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Vaping in the USA: It Can Get Worse (Probably)

Jim McDonald from Vaping 360 shares his thoughts on what’s going to happen to vaping in 2022 in the USA. For our full expert round-up, see Vaping Predictions 2022

It’s nearly impossible to overstate the magnitude of the current threats to vaping in the United States. It’s almost as though all the strategies and goals of the tobacco control opposition to vaping have converged at this moment to hit vaping from every direction simultaneously — with help (possibly) from all three branches of the federal government.

What it adds up to is a hydra-headed menace to the independent vaping industry, which has already been badly wounded. If we remain on the current course, vapers will no longer have access to legal open-system products like bottled e-liquid, and even closed-system products will be too expensive to make switching attractive to many people who smoke.

Let’s look at the threats one at a time.

The vape mail ban and PACT Act

Last December, Congress passed a law that ordered the U.S. Postal Service (USPS) to create regulations banning U.S. Mail delivery of vaping products. The law, called the Preventing Online Sales of E-Cigarettes to Children Act, also pushed vapes and e-liquid into the Prevent All Cigarette Trafficking (PACT) Act, which mandates strict tracking, reporting and tax rules for tobacco (and now vape product) shippers. Violatiors of the PACT Act can face serious criminal penalties, including prison. The law is enforced by a federal police agency – the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

The threat of inadvertent PACT Act violations caused FedEx and UPS – the two largest national shipping services aside from USPS – to immediately declare a no-vape-deliveries policy. (The third major carrier, DHL, already prohibited domestic vape shipments).

While online vape sellers waited for USPS to complete the formal rule – which finally happened in late October – they continued to ship via U.S. Mail. Now they’ve been forced to switch to an unproven, cobbled-together network of small private services to deliver vaping products to both residential and business customers (like vape shops).

While it took 11 months for the mail ban to take effect, the PACT Act’s restrictions began applying to vaping products in April – and they were immediately felt. Many online e-cigarette retailers went out of business, and most e-liquid manufacturers that had previously shipped directly to customers were forced to sell only through distributors or the few online retailers able to afford and navigate the maze of PACT Act compliance and reporting requirements.

Vape products made or distributed by tobacco companies like Vuse, Logic and JUUL (and a few independents like NJOY) are primarily sold in convenience stores and gas stations, giving them a huge advantage over products sold by online retailers and vape shops.

FDA and the PMTA process

Certainly the greatest single threat to open-system vaping in the United States is the Food and Drug Administration (FDA) – and particularly the FDA Center for Tobacco Products (CTP), which was created to regulate tobacco and declared its authority over vaping products with the 2016 Deeming Rule.

The Tobacco Control Act (TCA) that spells out CTP’s regulatory process grandfathered tobacco products that were available for sale as of Feb 15, 2007 onto the market without review. All products introduced after that date must go through a stringent review, with manufacturers submitting a Premarket Tobacco Application (PMTA) for each product variation. The deadline to submit PMTAs came in September 2020, and most products were then given a year to remain on the market while FDA considered the applications.

In late August, just before its self-imposed deadline to complete reviewing the millions of PMTAs that had been submitted, FDA announced that applications for vaping products in flavors other than tobacco and menthol would not be considered unless manufacturers had included evidence from complex and expensive clinical trials or longitudinal cohort studies proving their products would be helpful to adults quitting smoking and would not increase youth uptake.

The agency had told manufacturers many times – in guidance documents, public statements, and private communications – that such studies were not required to submit successful PMTAs. But FDA began issuing Marketing Denial Orders (MDOs) to small manufacturers based on the newly announced prerequisite, and ordering them off the market.

The sudden shift of evidentiary standards is widely believed to be a panicked response by FDA to pressure for a flavor ban from Democrats in Congress and tobacco control groups like the Campaign for Tobacco-Free Kids. Whatever the reason, the agency’s cookie-cutter PMTA denials led to many manufacturers challenging the MDOs in court, and while we’re a long way from a final result, some judges have granted stays of FDA enforcement while the appeals are considered.

If the courts eventually uphold FDA’s ability to change requirements for PMTA submission after the fact, the agency’s actions indicate its desire to eliminate the most popular and effective flavored products – and that’s likely what will happen. Few industry insiders believe vape shops can survive by selling a few tobacco and menthol-flavored e-liquid brands, so the agency’s “surprise switcheroo” (as one federal judge called it) could eliminate thousands of vape shops along with millions of flavoured products.

A recent and (of course) unwelcome development at FDA is President Biden’s announcement that he will nominate former FDA Commissioner Robert Califf to serve again in that role. Califf is a longtime opponent of vaping, and if approved will be unlikely to improve the regulatory environment for people who sell and use e-cigarettes.

Synthetic nicotine restrictions

A popular small manufacturer’s response to FDA’s PMTA denials has been to reformulate denied products with synthetic nicotine, which is generally believed to be beyond the CTP’s regulatory authority (the TCA gives FDA authority over products “made or derived from tobacco”, their components and parts).

Unfortunately, these companies’ actions – along with the announcement by convenience store vape villain Puff Bar that it too had switched to synthetic nicotine – have drawn the attention of anti-vaping organizations and the members of Congress that trust them. Those groups are now demanding that FDA’s drug regulators declare authority over synthetic nicotine, which some experts believe could be done without time-consuming notice-and-comment rulemaking. Others want Congress to amend the Tobacco Control Act to give CTP authority over all kinds of nicotine.

If FDA’s PMTA denials stand, and manufacturers are prevented from adopting synthetic nicotine as an alternative, there will probably be no way to maintain a legal marketplace of open-system products. However, with many hundreds of e-liquid manufacturers capable of churning out oceans of e-liquid, there remains an opportunity to create a thriving underground of black market products.

The Build Back Better nicotine tax

Buried in the $1.85 trillion Build Back Better Act – meant to fulfill President Biden’s promise of huge expenditures on “social infrastructure” – is language that would make vaping (and using nicotine pouches and lozenges) as or more expensive than smoking cigarettes.

The law, which has been proposed without success several times before, would tax nicotine at a rate that supposedly equals the federal tax rate on cigarettes. Unfortunately, the authors measured only the nicotine in cigarettes that is absorbed by smokers, not the actual quantity in a cigarette. With nicotine in e-liquid, however, they have proposed to simply tax all of the nicotine – at a rate of $50.33 per 1,810 milligrams-hat’s 2.8 cents per milligram. The tax would increase the cost of a 60ml bottle of 12mg/ml e-liquid by $20, or a 30ml bottle of 50mg/ml nicotine salts by $42. A litre of 100mg/ml DIY nicotine would have a tax of $2,780 added to its typical $100 price.

The troubled bill has gone through many iterations. The nicotine tax itself has been removed once, then added back before it passed the House of Representatives. Since the bill is being advanced through the “budget reconciliation” process – which allows it to pass the Senate with a simple majority, rather than requiring 60 votes like most bills – Democrats will need yes votes from all 50 of their members (and the Vice President’s tie-breaking vote) to pass the bill.

That means that any Democratic senator can get the bill tailored as they please if they’re willing to threaten Senate leadership with a no vote. There is hope that a few Democrats will insist the tax be removed, in large part because it violates President Biden’s promise of no new taxes on Americans who make less than $400,000 a year. Moderate Democrats are leery of facing independent voters next year with a yes vote on a gigantic spending bill making them vulnerable to Republican opponents.

If the tax passes, it would be yet another crushing blow to the independent industry, and another incentive for legal manufacturers to shift over to what is so far a mostly hypothetical black market.

Update: as we go to press, this tax has been removed from the bill (which could change).

It can get worse (probably)

I don’t have the time or space to show how all of these threats interact with each other, but you can probably see most of the possibilities. As of early December – 15 months after the PMTA submission deadline – FDA has authorized only one vaping product: the primitive tobacco-flavored Vuse Solo, made by cigarette giant British American Tobacco.

The door is being closed to a legal open-system market, and as it happens many of the entrepreneurs that pioneered the independent U.S. vaping industry are being squeezed out. Whether American regulators and legislators will ever decide that the country’s 30-plus million smokers deserve low-risk alternatives remains an open question.

With the mail ban and PACT Act already in place, we will probably find out in 2022 if FDA’s proposed shadow ban of flavors, restrictions on synthetic nicotine and a massive tax on nicotine will finish the open-system vaping market.

I used to say it can’t get any worse, but that would be tempting fate at this point. It probably can get worse. I’m not making any predictions for 2022. I’m just holding my breath.

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