Tag: United States

  • Mariana Islands Fails to Adopt Tobacco Report

    Mariana Islands Fails to Adopt Tobacco Report

    Credit: PVL

    The Senate of the Northern Mariana Islands, a commonwealth of the United States, has failed to adopt its committee report that recommends the passage of its version of a House of Representatives bill.

    That bill aims to increase government revenue by amending the definition of cigarettes to ensure that all tobacco products are properly taxed.

    Four senators voted “yes,” and four senators voted “no” to a motion to adopt the report of the Committee on Fiscal Affairs, but Senate president Edith E. DeLeon Guerrero announced that the report would not be adopted and would no longer exist, according to local media.

    DeLeon Guerrero, Senate vice president Sen. Donald M. Manglona, Sens. Paul A. Manglona, and Celina R. Babauta voted for the committee report’s adoption.

    House Bill No. 23-7 proposes to amend the definition of “cigarette” to include any product that resembles similarities to cigarettes based on its appearance, weight, usage, and packaging, such as “little cigars”, “filtered cigars”, or “roll-your-own.”

  • Maine Lawmakers Change Tobacco Bill to Save Shop

    Maine Lawmakers Change Tobacco Bill to Save Shop

    The Maine House of Representatives passed LD 2157, sponsored by Rep. Matt Moonen of Portland. The bill would prohibit tobacco sales within 300 feet of schools, in an effort to prevent tobacco and nicotine addiction among children.

    “At 300 feet, this would affect one existing business,” Moonen said on the House floor Tuesday night. “That business is in my district, this business sells tobacco within 26 feet of my school, and I would like that to stop.”

    That business is Fresh Approach, located in Portland’s West End. It’s right across the street from the Reiche Elementary School, according to media reports.

    “I’ve been here for 30 years, and in 30 years, I’ve yet to have a fourth grader come in here and try to buy a pack of cigarettes,” Chet Knights, owner of Fresh Approach, said. “It’s just kind of silly.”

    He says Fresh Approach is primarily a neighborhood grocery store, but some people come in to grab a sandwich and a pack of cigarettes. If he is prohibited from selling tobacco, those customers will go elsewhere.

    “When the construction guys come along, and they want to get a sandwich, a soda, and a pack of Marlboros, and they can’t get a pack of Marlboros, you’re gonna go down the street to the store with the big fancy signs,” Knights said, explaining that he does not advertise for tobacco products at his store. “For me, that business is just gone.”

    On Friday, the Maine state Senate amended that bill, so stores could not obtain a tobacco license within 300 feet of schools, but they could renew a tobacco license if they already had one. This essentially grandfathers Fresh Approach in and allows them to continue to sell tobacco products.

    The bill now goes back to the House.

  • Chalkey to Boost PCA Government Affairs

    Chalkey to Boost PCA Government Affairs

    Credit: Thapana Studio

    The Premium Cigar Association (PCA) has hired Richard Chalkey as its new director of Coalitions and Policy. Chalkey brings over a decade of professional experience from work in government and the private sector, according to an emailed press release.

    “The Premium Cigar Association has worked with Richard since his time in the West Wing of the White House through Congress and we look forward to having him join our team,” stated PCA Deputy Executive Director Joshua Habursky. “It is rare to find someone in Washington who has worked in the House, Senate, and White House –especially someone who worked four years in a White House and in the West Wing. We are glad to have the perspective and network that Richard will bring.”

    Previously, Chalkey served as the associate director of the National Economic Council and as the associate director of the Office of Legislative Affairs in the Trump White House. During his four years of service at the White House, Chalkey managed policy rollouts for the directors of his departments and in coordination with White House Senior Staff and Cabinet Agencies.

    Most recently, Chalkey served as deputy chief of staff for Rep. Nancy Mace of South Carolina in the 117th and 118th Congress. Prior to the White House, Chalkey also served in the office of former U.S. Senator Mark Kirk and former Congressman Rodney Davis, both of Illinois.

    Chalkey holds a bachelor of science in Management – International Business and a bachelor of science in Marketing from the University of Illinois at Urbana-Champaign. He is a U.S. State Department Gilman Scholar for studying abroad at the University of Hong Kong and currently is a May 2024 expected executive MBA candidate for the Darden School of Business at the University of Virginia.

  • U.S. Vape Market Tops $2.67 Billion

    U.S. Vape Market Tops $2.67 Billion

    Photo: auremar

    The combined sales of cartridge-based and disposable e-cigarette products to U.S. consumers by nine leading manufacturers increased by approximately $370 million between 2020 and 2021, while the total topped $2.67 billion, according to the Federal Trade Commission’s (FTC) third report on e-cigarette sales and advertising in the United States, which was released on April 3, 2024. E-cigarette companies also spent $90.6 million more advertising and promoting their products in 2021 than in 2020.

    The FTC report examines two main types of e-cigarettes. Some have rechargeable batteries and changeable prefilled cartridges; others are disposable after running out of charge or e-liquid. Reported sales of cartridge products increased from $2.13 billion in 2020 to $2.5 billion in 2021; sales of disposable, non-refillable e-cigarette products increased from $261.9 million in 2020 to $267.1 million in 2021.

    The 2021 report also provides details on some characteristics of e-cigarette products, including flavors and nicotine concentration, as well as the bundling of the components in cartridge systems. The data shows that in 2021, 69.2 percent of e-cigarette cartridges either sold or given away contained menthol-flavored e-liquids, and the rest were tobacco-flavored.

    Disposable e-cigarettes are not covered by the flavor restrictions imposed by the Food and Drug Administration. In 2021 “other” flavored devices made up 71 percent of all disposable devices sold or given away, with the most-popular subcategories being fruit-flavored and fruit & menthol/mint flavored products. These two subcategories alone made up more than half of all disposable e-cigarette devices sold or given away in 2021.

    According to the report, expenditures for the advertising and promotion of e-cigarettes increased from $768.8 million in 2020 to $859.4 million in 2021, with the three largest spending categories being price discounts, promotional allowances paid to wholesalers, and point-of-sale advertising. Together, these three categories accounted for almost two thirds of expenditures in 2021.

    Finally, the report discusses steps that e-cigarette companies took in 2021 to deter or prevent underage consumers from visiting their websites, signing up for mailing lists and loyalty programs, or buying e-cigarette products online. These steps include the use of online self-certification to verify users were at least 21 years old and following state laws requiring an adult signature upon delivery of e-cigarette products.

  • Top Court Asked to Review Anti-FDA Ruling

    Top Court Asked to Review Anti-FDA Ruling

    Photo: tinnaporn

    The U.S. Department of Justice has asked the Supreme Court to review a lower court’s ruling rejecting the Food and Drug Administration’s reasoning in denying premarket tobacco product applications submitted by Wages and White Lion Investments.

    According to the solicitor general, the 5th Circuit Court of Appeals relied upon “legal theories that have been rejected by other courts of appeals that have reviewed materially similar FDA denial orders.”

    The federal government’s decision to seek Supreme Court review is unsurprising, according to Reason. However, the libertarian publication also notes that there is a circuit split on whether the FDA acted in an arbitrary and capricious fashion when it refused to consider certain materials submitted with PMTAs and departed from previous guidance it had given the industry. Most circuits to hear such claims turned them away, according to Reason.

    The 5th Circuit (along with the 11th Circuit) did not. A Supreme Court review could help resolve the circuit split and remove any cloud over the FDA’s continuing ability to review (and deny) PMTAs for vaping products. Without Supreme Court review, vaping product manufacturers would be incentivized to seek review of any PMTA denials in the 5th and 11th Circuits, which could undermine the FDA’s regulatory authority.

     

  • California Firm Sues Zyn Makers

    California Firm Sues Zyn Makers

    Tobacco Reporter archives

    A law group in California has filed a lawsuit against Philip Morris in the state’s Southern District. The Schmidt National Law Group claims that the maker of Zyn is targeting children and young adults with its flavored nicotine pouches.

    “Now comes along Zyn the chewing gum, and the common denominator of all these nicotine delivery systems is as far as targeting towards kids, and I’m talking about kids, middle school, high school, younger and younger,” said Martin Schmidt, managing attorney at The Schmidt National Law Group.

    Although a person must be at least 21 years old to purchase the product legally, Schmidt says it is very accessible to people younger than 21. The class action lawsuit seeks “damages” from Philip Morris and Schmidt said he would like stricter limits on access to the product, according to media reports.

    The case could take years to work its way through the litigation process, according to Schmidt.

  • Northern Exposure

    Northern Exposure

    Vape and modern oral sales are rising, but combustibles remain king of the North American market.

    By Timothy S. Donahue

    It’s constant but unknown. While the nicotine market remains profitable, it is changing. As more major tobacco companies embrace next-generation products, combustible sales will suffer. The evolving regulatory environment will also continue to play a major factor in the North American nicotine market.

    According to Statista, in 2024, revenue in the U.S. nicotine market will reach $107.5 billion. It is projected to experience a compound annual growth rate of 0.62 percent between 2024 and 2028. The largest segment in the market remains combustible cigarettes, with an expected value of $82.7 billion in 2024. The Marlboro brand continues to dominate U.S. cigarette sales with a 50 percent market share.

    E-cigarette revenues are projected to reach $8.8 billion. Statista expects the vape market to experience an annual growth rate of 3.24 percent from 2024 to 2028. Retail sales of nicotine pouches are also seeing unprecedented growth. According to Euromonitor, the U.S. pouch market generated $8.58 billion in 2023 compared to $7.23 billion in the previous year. The U.S. modern oral nicotine market is expected to reach $11.03 billion by 2027.

    The Canadian tobacco market is much smaller than the U.S., reflecting that country’s lower population. Nicotine sales in Canada are projected to generate a revenue of $12.3 billion in 2024. The market is anticipated to experience a compound annual growth rate of 1.10 percent between 2024 and 2028. In Canada, too, combustible cigarettes continue to account for the majority of tobacco sales. The traditional cigarette market is expected to reach a volume of $10.6 billion this year. In 2024, the revenue in the e-cigarette market in Canada is estimated to reach $1.4 billion.

    Nicotine pouches were approved for sale in Canada on July 18, 2023, as a natural health product. Modern oral nicotine pouches are currently outside the scope of the federal Tobacco and Vaping Products Act and the provincial Smoke-Free Ontario Act 2017, which regulate tobacco and vaping products by restricting their advertisement, display and public use. However, that is expected to change soon.

    During an education seminar at the Total Products Expo (TPE) that took place in Las Vegas Jan. 30 to Feb. 2, 2024, Brad Seipel, executive vice president at MARC Research, noted that many of the next-generation tobacco products disrupting the market today have been on the market for over a decade. Innovation in the industry, he said, is being driven with a focus on tobacco harm reduction and a move away from traditional tobacco. “We are now living in a post-tobacco market. It is a nicotine market,” Seipel said.

    Brad Siepel (left) and Jason Carrington (Photo: Chemular)

    Bonnie Herzog, an analyst with Goldman Sachs, observed in an industry report that retailers are seeing customers making fewer trips to the store, which is being driven by consumers switching to alternative nicotine products like modern oral. These products often last longer than a typical pack of combustibles. She also explained that the illicit market for disposable vape products continues to be a growing concern for the nicotine industry and retailers alike as the U.S. Food and Drug Administration’s crackdown on flavors and noncompliant products has driven traffic to the gray/black market or retailers willing to sell unauthorized vaping products.

    She said a broad majority of retailers believe the situation is worsening with the impact felt strongest in urban areas and states with the strictest flavor bans. “Many retailers highlighted that the illicit disposable [e-cigarette] market is impacting cigarette volume, and [Altria] estimates the growth of these illegal products contributed to cigarette industry declines in the range of 1.5 percent to 2.5 percent over the last 12 months,” she said. “Retailers don’t believe the situation will change without more enforcement and are broadly pessimistic given the ubiquity of the offering, tracking/enforcement difficulty and relatively light penalties reducing deterrence.”

    One respondent to the survey pointed out that enforcement fines issued by the FDA are manageable ($19,192 per violation), and the extent of policing hasn’t resolved the issue. Others noted that retailers selling these products (i.e., on the gray market) are making hefty margins on those sales, which are helping them offset losses on (cigarette) sales.

    During Keller and Heckman’s E-Vapor and Tobacco Law Symposium, held Jan. 29–30 in Las Vegas, Brian King, head of the FDA’s Center for Tobacco Products, said his agency carried out a series of coordinated blitzes against Elf Bar and other “illicit” brands at several retailers that resulted in warning letters. The agency then issued civil money penalties following subsequent reinvestigations against retailers found to still be selling illegal products. Many of the recipients of these penalties were small businesses.

    “We do know that we need that comprehensive approach,” said King. “And so, we’ve also taken action on the borders, particularly for products that are coming in internationally. We do have import alerts in place. Those do address products that have been accurately declared. Of course, we know that there are entities that are misdeclaring products as well. Towards that end, we work very closely with colleagues at Customs and Border Protection. We did have an operation that was conducted earlier this year where we seized over $18 million worth of products, including Elf Bar, Funky Republic and several others. It was about 1.4 million units of illegal e-cigarettes. Ultimately, this is one example of ongoing activities. There will be more.”

    TIm Phillips (Photo: Chemular)

    Also speaking at TPE, Tim Philipps, with Tamarind Intelligence, said that a major issue is enforcement. While the FDA’s premarket tobacco product application (PMTA) process is expensive and onerous, it also seems pointless because there is little effort to stop products that skip the regulatory process from being marketed. According to Phillips, even the FDA’s current blitz barely skims the surface of the deepening gray/black markets.

    “The products that you’re getting offered in retail environments, they haven’t gone through a regulatory process, and there’s no signs of that happening, frankly,” he said. “The FDA is stepping up some of its enforcement activity. We’ve seen more and more of this happening, and I think it will keep increasing. But the reality is the market’s not being regulated at all. The same is happening, by the way, in the U.K. and all across Europe. We’re seeing a lot of products come in. The reason is that a lot of these products are being distributed directly to retailers or directly to consumers (from the manufacturer). And that’s been a great success.”

    A looming federal menthol ban could also boost the gray/black markets for nicotine products. The FDA has submitted proposals to the White House Office of Management and Budget (OMB) to ban the use of menthol in cigarettes and other tobacco products and prohibit all nontobacco flavors in cigars. The FDA is also expected to definitively define a “characterizing flavor.” The OMB is currently reviewing these proposals. Before the product standards can be implemented, the OMB must review their potential economic impact.

    The FDA has stated that it expects to announce the final ruling on the menthol ban in March. However, with the U.S. presidential election approaching this November, many industry experts are uncertain if any action will be taken at all. Unsurprisingly, several respondents to Herzog’s retailer survey expressed fatigue with ongoing uncertainties related to the potential federal menthol ban, the FDA’s efforts to enforce bans on illegal disposable vape products and flavors and the agency’s slow progress in completing PMTA reviews. The rapid growth of local flavor bans is also an expanding concern.

    “A number of retailers who are currently not subject to [local] flavor bans anticipate the potential in the near future given rapidly evolving legislative agendas,” Herzog stated. “The looming decision by the FDA on a federal menthol ban on (cigarettes) has also led many retailers to take a wait-and-see approach on carrying gray market vapor products, which are higher margin and more affordable for consumers.”

    The future of nicotine products still holds promise. Seipel said that the dissolvable and heat-not-burn segments have plenty of room for growth as the awareness and usage of those products haven’t yet gotten traction in the North American market. Seipel said as long as there are combustible smokers, there is going to be room for innovative products that help them switch to less harmful alternatives.

    “There’s also [an] opportunity in innovation for helping female smokers …. We have to remember that there are way more people out there that need help [quitting smoking],” he said.

    Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.
  • Califf Pushing U.S. Menthol Ban: Politico

    Califf Pushing U.S. Menthol Ban: Politico

    Photo: FDA

    U.S. Food and Drug Administration Commissioner Robert Califf has privately asked friends and public health experts to lobby the White House to ban menthol cigarettes, according to Politico. Califf reportedly fears that President Joe Biden might abandon the policy to avoid backlash from Black voters before the upcoming elections. The minority communities are core to Biden’s voter base.

    “Fundamentally, these bold actions are about saving hundreds of thousands of lives each year,” Califf said in 2022, when the FDA first proposed the ban. “Prohibiting menthol in cigarettes would mean over 18.5 million menthol cigarette smokers ages 12 and older in the United States would have a better shot at quitting.”

    In October 2023, the FDA finalized its menthol ban policy and submitted it for approval. However, the White House has not given it the go ahead due to pushback from a handful of influential Black industry allies who warn the ban would fuel an underground market, worsen over policing in minority communities and have a negative effect on Biden’s standing among Black voters.

    Advocates of the ban fear that the delay means politics will override the urgency of the ban and that Biden will delay implementation until after the November presidential election.

    “We’re now in a political season, and it’s only going to get tougher for them to do it,” said Yolonda Richardson, CEO of the Campaign for Tobacco-Free Kids. “All the delays are to the benefit of the tobacco industry. That’s just more time they have to keep them on the street, that much more time to addict kids.”

    Recently, Califf has been raising the issue internally in addition to soliciting outside help. He has enlisted senior White House officials and Health and Human Services officials to help advocate for the ban. Califf has also personally pressed senior Biden aides on the decision.

    “Everybody’s done what they could do,” said a senior administration official, who was granted anonymity to discuss private conversations. The White House declined to comment, citing a policy against discussing rules before they’re finalized.

    “The FDA remains committed to issuing the tobacco product standards for menthol in cigarettes and characterizing flavors in cigars as exponentially as possible, said Michael Felberbaum, FDA spokesperson.

    “In the last year of this administration, so many things happen with a lot of pressure to get things finished, and sometimes political pressure comes into play,” said Califf, who has also sought to restrict flavored cigars and wants to mandate lower nicotine levels in all cigarettes and other tobacco products. “A lot of considerations have to be navigated.”

    The FDA had initially hoped to finalize the menthol ban before the end of 2023. Now, the FDA has set a new deadline of March for a final rule. 

  • Luciano Cigars, Peter James Launch JV

    Luciano Cigars, Peter James Launch JV

    Luciano Cigars and Peter James Co. have announced the launch of Peter James Cigar Co., a new joint venture that will include cigars and accessories released in the near future.

    According to Luciano Meirelles, the new entity is a joint venture equally owned by Peter James Co. and Meirelles and his business partner, Tiago Splitter. The new company will hold the Peter James trademark in the U.S. as well as other trademarks for future products, according to Halfwheel.

    The two are working on a new cigar that will be launched in March, though details about its specifics have not been announced. However, the cigars will be produced at the Luciano Tabacos S.A. factory in Estelí, Nicaragua, and Luciano Cigars will distribute them.

    “This partnership is an extraordinary moment—a fusion of expertise and passion,” said Meirelles in a press release. “My love for the Peter James brand goes beyond their craft and luxury products.

    “There is an intentionality in everything they do: even the smallest details reveal beauty where most people won’t see it. That act of generosity carries beauty and passion into our world. We couldn’t be more excited for what’s to come.”

  • Attorneys General Urge Menthol Ban

    Attorneys General Urge Menthol Ban

    Credit: Jet City Image

    A coalition of 21 state attorneys general submitted a letter to the White House Office of Management and Budget urging the Biden administration to complete its review and swiftly implement proposed bans on menthol cigarettes and flavored cigars.

    “The proposed FDA rules, which are supported by ample evidence, have been long overdue,” said California Attorney General Rob Bonta in a press release. “In today’s letter, the coalition specifically highlights calls for action by civil rights and public health groups to remove menthol tobacco products from the marketplace to protect public health and address the systemic and disproportionate impact of these products on minority communities and other vulnerable populations, including young people.”

    Bonta said tobacco companies have intentionally targeted specific communities across the nation, particularly communities of color, which has contributed to significant health disparities and inequities.

    “The time to act is now,” said Bonta. “I urge the Biden Administration to finally halt the sale of these flavored tobacco products, which will lay the groundwork to reverse decades of disparities in tobacco use and save lives.” 

    In the letter, the multistate coalition urges the Biden Administration to finalize its review of the U.S. Food and Drug Administration’s proposed rules without delay.

    “As state and territorial chief legal officers, the attorneys general address unfounded claims that the proposed menthol ban will increase illicit trade or criminalize the individual purchase, possession, or use of menthol cigarettes and flavored cigars,” the letter states. “The coalition argues that the FDA’s proposed rules are critical steps for advancing health equity and protecting public health. Moreover, banning menthol cigarettes and flavored cigars will bring the country closer to achieving the Cancer Moonshot, President Biden’s historic push “to end cancer as we know it.”

    Bonta co-leads the attorneys general of Arizona, Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, North Carolina, North Mariana Islands, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, and District of Columbia.

    A copy of the letter can be found here.