Blog - Tobacco Reporter

Forest Urges Freeze on U.K. Tobacco Duty

Smokers’ rights group Forest is urging the U.K. government to freeze excise duty on tobacco in its March 15 budget after a poll found that almost two thirds of respondents (65 percent) believe the tax on tobacco in the United Kingdom is already “about right” (38 percent) or “too high” (27 percent).

Only one in five (20 percent) of those asked think the tax on tobacco is “too low,” while 15 percent said they “don’t know.”

Conducted on behalf of Forest by Yonder, the poll follows a recent report that the cost of a pack of cigarettes could go up by £1.15 ($1.36) after the Budget, while a 30-gram pouch of hand-rolled tobacco could rise by £2, if Chancellor Jeremy Hunt decides to stick with the annual tobacco escalator of inflation plus 2 percent.

The poll also found that 62 percent of adults think that purchasing tobacco from the black market is an “understandable” response given the high cost of tobacco sold legally in the United Kingdom whereas only 22 percent of respondents believe this is not an “understandable” response. Sixteen percent said they “don’t know.”

The Chancellor should freeze duty on tobacco and give smokers a break.

Simon Clark, director, Forest

According to the survey, Brits also believe that the government has more pressing concerns than tackling smoking.

Asked to consider a list of 10 issues for the government to address in 2023, respondents said tackling the rising cost of household utilities such as electricity and gas is the most important priority (54 percent), followed by improving the health service by providing more beds, frontline staff and cutting waiting lists (48 percent), tackling inflation (40 percent), and addressing care for the elderly (32 percent).

Other top priorities included tackling climate change (28 percent), the housing shortage (26 percent), and helping businesses recover from the impact of the pandemic (17 percent).

Tackling smoking was bottom of the list (10 percent), alongside tackling obesity (10 percent), and tackling misuse of alcohol (9 percent).

“The chancellor should freeze duty on tobacco and give smokers a break,” said Forest Director Simon Clark.

“Raising the tax on tobacco not only discriminates against poorer smokers, it will drive more consumers to the unregulated black market.

“This is bad news for legitimate retailers and bad news for the Treasury which could lose billions of pounds in revenue if more consumers buy their tobacco from illicit traders.”

“Significantly, there is very little stigma attached to buying tobacco on the black market. In a cost of living crisis the public understands that many consumers will opt for the cheaper option, even if it’s illegal.”

March 8, 2023

U.K. Chancellor Rejects Single-Use Vape Levy

U.K. Chancellor Jeremy Hunt has rejected calls from health officials to introduce a new levy on single use vapes in the government budget due to be presented on March 15, reports the news outlet I.

The Department of Health and Social Care has been pushing for the new tax to crack down on underage vaping. The proposals are expected to be included in the government’s response to the Khan Review on smoking, but treasury sources told I that the new levy will not be included in the March 15 budget.

“Department of Health officials are keen, but it’s not going to happen,” a source told I.

Anti-smoking activists too have been urging the government to start taxing disposable vapes. “Increasing the tax on single use disposable vapes in the March budget would be easy to do and by making them less affordable could reduce both child vaping and the vast quantities of single use vapes being thrown into landfill,” Action of Smoking and Health CEO Deborah Arnott was quoted as saying.

“Adult smokers find vaping useful in helping them quit, and that’s something we support. However, in the light of the recent increase in child vaping, government action is urgently needed to tighten regulation and increase enforcement,” Arnott added.

U.K. ministers are reportedly contemplating a range of measures to discourage underage vaping. Among the plans under consideration are a ban on candy-flavored vaping liquids and a crackdown on colorful marketing that could appeal to youth.

Britain bans sales of vapes to anyone below the age of 18, but national surveys have shown an increasing trend of 11-17 year olds using the devices, with health leaders blaming the rise on the marketing and flavors associated with them.

March 8, 2023

Zimbabwe: Optimism Ahead of Sales Season

Zimbabwe’s tobacco auctions will open tomorrow, March 8, with an official ceremony at the Tobacco Sales Floor (TSF), reports Chronicle. Although the auctions sell only around 5 percent of Zimbabwe’s crop, they are the major price setter and must thus occur first. Deliveries for the contract crop are scheduled to start March 9.

This year’s marketing season kicks off earlier than last year because favorable rainfall has resulted in sufficient volumes of cured and graded tobacco to start selling. In addition to the TSF, the Tobacco Industry and Marketing Board has licensed the Premier Tobacco Auction Floor and the Boka Tobacco Floors to auction tobacco this season.

Farmers interviewed by The Herald said they were optimistic about the upcoming sales season, citing favorable growing conditions and good quality leaf.

“This year’s yield will be better than the previous season due to the implementation of best agronomic practices,” Victor Mariranyika, president of the Tobacco Farmers’ Union Trust, was quoted as saying. “In terms of agronomic practices, the farmers have been looking after the crop very well, from seedbed to the auction, and we don’t expect any damage to the tobacco as a result of the rains.”

Tobacco growers will receive 85 percent of their earnings in U.S. dollars this year, up from 75 percent last. The remainder will be distributed in local currency. About 160,000 farmers grow tobacco in Zimbabwe, which is then exported to 60 countries.

March 7, 2023

Malaysia Urged to Reassess ‘Endgame’ Bill

The Malaysian Society for Harm Reduction (MSHR) has called on the Malaysian government to reassess the generational endgame (GEG) measure regarding vaping, reports the New Straits Times.

Sharifa Ezat Wan Puteh, MSHR chairman, stated that many smokers are using vaping to quit smoking cigarettes and that the GEG could be counterproductive as it positions vaping as equally harmful as smoking.

“While vaping has health risks, we cannot ignore scientific evidence that vaping is at least 95 percent less harmful than smoking,” said Puteh. “Several reputable public health organizations have made that estimate and endorsed by multiple developed countries. In addition, vape is also recognized as an effective tool to reduce smoking hazards and rates.”

The MSHR has suggested that vaping be regulated and training be provided to vendors on proper ways to switch to nicotine-replacement therapies and vapor products. It also suggests forming an independent committee driven by science and evidence to conduct in-depth research on vapor products.

“If we look at the decline in the smoking rates in countries with higher vaping rates, it speeds up as the vaping rate increase[s],” said Puteh.

“Legislative process for the new bill will take a lengthy time,” she said. “In addition, a bill should only be tabled with detailed discussion and studies on the proposed GEG measure that the previous minister proposed.

“Given this, we believe the government should take immediate steps to regulate vape products using existing laws to speed up regulations on the products to protect consumers from prohibited ingredients by introducing standards on the product as well as prohibiting access by minors.”

March 7, 2023

UL Solutions Obtains Consent Decree

UL Solutions obtained a consent decree against two companies selling vaporizer devices with unauthorized UL Marks, reports PR Newswire. Arizer, a manufacturer of vaping devices, and Greenlane Holdings, a distributor of vaping devices, both stipulated to a consent decree, permanent injunction and judgment of $2.2 million as part of a settlement of UL Solutions’ claims against them for trademark counterfeiting and false advertising in the Northern District of Illinois.

These consent decrees are part of a years-long effort by UL Solutions to deter vaping devices with counterfeit UL Marks from entering the marketplace. In 2019, UL Solutions brought its first suit against several manufacturers and distributors of these devices, including Kandy Pens and AFG Distribution. This case also ended with a consent decree, permanent injunction and judgment.

UL 8139, Standard for Electrical Systems of Electronic Cigarettes and Vaping Devices, was published in 2018. The UL 8139 safety standard is used to evaluate these products’ electrical, heating, battery and charging systems.

While compliance with UL 8139 is voluntary, over 35 manufacturers now have their vaporizer devices certified to this standard. Manufacturers that achieve UL certification have made the choice to put their products through the certification testing process, demonstrating their commitment to preventing serious injuries from lithium-ion battery fires and explosions.

With the increasing adoption of UL 8139 across the industry, some manufacturers applied counterfeits of the UL Mark to their products or packaging.

“Our investment in deterring counterfeiting delivers tangible value to our customers,” said Tammi Burke, director of customer marketing at UL Solutions. “Our customers invest heavily in designing and manufacturing their products to meet the requirements for UL certification. Only those companies that have earned our certification have the right to benefit from using the UL Mark. Counterfeiters of the UL Mark unfairly compete in the marketplace and claim an achievement they have not legitimately earned.”

“UL Marks appear on billions of products globally to demonstrate that these products meet scientific safety, performance or sustainability standards,” said Jackie McLaughlin, executive vice president and chief legal officer at UL Solutions. “To help safeguard the integrity of the UL Mark, we are committed to protecting our brand and taking on counterfeiters where necessary to protect the public and help fulfill our mission of working for a safer world. We applaud this decision by the Northern District of Illinois as it will help ensure the UL Mark remains a symbol of trust to the public.”

March 7, 2023

Study: Menthol Ban Increased Smoking Among Black Women

Massachusetts’ menthol cigarette ban led to a net increase in smoking among Black adults, according to a research letter published in JAMA Internal Medicine, reports the Reason Foundation.

Samuel Asare, principal scientist in tobacco control research at the American Cancer Society, suggested that banning menthol cigarettes is counterproductive to public health goals and called for better health equity.

“As the [U.S. Food and Drug Administration] plans to eliminate menthol as a characterizing flavor in cigarettes, interventions should address possible increases in cigarette smoking among Black females,” the research letter states.

The research showed that the menthol ban led to an 8.1 percent relative decrease in smoking among adults aged 25 and older, with the prevalence of current cigarette use dropping from 13 percent in 2019 to 12 percent in 2021. Part of this decrease was due to a 56.8 percent relative decrease in smoking among Black men. However, with a 58.6 percent relative increase in smoking among Black women and an equal prevalence of smoking among both genders in 2019, the menthol cigarette ban led to a net increase in smoking among Black adults in Massachusetts.

March 7, 2023

Factory Searched for Untaxed Products

Ukrainian detectives from the Economic Security Bureau of Ukraine and the Territorial Department of the Security Intelligence Service are searching a tobacco factory in the Lviv region upon suspicion of untaxed tobacco products.

Company officials are suspected of manufacturing and storing tobacco products without excise tax stamps; accounting and tax records do not show the economic transactions, and income received was not declared.

March 7, 2023

Ministers Oppose Vaping Ban

Health Minister Orazio Schillaci has been labeled a “communist” for his proposal to extend Italy’s public smoking ban, reports Reuters.

Schillaci’s plan, which also covers vaping, would cover the outside areas of bars and public transport stops, along with parks if pregnant women and children are present.

Junior Culture Minister Vittorio Sgarbi called Schillaci’s view “intimidating” and said such bans would instead encourage people to smoke.

“This is something typical of an authoritarian and dictatorial communist regime,” Sgarbi told AdnKronos news agency.

Italy’s minister of infrastructure and transport, Matteo Salvini, too, was outraged by the proposed law, saying that it was thanks to electronic cigarettes that he quit smoking, according to The Blitz.

“Electronic cigarettes are helping a lot of people to abandon regular cigarettes,” Salvini wrote on Twitter.

Some 24 percent of adult Italians were smokers last year—roughly 12.4 million people and the highest percentage recorded since 2009, according to Italy’s ISS health institute.

The government passed a ban on smoking indoors in 2003, which came into force two years later.

Health association Fondazione Umberto Veronesi estimates that at least 43,000 people die in Italy every year from smoking-related diseases.

March 7, 2023

Altria to Acquire NJOY Holdings

Altria Group has entered into an agreement to acquire NJOY Holdings for approximately $2.75 billion in cash. The transaction terms include additional $500 million in cash payments that are contingent upon regulatory outcomes with respect to certain NJOY products.

“We believe we can responsibly accelerate U.S. adult smoker and competitive adult vaper adoption of NJOY Ace in ways that NJOY could not as a standalone company,” said Altria CEO Billy Gifford in a statement. “We believe the strengths of our commercial resources can benefit adult tobacco consumers and expand competition. We are also excited to welcome NJOY’s talented employees to Altria at closing.”

“As a result of this transaction, Altria’s enhanced smoke-free portfolio will include full global ownership of products and technologies across the three largest smoke-free categories and a joint venture with JT Group for the U.S. commercialization of heated tobacco stick products.”

“We are excited to add NJOY’s e-vapor intellectual property as a new platform that we believe we can build on to help more adult smokers transition to smoke-free alternatives,” said Olivier Houpert, Altria’s new chief innovation and product officer.

Altria will hold a conference call at 9 a.m. Eastern Time on March 6, 2023. Access to the live webcast is available at. A replay of the webcast and a transcript will be available on the same website following the event.

In 2022, the U.S. vapor category comprised nearly 14 million U.S. adult tobacco consumers, including 9.5 million exclusive adult vapers, according to Altria. The segment generated approximately $7 billion in U.S. retail sales and represented approximately 15 percent of total estimated equivalized U.S. tobacco volumes and more than 50 percent of total estimated equivalized smoke-free tobacco volumes.

To date, the U.S. Food and Drug Administration has approved the marketing of 23 vapor products and devices. In 2022, NJOY received marketing granted orders for the NJOY Ace device, along with several tobacco-flavored pods. The regulatory agency is still reviewing NJOY’s premarket tobacco product applications for several NJOY menthol-flavored e-vapor products.

Altria said it had multiple sources of funding for the deal, including cash from a $2.7 billion agreement with Philip Morris International last year for the IQOS Tobacco Heating System.

The NJOY deal follows an announcement by Altria that it would exchange its entire minority investment in embattled Juul Labs for a nonexclusive global license for certain of Juul’s heated tobacco intellectual property.

March 6, 2023

22nd Century Group Secures Financing

22nd Century Group announced a new $21 million senior secured debenture financing to support increased working capital needs related to the significant growth outlook in both its VLN and GVB business lines. The new three-year financing was issued at a 5 percent original issuance discount, will bear cash interest at a rate of 7 percent per year and commence principal amortization in the second year at a rate of 2 percent of the original balance per month. The company has the option to redeem the facility early starting in the second year.

“We anticipate significant revenue growth in both of our core business lines and believe this financing will provide the appropriate working capital for the year ahead,” said Hugh Kinsman, chief financial officer, in a statement. “New retail partners already in talks to launch VLN in additional states as part of our national-scale distribution capabilities are expected to increase our manufacturing and inventory requirements. Additionally, the continued growth in customer demand at GVB has increased our capital needs for bulk ingredients and inventory going forward.”

In conjunction with the new credit facility, 22nd Century has also extended the maturity of $2.7 million in legacy seller notes assumed with its acquisition of GVB Biopharma to mid-2024. The company will file a Form 8-K with the Securities and Exchange Commission with complete details of the new debt facility and the terms of the refinanced legacy seller notes.

March 6, 2023