Blog - Tobacco Reporter

Chemular and IGEN Join Forces

Chemular and IGEN have formed a strategic alliance to create a new Compliance as a Service (CaaS) platform focused on streamlining the burden of compliance to small-sized and medium-sized companies who need turnkey solutions for Prevent All Cigarette Trafficking (PACT) Act, excise tax reporting and registration services.

“The time and effort required to stay compliant with federal, state and local laws is increasingly burdensome for small-[sized] to mid-sized companies in regulated categories,” said Jason Carignan, chief commercial officer of Chemular, in a statement. “Except for larger players, most companies don’t have a dedicated compliance officer who can ensure every regulatory detail is addressed so their products can stay on the market—especially in industries like ours, where the rules change rapidly. Chemular, now powered by the IGEN backbone, will be able to significantly scale its turnkey compliance service offering to a growing portfolio of tobacco manufacturers and distributors.”

In addition to saving time, utilizing the new CaaS platform can provide regulated companies with many other benefits, according to a company press release, including: streamlined remittance and reporting for excise tax, PACT Act, state registrations, and license capture; optimized growth opportunities by allowing employees and leadership to focus on what they do best: developing products and services; avoiding penalties with scaled compliance efforts that easily adapt to new markets with potentially different laws and regulations as the company grows; and reducing risk by monitoring real-time data and evolving regulations while establishing automated procedures that can minimize errors and detect fraud.

Failure to adhere to compliance guidelines can be costly for companies, leading to large fines and expensive sanctions, regulatory scrutiny and loss of trust in the marketplace. In some cases, noncompliant companies can have their products removed from store shelves, giving space to competitors who were able to better adjust to changing regulations.

“Compliance can be a long-term strategic advantage, yet most emerging businesses don’t have the resources and expertise to keep up with the growing complexity in regulatory requirements,” said Ryan Padget, president of IGEN. “We’re excited to bring our technology to Chemular, whose clients are regularly faced with regulatory hurdles, like PACT and excise tax reporting. This is just the beginning for our partnership—one that we see as a win for the industry as a whole.”

Along with this announcement, the Chemular and IGEN teams will be appearing at the tobacco industry’s largest trade show, TPE24, providing resources and education to the show’s retail attendees. Chemular will be hosting the “Fortify Your Future” educational sessions of the show from Jan. 30, 2024, to Jan. 31, 2024, and will be available to speak with attendees at their second-floor meeting room located next to the educational session.

Companies interested in becoming compliant or streamlining their current processes can visit www.chemular.com for more information.

January 29, 2024

BAT Faces Lawsuits Over Impairment

BAT is facing potential shareholder lawsuits targeting the $31.5 billion write-down in the fair market value of R.J. Reynolds Tobacco Co.’s traditional cigarette brands, according to the Winston-Salem Journal.

The write-down was disclosed in early December 2023. BAT changed the value status of Newport, Camel, Pall Mall and Natural American Spirit to “finite” from “indefinite.” The value lifespan of these brands has shifted to about 30 years from “perpetual,” according to Tadeu Marroco, BAT CEO, in the company’s fiscal 2023 financial update.

Multiple law firms, including Rosen Law Firm and Kuznicki Law, are soliciting plaintiffs for a class-action lawsuit. Some firms have cited a deadline of March 25, but a new round of solicitations has been made this week.

The law firms are requesting a class-action period of Feb. 9 to Dec. 6 for purchasers of BAT’s publicly traded securities.

BAT and certain unnamed current and former executives are potential defendants.

The potential lawsuits claim that BAT “made false and/or misleading statements and/or failed to disclose that BAT materially understated the risks and potential likelihood of an impairment to its premium American cigarette brands as a result of various longstanding headwinds.”

Following the write-down, investors sent share prices down 9 percent.

According to PricewaterhouseCoopers, an indefinite value “has no expiration date barring any significant legal, regulatory, contractual, competitive, economic or other factors that limit its useful life to the reporting entity.” A finite value typically covers brands whose worth is likely to decline over time.

Reynolds has been under increasing pressure from BAT to improve overall traditional cigarette performance. According to Marroco, BAT’s “performance in U.S. combustibles (traditional cigarettes) has been disappointing. Returning combustibles to consistent value creation is critical to our multi-category strategy in the U.S.”

January 29, 2024

China: Chain-smoking marathon runner banned

A 52-year-old man has been banned from Xiamen Marathon’s races for two years after he chain-smoked throughout the C&D Xiamen Marathon 2024 on Jan. 7, 2024, according to The Independent. He completed the race in three hours and 33 minutes, but his time and ranking were voided.

The smoker has also been reported to the Chinese Athletics Association for further penalties.

The man’s smoking was verified by “race supervision, referee reports, timing chip data, race videos, pictures and other materials,” according to the organizing committee.

The runner is popularly known as Uncle Chen and is often called “Smoking Brother,” according to Canadian Running magazine.

Chen reportedly smoked during a 2022 marathon as well.

Smoking is listed as one of the “(punishable) uncivil behaviors” on the Xiamen Marathon’s website along with “open defecation, littering, trampling on the flowers and grass and other behaviors that might affect other runners.”

Other Chinese cities have begun addressing smoking during marathons and introducing rules against “uncivilized behavior.” The Chinese Athletics Association introduced a proposal last year aimed at encouraging healthier participation and reducing smoking during road-running events. According to the proposal, participants caught not adhering to the new rules would be subject to disqualification.

Chen is an ultramarathoner, and images of him smoking during races first emerged in 2018.

January 29, 2024

Activists Protests ‘Misguided’ Zyn Probe

U.S. Senate Majority Leader Chuck Schumer’s call on the U.S. Food and Drug Administration and Federal Trade Commission to investigate the marketing practices and health effects of Philip Morris International’s Zyn nicotine pouch brand provoked a backlash among advocates of tobacco harm reduction.

“The American people have seen this movie before with less harmful e-cigarettes,” said Tony Abboud, executive director of the Vapor Technology Association (VTA).

“Congressional leaders yell at unelected bureaucrats at the FDA who scurry to remove products from the market that offend their sensibilities—even though those products are less harmful than traditional cigarettes, and have been proven to help people quit smoking deadly cigarettes altogether.

“These misguided actions deprive American adults of less harmful, non-combustible, and non-tobacco nicotine products that are a proven alternative to combustible cigarettes and that the largest clinical trial in the U.S. has found to cause them to quit smoking even if they have no intention to quit cigarettes.

“There is already a de-facto ban on e-cigarettes. Sen. Schumer simply wants this ban extended to other products he and the Washington establishment deem undesirable.

“As with e-cigarettes, Sen. Schumer falsely asserted that Zyn products are popular with younger users. Yet, the National Youth Tobacco Survey data demonstrates that only 1.5 percent of youth have even tried nicotine pouches. When will the federal government stop hiding behind an excuse that has been disproven by their own data?

“VTA stands with Zyn, and the makers of modern oral nicotine pouches, in the fight against arbitrary and capricious government action. Because cigarettes remain the No. 1 cause of preventable death and disease in the U.S., VTA insists on broad access to a wide variety of non-combustible products to preserve freedom of choice for adults who want to use nicotine – and to provide access to proven harm-reduction and smoking-cessation options essential for saving American lives.”

Earlier, Schumer’s call for an investigation prompted PMI to publish a video clarifying its marketing practices.

January 28, 2024

Tanzania Targets Illicit Drug Sales

Tanzania initiated a nationwide operation targeting all illicit drug selling points, pharmacies and entertainment venues where shisha is widely available, says the Drug Control and Enforcement Authority (DCEA), according to the Xinhua News Agency.

The operation will encompass land and sea areas, according to DCEA Commissioner Aretas Lyimo.

Lyimo noted that recent operations uncovered widespread cannabis cultivation in the Mara and Morogoro regions, and there were high instances of drug-related cases in Kilimanjaro and Tanga.

“The operations will encompass drug farms, border areas, distribution points and usage sites, including bars,” said Lyimo. “Anyone found using drugs, including shisha, will face legal consequences.”

January 26, 2024

Kaival Announces Reverse Stock Split

Kaival Brands Innovation Group, the parent to Bidi Stick vaping products, announced a 1-for-21 reverse stock split that became effective at the opening of trading Jan. 25.

It’s not the first time the company has made such a move. In 2021, when the company applied to list on NASDAQ, the company implemented a 1-for-12 reverse split of its common stock, effective before the opening of the market on July 20. As a result of that reverse split every 12 shares were exchanged for one share of the common stock.

Kaival Brands’ Common Stock will continue to trade on the Nasdaq Capital Market under the symbol KAVL. The new CUSIP number for the Common Stock following the Reverse Stock Split will be 483104402.

The company’s board approved the Reverse Stock Split. The material effects of the Reverse Stock Split are:

Every 21 shares of the issued and outstanding Common Stock has been combined into one (1) share of Common Stock.
The number of outstanding shares of Common Stock has been proportionally reduced from 58,661,090 shares to approximately 2,793,386 shares.
The Reverse Stock Split will not reduce the total number of Kaival Brands’ authorized shares of Common Stock.
The ownership percentage of each Kaival Brands stockholder will remain unchanged, other than as a result of fractional shares. No fractional shares of Common Stock will be issued in connection with the Reverse Stock Split. Stockholders that would hold a fractional share of Common Stock as a result of the Reverse Stock Split will have such fractional shares of Common Stock rounded up to the nearest whole share of Common Stock.
The number of shares of Common Stock available for issuance under the Company’s equity incentive plans and the Common Stock issuable pursuant to outstanding equity awards and common stock purchase warrants immediately prior to the Reverse Stock Split will be proportionately adjusted by the ratio of the Reverse Stock Split. The exercise prices of such outstanding options and warrants will also be adjusted in accordance with their respective terms.

“Among other considerations, the Reverse Stock Split is intended to assist in bringing Kaival Brands into compliance with the $1.00 minimum bid price requirement for maintaining the listing of its Common Stock on the Nasdaq Capital Market, and to make the prevailing prices of the Common Stock more attractive to a broader group of institutional investors,” the company wrote in a press release.

Stockholders owning shares via a broker, bank, trust or other nominee will have their positions automatically adjusted to reflect the Reverse Stock Split, subject to such broker’s particular processes. Such stockholders will not be required to take any action in connection with the Reverse Stock Split.

January 26, 2024

KT&G Implements Early Settlement Payments

KT&G is implementing early cash payments of settlement amounts to small and medium-sized partner companies to alleviate their burdens and strengthen cooperative management ahead of the Lunar New Year.

Among the partner companies that supply raw materials, components and consumables, KT&G is expediting the payment of a total of KRW664 billion to 41 companies more than a month earlier than the regular payment date.

To ease the financial burden on small and medium-sized partner companies, which face increased capital demands before major holidays such as Lunar New Year and Chuseok each year, KT&G has been executing early payments of settlement amounts. Last Chuseok, they made advance payments totaling KRW917 billion ($497.5 million) to support the liquidity of partner companies.

Furthermore, KT&G is actively participating in the “Settlement Amount Linked Company” program, which reflects the increase in raw material prices in supplier payments, reducing the burden on small and medium-sized partner companies. This initiative aims to establish a cooperative trading culture and lead the way in the development of a fair market economy.

In addition to these efforts, KT&G is operating various support systems for mutual growth, such as monthly full cash payments of settlement amounts to alleviate financial difficulties for partner companies.

“Amidst ongoing global inflation and interest rate hikes, we decided to expedite the payment of settlement amounts to partner companies facing high capital demand ahead of the Lunar New Year,” said a KT&G representative in a statement. “We will continue to explore various support measures to realize the values of mutual growth with partners and enhance sustainability across the entire value chain.”

January 26, 2024

UKVIA Exposes Illicit Vape Sellers

Authorities have been alerted to more than 100 retailers suspected of underage and illicit vape sales through the U.K. Vaping Industry Association’s (UKVIA) nationwide Be Vape Vigilant initiative, according to a UKVIA press release.

The ongoing campaign, which started at the end of 2023 and is supported by Trading Standards, the Association of Convenience Stores and the wider retail sector, was created to encourage legitimate businesses and the general public to help cut off youth sales and the supply of illegal products at source by turning in those retailers and wholesalers believed to be flouting the law.

A new online platform has been established as part of the initiative, through which suspected rogue traders can be reported. The UKVIA then passes the information on to the relevant authorities who will use the intelligence in their ongoing efforts to crackdown on rogue traders. To date, 136 reports have been made through the platform.

“Trading Standards Services rely on intelligence to target enforcement effectively and efficiently, so we are pleased that the Be Vape Vigilant reporting line is being used to let us know about people selling illegal vapes and/or selling vapes to children,” said Kate Pike, lead officer for vaping at Trading Standards. “The more intelligence the better from our point of view”

Of those businesses flagged, more than half were nonspecialist retailers including convenience stores, corner shops, off-licenses and market stalls. One of the sellers reported through the platform was a dessert shop and one was a private residence.

Almost 20 percent of all reports related exclusively to the underage sale of vaping products, while 47 percent related exclusively to illicit and noncompliant products. Overall, more than one-third of the reported businesses were believed to be guilty of both.

Other key data includes: 77 percent of the retailers were physical sellers while 23 percent were online; 84 percent of the retailers were located in England, 9 percent in Scotland and 7 percent in Wales; Swansea was the area with the highest number of reports; at least two of the retailers have previously been reported to Trading Standards and the police; and eight of the retailers were suspected of engaging in other illegal activity such as the supply of drugs and the underage sale of tobacco.

“I was pleased to see so many people have engaged with the campaign in the short time since its launch and thank all those who have used the Be Vape Vigilant platform to sound the alarm on retailers suspected of underage and illicit vape sales,” said UKVIA Director General John Dunne. “Many of the reports actually came from legitimate vape retailers, which makes clear that unscrupulous sellers are not welcome and will not be tolerated by our industry.

“The data gathered from the first batch of reports supports the link between youth access to vaping and illicit products with many of the retailers believed to be engaging in both. Further, the sheer number of reports, paired with the fact that two of the retailers have already been reported to the authorities, reinforces the need for greater resources and support for Trading Standards.”

Dunne added: “The UKVIA is currently involved in a major industry-wide consultation to develop a framework for vape retail and distributor licensing—due to be presented to parliamentarians in February—which could generate millions of pounds in additional funding for enforcement and further bring the hammer down on rogue retailers.

“While 100 reports is an excellent first milestone, this only represents a step on the journey to creating a more responsible and accountable sector—which is why the UKVIA will be ramping up this campaign moving into 2024 and is calling on those within and outside the industry to be vape vigilant.”

As part of the Be Vape Vigilant initiative, the UKVIA has also created a range of downloadable materials, which businesses can display in-store and online to mobilize the general public in helping to bring cowboy retailers and wholesalers to justice.

January 26, 2024

PMI Clarifies Zyn Marketing Practices

Philip Morris Global Chief Communications Officer Moira Gilchrist has clarified in a video presentation PMI’s marketing practices and facts relating to Zyn nicotine pouches, which recently came under fire by Senate Majority Leader Chuck Schumer.

Schumer asked the U.S. Food and Drug Administration and the Federal Trade Commission to take action on PMI’s marketing practices and the health effects of Zyn, calling the product the next “trend in addiction for teens.”

January 26, 2024

Kiwi Tax Freeze Proposal Gets Backlash

A proposal to freeze tobacco excise taxes for three years has triggered a fierce backlash in New Zealand, according to Radio New Zealand.

Associate health minister Casey Costello came under heavy political fire after she suggested temporarily halting tobacco tax increases in consideration of smokers’ socioeconomic backgrounds. Smokers tend to earn lower wages than the population at large.

Health Coalition Aotearoa co-chairperson Boyd Swinburn said such a move would make tobacco products more accessible.

“This proposal from Costello to put a three-year freeze on this inflation-adjusted excise tax is essentially meaning that tobacco is going to get relatively cheaper over the next three years, because it won’t be keeping pace with the rest of inflation,” he said.

Swinburn called on Prime Minister Christopher Luxon to take action.

“The Health Coalition is calling for [Costello] to be replaced as an associate minister of health, given all these policies she’s come out with which are really supporting the tobacco industry’s position.”

Action on Smoking and Health Director Ben Youden said the Costello’s proposal did not make much sense.

“Given the finance minister has stated last year that tobacco tax is an important revenue, it seems odd that a freeze on excise tax would be on the table.”

Asthma and Respiratory Foundation NZ chief executive Letitia Harding called Costello’s proposal “outrageous,” adding that it amounted to another win for the tobacco industry.

The current coalition government has been criticized for tobacco-friendly policies. One of the first actions upon taking power in late 2023 was to ditch the country’s controversial generational tobacco ban.

January 26, 2024