaii and the Vaporium in Illinois. In its letter to Vaporium, the FDA stated that the company continues to “manufacture, sell and/or distribute to customers in the United States The Vaporium 6 mg Red White and Blue 70/30 30 mL e-liquid product” without a marketing authorization order.
“Your firm is a registered manufacturer with 19,860 products listed with FDA. It is your responsibility to ensure that your tobacco products comply with each applicable provision of the FD&C Act and FDA’s implementing regulations,” the letter states. “Failure to adequately address this matter may lead to regulatory action, including, but not limited to, civil money penalties, seizure and/or injunction.”
Companies that receive warning letters from the FDA have to submit a written response to the letter within 15 working days from the date of receipt describing the company’s corrective actions, including the dates on which it discontinued the violative sale and/or distribution of the products. They also require the company’s plan for maintaining compliance with the FD&C Act in the future.
Many of the FDA’s letters so far have gone to local vape shops that manufacture their own e-liquids in the store. For example, Vapor Tech Hawaii’s letter states that the FDA has determined that it “manufacture[s], sell[s] and/or distribute[s] to customers its Vapor Tech Hawaii Waikikiwi 100 mL 3 mg e-liquid product” without a marketing authorization order.
On March 12, the U.S. FDA sent warning letters to 13 firms that manufacture and sell unauthorized e-liquids.
March 22, 2021
Zimbabwe Debates Price Mechanism

Photo: Taco Tuinstra
Stakeholders are debating whether minimum auction prices should continue to determine the pricing of contract tobacco in Zimbabwe, reports The Zimbabwe Mail.
Zimbabwe has a dual marketing system where tobacco is sold through both auction and contract. Over the years, prices have been determined by the minimum price paid on the auction market.
At the time this policy was put in place, tobacco sold through the auction accounted for nearly half the total output. Over the years, however, the share of auction sales has declined sharply because most farmers are unable to self-finance their operations due to lack of collateral. Last year, the Tobacco Industry and Marketing Board (TIMB) registered about 146,000 growers, of which 95 percent were funded by contractors.
Industry players and analysts said it would be absurd to continue applying the policy as the tobacco farming landscape has completely changed.
“Pricing of contract tobacco—95 percent of national production—cannot continue to be based on the minimum of tobacco prices paid on the auction floors,” said Rodney Ambrose, CEO of the Zimbabwe Tobacco Association (ZTA).
We can’t just throw away this important tool of price discovery.
Paul Zakariya, executive director, Zimbabwe Farmers’ Union

TIMB CEO Andrew Matibiri also believes it is “unfair” for a small crop size of lower quality to determine the minimum grade price of tobacco.
“It is a very valid issue, and the board has agreed that something needs to be done,” said Matibiri, who is scheduled to step down from his position later this year.
However, Zimbabwe Farmers’ Union executive director Paul Zakariya fears that abandoning the dual marketing system would leave farmers exposed to price manipulation by contractors.
“We can’t just throw away this important tool of price discovery,” he told The Sunday Mail Business. “The competition at the auction is quite important.”
There would be some sort of minimum guaranteed price for every grade so that farmers can be protected from price manipulation.
Andrew Matibiri, CEO, TIMB

Matibiri said the TIMB would ensure that farmers are protected from rigged prices.
“There would be some sort of minimum guaranteed price for every grade so that farmers can be protected from price manipulation,” he said.
The tobacco selling season is scheduled to start on April 7, with the trade anticipating lower volumes but higher quality than last year. The ZTA expects output to reach at least 180 million kg, down from 184 million kg in the previous growing season.
“Though yields will be down, the quality of this season’s crop is better than 2020,” the ZTA wrote in its monthly tobacco report for March.
Firm prices are also expected during this marketing season, which opens on April 7. Merchants are expected to bring in above US$500 million to the market.
Tobacco Reporter covered the Zimbabwean tobacco market in depth in 2018.
March 22, 2021
Push for Menthol Ban Gains Momentum

Photo: Miriam Doerr | Dreamstime.com
The likelihood of a ban on menthol cigarettes in the United States is increasing as the impact of menthol cigarettes on Black Americans becomes clearer, according to an article in The New York Times.
Many public health advocates have been pushing for a crackdown on menthol cigarettes, but thus far no federal ban has been enacted.
Critics accuse the tobacco industry of marketing menthol cigarettes disproportionally to Black Americans, highlighting racial inequities. According to the Centers for Disease Control and Prevention, Black smokers smoke less but die at a higher rate from heart attacks, strokes and other tobacco-related diseases than white smokers do. The FDA reports that 85 percent of Black smokers use Newport, Kool and other menthol brands. Menthol cigarettes are easier to become addicted to and harder to quit than plain tobacco, according to health advocates.
Covid-19 exposed the discriminatory treatment that Black people have been facing for hundreds of years. It’s precisely at this time that we need strong public health measures.
Phillip Gardiner, co-chairman, African American Tobacco Control Leadership Council

“Covid-19 exposed the discriminatory treatment that Black people have been facing for hundreds of years,” said Phillip Gardiner, a co-chairman of the African American Tobacco Control Leadership Council, which has been pushing for menthol bans in communities across the country. “It’s precisely at this time that we need strong public health measures.”
Support for a menthol ban has been growing at various levels of government. Many states and municipalities have been passing laws at the state and local level to ban menthol cigarettes, and with many white parents supporting sweeping flavor bans, it has “brought new resources to the issue.”
The FDA is also under a court order to respond to a citizens’ petition for a menthol ban by April 29.

We opened the door on this in a Republican administration. You don’t think a Democratic administration will finish the business? Of course they will.
Scott Gottlieb, former FDA director
Many are hopeful that the Biden administration will move forward with a ban, looking to Biden’s past support of tobacco control measures.
“We are thinking about all of our options that could help reduce tobacco use and address persistent disparities,” said Kevin Munoz, a spokesman for the White House.
In 2018, Scott Gottlieb, FDA director under the Trump administration, announced that the FDA would enact a ban on menthol but was immediately opposed by North Carolina Senator Richard Burr, who represents a prominent tobacco-growing state. Burr later convinced the administration to kill the ban in 2019.
Gottlieb believes that the Biden administration will put a menthol ban in place. “We opened the door on this in a Republican administration,” he said. “You don’t think a Democratic administration will finish the business? Of course they will.”
March 22, 2021
Cambodia Cracks Down on Heating Products

Photo: Tobacco Reporter archive
Cambodia’s National Authority for Combating Drugs (NACD) has instructed all relevant ministries and institutions to take immediate action to stop the use and commercialization of heated-tobacco products (HTPs), reports The Phnom Penh Post.
“All forms of trafficking, trading and importation of HTPs must be stopped, and information on import restrictions must be disseminated to all vendors and the public,” the NACD stated in a directive.
Citing the World Health Organization, the NACD said the use of cigars, electronic nicotine-delivery systems (ENDS) and HTPs can lead to serious lung disease and even death. The announcement further said that using these products is also a motivating factor for people to use other illegal drugs.
Cambodia has restricted ENDS since February 2014, but its guidelines did not cover newer HTPs.
Deputy National Police Chief Mak Chito said that in the past, the authorities had confiscated many of these products. He said that although some other countries consider the use of these products legal, Cambodia does not allow it.
“In Cambodia, there are also bad people who are cheating by using methamphetamines or marijuana [with these devices],” he said.
March 22, 2021
Kaival Appoints New Board Members
Kaival Brands Innovations Group has appointed Paul Reuter, Carolyn Hanigan and Roger Brooks to its board of directors.
In addition to gaining the experience and judgment that the new members will bring to the board, their appointments are intended to ensure the company complies with certain corporate governance rules ahead of its planned Nasdaq uplisting.
“We are very pleased that Paul, Carolyn and Roger have agreed to join us as new members of the board,” said Niraj Patel, CEO of Kaival Brands, in a statement. “Coming off a remarkable year that demonstrated the strength of our team and products, these three individuals are joining the company at an exciting time. We look forward to benefiting from their diverse backgrounds and respective expertise.”
Reuter brings nearly five decades of industry experience in small box retail as a journalist, editorial director, entrepreneur and speaker. He has launched two businesses, including MidWest Retail Group, where he served as chairman and founding partner from April 2013 through June 2019. He is also the founder of Kreative Collaborations, an industry consultancy.
Prior to her retirement, Hanigan was the president of Reynolds American Innovation Co., an operating company of Reynolds American Inc. (RAI). Hanigan led the global vapor collaboration with British American Tobacco (BAT) up until RAI was acquired by BAT in 2017.
Coming off a remarkable year that demonstrated the strength of our team and products, these three individuals are joining the company at an exciting time.
Niraj Patel, CEO, Kaival Brands
She was the architect of RAI’s U.S. reduced-risk products strategic direction to further the vision of transforming tobacco. Under her leadership, RAI prepared both the U.S. commercial execution and regulatory applications for the Glo tobacco-heating products, the Velo nicotine pouches, and the Alto, Ciro, Vibe and Solo nicotine vaporizers.
Brooks is currently the chairman, treasurer and co-founder of Abierto Networks. Prior to his roles at Abierto Networks, from 1998 to 2008, Brooks was the lead independent director and member of the compensation and audit committees for Moldflow Corp. From 2017 to 2019, Brooks served as an independent director of Lytron Incorporated.
Kaival Brands recently reached $100 million in revenues.
March 22, 2021
Becerra Confirmed as Secretary of HHS

Xavier Becerra (Photo: State of California Department of Justice)
The U.S. Senate on Thursday narrowly confirmed Xavier Becerra as President Biden’s secretary of Health and Human Services (HHS), reports The New York Times.
Becerra will take charge as the Biden administration is working to lead the nation out of the coronavirus pandemic.
Biden’s selection of Becerra was a surprise, and it set off an immediate debate over whether, as a lawyer, he was the correct choice to lead a department that oversees high-profile medical agencies, including the Food and Drug Administration, the Centers for Disease Control and Prevention, and the National Institutes of Health. Republicans argued he was unqualified.
Democrats argued that Becerra had deep expertise in health policy. As California’s attorney general, he led 20 states and the District of Columbia in a campaign to protect the Affordable Care Act from being dismantled by his Republican counterparts. He has also been vocal in the Democratic Party about fighting for women’s health, including access to contraceptives and abortion.
In a tweet earlier this year, Derek Yach, president of the Foundation for a Smoke-Free World, described the nomination of Becerra as a “serious missed opportunity.”
“At a time of public health crisis, deep expertise in public health, medicine and science should matter,” Yach wrote. “Sadly, this is not apparent in the pick of the lead cabinet health voice.”
James A. Mish, CEO of 22nd Century Group, welcomed Becerra’s appointment, citing his leadership in tackling cigarette addiction.
According to Mish, Secretary Becerra is a long-time proponent of a reduced nicotine cap for cigarettes and tougher regulation for the tobacco industry. While serving as the attorney general of California in 2018, Becerra and five other attorneys general wrote a letter in response to the FDA’s Advance Notice of Proposed Rulemaking, strongly supporting a tobacco product standard for the nicotine level of combusted cigarettes.
“We look forward to joining Secretary Becerra, the HHS and the FDA on tackling the pressing public health tragedy caused by addictive cigarettes that is costing millions of Americans’ lives and billions of dollars each year,” said Mish in a statement.
March 19, 2021
Buyers Commit to Paying Above Minimum

Photo: Taco Tuinstra
The Malawi government has signed an agreement with tobacco leaf buyers that commits the buyers to purchase all leaf above the agreed minimum price that has been set for this year’s tobacco marketing season.
The minimum leaf price has not yet been for the 2021 growing season. Agriculture Minister Lobin Lowe said that the government expects higher prices this year because production is well below the anticipated level, reports the Nyasa Times.
Leaf buyers are looking to purchase about 132 million kg of leaf in Malawi this season, but estimates indicate that only 122 million kg have been produced.
March 19, 2021
Tobacco Brand Selection Dwindling in N. Ireland

Illustration Skypixel | Dreamstime.com
Cigarette makers are removing their brands from the Northern Ireland market due to the additional costs incurred from post-Brexit rules, reports Belfast Live.
The Northern Ireland Protocol requires tobacco products sold in the region to continue to bear EU pictorial health warnings, whereas the remainder of the U.K. is moving to Australia’s style of health warnings.
The protocol, which was agreed upon by the EU and U.K. to avoid a hard border on Ireland, keeps Northern Ireland in the EU single market for goods but includes extra checks and regulatory processes for products arriving in Northern Ireland from Great Britain.
Imperial Brands announced that it will withdraw some of its brands in Northern Ireland due to the cost of establishing separate production lines for the different packaging.
Japan Tobacco International (JTI) announced a similar type of move, saying, “the post-Brexit requirement to have different packaging in Northern Ireland (i.e., different health warnings) will mean a very small additional reduction in our NI product range. JTI’s product range in Northern Ireland remains extensive, and whenever we delist a product, we always take consumer needs into careful consideration to ensure we have a range of alternatives and pack formats/sizes available within our brand portfolio for adult consumers to choose from.”
March 19, 2021