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  • Korea to Crack Down on E-liquid Tax Evaders

    Korea to Crack Down on E-liquid Tax Evaders

    Photo: makistock

    South Korea plans to crack down on traders who try to evade taxes on e-liquids by falsely claiming that their products contain synthetic nicotine rather than tobacco-derived nicotine, reports The Korea Bizwire.

    On Nov. 10, the Korea Customs Service announced it has developed a highly accurate method to identify whether the nicotine contained in e-liquid is extracted from tobacco leaves or created in a laboratory. 

    This method uses derivatization technology to increase the detection sensitivity by a factor of 30. 

    Classified as cigarettes under tax laws, e-liquids containing natural nicotine are subject to an inland duty of KRW1,799 ($1.32) per mL. 

    By contrast, e-cigarettes containing synthetic nicotine are classified as manufactured goods and are therefore exempt from cigarette consumption taxes. 

  • Iranian Tobacco Mulls Investment in Zimbabwe

    Iranian Tobacco Mulls Investment in Zimbabwe

    Photo: Taco Tuinstra

    The Iranian Tobacco Co. wants to invest in Zimbabwe to reduce the cost associated with buying tobacco through middlemen, reports The Sunday Mail. Among the areas the Iranians are targeting are irrigation, curing and mechanization. They also want to contract with farmers and set up factories in Zimbabwe. 

    The investments were discussed during a visit to Tehran by a delegation led by Zimbabwe First Lady Auxillia Mnangagwa.

    “We get our needs through agents, and prices go higher for us and also causing Zimbabwean farmers to have little profit,” said Iran’s vice president of commerce and economy, Hamid Gharesheikh, during the meeting.

    “We want to get companies to work with directly in Zimbabwe and do away with middlemen. We are under sanctions, and it’s difficult for us to import from other Western countries, but with Zimbabwe, we have a better understanding and for that, our cooperation will be helpful to both of us. We can also supply you with equipment such as tractors and implements for production. We can also supply dryers for curing and processing,” he said. 

    The proposed cooperation dovetails with Mnangagwa’s passion to economically empower Zimbabwe’s citizenry, especially women and youths, in the effort to attain upper middle-income status for the country by 2030. 

    During the meeting, Gharesheikh said Iran would prioritize women in its investments.

  • Morocco to Increase Waterpipe Taxes

    Morocco to Increase Waterpipe Taxes

    Photo: alexlmx

    Morocco is preparing to increase taxes on waterpipes, reports Morocco World News.

    The country’s Finance and Economic Development Committee approved the new taxes on Nov. 9. Following the increase, smokers would pay MAD675 ($63) per kg of shisha smoking material.

    The approval comes after a government amendment to the Finance Bill of 2023 extending the tax base to include shisha without tobacco and electronic cigarettes. 

    Officials said the measure “aims to preserve the health of consumers, especially young adults, and to protect them against the negative effects of consumption and addiction to these products.” 

    The statement further explains that the imports of tobacco-free shisha are not subject to taxes, although they carry the same health risks as tobacco-based shisha. 

    The decision to raise the tax is based on World Health Organization research indicating that smoking products containing a mixture of fruits and herbs without tobacco pose a similar risk to tobacco products. 

    The WHO recommends subjecting such products to the same restrictions and taxes as tobacco products.

    According to the Moroccan government, the European Commission classifies herbal mixtures, aromatic herbs or fruits as smoking products.

  • Pyxus Sales up by Third

    Pyxus Sales up by Third

    Photo: Taco Tuinstra

    Pyxus International reported sales and other operating revenues of $508.3 million for the three months ended Sept. 30, 2022, up 28.9 percent in the comparable 2021 period. Operating margin increased $21.6 million to $27.1 million. Net loss improved by $8.2 million to $1.5 million. Adjusted EBITDA increased 63 percent to $42.2 million.

    “We are pleased with the results achieved during the first half of fiscal 2023, particularly our efforts to reduce supply chain complexities and increase operational efficiencies,” said Pyxus President and CEO Pieter Sikkel in statement.

    “These efforts resulted in more normalized shipments in certain markets compared to the prior year. During the quarter, we increased sales and other operating revenues by $114.1 million, and operating margin improved by $21.6 million primarily due to increased demand and more normalized timing of shipments from Africa, Asia and South America.

    “This enabled the company to utilize cash generated from increased sales in the quarter to refinance the Delayed Draw Term Loan Facility, repay a portion of the revolving loan facilities and fully fund the U.S. defined benefit pension plan.

    “As of Sept. 30, 2022, our inventory increased $87.7 million compared to the prior year primarily due to higher green tobacco prices and processing costs in Africa and South America and delayed shipments from North America. Our processed tobacco inventory continues to be more than 90 percent committed to specific customers. The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand.

    “The prevailing La Nina weather patterns continue to adversely affect the global supply of tobacco. Through our efforts to accelerate buying activities in certain key markets, investments we have made across the business, and engaging with customers in transparent dialogue regarding the impacts of La Nina and inflation on our business, we purchased sufficient volume to meet near-term customer demand and maintained our gross profit as a percentage of sales despite historic inflation.

    “As we approach the second half of fiscal 2023, we are closely monitoring the market for crop inputs like fertilizer and taking steps to mitigate the near-term risk of supply shortages where possible. We continue to expect fiscal 2023 sales to be between $1.75 billion and $1.95 billion and adjusted EBITDA to be between $130 million and $160 million.

    “We remain focused on driving stakeholder value as we accelerate our contributions toward a net-zero future and were recently awarded a Golden Leaf Award in the Best ESG Program category for our efforts to promote sustainable fuel production helping to mitigate deforestation. We received positive feedback from customers on our environmental, social and governance framework, specifically our strategic alignment with our customers’ targets, and look forward to increasing collaboration so that together we can grow a better world.”

  • LG Chem Beats Exploding Battery Lawsuit

    LG Chem Beats Exploding Battery Lawsuit

    Photo: gangster9686

    LG Chem has defeated a lawsuit in Ohio over an exploding e-cigarette battery after a federal judge ruled he has no jurisdiction to oversee the case, reports Law360.

    Paul Straight sued the South Korean chemicals company after an e-cigarette purchased at a Vapor Station store in Ohio exploded and burned through his jeans and left thigh. He sustained second-degree and third-degree burns to his thighs and left wrist and now limps as a result of his injuries, according to his lawsuit.

    LG Chem maintained it did not authorize Vapor Station to sell single batteries. Rather, they were meant to be used in battery packs for power tools and other products. The company also argued it did not make, sell or distribute the batteries in Ohio.

    The judge did not buy Straight’s assertion that the company’s other business in the state was enough for the judge to exercise specific jurisdiction.

    “LG Chem in fact has established that it neither earned revenue from the sale or distribution of 18650 cells in Ohio nor advertised or solicited business in Ohio with respect to 18650 cells,” Judge James L. Graham of the Southern District of Ohio wrote.

    The case is Paul Straight v. LG Chem Ltd. et al., case number 2:20-cv-06551.

  • California Sued Following Flavor Poll

    California Sued Following Flavor Poll

    Photo: niroworld

    Tobacco companies filed a lawsuit against California in federal court over the state’s ban on flavored tobacco one day after voters backed the ban in a Nov. 8 referendum, reports the Courthouse News Service.  

    Though more than half the state’s ballots have yet to be counted, media outlets have declared that the referendum will pass. Unless a judge agrees to intervene, the ban is set to go into effect no later than Dec. 21, 2022.

    In their suit, the tobacco companies argue that the Family Smoking Prevention and Tobacco Control Act (TCA) of 2009 allows states and municipalities to regulate tobacco products but not to ban their use or sale.

    “The ban falls under the TCA’s express preemption clause, which preempts ‘any [state] requirement’ that is ‘different from, or in addition to,’  a federal requirement about a tobacco product standard,” the suit reads. “A flavor ban is a paradigmatic tobacco product standard.”

    In 2020, California lawmakers passed a ban on all flavored nicotine products except hookah, loose leaf tobacco (for pipes) and premium cigars. Menthol products are also covered by the legislation.

    Opponents of the ban collected more than 1 million signatures and forced the state to hold a referendum on the ban. Originally scheduled to take effect Jan. 1, 2021, the legislation was then suspended until the Nov. 8 vote.

    Tobacco companies already sued California over the flavor ban in 2021. But a federal judge dismissed the case, telling the plaintiffs to wait for the voters to weigh in before suing.

  • Juul Secures Funding to Stay in Business

    Juul Secures Funding to Stay in Business

    Photo: H_Ko

    Juul Labs has secured a cash infusion that will keep the e-cigarette maker in business while it appeals the U.S. Food and Drug Administration’s marketing denial order (MDO) related to its vapor products, reports The Wall Street Journal.

    Juul Labs reportedly has stopped bankruptcy preparations. As part of a reorganization, the company plans to lay off 400 employees and reduce its operating budget by up to 40 percent.

    The financing is the first piece of a bailout package under discussion with two early Juul investors, Nick Pritzker and Riaz Valani, who were Juul’s largest shareholders before Altria Group bought its Juul stake for $12.8 billion.

    A pioneer in the vaping business, Juul Labs has gone from dominating the U.S. e-cigarette market to fighting for its survival in a relatively short time.

    Following its initial success, the company quickly came under regulatory scrutiny over its marketing practices. Critics blame Juul Labs for contributing to an “epidemic” of underage vaping.

    Thousands of lawsuits have been filed against Juul over the past several years, alleging that the company marketed its e-cigarettes to children. Juul has said it never marketed to underage users.

    In September, Juul Labs agreed to pay nearly $440 million to settle a two-year investigation by 33 U.S. states into the marketing of its vaping products.

    Juul’s e-cigarettes were briefly banned in the U.S. in late June after the FDA concluded that the company had failed to show that the sale of its products would be appropriate for public health. But following an appeal, the health regulator put the ban on hold and agreed to an additional review of Juul’s marketing application.

    In October, Juul published the details of its MDO appeal. In late September, Juul shareholder Altria Group exercised the option to be released from its noncompete deal with the e-cigarette maker.

  • Youth Tobacco Survey Results Released

    Youth Tobacco Survey Results Released

    More than one in 10 U.S. middle school and high school students (3.08 million) had used a tobacco product during the past 30 days in 2022, according to data from the 2022 National Youth Tobacco Survey (NYTS) released by the U.S. Food and Drug Administration and Centers for Disease Control and Prevention in the Morbidity and Mortality Weekly Report. This figure included 16.5 percent of high school students and 4.5 percent of middle school students.

    Approximately 3.7 percent (1 million) of all students reported currently smoking any combustible tobacco product. Current use of at least two tobacco products was reported by 3.5 percent (960,000).

    The most commonly used type of product were e-cigarettes (9.4 percent), followed by cigars (1.9 percent) and cigarettes (1.6 percent). More than 2.5 million middle school and high school students currently used e-cigarettes.

    “It’s clear we’ve made commendable progress in reducing cigarette smoking among our nation’s youth. However, with an ever-changing tobacco product landscape, there’s still more work to be done,” said Brian King, director of the FDA’s Center for Tobacco Products. “We must continue to tackle all forms of tobacco product use among youth, including meaningfully addressing the notable disparities that continue to persist.” 

    Additionally, the 2022 NYTS findings suggest ongoing disparities in tobacco product use—both overall and across population groups. For example, current use of any tobacco product was higher among non-Hispanic American Indian or Alaska Native students (13.5 percent), those identifying as lesbian, gay or bisexual (16 percent), transgender (16.6 percent), and those experiencing severe psychological distress (12.5 percent). Non-Hispanic Black students reported the highest percentage of combustible tobacco product use (5.7 percent), including cigar use (3.3 percent).

    The NYTS is a nationally representative survey of U.S. middle school (grades 6–8) and high school (grades 9–12) students that focuses exclusively on tobacco product use and associated factors and remains critical to informing the FDA’s tobacco regulatory activities in the United States. The FDA and the CDC have been collaborating on the implementation of the NYTS questionnaire and release of data since 2011.

  • Firms Urge Crackdown on Illicit Trade

    Firms Urge Crackdown on Illicit Trade

    Photo: Ivan Semenovych

    Tobacco companies have called on the government of Ukraine to crack down on the illegal cigarette trade, reports Interfax Ukraine.

    Speaking during a roundtable discussion organized by the American Chamber of Commerce in Ukraine, Philip Morris Ukraine General Manager Maksym Barabash noted that war, inflation and the associated drop in consumer incomes had accelerated the growth of the illegal tobacco market in Ukraine.

    In August 2022 alone, the share of illegal tobacco products grew by 5 percentage points to 21.9 percent from 16.9 percent in 2021. According to Barabash, the state misses out on UAH44 ($1.19) from each illegal pack of cigarettes. To date in fiscal year 2022, the state budget has already lost UAH20.6 billion in unpaid tobacco taxes.

    To facilitate the fight against illegal cigarettes, tobacco companies proposed the creation of a joint working group with a coordination center in the Office of the President.

    “Countering illegal turnover of tobacco products belongs to the competence of several regulatory and law enforcement agencies,” said Svitlana Sharamok, general manager of Japan Tobacco International Ukraine. “However, due to the unclear division of powers, these agencies do not always work in a coordinated manner and sometimes even compete with each other.”

    Sharamok added that the work of the new group should not be judged by the number of raids or confiscated cigarettes but by the decrease in illegal sales.

  • ‘Evidence on Heating Products Substandard’

    ‘Evidence on Heating Products Substandard’

    Photo: librakv

    The quality of evidence available about heated-tobacco products (HTPs) is substandard, and policymakers should be wary of claims made about their role in harm reduction, say the authors of a new study published in Tobacco Control.

    HTPs have gained popularity in recent years, with proponents insisting they are less harmful to health than conventional cigarettes. However, researchers at the University of Bath argue that the evidence underpinning these claims is largely unrepresentative of real-world use and at high risk of bias.

    In their analyses of 40 publicly available clinical trials for HTPs—29 of which were tobacco industry affiliated or funded—the researchers judged most of the available clinical trials “at high risk of bias” given their methodology and choice of study design.

    The most common reason for studies being at high risk of bias was performance bias, whereby the interventions allocated were known to participants and those conducting tests. There was also failure to report all results data for all trial measurements, a shortcoming known as selective reporting bias.

    The authors argue that presence of these biases compromises the validity of trials and can lead to overestimation of the effects of HTPs. They also identified further limitations within trials, including short durations, restrictive conditions unreflective of real-world circumstances and a lack of relevant comparators, like e-cigarettes.

    Bath’s Tobacco Control Research Group says much more detailed, independent research is needed to assess the short-term and long-term health effects of HTPs.

    In the meantime, they argue that consumers should be wary of harm reduction claims and that policymakers and regulators should carefully consider the usefulness of these trials when making decisions surrounding HTPs.

    “Over recent years, we have seen great expansion in the heated-tobacco market in the U.K. and around the world. This growth has been predicated on a marketing claim that these products are better for health in comparison with traditional cigarettes,” said lead researcher Sophie Braznell from Bath’s Department for Health.

    “Our analysis suggests that the picture is far less clear cut. The clinical trials available, which are used by the tobacco industry to substantiate these claims, were often substandard in terms of how studies were conducted and reported, and most were industry-affiliated in some way.

    “As more consumers move away from cigarettes toward these new-generation products, we need much better evidence to assess their health impacts now and into the future. In the meantime, the jury is very much still out on their benefits.”

    “These findings in relation to clinical trials for heated-tobacco products are significant and we need to be wary of health claims made,” added study co-author Gemma Taylor from the Addiction and Mental Health Group and Department of Psychology at the University of Bath.

    “At the same time, though, it is important to note the clear distinction between ‘heated-tobacco products’ and ‘e-cigarettes.’ Consumers and health policymakers must not equate the potential benefits of e-cigarettes in helping people to quit smoking with heated-tobacco products.”