Category: Featured

MDO Stay Boosts Kaival’s Results

Photo: crizzystudio
Kaival Brands Innovations Group reported revenues of $3.8 million for the third quarter of fiscal year 2022, up from $3.2 million for the same period of 2021. Gross profit was $442,100 compared to a loss of $84,300 for comparable 2021 period.
Kaival attributed its improved revenues in part to an August court ruling that set aside a marketing denial order issued by the U.S. Food and Drug Administration to the company’s nontobacco flavored Bidi Stick e-cigarettes. Arguing that the agency had insufficiently considered Kaival Brands’ marketing and sales access restriction plans, the U.S. Court of Appeals for the Eleventh Circuit ordered the FDA to further review Kaival’s premarket tobacco product applications, allowing the company to continue to market its products.
Eric Mosser
“The recent 11th Circuit ruling in favor of Bidi Vapor alleviated a significant barrier to our adult-focused B2B sales efforts, which we believe will once again allow us to materially scale our business, grow revenue, move toward net profitability in the future and increase shareholder value,” said Kaival Brands President and Chief Operating Officer Eric Mosser in a statement.
Mosser added that the company is working with Philip Morris to expand international distribution into new global markets. In June, Kaival Brands Innovations Group’s subsidiary, Kaival Brands International (KBI), entered into a licensing agreement with Philip Morris Products (PMP) for the development and distribution of electronic nicotine-delivery system products outside the U.S.
“We expect to begin recognizing revenues from this international licensing agreement in our fiscal fourth quarter,” said Mosser.
In July, Kaival announced the launch of PMP’s Veeba vapor product in Canada, with royalties due to KBI pursuant to the international licensing agreement.
September 13, 2022
Firms Settle New York Tax Evasion Case

Image: Rawf8
New York’s attorney general office announced a $50 million agreement with Grand River Enterprises Six Nations of Canada (GRE) and Native Wholesale Supply Co. (NWS) of New York to settle allegations of tax evasion in the state.
According to the complaint, the two companies brought millions of cartons of unstamped cigarettes into New York from Canada.
The attorney general’s office contends that NWS purchased cigarettes and tobacco products from GRE, imported them into New York, and distributed the cigarettes to retailers in the state—despite having no license to do so. GRE allegedly knew that the cigarettes it sold to NWS would be sold into New York without going through a New York state licensed stamping agent for prepayment of state taxes and would be neither stamped nor taxed as required by New York law.
“Hardworking New Yorkers pay taxes and so should multi-million-dollar companies,” said New York Attorney General Letitia James in a statement. “Regulating and taxing cigarettes is a critical tool to protect public health from the deadly dangers of tobacco. Today’s agreement enforces New York’s laws and will stop the overflow of unstamped cigarettes into New York.”
In addition to paying the $50 million, the companies agreed to modify their business practices to prevent future sales of unstamped cigarettes in New York.
In a statement, NWS clarified that while the settlement ends the litigation, it is not an admission of wrongdoing.
“In this almost decade-long dispute, the NY Attorney General claimed that sales of cigarettes by NWS to certain Native American Nations situated within the geographic borders of New York state were subject to New York state regulation and taxation. NWS, as well as the manufacturer of those products, GRE, vigorously objected to and adamantly denied such claims. As part of NWS’ Chapter 11 plan of reorganization, NWS allowed those claims to proceed in federal court in New York State.
“The settlement announced today brings an end to that litigation, without any admission of wrongdoing or liability by NWS or GRE. The settlement payments are to be paid solely by NWS and are not denominated as payment of back taxes. They are payments that the parties agreed are payments of disputed claims payable under the trust set up in accordance with the Chapter 11 plan of reorganization.
“NWS and GRE have at all times maintained and continue to maintain that the transactions at issue do not and did not violate any federal or New York State laws, particularly in view of well-established sovereign and treaty rights established with the federal government.”
September 13, 2022
A Second Chance

Photo: andranik123
How companies can make the most of a recent court ruling requiring the FDA to reassess thousands of PMTA rejection notices.
By Neil McKeganey
It would be hard to overstate the threat that youth vaping in the United States poses to the use of e-cigarettes as a means of tobacco harm reduction. Respected national surveys have shown a rising trend in youth vaping, with the threat to the vaping industry as predictable as night following day.
Former Food and Drug Administration Commissioner Scott Gottlieb could not have been clearer in signaling that threat when he said that the offramp to adult smoking could not be justifiably achieved at the cost of the on-ramp of teen vaping. If anybody was in any doubt about the risks that youth vaping poses to the entire e-cigarette industry, those doubts would have surely been extinguished in the recent ruling against Juul Labs, which required the company to pay in excess of $438 million to compensate states for the harms caused by past marketing practices increasing the likelihood of youth using their eponymously named vaping device.
For vaping companies, the threat of youth vaping may have lifted slightly in a recent U.S. court ruling requiring the FDA to pay attention to what vapor companies are doing in trying to restrict youth access to their products. Odd as it may sound, after having encouraged vapor companies to pay attention to their marketing and sales practices in light of the rising trend in youth vaping, the FDA’s position appears to have been that those efforts were almost certainly doomed to fail, with youth accessing what are often easy-to-conceal vaping products with relatively little difficulty through their social networks.
With vapor companies having invested heavily in age verification software, point-of-sale restrictions and in the removal of flavored e-liquids, it would have been a bitter pill to swallow to be told that the regulators had largely ignored those efforts to reduce youth access to their products.
The logic behind the FDA’s decision seems to have been that it would be easier to expedite the large number of premarket tobacco product applications (PMTAs) by adopting a “Fatal Flaw” approach—rejecting those applications that did not present data from either longitudinal customer studies or randomized trial evaluations and simply ignoring what the companies were doing to lessen the likelihood that their products would be found in the hands of youth.
By ruling against the FDA in legal action initiated by six vapor companies that had received marketing denial orders without the FDA even paying attention to their youth sales restriction efforts, the judges have effectively provided vapor companies with a second chance to have their PMTA applications reassessed.
So, what should vapor companies do given the legal victory that has been dropped in their lap? Clearly, it is going to be important for companies to do all they can to restrict youth access to their vapor products. But actions taken by these companies is not the same thing as being able to present evidence to the FDA that their products are not being used by youth.
To this end, research undertaken by the Centre for Substance Use Research (CSUR) in Scotland may help many of the companies concerned. For the last two years, the CSUR has been measuring the prevalence with which over 200 e-cigarette devices are being used by youth and adults within the United States. This ongoing research provides vapor companies with product-specific data showing the extent to which their products are being used, or more crucially, are not being used by youth.
Valuable as the data from this study undoubtedly are, vapor companies also have to be able to show the benefit of their products to adult smokers. The fastest route to obtaining this data is through an actual use study in which adult smokers using a company’s vapor products are monitored over a number of weeks to determine how many smokers are able to quit or reduce their cigarette smoking through using the company’s vapor products.
To obtain a marketing authorization, vapor companies have to be able to show two things—that their products are not being used by youth and that they can help adult smokers in quitting or reducing cigarette consumption. Succeed in these two things and vapor companies can have a bright future. Fail in either one and the future looks a lot bleaker.
Neil McKeganey is the director of the Center for Substance Use Research in Glasgow, Scotland.

September 12, 2022
Lucie Salhany Joins 22nd Century Board
Lucie S. Salhany
22nd Century Group has appointed Lucie S. Salhany to its board of directors.
Salhany is a highly accomplished media executive with extensive experience in assessing and understanding the consumer landscape, positioning unique products for successful launch utilizing digital media, corporate strategy and entrepreneurial ventures.
She is widely recognized for her appointment as the first woman chair of a major broadcast network, which was earned through her unparalleled track record of successful growth and expansion in the industry. Salhany will serve as a member of 22nd Century’s corporate governance and nominating and finance committees.
“I am delighted that Lucie has chosen to join 22nd Century’s board of directors. Her well-established track record of success in business along with her strong background in and knowledge of the media industry will be extremely valuable for the company as we execute on our mission to reduce the harm caused by smoking, launch VLN and monetize our hemp/cannabis operations,” said 22nd Century Board Chair Nora B. Sullivan in a statement.
“We are confident her contributions will help raise 22nd Century’s profile in the consumer marketplace and mainstream media. Lucie’s appointment also reflects our continued commitment to the diversity of our board, and I very much look forward to her perspective and contributions in the board room.”
Salhany is currently president and CEO of her own consulting company, JHMedia. She was also one of the founding partners of Echo Bridge Entertainment and CEO and president of LifeFX Networks.
September 12, 2022
Cigar Association Meets CTP Officials

Photo: Rawf8
The Premium Cigar Association (PCA) briefed Brian King, the new director of the Center for Tobacco Products (CTP), on the industry’s issue set and the association’s priorities.
The briefing, which was one of King’s first engagements with stakeholders, covered material facts about the uniqueness of the products, legislative history, current health data, economics and impact of regulatory efforts.
King was joined by several other members of the U.S. Food and Drug Administration, including Michele Mital, deputy director of the CTP. The PCA was represented by Greg Zimmerman (The Tobacco Co.), Scott Regina (Emerson’s Cigars), Mike Condor (Crowned Heads), Scott Pearce (PCA), Joshua Habursky (PCA) and Patrick Anderson (PCA consultant).
“Director King is a researcher, and we urged him to lean into that part of his background and shed the current mantel that CTP wears—‘tobacco-free’ ideology is not what the Tobacco Control Act authorized,” said Zimmerman, president of the PCA, in a statement.
“A lot of time and money has been spent by the government to try and justify FDA’s efforts to regulate premium cigars. While PCA is proud of our wins in defense of the industry, what we really need them to understand is that they are not achieving their own goals when they take broad sweeping approaches to regulation,” said Pearce, executive director of the PCA.
“As long as the FDA remains our regulator, there needs to be productive dialogue. The necessity for the FDA to be aggressive toward premium cigars is not prudent, and we are hopeful that this personnel change will represent a departure from the past actions that were based on a one-size-fits-all approach,” noted Habursky, deputy executive director and head of government affairs for the PCA.
September 12, 2022
Correction

Photo: iQoncept
On July 14 and Aug. 6 of this year, Tobacco Reporter published two articles (“Pakistan’s Track-and-Trace System Under Fire” and “More Firms Adopt Tracking System”) with incorrect information about Inexto, a Swiss company active in the field of tracking and tracing.
The articles reference Codentify software and a legal challenge to Pakistan’s decision to award its track-and-trace system to the National Radio and Telecommunication Corp.
Unfortunately, the “news” contained in these articles turned out to be based on outdated information presented on a tobacco news aggregation website.
Codentify has long been replaced by a product called Inextor, and the referenced legal challenge was decided in May 2020 when the Islamabad Court canceled the bidding process for procedural motives unrelated to Inexto or its product.
Tobacco Reporter regrets the error and any harm caused to Inexto. The articles were removed from our website on Aug. 29.
September 12, 2022
‘FDA Downplays PMTA Acceptance Numbers’

Amanda Wheeler (Photo: AVM)
The U.S. Food and Drug Administration is understating the number of nontobacco nicotine (NTN)-related premarket tobacco product applications (PMTAs) it has accepted for review in order to avoid criticism from tobacco control groups that seek prohibition of all vaping products, reports Vaping360, citing American Vapor Manufacturers Association (AVM) President Amanda Wheeler.
On Sept. 8, the FDA announced it has accepted over 350 PMTAs (out of nearly 1 million applications) for NTN products. Wheeler insists that AVM member companies alone have received acceptance letters for 4,700 PMTA submissions.
“Once again, the FDA and its Center for Tobacco Products are misleading the public and press on crucial data and methods in its approval process for vaping products,” Wheeler said in a statement. “The figures stated in its press release today on synthetic nicotine applications are demonstrably inconsistent with FDA letters to our own members indicating many thousands more applications successfully filed than FDA now claims.”
An acceptance letter indicates that the application has met the basic requirements to move forward in the review process. It does not authorize the applicant to market the product.
The AVM also says the FDA altered required PMTA forms close to the submission deadline to disqualify already-submitted applications. According to Wheeler, the application forms were “abruptly altered” without public notice, “apparently as a means to disqualify wide swaths of already-filed applications.”
In March, U.S. President Joe Biden signed legislation authorizing the FDA to regulate synthetic nicotine products. Manufacturers had until May 14 to submit PMTAs and were given two additional months to continue selling products with pending PMTAs. When the grace period ended July 13, all synthetic nicotine-based products became subject to FDA enforcement.
September 12, 2022
Startup Uses Tobacco to Cultivate Meat

Photo: Victor Moussa
An Israeli food technology startup company is using tobacco plants to help it create vegetarian hamburgers, reports The Jerusalem Post.
BioBetter has deployed tobacco plants as natural bioreactors to create the growth factors necessary for the cellular development of cultivated meat.
According to the firm, this development could significantly reduce the cost of cultured meat and help rapidly advance its commercialization. Cultured meat could eventually replace beef cows, which are a major factor in producing greenhouse gases and promoting hazardous global warming.
“World population growth and dwindling natural resources are going to put incredible strain on meat supply and the already fragile environment in the coming decades,” said BioBetter CEO Amit Yaari. “Cultivated meat offers a promising solution to these problems and can ensure a more resilient supply chain with better economic and environmental returns.”
In addition to addressing environmental challenges, the work will also create a new source of income for local tobacco farmers, who have suffered losses as cigarette consumption dwindles.
Boosted by a fresh injection of venture capital, BioBetter plans to scale up production in 2023 and commercialize its tobacco plant-derived, food-grade growth factor portfolio by 2024.
September 12, 2022
SM Chairman Corrects Share Sale Reporting

Photo: BillionPhotos.com
Swedish Match Chairman Conny Karlsson has corrected the reporting that was mistakenly made to the Swedish Financial Supervisory Authority regarding a sale of his shareholding in Swedish Match, the company announced in a press note.
The background to the mistake is the chairman’s instruction to his bank to accept the public offer from Philip Morris in respect of his shares in Swedish Match.
Such acceptance of the offer may be withdrawn at any time until the expiry of the acceptance period in accordance with the terms of the offer and Swedish Takeover Regulation. However, an acceptance of the offer should only be reported if and when the offer is declared unconditional and provided it has not then been withdrawn.
In May, the Swedish Match board of directors accepted Philip Morris’ $16 billion offer for their firm, pending shareholder approval. The multinational recently extended the acceptance period from Sept. 10 to Oct. 21, following indications that European regulators needed more time to review the deal.
The EU competition enforcer has indicated it will complete its evaluation by Oct. 11.
September 9, 2022
Study: Smoking More Prevalent in Rural Areas

Photo: Scott Brook
Cigarette smoking is more prevalent among Americans residing in rural areas, and they also have a more difficult time quitting smoking than urban residents, according to a study involving Rutgers researchers.
The study, published in JAMA Network Open, found smoking prevalence was higher in rural areas than in urban areas—19.2 percent versus 14.4 percent. While the number of smokers quitting in 2020 was similar in both rural and urban areas—52.9 percent compared with 53.9 percent—the odds of quitting between 2010 and 2020 were 75 percent lower in rural areas compared with urban areas.
“Higher cigarette smoking prevalence and lower cessation in rural populations have led to higher rates of smoking-attributable cancer incidence and death in rural [residents] compared with urban residents,” said study co-author Andrea Villanti, associate professor in the department of health behavior, society and policy at the Rutgers School of Public Health and deputy director of the Rutgers Center for Tobacco Studies, in a statement. “Tobacco cessation, therefore, is a high-impact target for cancer prevention efforts in rural populations.”
The study used data from the U.S. Department of Health and Human Services’ 2010–2020 National Survey on Drug Use to analyze adults who had smoked at least 100 cigarettes in a lifetime, which they defined as lifetime cigarette smoking. Current smoking was defined as smoking one or more cigarettes in the past month and former smoking as no cigarettes in the past year. Overall and annual quit ratios were estimated as proportions of former smokers among lifetime smokers.
The researchers found that of the 161,348 lifetime cigarette smokers analyzed, 33.5 percent were former smokers.
According to the researchers, the findings support the existence of a persistent rural/urban disparity, possibly attributed to the fact that rural residents may face more barriers to using smoking cessation services than urban residents or may be in an earlier stage of motivation to quit.
They suggest smoking intervention at the clinical setting, health system or population level might improve reach and sustainability of cessation services for rural residents. Tobacco cessation resources, including telephone quit lines and telehealth counseling, could also reduce barriers to accessing tobacco treatment in rural residents.
The study team was led by Indiana University and included researchers at Yeshiva University.
September 9, 2022