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  • BAT to Shut Down Only South African Plant

    BAT to Shut Down Only South African Plant

    BAT South Africa (BATSA) announced it will cease local production of factory-manufactured cigarettes and close its sole manufacturing facility in Heidelberg, Gauteng, by the end of 2026, citing the overwhelming growth of illicit cigarettes in the market. The company estimates that illegal products now account for about 75% of cigarette sales in South Africa, rendering local manufacturing commercially unviable. The plant is currently operating at just 35% of capacity due to sustained volume losses linked to the illicit trade.

    “We have tried everything to ensure we don’t have to close this facility, which has been a part of the Heidelberg community since 1975, including implementing various efficiency initiatives over the years,” said Johnny Moloto, head of corporate and regulatory affairs at BAT Sub-Saharan Africa.  “But when three-quarters of your market is illicit, there’s a limit to what any company can do. We’ve reached that limit.”

    BATSA said the closure will directly affect approximately 230 employees and their families and will also have knock-on effects across the local value chain, including suppliers, logistics providers, and contractors in the Lesedi community. The company has initiated a formal consultation process with employees and unions in line with labor law and expects this process to conclude by the end of March 2026, ahead of the full shutdown later in the year. Despite the closure, BATSA stressed it is not exiting South Africa and will transition to an import-based supply model to continue serving adult consumers.

    The company said it has spent more than a decade engaging with government and law-enforcement authorities, warning that policy decisions such as the 2020 tobacco sales ban, above-inflation excise increases, and proposed new tobacco legislation have widened the gap between legal and illegal products. BATSA argued that enforcement efforts have been insufficient to protect legitimate businesses and jobs, with illicit cigarettes costing an estimated R28 billion ($1.7 billion) a year in lost tax revenue. BATSA also warned that illicit trade is increasingly affecting other sectors, including alcohol, pharmaceuticals, and consumer goods.

    The growth of illicit trade accelerated after a Covid-era ban on tobacco sales in 2020, from which BATSA says the legal market never recovered. BATSA said it could reconsider local manufacturing if there is sustained progress in curbing illicit trade but cautioned that proposed new tobacco legislation and rising excise duties risk further worsening the problem.

  • Shutdown End Puts Hemp on the Clock

    Shutdown End Puts Hemp on the Clock

    This week, President Donald Trump signed a funding bill to end the government shutdown, but, according to Forbes and other industry experts, tucked inside the legislation is an amendment that has the potential to dismantle the country’s $28 billion hemp industry. The provision rewrites the federal definition of hemp, and, after a 12-month grace period, would effectively outlaw most hemp-derived THC products, including the booming market for THC beverages and edibles.

    Since the 2018 Farm Bill legalized hemp and its derivatives, hemp-derived intoxicating products have proliferated nationwide, sold online and in mainstream retailers without the restrictions placed on marijuana. The new amendment closes that loophole by banning synthetic cannabinoid conversion (such as CBD-to-THC processing) and capping THC content at 0.4 mg per package—far below the levels in virtually all current hemp products, many of which contain at least 5 mg and some up to 1,000 mg per package.

    “This is an extinction-level event for the CBD products industry, and the greater hemp and hemp beverage industry,” said Jim Higdon, cofounder of Louisville-based Cornbread Hemp. “If we can’t stop it, and we don’t pivot, it will destroy our business. Every product that we make currently will become a Schedule I narcotic when it is implemented.”

    Industry leaders, including beverage manufacturers and multistate cannabis operators, warn that the measure would wipe out companies built around hemp-derived THC and plan to lobby aggressively for revised regulations during the one-year window. The amendment has ignited political tension as well, with Senator Mitch McConnell—architect of the 2018 hemp legalization push—now leading efforts to curb intoxicating hemp products amid rising concerns about youth exposure.

    “Mitch McConnell, the man who gave us the seeds to grow hemp, now wants to burn the crop and salt the ground,” said Thomas Winstanley, the executive vice president of Georgia-based Edibles.com. “[We see] it as not one year to ban, it’s one year to regulate. We do not see this as the end. The clock started, but there’s still runway for better policy here. It was a tough battle to lose, but it’s not the end of the war.”

  • FDA to Allocate $200M Toward Combating Illicit Vapes

    FDA to Allocate $200M Toward Combating Illicit Vapes

    As part of the continuing resolution passed by Congress and signed yesterday (November 12) by US President Donald Trump to reopen the government, the Food and Drug Administration (FDA) will be required to allocate at least $200 million of its $712 million in user fees toward enforcing regulations on electronic nicotine delivery systems (ENDS). Of this amount, $2 million will support a multi-agency task force, including the Justice Department and Homeland Security, aimed at cracking down on illegal ENDS products imported from China and other countries.

    The FDA is also required to update its 2020 ENDS enforcement guidance within one year to include flavored disposable vapes and clarify the definition of disposable ENDS products. In addition, the law updates the Imports and Exports section of the Food, Drug, and Cosmetic Act to include tobacco products, strengthening the FDA’s authority to regulate their import alongside food, drugs, devices, and cosmetics.

    The agency must provide semi-annual reports to Congress on efforts to remove illegal ENDS products from the market, with the first report due within 180 days of enactment (November 12). The FDA is also expected to submit a report detailing its work to educate retailers on which products are legally allowed for sale.