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Sri Lanka Plans Annual Tobacco Tax Hikes

Photo: sezerozger

Sri Lanka’s National Authority on Tobacco and Alcohol (NATA) wants to change taxes so that cigarette prices increase by 6 percent each year, reports The Island.
The proposed tax formula comprises six components––cigarette tax percentage, proposed price for next year, inflation, present price, GDP and the “externality factor” of 4 percent.
“The 4 percent is added to ensure that the price of a cigarette is increased every year even if inflation drops to zero,” said Samadhi Rajapaksa, Chairman, NATA.
Rajapaksa noted that Sri Lankan depends less on tobacco tax revenue than many people believe. “Our tax revenue from these sources is about 11 percent only,” he said.
Earlier, Rajapaksa said that the NATA would increase the minimum age for sale, purchase and promotion of tobacco products from 21 to 24 in 2022.
Rajapaksa told the media that NATA had decided to amend the National Authority on Tobacco and Alcohol Act this year.
The increase of the minimum age for sale, purchase and promotion of tobacco products was one of the proposed amendments to the Act, he said.
“Already advertising, promotion and sponsorship of tobacco is prohibited. We want to stop the cross border advertising of tobacco products, too,” he said.

January 3, 2022
Cigarette Taxes up in the Philippines

Photo: mehaniq41

Cigarette excise taxes in the Philippines increased from PHP55 ($1.08)) to PHP55 per pack on Jan. 1, reports The Philippine Daily Inquirer. Under the tobacco tax law of 2019, they will continue rising by PHP5 per pack annually until they reach PHP60 per pack in 2023.
Meanwhile, the excise tax rate on conventional freebase or classic nicotine vaping products increased to PHP55 per 10 ml from PHP50 last year. The rate for nicotine salt vapes rose to PHP47 per ml from last year’s PHP42 per ml.
Despite the coronavirus pandemic-induced recession in 2020, “sin” tax collections from cigarette and alcohol products rose to PHP227.6 billion from PHP224.6 billion in 2019. Actual 2020 collections exceeded the conservative PHP201.5-billion target, as lockdowns dampened sales and limited distribution of tobacco and alcohol products due to movement restrictions on non-essential goods.
Market leader Philip Morris Fortune Tobacco Co. estimates that illicit cigarettes increased their market share to 8.6 percent in 2021 from about 5 percent in 2020.
The Bureaus of Internal Revenue estimates that the 2.5 million illicit cigarette packs it confiscated last year deprived the government of about PHP123.3 million in tax revenues.
As of November 2021, law enforcement had apprehended 102 illicit cigarette traders and to seized 38,827 master cases of illicit cigarettes worth PHP1.3-billion.

January 3, 2022
Taking Root

Photo: ArtushFoto

Programs to combat deforestation are gaining momentum in Zimbabwe.
By Daisy Jeremani
As Zimbabwe grapples with deforestation, of which 15 percent to 20 percent is attributed to tobacco curing, farmers, merchants and the government have taken a stand to push back the loss of woodlands estimated at 330,000 hectares per annum.
One of the initiatives involves farmers contributing a portion of their seasonal income into a reforestation fund that is managed by the Forestry Commission of Zimbabwe (FCZ), a government agency.
A second one is run by an association of tobacco merchants. Through the Sustainable Afforestation Association (SAA), buyers also contribute money for reforestation activities. The planting of trees started in 2014 with a buy-in from only six merchants, but now the number has risen to about 350 with a target of planting at least 3,000 hectares to 3,500 hectares of trees every year. So far, they have planted about 20,000 ha.
In an interview with Tobacco Reporter, SAA’s business relations manager, Lloyd Mubaiwa, said his organization was set up by tobacco merchants “so that we create a sustainable source of fuel for tobacco curing so that we reduce the decimation on indigenous woodlands by tobacco farmers.”
Besides loss attributable to the curing of tobacco, there has also been a massive decimation of natural woodlands and plantation forests due to various other factors, among them agricultural expansion, growth of settlements, infrastructure development, demand for firewood for domestic use and brick molding. Brick molding is almost the same as tobacco curing, as barns are built using bricks that would have been burned using traditional kilns, which require lots of wood to fire them up.
The FCZ estimates that 330,000 hectares of natural forest are lost yearly, and 20 percent of that loss is caused by farmers, especially smallholders, cutting wood to cure tobacco. Approximately 80 percent of tobacco growers in Zimbabwe are smallholders who rely on forests nearby to cure the leaf because they lack money to buy coal, which better-resourced larger farmers use.
A farmer using a conventional barn burns 9 kg of wood to cure 1 kg of tobacco, according to FCZ, whereas between 0.8 kg to 2.5 kg of coal are burnt to produce the same amount of leaf. A paper published by the International Journal of Development and Sustainability in 2014 said 0.6 ha of forest woodland are cleared yearly to process a hectare of tobacco.

Native woods cut down for curing near a tobacco farm in Zimbabwe (Photos: Taco Tuinstra)

Planting Trees
To narrow the environmental cost of leaf processing, the government put in place a statutory instrument in 2012, which requires that for every three hectares of tobacco planted, the farmer must establish at least one hectare of trees for the curing of tobacco. Under the FCZ initiative, on each sale, the government is levying growers 0.75 percent, which goes through the Tobacco Industry Marketing Board (TIMB) and then to FCZ to be used to fund afforestation projects.
Initially, merchants gave out mainly eucalyptus seeds to farmers when they came to sell their tobacco at the auction floors, but they realized that farmers did not establish any nurseries, according to Mubaiwa. After the seed initiative failed, the buyers started distributing seedlings, but, again, that failed as most of the seedlings just died under sheds at farms.
“Now what we do is a farmer gives us the area that he intends to establish a plantation. We GPS the area, draft a contract he or she signs, and then we carry out the operations that are required,” Mubaiwa said.
They sign 20-year contracts under which 20 percent of the harvest goes to the farmer and 80 percent goes toward a community fuel project. After 20 years, the plantation is handed over to the farmer and they can do whatever they want with it. SAA believes that the planation will be a lifetime investment, and the farmer should be able to harvest for the next 40 years to 50 years.
“What we are saying is [that] we have taught the farmer how to grow the trees, how to look after them, how regenerate the coppicing or the shots and also [help] him identify and access markets to maximize his share value,” said Mubaiwa.
There is also another incentive to the farmer during this partnership as SAA pays what it terms relief fees, which is money that it pays toward the farmer’s land tax obligations all the years that they are in partnership. The money is paid at $15 per ha.
SAA does not only contract farmers, but it also trains them to grow seedlings to its specifications. The seedlings are grown in floating trays that were developed specifically for forestry, which gives a good root-to-shoot ratio. The bigger nurseries are in Harare and smaller ones are in areas that the organization is planting in.
Since its formation in 2013, SAA has established approximately 20,000 ha of commercial eucalyptus plantations through long-term partnership contracts with about 320 farmers in the four main tobacco growing areas north of the country. It targets to establish between 35,000 ha and 40,000 ha of eucalyptus plantations across the main tobacco growing areas in the next 10 years for sustainable tobacco curing in the country.

Alternative Energy Options
SAA does not only contract farmers, but it also trains them to grow seedlings to its specifications.
“To augment its biomass energy drive,” Mubaiwa wrote on Zimbabwe Forestry Online in April this year, “SAA has also collaborated with recognized research institutions such as the University of Zimbabwe and the Tobacco Research Board (TRB) to explore the use of bamboo, ethanol, biogas and solar energy as alternative energy options for tobacco curing. There has been very little progress in the development of these modern technologies, primarily due to a lack of national strategies to promote them.”
The afforestation levy on growers was introduced in 2015 at a rate of 1.5 percent of leaf sales per farmer and is run by FCZ. Growers complained that the levy was too high, so the government agreed that it would be reduced to 0.75 percent.
FCZ spokesperson Violet Makoto said that although they started getting the funds from the treasury through the TIMB recently, the afforestation levy has enabled them to address the supply side of afforestation as well as enhance their research into species that can be used for tobacco curing and capacitating them to be visible to farmers and assist with Extension services.
The government agency has also set up nurseries to address the issue of seedlings’ availability in the tobacco producing Mashonaland West, Manicaland, Mashonaland Central and Mashonaland East provinces. Besides urging farmers to grow fast-growing eucalyptus, Makoto said FCZ is also carrying out research into other species that can be used—preferably indigenous species.
“So research is ongoing to try out in terms of biomass value of the different indigenous species to see if they will be suitable for tobacco curing,” Makoto told Tobacco Reporter.
She could not disclose figures on the hectarage grown under the levy, saying farmers have just embarked on this program, but she said uptake has been encouraging from large-scale tobacco growers. Makoto estimates that each of the big growers have set aside two hectares of trees for tobacco curing. The FCZ is also trying to make inroads to smaller scale farmers so that they establish community woodlots that they can harvest from.

Zimbabwean tobacco growers inspect new technologies to help reduce energy consumtion.

New Technologies
In addition to replenishing forests, the government, through the TRB, is researching into, developing and promoting adoption of more energy-efficient curing options as well as renewable curing systems.
One of the new technologies being promoted is the rocket barn, which is suitable for smallholders. Invented in Malawi and adopted and further developed by the TRB, the barn utilizes 4 kg of wood to cure 1 kg of tobacco whereas the conventional barn consumes 9 kg of wood to cure 1 kg of the crop. The small diameter furnace, introduced locally in 2014, also cures 0.5 ha of crop in a five to six day cycle compared to seven to 10 days in a conventional barn.
There is also the larger, more expensive, twin-turbo barn, which is the most energy efficient model so far. According to the TRB, this technology utilizes any flammable material, including sawdust, wood and liquefied petroleum gas. A farmer needs about 1.5 kg of firewood to produce 1 kg of tobacco.
In September this year, the TIMB launched a tobacco value chain development plan that seeks to promote use of solar and other renewable technologies to gradually phase out heavily polluting wood and coal-based curing systems.
The Zimbabwe Tobacco Association’s chief executive, Rodney Ambrose, regretted the teething problems that have affected the FCZ managed program.
For three years since its launch, he said, officials bickered over how the fund was to be administered. Many opportunities were missed over the years the tobacco levy was deducted but kept in the TIMB bank account as officials differed.
“Then in 2020, a decision was made that [the] Forestry Commission of Zimbabwe should do the afforestation,” he said.
The Tobacco Farmers Union of Zimbabwe’s president, Believe Tevera, also a farmer in Mount Darwin, Mashonaland Central Province, is also critical of the FCZ initiative. He said it was high time they saw real environmental remedy though the levies as the rate at which degradation is happening was not congruent with the steps that are being taken to correct the problem.
“In Mount Darwin, we have been advocating to have that money channeled through the promotion of community-owned woodlots because we have wetlands. We can actually utilize these wetlands by planting gumtrees (eucalyptus). We can also grow the trees in gullies as there is a lot of soil erosion, which is being caused by deforestation,” he said.

January 1, 2022
Back Choice, Beat Prohibition

An inconvenient truth: Some people enjoy smoking. (Photo: pikselstock)

There are millions of adult smokers who don’t want to quit. Their preference should be respected.
By Simon Clark
The announcement in December that the New Zealand government intends to ban the sale of tobacco to anyone born after 2008 is merely the latest example of a process dubbed “creeping prohibition.” Smoking bans, the prohibition of flavored cigarettes and punitive taxation are just three measures that have only one aim and that’s to eradicate smoking and create a utopian “smoke-free” society.
The health risks associated with smoking have been well known and widely understood for decades. As a result, millions of people have stopped smoking. Many more have chosen never to smoke. Nevertheless, many adults still enjoy smoking and don’t want to quit, and everyone—the tobacco industry, vaping advocates, public health campaigners and politicians—should respect their choice. Instead, a key stakeholder, the adult smoker who doesn’t want to quit, is increasingly marginalized and ignored.

In 2016, as director of the smokers’ group Forest (Freedom Organisation for the Right to Enjoy Smoking Tobacco), I commissioned a report called “The Pleasure of Smoking: The Views of Confirmed Smokers.” Despite making every effort to promote it, the study was largely ignored, but it’s still relevant, and if we were to commission the same report today, the results would, I believe, be very similar.
In brief, a survey of over 600 smokers by the Centre for Substance Use Research (CSUR) in Glasgow found that nearly all respondents (95 percent) gave pleasure as their primary reason for smoking. Most of those surveyed (77 percent) expected to smoke for many years, with only 5 percent envisaging a time in the near future when they might have stopped. More than half the respondents (59 percent) had used alternative nicotine-delivery products such as e-cigarettes. Few, however, were persuaded to switch permanently from combustible cigarettes to vaping.
At the time, Neil McKeganey, director of the CSUR, said, “This research has provided considerable detailed information on the way in which smoking is viewed by a group of confirmed smokers, a body whose opinions are rarely taken into account by government or tobacco control groups. The implications of these findings from a smoking cessation perspective are significant because there is a clear gulf between the way smoking is typically viewed as a negative, somewhat reprehensible, behavior and how the smokers themselves saw smoking as a source of pleasure—a choice rather than an addiction.”

One company that wants to eradicate combustible tobacco is tobacco giant Philip Morris International. In 2018, the company said it wanted to phase out cigarettes as soon as possible. In 2019, the then managing director of Philip Morris U.K. said, “There is no reason why people should smoke anymore.” Last year, the company even urged the U.K. government to ban the sale of cigarettes within a decade. While I applaud and support PMI’s commitment to developing reduced-risk products, this represents an outrageous attack on consumer choice—never mind rival companies—and is an insult to the many adults who enjoy smoking, don’t like vaping and don’t want to quit smoking.
In addition to funding the Foundation for a Smoke-free World, launched in 2017, PMI also funded, in 2019, an online initiative called Quit Cigarettes. It was created by Change Incorporated, part of the VICE Media group. Headlines on a dedicated campaign website included: “How Smoking Increases Chances of Genital Warts,” “How Smoking is Ruining Your Sex Life,” “Is Smoking a Deal-Breaker on Tinder?” “How Cigarettes Blight British Seaside Towns” and “This is How Smoking Makes Your Penis Shrink.” The Change Incorporated website also included “witty” one-liners such as “Definition of a cigarette—a bit of tobacco with a fire at one end and a fool at the other.” To be fair to PMI, a disclaimer stated that “VICE maintains editorial control, so Philip Morris International may not share the views expressed,” but it’s hard to argue that the campaign did not broadly complement PMI’s own anti-smoking agenda.

To be clear, Forest, which was founded in 1979, is fully supportive of efforts by PMI and other companies to develop, manufacture and market risk reduction products, be it e-cigarettes, heated-tobacco, nicotine pouches or products yet to be invented, because we believe in choice. We also support efforts to educate and inform consumers about the relative risks of different nicotine products so they can make informed choices, including not to smoke or vape.
What we cannot support are campaigns and strategies that appear to undermine or belittle smokers who don’t want to quit while targeting a “smoke-free world” that, in our view, can only be achieved by creating a society in which generations of consumers are not only denied a choice of combustible products but are increasingly restricted from using them and punished or ostracized when they do. If smokers choose to quit or switch to reduced-risk products voluntarily and without coercion, there would be no cause for complaint. Embracing or meekly accepting measures designed to prevent adults from smoking is another matter.

Unsurprisingly, several vaping advocacy groups and companies have also jumped on the anti-smoking bandwagon. In 2020, a leading vaping company in the U.K. backed calls to ban smoking outside pubs in England. Another wanted to see less smoking on TV. Meanwhile, a global vaping advocacy group is currently running a campaign called “Back Vaping, Beat Smoking.” The campaign logo features a boxing glove, and one campaign banner features a boxing ring with two boxers inside the ring. One represents vaping, the other smoking. The figure that represents “smoking” is cowering in a corner. The message is clear and, in my view, unnecessarily provocative. There are many positive ways to promote vaping to smokers, and this isn’t one of them.
More anti-smoking messaging was evident at a rally organized by pro-vaping groups in London in November. One placard that read, “Back Vaping, Protect the NHS” implied that smokers are a drain on National Health Service (NHS) resources in a country where taxpayer-funded medical treatment is free at the point of use. In fact, the estimated cost of treating smoking-related diseases on the NHS is £2.7 billion ($5.57 billion) a year. The annual revenue from tobacco taxation is currently around £9 billion, so in financial terms, smokers are neither a burden on the health service nor the taxpayer.
So why are these and other groups promoting the type of messages we would normally expect from anti-smoking activists? Perhaps they hope to win recognition or support from politicians and the public health industry. If so, they are likely to be disappointed because evidence suggests that the tobacco control industry, including politicians and campaigners, are only interested in vaping as a short-term “solution” to the “problem” of smoking. Few, if any, consider vaping to be a long-term alternative to smoking and certainly not a pleasurable habit in its own right. In their view, e-cigarettes and other reduced-risk products are smoking cessation aids and a stepping stone to giving up nicotine completely.

Which brings me to the public health endgame. Is it smoke-free or nicotine-free? What is the long-term outlook for all nicotine consumers, even in more liberal markets, if governments achieve their initial target of a smoke-free world? It’s clear to me, and others, that even in countries like the U.K. that currently have a relatively relaxed attitude to e-cigarettes, the endgame for public health campaigners is the eradication of all forms of recreational nicotine.
Some tobacco harm reduction advocates seem to think that eradicating combustible tobacco will ultimately benefit all smokers because their physical health will improve, but what about those like British artist David Hockney, 84, who says he smokes for his mental health? Is he, and millions like him, not entitled to make that choice for himself? “I couldn’t imagine not smoking,” says Hockney, “and when people tell me to stop, I always point this out. I’ve done it for 68 years, so are you telling me I’m doing something wrong?”
Meanwhile, by failing to challenge the stop smoking brigade, tobacco harm reduction campaigners are actually advancing the inevitable attempt to force consumers to give up all forms of nicotine. Indeed, the idea that vaping will not be a future target for every public health campaigner, even those who are currently well disposed to vaping as a smoking cessation tool, is naive if not laughable.
Millions of adults enjoy smoking and don’t want to quit. The war on smoking is therefore a war on choice and pleasure, and users of all recreational nicotine products should be fighting as one united army. Instead, by failing to support smokers who don’t want to stop, many tobacco harm reduction advocates are foolishly, for short-term gain, weakening the efforts of those who truly believe in freedom of choice and personal responsibility. And if we lose that battle, I guarantee we will lose the war on nicotine too.

Simon Clark is director of the smokers’ lobby group Forest (Freedom Organisation for the Right to Enjoy Smoking Tobacco).

January 1, 2022
New Hurdles Ahead

Photo: Attasit

Growers discuss the challenges and opportunities facing their sector during ITGA’s annual Issues Day.
By Stefanie Rossel
Increasing regulatory pressure, sustainability, climate change and child labor emerged as the main challenges during the International Tobacco Growers’ Association’s (ITGA) Issues Day on Nov. 18. Due to the ongoing Covid-19 pandemic, the conference for took place virtually for the second year in a row.
The ITGA’s president, Abiel M. Kalima Banda, described 2021 as another year of limitations. Interestingly, though, the Covid-19 crisis wasn’t as bad for the tobacco industry as it was for other businesses, as ITGA’s CEO Antonio Abrunhosa pointed out. Especially in the main leaf countries, production went back up again, with markets returning to normal.
However, new regulations are presenting new challenges to farmers. For example, just one day before the ITGA meeting, the European Union executive outlined a draft law requiring companies to prove that agricultural commodities destined for the bloc’s 450 million consumers were not linked to deforestation. “The future of regulation will be tougher than it is now,” said Abrunhosa. “Growers will suffer the greatest part of sustainability issues. Buyers must be aware that farmers need a decent income to be sustainable and support their families.”
While burley witnessed another year of decline, flue-cured Virginia (FCV) volumes in Brazil, Zimbabwe, the U.S. and China experienced a boost, according to ITGA tobacco expert Ivan Genov, referring to data provided by Universal Leaf. An even higher growth rate is expected for 2022, but it is likely to remain below the range that was the norm before the pandemic. Growers are faced with steadily increasing production costs, Genov said. “The situation remains volatile; the pressure on the sector remains strong. Sustainability issues will increase and intensify further.”

Slight Recovery
Ivan Genov
World tobacco leaf production stood at an estimated 4.74 billion kg in 2021, with FCV production amounting to 3.47 billion kg, slightly up from 3.37 billion kg in 2020. By 2022, production is anticipated to reach 3.5 billion kg. Dark air-cured production remained stable at 111 million kg in 2021, whereas oriental declined from 155 million kg in 2020 to 128 million kg in 2021. Burley production declined to 411 million kg in 2021 from 446 million kg a year earlier. The latter crop is expected to recover next season, with production going back up to 468 million kg in 2022, which would still be below pre-Covid-19 levels.
Seven of the world’s top 10 tobacco exporters by volume saw declines in 2020. Brazil’s exports dropped from 530 million kg in 2019 to 485 million kg in 2020; China’s exports declined from 194 million kg in 2019 to 186 million kg in 2020; and India’s exports decreased from 186 million kg in 2019 to 177 million kg in 2020. Only Argentina and Turkey registered a minor increase in production for export, according to U.N. Comtrade figures.
In terms of value, Brazil finished first with $1.51 billion worth of tobacco exports in 2020, followed by Zimbabwe ($741 million) and the United States ($695 million). According to Universal Leaf, China will provide around 50 percent of global FCV production in 2021, followed by North, Central and South America with a combined 24 percent share. Africa and the Middle East, currently standing at 10 percent, are expected to increase production volumes in 2022.
Growers in the U.S. and Zimbabwe suffered challenging working conditions in 2020. The U.S. fought a trade war with China, whereas Zimbabwe was hit hard by Covid-19, which delayed auctions. On Nov. 8, the country’s ministry of lands and agriculture announced plans to generate more value from its tobacco sector. It aims to create a $5 billion tobacco industry by 2025.

Cigarette Value Under Pressure
Shane Macguill
Shane MacGuill, Euromonitor global lead for nicotine and cannabis, looked at the current key drivers in the global tobacco market. The Covid-19 disruption, he observed, has created both threats and opportunities. The pandemic will potentially have implications in the medium term regarding consumer choice and disposable income. Significant prevalence and visibility declines, caused by tobacco control, he noted, will probably be the long-term key driver. MacGuill expects this to ease a little in the future, though. Heated-tobacco products (HTPs) and nicotine pouches have broadened the nicotine universe and caused a fragmentation. “As a consequence, cigarette value will diminish over time,” he said. Regulatory innovation has been key in the tobacco space historically and is expected to continue, potentially even further. MacGuill singled out the “beyond nicotine” sector as another key driver.
In 2020, global cigarette volumes just held up, whereas value came under pressure, according to MacGuill. Excluding China, consumption stood at 2.79 trillion cigarettes. Illicit product accounted for 12 percent of cigarette sales.
The value of cigarette sales declined by 0.2 percent in 2019–2020, while stick equivalent value rose 1.4 percent. The overall value of the global cigarette market was $484 billion, and the global average pack price was $2.77, or $3.47 excluding China. Cigarettes represented an 84 percent share of total value sales (81 percent excluding China).
Between 2015 and 2020, total cigarette demand grew most in Ethiopia, Jordan, Egypt, Hong Kong, Cambodia, Brazil, Vietnam, Algeria, Lebanon and El Salvador—primarily developing countries that saw migration from other tobacco categories into the cigarette category and perhaps lower regulation and excise. Demand fell most in Japan, Sri Lanka, South Africa, Ukraine, Peru, the Philippines, Australia, Saudi Arabia, Lithuania and Greece. Here, the decline was pushed by a combination of strong regulatory measures, increased taxation and the rise of cigarette alternatives. HTPs were driving substantial cigarette volume loss, most notably in Japan.
Of the top 15 stick markets, Egypt, Vietnam, Bangladesh and India are expected to grow in stick/stick equivalent volume.

HTPs Heating Up
Global illicit cigarette trade dropped during 2020 as border closures and lockdowns interfered with illicit supply chains. However, MacGuill expects a return in growth, with illicit trade standing at around 15 percent eventually. Eastern Europe and Asia-Pacific will be among the most affected regions over the next five years as a result of affordability.
“HTPs will cement their place at the head of the vapor growth narrative,” MacGuill predicted. “With the leading growth markets between 2020 and 2025 including Russia, Germany, Poland, the U.S., Japan, Italy, Ukraine and South Korea. To consumers, availability, ease of use, the possible impact on health but also price are among the most important product features. In a consumer survey, lack of information on the products was named as the essential barrier for not using HTPs.”
Nicotine pouches reached a value of $1.2 billion in 2020. With benefits from lower barriers to consumers’ communication and—for the time being—less regulatory pressure, the segment is expected to grow by 40 percent to 2025.
During 2020, overall monthly nicotine use grew in 17 markets, possibly due to pandemic-related factors, such as boredom and stress, according to Euromonitor. While cigarette use mostly declined or stayed flat and e-cigarette use plateaued in some key markets, HTPs saw a significant uptake. Across formats, price remained the key product feature.
Many tobacco manufacturers see their future in “beyond nicotine” products, especially in the field of cannabis. According to MacGuill, investors are now assigning greater value to nicotine companies that are more diversified away from combustible products. Companies are also likely to focus more on cannabis as a potential substitute for their tobacco and nicotine products. Sales are set to reach $92 billion by 2026. Key trends in the cannabis space include a wider range of ingredients and formulations, targeting new populations, such as gamers, and new occasions, such as cannabis products in tins for dogwalkers.

More Regulation Looming
Michiel Reerink
Michiel Reerink, corporate affairs director and managing director at Alliance One International, listed the outcomes of the ninth session of the Conference of the Parties (COP9) to the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC), which took place Nov. 8–13, 2021. Among other things, COP9 delegates agreed on the creation of an investment fund to support control activities and noted and deferred to WHO reports on technical matters including HTPs as well as on research and evidence on novel and emerging products without discussion or decision until COP10 in 2023.
In the EU, the Supply Chain Due Diligence Act will increase the industry’s regulatory burden. In March 2021, the European Parliament adopted a resolution on corporate accountability, which stipulates a due diligence requirement for human rights and environmental standards that is likely to be aligned with OECD and United Nations Guiding Principles. By now, 15 EU member states have adopted human rights at the supply chain level. “Suppliers should prepare for this legislation,” Reerink said. “Due diligence should already be part of their company code of conduct.”

Finding Alternative Livelihoods
Heliodoro Campos, manager of the National Tobacco Fund in Colombia (Fedetabaco), described the plight of small-scale tobacco farmers in his home country. The sudden exits of Philip Morris International and British American Tobacco in 2019 and 2020, respectively, left thousands of tobacco famer families struggling for alternative sources of income (see “Blueprint for Exit,” Tobacco Reporter, March 2021). A conversion plan that envisaged the cultivation of permanent crops, such as Tahiti lemon, for the 30 percent of families that are landowners and transitory crops, such as maize or yuca, for the remaining 70 percent of families who lease their land did not materialize, as Colombia didn’t provide the required financing.
Campos’ presentation was a cry for help. Stakeholders are now hoping that a new conversion plan that foresees the production of non-THC cannabis will yield better results. A pilot project is expected to provide insights into the cost of production and potential profitability next year. Campos said he was trying to find resources for this plan, also internationally.

Stepping up the Fight
Innocent Mugwagwa, senior manager of the Eliminating Child Labor in Tobacco Growing Foundation (ECLT), outlined the development of his organization, which has moved from focusing on implementing small projects in Africa in the first decade of the millennium to signing pledges of commitment with companies and addressing minimum requirements for businesses and human rights in the 2010s.
In 2021, the foundation started concentrating on technical assistance, supporting governments so that they can protect children’s rights and supporting businesses to prevent and remedy child labor. It will also cooperate more closely with the ITGA to strengthen famers’ voices in defining fair standards and educate farmers in languages they understand. “We already worked together with the ITGA in the education of farmers on Covid[-19],” Mugwagwa explained. Furthermore, the ECLT will leverage governments and businesses to support ITGA members’ and farmers’ efforts in combatting child labor.
The ITGA’s vice president, Jose Aranda, closed the conference by emphasizing that a unified voice and strengthened efforts were needed to fight the challenges. “We must understand that the new challenges to our sector are threatening, with increasing regulations and the growing popularity of products without tobacco. Some markets are already gone.”

Antonio Abrunhosa
Vázquez succeeds Abrunhosa as ITGA CEO
The International Tobacco Growers Association appointed Mercedes Vázquez as its new CEO during the organization’s 36th annual general meeting, which took place virtually Nov. 18-19. Vázquez succeeds António Abrunhosa, who announced his retirement after serving in the position since 1998.
Members expressed their gratitude and highlighted Abrunhosa’s role in positioning ITGA as a key player in the global tobacco sector.
“In my new role I will do my best to continue this learning process from all of you so I can ensure and reinforce the long-lasting relations with our partners so we can together overcome the common challenges we are facing in our sector,” said Vázquez.

Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.

January 1, 2022
Making its Mark

Photo: Poda Holdings

By addressing the shortcomings of existing products, Poda Holdings is pushing heat-not-burn technology to new levels.
By Marissa Dean
Sales of heat-not-burn (HnB) products have increased dramatically in recent years. In Japan—the world’s largest market for these products—HnB has helped drive down traditional cigarette consumption to unprecedented lows. Due to the absence of combustion, HnB devices release significantly lower levels of harmful toxicants than traditional cigarettes, allowing smokers to move down the risk continuum while continuing to derive the satisfaction they seek from nicotine.
Globally, the HnB market is dominated by large companies, such as Philip Morris International, BAT and Japan Tobacco International, along with regional players, such as KT&G. But smaller companies, too, are eager to make their mark. By addressing what they perceive to be the shortcomings of existing devices, they are slowly but surely claiming their share of this promising category.
Poda Holdings is one such company. The firm was founded in January 2015 with the goal of creating the best HnB product ever made, according to CEO Ryan Selby. “Many adult smokers have been seeking smoke-free products that have the potential to reduce the risks associated with their smoking habit,” he said. “By focusing on their wants and needs, we were able to identify some key components missing from the heat-not-burn industry.”
The company offers an HnB tobacco-free product called Beyond Burn. “Our flagship Beyond Burn Poda Pods contain a unique tobacco-free blend of pelletized tea leaves infused with synthetic nicotine, which have been expertly crafted to mimic the sensorial experience of traditional cigarettes without the smoke, without the smell and without the tobacco,” the company explains on its website. The tea leaves (versus tobacco or other substances) provide a stable, consistent and low-cost substrate that is truly tobacco-free for use in the device, according to Poda.

“The closed-ended design allows an incredibly wide variety of substances to be used in our system—something that open-ended systems simply cannot do.”

Ryan Selby, CEO, Poda Holdings

A New, Clean Technology
Poda’s current technology, which took six years to develop, consists of the Beyond Burn Poda Pods and the Beyond Burn heating device. The device features a single button with three temperature settings. It has a fast-charging battery that is capable of heating a full pack of pods on a single charge, and the company plans on launching additional devices across different price points in the future to allow consumers more choices.
“When we looked at the HnB space, it was clear that innovations were happening all around,” said Selby. “We knew that making a product that replicated the sensorial experience of smoking was only half the battle. Being well-versed in the space, we knew that odor and residue buildup in heating devices was a major user pain-point and one that no one had yet solved. In our research, this was one of the primary challenges users faced—a heating device that started out with excellent performance, only to degrade with use, gathering strong odors and requiring extensive cleaning to keep the device operational. This contamination also left flavor residue in the heating devices, limiting the options for switching different flavors and different types of substances. It was our goal to solve that problem as a primary focus, finding a way to keep all the mess contained within each disposable pod.”
The Beyond Burn Poda Pods are considered “zero-cleaning,” meaning that their pod design keeps any potential mess contained within the pod itself, taking away the need for cleaning or maintenance. This also means there is no residual odor in the heating device and no cross-contamination between pods when they are switched. “What sets us apart really boils down to our patented closed-ended pods,” said Selby. “The closed-ended design … allows an incredibly wide variety of substances to be used in our system—something that open-ended systems simply cannot do. Ground plant matter, pellets, sheets, liquids, etc., are all possible in our pods, where our open-ended competitors would have to come up with solutions for each of these material forms individually.”
“Big Tobacco was coming at the challenges in the space with answers that fit their existing manufacturing methods and techniques, and thus they weren’t thinking very far outside the box,” Selby said. “Poda came at the problem from a totally different angle.”
Pods are currently packaged in the company’s facility in China and are packaged in cartons of 200 pods, with each carton containing 10 packs of 20 pods. The current manufacturing capability is over 400,000 pods per month, but the company is currently scaling up production and plans to produce over 10 million pods per month by the end of 2021. “We’ve raised enough capital to scale up our production capabilities to meet initial launch demand, and we have a comfortable runway to execute our launch plans,” said Selby.

Poda Holdings’ Beyond Burn Poda Pods contain a unique tobacco-free blend of pelletized tea leaves infused with synthetic nicotine, which mimic the sensorial experience of traditional cigarettes without the smoke, without the smell and without the tobacco.

Regulation
The absence of tobacco in Poda’s products offers opportunities that are unavailable to tobacco-containing offerings. “The tobacco space is heavily regulated throughout the world, and new reduced-risk and heat-not-burn products face many of the same regulations as cigarettes as well as additional regulations pertaining to products in the vaporization space,” said Selby. “This overlap creates a complex regulatory landscape that is constantly evolving—each country having their own unique framework. Our first offering—our flagship Beyond Burn Poda Pods—contain no tobacco products whatsoever, so they tend to be outside the scope of existing tobacco regulations. As the landscape changes, our closed-ended pods will allow for exploring a multitude of different substance options for tobacco and beyond—allowing Poda to navigate regulatory hurdles in a way many of our competitors aren’t able to.”
While Poda Pods do not currently contain tobacco, the company has opted to file a premarket tobacco product application (PMTA) in the U.S. The PMTA pathway is a long process, with only a handful of applications approved to date, but it is necessary to market deemed tobacco products in the U.S. According to the Food and Drug Administration, deemed tobacco products consist of “electronic nicotine-delivery systems, which include e-cigarettes, e-cigars, e-hookah, vape pens, personal vaporizers and electronic pipes; pipe tobacco; dissolvables; nicotine gels; waterpipe (hookah); cigars; and future tobacco products.”
“We believe that our Beyond Burn Poda Pods are not subject to the PMTA as they contain lab-synthesized synthetic nicotine, no tobacco ingredients whatsoever and, importantly, cannot be used with any other tobacco products,” said Selby. “However, there are a multitude of potential future opportunities for Poda products to be used with tobacco, and so in order to demonstrate our commitment to total compliance with the PMTA, we have begun the PMTA process in the USA for Poda products containing tobacco and tobacco-derived products.”
Poda products contain synthetic nicotine, which is essentially chemically identical to tobacco-derived nicotine but currently outside of the FDA’s remit. Poda chose to use synthetic nicotine because it allows for more control over what goes into the pods. “Synthetic nicotine offers the same satisfaction as tobacco-derived nicotine without the chance of impurities and harmful substances from the tobacco plant contaminating it during the extraction process,” said Selby.
Beyond Burn Poda Pods are currently available in three different flavors with more expected down the line. The company is planning for other content offerings as well, including coffee/caffeine infused products, nicotine-free blends, real tobacco, cannabis/CBD and medicinal herbs. “We envision a family of devices, all designed to work with our pods, regardless of pod contents.”

Thinking Outside the Industry
To better reflect its broad, multisector ambitions, Poda recently announced a new planned corporate structure featuring six subsidiaries—Poda (Tobacco), Poda (Alternatives), Poda (Therapeutics), Poda (THC), Poda (CBD) and Poda (Research and Development). Poda has also filed intellectual property patents (already granted in Canada) for its proprietary technology, brought on new board members and created new positions. Former Juul Canada president, Michael Nederhoff, joined the global advisory board and is consultant to Poda’s management team and the company’s board, assisting with the company’s global expansion. Nicholas Kadysh, former Juul head of corporate affairs, recently joined Poda’s global advisory board as well.
Poda is also thinking beyond consumer goods, entering the medical device market and appointing the company’s first chief medical officer, Jagdeep Gupta. “I am very pleased to have received approval from the board to enter the medical device market and to create the position of chief medical officer for Poda,” wrote Selby in a press release. “In addition to providing exceptional reduced-risk products designed for current adult smokers, Poda is also committed to providing effective smoking cessation products designed to help adult smokers quit smoking.”
“Quitting smoking can be difficult, and the addition of Dr. Gupta as chief medical officer will help Poda to develop medically approved products and treatment strategies designed to provide adult smokers with the tools they need to successfully quit smoking. In addition, there are numerous opportunities for Poda to utilize our intellectual property and related technologies to potentially facilitate the delivery of many different therapeutic molecules by inhalation.”
Gupta later announced that he began clinical trials for Poda’s smoking cessation products. “I have already initiated the process of setting up the first clinical trials related to the efficacy of Poda’s products as smoking cessation tools,” Gupta wrote in a release. “I am currently in the process of setting up a pilot study, which will give us a solid platform for developing strong and effective clinical trials. These clinical trials will be designed to result in the publication of Level 1 evidence in respected medical journals globally if the data provides evidence. The pilot studies will also be designed to establish a scientific basis for the efficacy of Poda’s products as smoking cessation tools and additionally may provide Poda with access to research grants and other funds that can be used for additional studies, clinical trials and validation research.”
In addition to expanding into the medical device industry, Poda signed a supply agreement with Greenbutts, a biodegradable filter manufacturer. “This supply agreement will provide the company with access to 100 percent biodegradable filters for use in our Beyond Burn Poda Pods,” according to Selby. “The inclusion of Greenbutts’ biodegradable filters into our already biodegradable and compostable Poda Pods allows Poda the ability to offer a completely biodegradable and truly compostable heat-not-burn product, something that has never been done in the heat-not-burn tobacco market.”

Gamechanger
Poda has accomplished a lot in the past six years and is now poised to be a potential gamechanger in the heat-not-burn market. A mess-free, zero-cleaning biodegradable product that could reach beyond tobacco and nicotine products seems like it would be a very attractive product for consumers—and it would seem others agree; Poda recently received an order for 500,000 Beyond Burn Poda Pods and 2,000 Beyond Burn Heating Devices, expected to be used during the initial launch in the European market later this year.
Time will tell how this technology impacts the market. Selby, for his part, is confident Poda could change the face of HnB. “I believe that Poda really is the solution the HnB space has been waiting for,” he said.

Marissa Dean joined Tobacco Reporter in the summer of 2018 as a copy editor. Since that time, she has taken on additional responsibilities, including feature writing. Her skills span the publishing industry from layout and design to copy editing to content creation.

January 1, 2022
The Need for Nuance

Photo: Andrey Popov

It’s time for regulators to stop lumping all tobacco products together as being equally risky.
By George Gay
“It’s still difficult for me to understand how the European Commission can claim on the one hand that they want to do everything in their power to fight cancer, including revising tobacco policy, yet on the other hand completely reject the idea of liberalizing regulations for one of the very few products that has shown it can displace cigarettes.”
The above is a quote attributed to the Swedish member of the European Parliament, Sara Skyttedal, as part of a Snusforumet story published on Nov. 19. Skyttedal is clearly frustrated and angry with the commission, and, according to my interpretation of the story, her frustration comes down in part to the fact that while the commission says it wants to reduce the incidence of smoking throughout the EU to the low level at which it stands in Sweden, it is not willing to remove the ban on snus, the product that has largely displaced cigarettes in Sweden but that, for inexplicable reasons, is banned in the EU with the exception of Sweden.
I feel certain Skyttedal is merely making a point: She doesn’t really believe there is a logical conflict in the commission’s position. The apparent conflict is easily resolved by pointing out that while the commission might say it wants to do everything in its power to fight cancer, that is not the case. In fact, this becomes clear later in the story when, talking about the connection between Sweden’s low level of tobacco-related cancers relative to those in the rest of the EU and the fact that Sweden is the only country in the EU where snus is legally available, Skyttedal says the commission sees the connection but is not willing to act on it.
I hate to state the obvious, but I would guess that one of the commission’s hang-ups has to do with tobacco. It can tolerate the idea that nicotine in the form of nicotine-replacement therapy products or even vaping products should be allowed to replace tobacco products, but it cannot bear the idea that tobacco products might be allowed to substitute tobacco products. Tobacco has pariah status; nicotine is somewhere lower on the continuum of the unacceptable.
Let me provide an example. In November, my newspaper ran a story about how, because of the goods transport chaos afflicting the U.K. post-Brexit, there might be a shortage of alcohol this Christmas. This was seen as a negative because, apparently, we cannot celebrate this Christian festival without being off our heads, and despite the fact that such a shortage would probably result in fewer family fights, stomach-pumping hospital visits, drunk driving and all that entails, assaults on hospital accident and emergency staff and even deaths, since alcohol kills.
Imagine, however, if the story had been about a shortage of tobacco at Christmas. This would have been presented as a positive, though it would have caused a number of negative outcomes and almost no positive results, with the exception that a few people might have discovered they were able to quit their habit.

Language Matters
But I digress. Let me return to Skyttedal’s original complaint about the commission’s failure to follow through on its aim to do everything in its power. There are certain categories of phrases that immediately flash warning signs to the effect that what is being said should be taken with a pinch of salt, and one such category comprises those with superlatives. Just think of the phrases “nobody wants to see …” and “everyone agrees that ….” You hear and see such phrases used all the time, but it doesn’t take more than a second’s thought to realize they cannot be correct. It is almost impossible to imagine an instance when nobody or everybody was in favor of something. So when somebody tells you they are doing “everything in their power” to bring about a certain result, you know it’s time to look somewhere else for help.
Language matters, and, to my way of thinking, one of the problems that people who champion tobacco harm reduction have helped to create is down to the fact that they have been too willing to accept and parrot some of the extreme language and figures used by those people also involved in tobacco control but who are opposed to harm reduction. For instance, there has been a willingness to go along with claims of nicotine addictiveness that are clearly unsupportable, even though some health professionals keep this pot simmering by telling smokers they cannot give up nicotine without the support of … yup, there’s a surprise, health professionals.
Probably the ultimate superlative is “smoking kills,” which has become so ingrained that you are mocked if you say you don’t agree with it, but the truth of the matter is that a certain percentage of smokers die of smoking-related diseases, mostly after a long and possibly enjoyable history of smoking. The other smokers die of something else—perhaps of injuries caused by a drunk driver. And, I hate to be downbeat, nonsmokers die too, perhaps of “tobacco-related diseases,” though ones caused by pollution. If they didn’t die, the world would become full up, and the gene pool would lose its vigor.
OK, some will argue the smoking problem is not only about death but about the physical and economic costs of smokers living with medical conditions linked to their habit. But we are all prisoners of the choices we make. I doubt there are many people who reach the age of 50 without carrying some physical ailment linked to something they did when they were young. Some footballers die at relatively young ages having suffered from dementia attributable to their playing football, but few would claim playing football kills. Rather, we try to change the rules of the game and the equipment used to prevent brain damage—we employ harm reduction techniques.

Perhaps it’s time to reconsider what we mean by “smokeless.” After all, some tobaccos are cured using artificial heat—in some cases by burning wood fuel and contributing to deforestation. (Photo: phanasitti)

Distortion is a Problem
On the question of parroting figures, take the annual death toll attributed to tobacco-related diseases. Over the years, it has been increased a number of times, usually in lots of one million, so it now stands at the nicely rounded figure of 8 million. At the same time, the World Health Organization, which has ownership of this figure, has been claiming success in its efforts to prevent the deaths attributed to tobacco. But even given the world’s population has been increasing, it cannot be the case that the figure for tobacco-related deaths keeps leapfrogging this supposed success.
Why is this important? Because by exaggerating the problems caused by tobacco, some sections of tobacco control have been allowed to distort the picture to such an extent that it becomes difficult to sell the idea of tobacco harm reduction. When tobacco is depicted as being “deadly”—a superlative you often see applied to this product—and that depiction is not challenged, it becomes too counterintuitive even for the uncommitted to imagine that the problem caused by tobacco can be significantly reduced by another tobacco product such as snus. Additionally, because too many people have, for a quiet life, gone along with the U.S. Food and Drug Administration’s airy-fairy idea that e-cigarettes can be “deemed” “tobacco” products, the use of even vaping products as tobacco harm reduction agents can be challenged easily by those who wish to do so.
What we need is honesty. For instance, we need to stop lumping all combustibles together as if the consumption of cigarettes, cigars or pipe tobacco is equally risky. This cannot be the case, especially at a population level. And we have to do the same in respect of smokeless products. For instance, what do we mean by “smokeless”? Are we talking only of the consumption of the final product? Perhaps it’s time we checked out whether some of the tobaccos used in some “smokeless” products are cured using artificial heat—in some cases by burning wood fuel and contributing to deforestation.
It has become fashionable to talk of both individual and population risk, so, in this context, is it OK to reduce the harm caused to individuals by tobacco consumption if the production of the less risky items involves damaging the environment and, by extension, threatening the health of tobacco and nontobacco users alike?
This is a massively complex question, the answer to which would mean a descent into not altogether helpful relativities. One thing seems clear to me, however. If you drew up a continuum of environmental risk caused by tobacco and nicotine products, you would wind up with a picture somewhat different to the continuum of individual consumer risk caused by tobacco and nicotine products, which we are more used to seeing. But one thing would remain pretty much the same. Smokeless products, such as nicotine pouches, snus and chewing tobacco, would be the stand-out products when it comes to reduced environmental risks. What would change, I think, is that the divisions between combustibles in respect of environmental risks would widen appreciably, and vaping products, which are smokeless, while scoring well on the individual consumer risk continuum might well end up in free fall on the environmental risk continuum, something that needs to be addressed.
I’ve seen it said that there should be one set of rules for combustible products and another set of rules for noncombustible products. I think the rules need to be more nuanced than that.

George Gay is Tobacco Reporter’s European editor, but his territory spans the globe. Based in London, George has covered the tobacco industry since 1982, initially for a U.K.-based publication and since 2004 for Tobacco Reporter. George’s understanding of industry issues, combined with his keen sense of observation and dry wit, have earned him a loyal following among Tobacco Reporter’s readers.

January 1, 2022
Who D’Ya Think You Are?

Photo: EwaStudio

Your business from the regulators’ perspectives
Willie McKinney and Cheryl K. Olson
Let’s do a thought experiment. Imagine—some of this may sound familiar—that you’re one of two brilliant young graduate students attending a university in the middle of Silicon Valley. You come up with a jewel of an idea for a product that could help cigarette smokers reduce their mortality and morbidity by delivering nicotine with far fewer health-destroying byproducts of combustion than traditional cigarettes.
The business environment around you is laced with artificial intelligence, self-driving cars and apps that brashly take on entire industries. The ethos of your fellow entrepreneurs is to challenge everything, smash things when they get in your way and loudly proclaim that you’re changing the world for the better. You can always correct your mistakes later.
What business are you in? To your eyes, you’re in the smoking cessation business. That is, after all, your stated goal and the purpose of the device you’ve designed. It’s a noble cause that could save millions of lives while making your investors and you a fortune. You’ve hit that ideal of doing good while doing well. What could possibly go wrong?
A lot, it turns out. Predicting those potential disasters requires that you know whether you perceive the fundamentals of your business the way that others—especially government regulators—perceive it. In our not-really-hypothetical example, the protagonists saw themselves as fighting Big Tobacco. They approached marketing their product as if it were a kind of ride share or housing share offering, industries in which regulations are both few and local. They were making consumer goods, so they mostly hired executives from packaged goods industries little acquainted with addictive ingredients or tobacco industry history.
The U.S. Food and Drug Administration viewed your imagined company through a different lens. To the government (and soon the press and the general public), you were simply an extension of Big Tobacco. Your Silicon Valley brashness backfired, triggering memories of industry lies about the addictiveness of nicotine and cynical attempts at youth smoking prevention by tobacco companies. A hero’s journey became a cautionary tale.
Can this still happen today? Can the lens through which you view your company be dramatically different from the perspective taken by government regulators? Unfortunately, we see it all the time.

A Tale of Two Companies
Josh Israel started Hale Therapeutics with a co-founder who lost a family member to smoking combustible cigarettes. His device is programmed to deliver and taper off heated, aerosolized nicotine as a way of ending the addiction.
“It minimizes the discomfort of nicotine withdrawal while you learn to live a smoke-free life,” said Israel.
Hale approached the FDA’s Center for Drug Evaluation and Research (CDER) to open discussions toward approval of what Israel viewed as an innovative pharmaceutical delivery system for a much-studied drug. That may sound like a strange approach to take. Why not pursue a marketing authorization from the FDA’s Center for Tobacco Products (CTP)? That would be faster and likely to succeed. CTP had already authorized VUSE, calling that ENDS device’s aerosol “significantly less toxic than combusted cigarettes.”
“We’re not a tobacco product. So we don’t want to be licensed as a tobacco product, and we don’t want to be looked at as a tobacco product,” Israel continued. “It’s a smoking cessation product. Why would we be classified as anything else?”
The FDA saw things differently. New CDER guidance on testing “inhaled nicotine-containing drug products” focuses on the word “heated,” and the “novel chemicals” that heat might generate. CDER may have viewed Hale’s device as akin to an e-cigarette because it heats. This difference in perceptions led CDER to point Hale toward spending a substantial chunk of time and money on animal studies that would not have been required had Hale gone down the CTP path for permission to market the same device. (And run counter to FDA pledges and initiatives to reduce use of animals in research.)
Meanwhile, Brian Quigley, the COO of Respira Technologies, was preparing to meet with CDER about his product, a nebulizer for use as a nicotine-replacement therapy. It creates and controls an unheated nicotine aerosol.
“It’s kind of shocking to think that in 2021, the number one way that smokers try to quit is cold turkey,” said Quigley.
Unlike Hale’s experience, CDER apparently viewed Respira’s product much as the company did. The fact that the nicotine was unheated worked to Respira’s advantage. CDER was more comfortable allowing the data to guide what preclinical studies Respira’s product will need. Quigley expects to submit an Investigational New Drug application to CDER in 2022.
Hale Therapeutics, however, faced a potentially costly choice. It could fight CDER. It could devote time and capital to research that it contends is unnecessary. It could switch paths, reluctantly accept the perception that it was making a tobacco product, and apply to CTP. After much deliberation, Josh Israel decided to … do something different. Hale would keep talking with the FDA about reducing the testing burden but would take action to forward its mission elsewhere.
Hale went to the U.K. and applied for a license from its Medicines and Healthcare products Regulatory Agency (MHRA) as a smoking cessation device.
“The goal for any public health agency should be to get people off combustible cigarettes, full stop,” said Israel. “We were embraced by the MHRA. And it’s unfortunate that the FDA is not taking the same approach.”
What is that approach? The MHRA is developing a licensing process by which e-cigarettes could be prescribed by the National Health Service in England as a medical product for smokers who wish to quit smoking. It would be the first country in the world to do so.
There are about 6.1 million smokers in England, with rates of smoking roughly inversely correlated with socioeconomic status. That means that smokers generally are at greater risk for a variety of other health and social problems, making smoking cessation especially impactful. For several years, e-cigarettes have been promoted by the governmental to combustible cigarette smokers as an effective way of both reducing immediate harm and putting those smokers on a path to quitting nicotine completely.
“The MHRA evaluation program for e-cigarettes is focused on nicotine delivery—not cessation per se—as a measure of efficacy, and with as few harmful and potentially harmful constituents as possible,” said Ian Fearon, a U.K.-based clinical research scientist who consults on nicotine and tobacco product studies. “It appears easier to obtain a medical license with MHRA than a market authorization from the Center for Tobacco Products, given the volumes of data required to support a PMTA.”

A Difference in Politics and Philosophies
One reason why there may be such a difference is that regulators reflect and illuminate the values and experiences of the countries they regulate. When CDER issued its guidance for inhaled nicotine-containing drugs in October 2020, the public perception of vaping in the U.S. had hit new lows.
San Francisco had recently banned the sale of all e-cigarettes within the city limits, ironically using a supposedly pro-health agenda to push an unknown number of former smokers who were using vaping to quit back to using combustible cigarettes. E-cigarette or vaping use-associated lung injury, which had been falsely associated with commercial vaping products, was still in the headlines.
Not surprisingly, the CDER guidance focuses on what could go wrong. It recommends hunting for potentially toxic “novel chemicals” through years of rodent inhalation studies before testing heated nicotine products in humans.
The U.K. has never experienced an American-style moral panic over e-cigarettes and youth. This takes a political thumb off the scale in their pragmatic weighing of the science.
It’s also not surprising that the two FDA centers that regulate nicotine products can be fractious. CDER has been part of the FDA since the 1980s. Its pathways to approval are well entrenched and clearly marked. Its mission is “making sure that safe and effective drugs are available to improve the health of the people of the United States.”
By contrast, the FDA’s Center for Tobacco Products is a newbie, born from the Tobacco Control Act of 2009. It’s about balancing health risks among different segments of the public. CTP plays by different rules, proclaiming on its website that the “FDA’s traditional ‘safe and effective’ standard for evaluating medical products does not apply to tobacco.” It doesn’t approve products; it permits them to be marketed. Because of its youth, CTP procedures are still forming and solidifying.
So, let’s go back to our mind experiment for a moment. Now how do you view the business your company is in?

Willie McKinney is the founder of McKinney Regulatory Science Advisors. He’s held senior regulatory roles at major tobacco product companies and served for three years as the industry representative on the FDA’s Tobacco Products Scientific Advisory Committee.

Cheryl K. Olson is a California-based public health researcher who specializes in behavioral health issues and consults on tobacco product behaviors. She spent 15 years on the faculty of Harvard Medical School.

January 1, 2022