Sign Out Sign Out

Vapor Technology Association

Join Today Dashboard

The Negative Impact of New Nicotine Tax

by Leave a Comment

Prepared by John Dunham & Associates

John Dunham & Associates


for the Vapor Technology Association

December 2021

THE NEGATIVE ECONOMIC IMPACTS OF THE
NEW NICOTINE TAX IMPOSED ONLY ON VAPOR PRODUCTS

IN THE RECONCILIATION BILL (HR 5376)

Executive Summary

Background

  • The vapor product industry is an important part of the US economy.  About $8.1 billion in vapor sales lead to 133,600 jobs and $22.1 billion in economic activity. 
  • About 35,000 of these jobs are held by people working for the over 9,850 independent adult-only, retail vape shops located across the country.  Even so, the number of independent adult-only, vape shops has fallen by 27 percent since 2018 as a result of new state and federal taxes and regulations. 
  • Congress is currently deciding whether to impose a new tax only on vapor products of 2.78-cents per milligram of nicotine, believing that such a tax would “equalize” or create “parity” with cigarette taxes.
  • Conclusions
  • Our analysis finds that the bill would not create anything close to parity with cigarette taxes but, rather, would tax vapor products at a much higher rate – up to nine times higher – than the tax on a pack of cigarettes.
  • Our analysis also finds that, if passed, the proposed nicotine tax in the Reconciliation Bill:
  • Would lead to a net price increase on vapor products at retail of about 53 percent (21.2 percent for a standard two-pack of closed-system pod products and 73.5% for a standard 60 milliliter bottle of open system e-liquid), while the price of cigarettes and other tobacco products would remain unchanged as they would not be subject to any additional federal tax.
  • Would lead to a reduction of nearly 42,800 full-time equivalent jobs and the loss of $2.2 billion in wages and benefits.
  • Would negatively impact the size of the overall economy which would fall by about $7.0 billion.
  • Would result in states and their localities losing $620.1 million in taxes while the federal government attempts to generate revenues.
  • Would lead to a loss of about 31.9 percent of vapor product sales or 3.7 million milliliters of e-liquid consumed.  Of this loss, 61.2 percent would be the result of consumers switching to other tobacco products, including combustible cigarettes.  An additional 18.5 percent of these lost sales would move to the black market.

Table 1
Economic Impact of Proposed Nicotine Vapor Product Tax Increase

 DirectSupplierInducedTotal
Jobs-21,331-8,974-12,470-42,776
Wages-$869,866,251-$636,356,853-$707,328,020-$2,213,551,124
Economic Output-$2,562,607,363-$2,205,386,235-$2,255,024,480-$7,023,018,078
State and Local Taxes   -$620,087,422

Background on the Proposed Nicotine Tax Increase in HR 5376

The U.S. Senate is currently considering the Reconciliation Bill, known as HR 5376, which was recently passed by the U.S. House of Representatives.  As passed by the House, HR 5376 would impose a new tax only on e-cigarettes or vapor products containing nicotine that are manufactured in or imported into the United States in the amount of $50.33 per 1,810 milligrams of nicotine.  The nicotine tax rate would be $0.0278 for each milligram of nicotine in a vapor product ($50.33 / 1810 milligrams of nicotine = 2.78-cents/mg). In HR 5376, taxes on existing tobacco products, including combustible cigarettes, would remain unchanged.[1]


The proposal claims to equalize the tax on e-cigarettes at the same rate as cigarettes, at least at the Federal level, in an effort to create parity between the products.  However, our analysis finds that the bill would not create anything close to parity with cigarette taxes but, rather, would tax vapor products at a much higher rate – up to nine times higher – than the tax on a pack of cigarettes.

The current federal tax on cigarettes is $50.33 for every 1000 cigarettes, which amounts to a federal tax of $1.01 for a pack of cigarettes ($50.33 / 1000 = $0.05033 x 20 cigarettes per pack).  

A pack of cigarettes contains approximately 204 milligrams of nicotine (10.2 mg/cigarette x 20 cigarettes per pack).  Applying the proposed nicotine tax of 2.78-cents per milligram to cigarettes, means that the tax on a pack of cigarettes should be $5.41, not $1.01. 

Viewed another way, the federal tax on cigarettes, if applied to their nicotine content, would only amount to less than half a penny per milligram, not the 2.78-cents Congress seeks to impose on e-cigarettes ($1.01 per pack / 204 mg of nicotine per pack).

As defined in the bill, the proposed tax would be equal to about $2.22 on the standard closed system nicotine vapor product (such as a two pack of JUUL pods), and an astonishing $10.01 on the standard average 60 milliliter bottle of nicotine containing e-liquid used in an open system vapor device. The following table shows the significant tax differential on a per unit and as a percentage of the retail price for each of these products and demonstrates that HR 5376 fails to create any parity, but significantly overtaxes e-cigarettes, making cigarettes more financially attractive.

Table 2
Comparison of Proposed Nicotine Tax to Actual Cigarette Taxes in the United States

 Cigarettes(pack)Closed-System Vape (2-pods)Open-System Vape (60ml)Cigarette Tax < Closed-SystemCigarette Tax < Open-System
Tax Per Unit$1.01$2.22$10.01-120.3%-891.1%
Tax as Percent of US Retail $14.4%21.2%73.5%-47.1%-410.2%
Tax Per Mg of Nicotine0.5-cents2.8-cents2.8-cents-461.6%-461.6%

The Negative Effect of Recent Taxes and Restrictions on the Vaping Industry

The nicotine vapor industry is an important segment of the American economy; however, a range of new laws including a ban on most flavored nicotine vapor products, increased age-of-use, and the imposition of taxes and bans at the state and local levels have already led to significant losses in jobs and tax revenues from the sector.

The first comprehensive analysis of the economic impact of the industry in the country was completed in 2018.[2] At that time, over 166,000 jobs depended on the production and sale of vapor and electronic cigarette products. Those holding these jobs received nearly $7.9 billion in wages and benefits, while generating almost $24.5 billion for the US economy.  (Table 3)

In 2018, the Federal government received about $1.9 billion in various tax revenues from the industry’s businesses and employees. State and local governments received about $1.5 billion in tax revenues from the industry and its employees, and an additional $909.0 million in state excise and sales tax revenues from adult consumers who purchased nicotine vapor products during that year. (Table 3)

Table 3

Economic Impact of Nicotine Vapor Industry in the United States (2018)

 DirectSupplierInducedTotal
Jobs87,58129,42748,999166,007
Wages$3,277,220,400$2,092,844,100$2,527,825,000$7,897,889,500
Economic Output$9,151,211,700$7,272,386,500$8,033,914,100$24,457,512,300
     
Federal Taxes   $1,860,313,877
State and Local Taxes   $2,359,821,765
  Taxes on Businesses and Employees  $1,450,820,541
  Consumption Taxes   $909,001,224
Total Taxes   $4,220,135,642

 Of the jobs created by the industry in 2018, nearly 87,600 were direct jobs, including people working in the vapor product manufacturing and distribution chain, and most importantly, 58,430 jobs were at small, independent vapor retail stores, or vape shops.[3],[4]  (Table 4)

Table 4

Breakdown of Independent Vape Shop Jobs (2018)

 JobsPercent of JobsStores
Direct Jobs87,574100.0% 
Vape Shop Jobs58,42966.7%13,481

In 2021, we completed a full review of the current vapor industry to determine the current state of the industry.[5]  We found that following the imposition of significant restrictions on the sale of these products at the Federal, state and local levels, the impact of the vapor industry has decreased by about 11.6 percent.  Even so, it is still a major contributor to the US economy, and an even larger taxpayer.  (Table 5) 

While employment is down by about 32,400 jobs in the industry itself (or 24.2 percent), sales are down by just 11.6 percent.  At retail, due to higher prices, sales are down by just 9.7 percent.  However, this was before the FDA required that most vapor product producers pull their items from the shelves.[6]

Overall, due to higher state excise and sales tax rates, the amount collected by government’s has increased by about $494.2 million or 11.7 percent.

Table 5

Current Economic Impact of Nicotine Vapor Industry in the United States (2021)

 DirectSupplierInducedTotal
Jobs66,36428,09839,111133,575
Wages$2,741,178,400$2,018,273,300$2,243,794,900$7,003,246,600
Economic Output$8,087,436,700$6,879,165,500$7,124,240,600$22,090,842,800
     
Federal Taxes   $1,480,211,544
State and Local Taxes   $3,234,123,298
  Taxes on Businesses and Employees  $1,351,790,191
  Consumption Taxes   $1,882,333,107
Total Taxes   $4,714,334,842

A new federal tax on nicotine of 2.78-cents per milligram, as proposed in HR5376 will increase smoking in the United States, as people switch from more expensive vapor products to less expensive cigarettes. Not only will cigarette taxes be substantially lower than vapor taxes under the House bill, but the bill will increase cigarette sales.

In fact, the tax is regressive and a new tax on consumers making less than $400,000 a year.  It would also make cigarette taxes 9 times lower than those on less harmful vapor products.


The Negative Economic Effects of a New Regressive Tax on Nicotine Vapor Product Sales

Based on an analysis conducted by JDA, were the Federal government to impose a new tax on the sale of nicotine vapor products in HR 5376, the impact on the economy would be more than $7.0 billion, with as much as 3.7 billion milliliters in lost sales.[7] 

As many as 42,800 jobs would be lost throughout the country – at a time when nearly 2.6 million people are looking for work. Moreover, the jobs lost as a result of the proposed tax would result in a loss of $2.2 billion wages. Further, state and local governments would lose about $620.1 million in taxes from the vapor industry and its consumers.

Table 6

Economic Losses Resulting from a 2.78-cents per MG Tax on Nicotine Vapor Products

 DirectSupplierInducedTotal
Jobs-21,331-8,974-12,470-42,776
Wages-$869,866,251-$636,356,853-$707,328,020-$2,213,551,124
Economic Output-$2,562,607,363-$2,205,386,235-$2,255,024,480-$7,023,018,078
State and Local Taxes   -$620,087,422

Most importantly, a large number of the remaining 9,847 independent adult-only vapor shops would likely be forced to close, since their fixed costs could far outweigh any remaining sales.

These small, often family-owned retailers have already suffered under the regulations imposed on vapor products.  Between 2018 and 2021, over 3,630 of these stores have shut their doors, putting almost 23,500 people out of work.  These are real people, with real jobs, located throughout the United States.[8]

Table 7

Losses in Adult-Only Vapor Shops Since 2018

As of 2021JobsPercent of JobsStores
Direct Jobs66,364100.0% 
Vape Shop Jobs34,95752.7%9.847
Change from 2018JobsPercent ChangeStoresPercent Change
Direct Jobs-21,210-24.2%  
Vape Shop Jobs-23,472-40.2%-3,634-27.0%

Nicotine Tax Will Increase Cigarette Smoking and Black Market Sales

Economists have long known that for all normal goods, such as vapor products, higher prices lead to lower sales.  That is the nature of most markets and was first contemplated by the 256th couplet of Tirukkural, which was composed around the year zero.[9]

It was not until 1767 that the phrase “supply and demand” was first used by Scottish writer James Denham-Steuart in his Inquiry into the Principles of Political Economy.[10] Adam Smith popularized the term in his 1776 book The Wealth of Nations and brought it to the forefront of economic theory.[11]  In effect, higher taxes lead to higher prices which in turn would lead consumers to either: 

  1. Completely stop using nicotine products,
  2. Switch to another tobacco product, such as cigarettes,
  3. Continue to vape but purchase their products over the already growing black market.

Table 8

Shift in Vapor Sales to Combustible Cigarettes or Other Nicotine Products

 MillilitersPercent
Current Vapor Sales11,692,582,699 
Lost Vapor Sales-3,732,570,585 
   
Of Which  
  Switch to Other Products-2,283,717,02861.2%
  Quit-757,711,82920.3%
  Black Market-691,141,72918.5%

JDA’s modeling suggests that a large portion of consumers would react by purchasing unregulated products over the black market or make their own e-liquids. Overall, the market for vapor products would fall by about 31.9 percent, with 18.5 percent of that shifting to black market sales.  Of the remaining 81.5 percent of lost sales, 20.3 percent would be due to vapor users quitting the use of nicotine products entirely, while the remainder, 61.2 percent would result from consumers shifting to other nicotine-based products including combustible cigarettes.[12]

These figures (which reflect a price increase resulting from the tax of 53 percent) are conservative and are not out of line with other studies examining the substitution of vapor products and combustible cigarettes when taxes are imposed. 

For example, a study analyzing Minnesota’s 2013 tax on e-cigarettes suggested that it led to increased adult smoking and reduced smoking cessation.  The analysis suggested that there was cross elasticity of current smoking participation with respect to e-cigarette prices of 0.13.[13]  Note that this suggests that a 53 percent increase in the price of vapor products would increase smoking incidence by 6.89 percent.  Since about 34.1 million Americans currently smoke cigarettes, this would lead to an increase in the number of smokers of 2.16 million individuals.[14]  Since an estimated 8.1 million adults are vapor users, this would mean that more than a quarter of these people would switch to cigarettes.[15]

Still other studies have shown even higher demand elasticities and levels of substitution that are modeled here.[16]

– John Dunham & Associates, 2021

[1] See Rules Committee Print 117-17 Text Of Hr 5376, Build Back Better Act, November 3, 2021, found at https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117HR5376RH-RCP117-18.pdf 

[2] The Vapor Industry Economic Impact Study (2018), Prepared for Vapor Technology Association, by John Dunham & Associates, April 29, 2019.

[3] Ibid.  This includes as many as 3,094 jobs (803 shops) in Florida, 2,832 jobs (614 shops) in Ohio, 2,280 jobs (533 shops) in Pennsylvania, 1,522 jobs (359 shops) in Michigan and 898 jobs (204 shops) in Wisconsin.

[4] In addition, there are 11,920 full-time equivalent jobs created by vapor product sales at traditional retailers like supermarkets, convenience stores, drug stores, and department stores.

[5] The Vapor Industry Economic Impact Study (2021), prepared for Vapor Technology Association, by John Dunham & Associates, September 20, 2021.

[6] See for example: FDA Denies Marketing Applications for About 55,000 Flavored E-Cigarette Products for Failing to Provide Evidence They Appropriately Protect Public Health: Action Marks First Marketing Denial Orders for E-Cigarette Products; Press Release, Food and Drug Administration, August 26, 2021, at: https://www.fda.gov/news-events/press-announcements/fda-denies-marketing-applications-about-55000-flavored-e-cigarette-products-failing-provide-evidence

[7] Based on a multi-state, multi-market demand model developed for the Vapor Technology Association by John Dunham & Associates, 2021.

[8] The proposed federal tax on vaping liquids would harm small businesses, resulting in a 31.9 percent reduction in their overall sales. Very few businesses can withstand such a reduction in revenues.

[9] Chendroyaperumal, Chendrayan, The First Laws in Economics and Indian Economic Thought – Thirukkural, SSRN, January 29, 2010, at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1545247 The citation states: if people do not consume a product or service, then there will not be anybody to supply that product or service for the sake of price.

[10] Steuart, James, An Inquiry Into the Principles of Political Oeconomy: Being an Essay on the Science of Domestic Policy in Free Nations, James Williams; and Richard Moncrieffe, 1770.

[11] Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, (London: Methuen and Co., Ltd.), 1904.

[12] Quit rates from: Estimating Consequences of a Ban on the Legal Sale of Menthol Cigarettes, prepared by Compass Lexecon for Lorillard Tobacco Company, January 19, 2011.  On-line at: https://www.thecre.com/ccsf/wp-content/uploads/2011/03/compass_1_19_2011.pdf  According to its website, Compass Lexecon is one of the world’s leading economic consulting firms.

[13] Based on a 40.7 percent increase in price. See: Saffer et al., E-Cigarettes and Adult Smoking: Evidence from Minnesota, NBER Health Economics Program, December 2019, at: https://www.nber.org/papers/w26589

[14] Fast Facts and Fact Sheets, Centers for Disease Control and Prevention, at: www.cdc.gov/tobacco/data_statistics/fact_sheets/index.htm?s_cid=osh-stu-home-spotlight-001

[15] Villarroel, Maria, et. al., Electronic Cigarette Use Among U.S. Adults, 2018, NCHS Data Brief No. 365, April 2020 at:  www.cdc.gov/nchs/products/databriefs/db365.htm

[16] Cotti, Chad, et al., The Effects of E-Cigarette Taxes One-Cigarette Prices and Tobacco Product Sales: Evidence From Retail Panel Data, National Bureau of Economic Research Working Paper 26724, Revised April 2021, at: http://www.nber.org/papers/w26724

Gov. DeSantis Veto’s Flavor Ban SB 810!

by Leave a Comment

VAPOR TECHNOLOGY ASSOCIATION APPLAUDS GOVERNOR DESANTIS FOR DECISION TO VETO ADULT FLAVOR BAN BILL

Governor DeSantis is the First Governor to Veto A Flavor Ban

Washington, D.C. – September 9, 2020 – The Vapor Technology Association (VTA) applauds Florida Governor Ron DeSantis (R) for his decision to veto SB 810, a flavor ban. SB 810 was passed by the legislature in March of this year under the mistaken belief that it would raise the age to purchase vapor products to 21. But, due to federal legislation passed in December 2019, the legal age to purchase vapor products was already 21 in Florida making that portion of the bill “superfluous” in the Governor’s words.

“Governor DeSantis has shown true leadership and understanding in his decision to veto SB 810,” said Tony Abboud, Executive Director of the Vapor Technology Association. “On behalf of all the vapor companies, large and small, and the more than one million vapers in the state of Florida, VTA thanks Governor DeSantis for his bold decision to protect Florida’s public health and economy, which comes at a time of great uncertainty for many. This is the positive reinforcement the industry and the people of Florida need.”

The Vapor Technology Association worked closely with the Florida Smoke Free Association, a VTA member association, to educate legislators throughout the legislative session and had moved a meaningful regulatory bill that would have provided real solutions to the core issue of youth access and/or appeal. However, that effort was tossed in favor of an unnecessary and last minute flavor ban, disguised as a bill that would merely raise the age to 21.

Immediately after the bill’s passage in March, VTA went to work on a multi-media veto campaign strategy that involved:

  • the VapersSayVeto call to action site,
  • the industry’s only television advertisement directed at the Governor,
  • a social media drumbeat, and
  • professional economic analysis from VTA economist John Dunham & Associates

The statewide campaign educating the Governor and his advisors on the negative public health and economic impacts of SB 810 was deployed in cooperation with the Florida Smoke Free Association, which also delivered sophisticated and passionate messages of their own to the Governor.

Moreover, VTA’s economists prepared a report and were deployed to explain that, if enacted, this bill would have removed $605.6 million from Florida’s economy, cost $41.3 million in state and local tax revenue, and put more than 4,500 Floridians out of work. In addition, VTA’s economist testified before the Florida Office of Economic Development Review Committee and was asked to provide additional data for consideration leading to the commission announcing that SB 810 would have serious adverse tax implications for Florida’s economy.

Governor DeSantis took the time to learn about the industry’s impact in the state and understand the legislation’s negative consequences, as seen in his veto transmission letter to Florida’s Secretary of State Laurel Lee. He also recognized that this bill would not achieve its goal of reducing youth vaping. We are pleased that the Governor’s thoughtful veto message clearly reflected the same core issues that we presented in VTA’s request for a veto.

VTA has led national efforts to address underage use of e-cigarettes. Our comprehensive plan announced last year, ensures controlled distribution of all tobacco products, including e-cigarettes, and to impose real limits on access and appeal of all tobacco products to youth. Flavor bans like SB 810 are not effective, rather they eliminate adult alternatives to dangerous cigarettes for adult smokers and devastate small businesses. VTA commends Governor DeSantis for listening to his constituents and understanding the real public health policy implications at stake, specifically, that flavor bans will lead to an unregulated black market and will drive adults back to smoking dangerous cigarettes.

About the Vapor Technology Association

The Vapor Technology Association is the U.S. non-profit industry trade association whose 1000+ members are dedicated to innovating and selling high quality vapor products that provide adult consumers with a better alternative to traditional combustible cigarettes. VTA represents the industry-leading manufacturers of vapor devices, e-liquids, flavorings, and components, as well as the largest wholesalers, distributors, importers, and e-commerce retailers, in addition to hundreds of hard-working American brick-and-mortar retail store owners throughout the United States. Follow us on Twitter.

FDA DENIES PMTA Deadline Extension. What does it mean?

by Leave a Comment

PMTA UPDATE FOR MANUFACTURERS & RETAILERS
August 31, 2020

As the September 9, 2020, Pre-Market Tobacco Application (PMTA) deadline is rapidly approaching, VTA members are working feverishly on finalizing their applications for submission to FDA. This update summarizes some important developments that will impact everyone involved. Specifically, we first address manufacturer-related updates and then retailer-related updates. 

MANUFACTURER UPDATE

FDA Says It Will NOT Extend September 9 Deadline: Late on Friday afternoon, we received an e-mail from FDA, responding to our request for an extension of the PMTA deadline, saying that FDA will not extend the September 9 deadline. The FDA wrote, in part:

“Dear Mr. Abbound [sic]: Thank you for contacting the U.S. Food and Drug Administration’s (FDA’s or the Agency) Center for Tobacco Products (CTP) to request an additional extension of the premarket application deadline on behalf of your members with deemed new tobacco products.  […]

FDA has received many individual requests for a further extension of the September 9, 2020, premarket application deadline. After considering your request, FDA has determined that it will not grant a further extension of the September 9, 2020, premarket application deadline set by the Court for members’ products. Any additional delay would impede FDA’s critical public health priority to promptly require submission of premarket tobacco applications.”

Important Guidance for Companies Filing Applications: In the email, FDA went on to explain that it “intends to prioritize enforcement decisions on a case-by-case basis such as prioritizing enforcement based on the likelihood of youth use or initiation. However, FDA intends to take individual circumstances into account as it considers your members’ premarket tobacco product applications that are submitted by the September 9, 2020, deadline.” 

Because FDA is making decisions on a case-by-case basis, it is imperative that you make your specific case if, for example, there are certain elements that may be incomplete in your application. Specifically, FDA said:  “FDA encourages your members to explicitly identify any content that may be missing from an application and clearly explain how COVID-19, a recent natural disaster, or other unforeseen circumstance has affected ability to provide such information.”

Also, FDA has said that it will work with companies to get their applications through the process during the 12-month review period under certain circumstances: FDA wrote: “If an application is sufficient to be accepted, filed, and proceed to scientific review and, during such review, your member would subsequently provide the needed information and make substantial progress toward addressing deficiencies in an application, we intend to take that into account in deciding whether to initiate enforcement action against products for being on the market without premarket authorization, even where FDA is reviewing applications after September 9, 2021. The decision as to whether to enforce after the one-year review period may take into account responsiveness to our requests, the particular nature and extent of scientific evidence that is lacking, and evidence of demonstrated hardship due to the COVID-19 pandemic, recent natural disasters, or other unforeseen circumstance in obtaining such evidence.”

In addition to extending the deadline, VTA has encouraged FDA to work with companies as they navigate the process. Last Friday’s email sends the message that, while they are not moving the deadline further, they are planning to take into account each companies’ special circumstances. 

Today, FDA published another statement regarding upcoming PMTA submissions. The “Perspectives” piece published today by FDA today covers a number of topics. Here are the most relevant:

FDA Expects a Large Number of Applications and the One Year Review Timeline May Be Exceeded.  FDA acknowledged “there are over 400 million deemed products listed with FDA. Even if applications are submitted for only a portion of those products, the likelihood of FDA reviewing all of these applications during the one-year review period is low, given that this would be an unprecedented number of applications and several orders of magnitude greater than anything the Agency has experienced.” […]  Depending on the number of new applications we receive by the deadline—which could be anywhere from a few hundreds of thousands to millions—as a matter of practicality we may not be able to fully complete review of all tobacco product applications that we receive by Sept. 9, 2020 within the year.”

FDA Will Work With Companies By Sending Deficiency Letters:  “Further, although we expect high quality and complete applications to come in by Sept. 9, if we do find deficiencies, it is likely FDA will issue a Deficiency Letter with a 90-day deadline for companies to respond.” Giving companies an opportunity to cure deficiencies in their applications, rather than simply rejecting the application, is something we have encouraged FDA to do.

FDA Says It Will Devote Resources to Expedite Review for both Small and Large Manufacturer Applications: Director Zeller wrote, “As always, FDA intends to be fair in allocating FDA resources to review applications from both small and large manufacturers and importers, and from applications received through different pathways.  Additionally, we intend to maximize the resources that we have to review the most products in the shortest timeframe—with the above guiding principles in mind. To help with this, we are refining our review processes to shorten the overall review time.”

RETAILER & DISTRIBUTOR UPDATE

Many of our retailers are asking about what they can expect and what they should do regarding the upcoming PMTA deadline. Here’s a quick update on FDA planned actions that affect retailers.

Will There Be a Sell-Through Period After September 9, 2020?  No. Unlike with prior regulations for which FDA has permitted a “sell-through” period allowing the continued sale of non-compliant products (i.e., non-compliant labels), there will be no sell-through period allowed for non-compliant products after September 9, 2020.  In other words, if a product SKU is not covered by a PMTA that has been accepted for review by the FDA, or if a manufacturer has simply failed to file any PMTA, those products cannot continue to be legally sold after September 9, 2020.

So What Happens on September 10, 2020? In the past, FDA has focused its initial enforcement activity around manufacturers and importers rather than at the distributor and retail levels of the supply chain as this is the most efficient use of its limited enforcement resources. Importantly, it will take FDA some time to compile a list of those products for which it has received PMTAs in order to begin its enforcement activity. 

FDA to Publish PMTA List: Last month, VTA made a specific request to the FDA that it change its prior practice and publish a list of the products covered by PMTAs so that retailers and distributors have a clear understanding of the specific products (not just brands or manufacturers) for which FDA has received an application. Today, FDA announced, “In addition, we plan to make publicly available a list of the deemed new tobacco products that are subject to the Sept. 9 deadline, were on the market as of Aug. 8, 2016, and for which a premarket application is submitted by Sept. 9, 2020.”  FDA will do this while also respecting the confidentiality requirements under the Federal Food, Drug and Cosmetic Act.  FDA also noted that while the deadline is on September 9, 2020, it will take FDA some time for them to compile and confirm that their list is accurate before publication. The fact that FDA will be publishing such a list is dramatic change from their prior practice. In the meantime, we will do our best to inform you of VTA members which are participating in the process.

FDA Has Suspended In-Person Inspections:  In March, due to COVID-19, FDA issued a partial stop-work order instructing all of the agencies with which it contracts at the state level to stop doing compliance checks and vape shop inspections.  This suspension of in-person retail enforcement activity is likely to continue until COVID-19 restrictions begin to lift, but FDA has stated it plans to continue its monitoring of social media, websites and publications and will issue warning letters when needed.

FDA Will Continue Its Enforcement Priorities: In February 2020, and more recently the FDA outlined and reiterated its enforcement priorities.  FDA will continue to focus its enforcement efforts on:

  1. Flavored cartridge-based ENDS products.
  2. All other ENDS products for which the manufacturer has failed/fails to take adequate measures to prevent access or use by minors.
  3. Any ENDS products that are targeted to minors or which are likely to promote use by minors.
  4. Manufacturers which have not filed PMTAs on or by September 9, 2020.

What Can Retailers Do Now?  Beginning on September 9, 2020, retailers can ask manufacturers for specific information on whether their products are covered by a PMTA.   Each manufacturer may have a different method of providing you with evidence that it has filed PMTAs for its products, including, for example, a redacted version of its Cover Letter or proof of submission through the electronic filing portal.  While FDA is not currently performing in-person inspections, they will likely resume soon after COVID-19 restrictions are lifted. So, if inspections resume before FDA publishes the list of products for which PMTAs have been filed, you can insulate yourself from potential exposure by having on hand documentation from your manufacturers regarding the product that you have on the shelves.

New York DOH Confirms Cause Of Vaping Controversy

by Leave a Comment

The New York State Department of Health today released one of the few first statements by officials at the state or federal level that gives a fair and accurate representation of what may have led to recent cases of lung illness.  VTA applauds NYDOH for identifying unregulated black-market cannabis-containing products as the likely culprit and for warning consumers to the dangers of these products so that they are fully informed about what products to avoid.
 
Specifically, NYDOH explained that:
 
“Laboratory test results showed very high levels of vitamin E acetate in nearly all cannabis-containing samples analyzed by the Wadsworth Center as part of this investigation. At least one vitamin E acetate containing vape product has been linked to each patient who submitted a product for testing. Vitamin E acetate is not an approved additive for New York State Medical Marijuana Program-authorized vape products and was not seen in the nicotine-based products that were tested.  As a result, vitamin E acetate is now a key focus of the Department’s investigation of potential causes of vaping-associated pulmonary illnesses.”
 
In addition, the NYDOH made the following statement, which echoes precisely the same warnings that VTA issued in a statement last week:
 
“Anyone using vape products should never use unregulated products purchased ‘off the street.’ Cannabis-containing products are not legally available in New York State for recreational use. These unregulated products are not tested and may contain harmful substances. Users of vape products should never modify vape products or add any substances to these products that are not intended by the manufacturer.”
 
To reiterate, VTA in no way supports the manipulation or adulteration of vapor products to consume THC, THC oil, marijuana, or synthetic products like K2.  
 
E-cigarettes and other nicotine-containing vapor products are designed for the consumption of nicotine to provide adult smokers an alternative to cigarettes; they are not intended to be used to consume illicit substances.  Also, the NYDOH finding underscores the fact that while nicotine-containing vapor products are heavily regulated by the Food & Drug Administration, cannabis-vaping products are entirely “unregulated.”
 
According to Public Health England and the Royal College of Physicians, after a complete review of all the peer-reviewed science on vapor products, nicotine-containing e-cigarettes and vapor products are at least 95% safer than smoking cigarettes.  

VTA Asks Health Officials to Speak Responsibly

by Leave a Comment

In light of the seriousness of reports regarding lung disease in youth, the Vapor Technology Association (VTA) strongly urges public officials to thoroughly investigate the circumstances which might have led to each reported hospitalization before making statements to the public as to whether certain products are implicated in these incidents. To date, several public health agencies have failed to provide clear information and, instead, are unnecessarily frightening consumers by failing to distinguish between e-cigarettes and non-nicotine vaporizers.

Recent reports increasingly indicate that these adverse events are linked to illicit substances such as THC and cannabis, not e-cigarettes. For example, the New Mexico Department of Health has clearly determined that products containing THC are likely responsible for the cases highlighted in New Mexico. Despite this, virtually every other public health official continues with their generalized and repeated references to “e-cigarettes.” Such inaccurate warnings will result in either (1) people continuing to use the risky products actually causing the harm about which they have not been specifically warned; or (2) many smokers using e-cigarettes becoming ‘scared’ by these reports and moving back to deadly combustible cigarettes. 

VTA condemns in the strongest possible terms the sale or use of black-market products and does not endorse the manipulation or adulteration of vapor products to consume THC, THC oil, marijuana, or synthetic products like K2. E-cigarettes and other nicotine-containing vapor products are designed for the consumption of nicotine to provide adult smokers an alternative to cigarettes; they are not intended to be used to consume illicit substances.

E-cigarettes and nicotine-containing vapor products are used by millions of adults as an alternative to combustible cigarettes, and most vapor products on the market are of high-quality. Nonetheless, no person should:

  • misuse or alter a vapor device designed for vaping nicotine-containing products by attempting to vape anything other than an e-liquid designed to be used with that device;
  • use any products other than those purchased from a reputable establishment; and
  • use a vapor product offered to them by someone else without knowing precisely what they are consuming.

FDA has imposed regulatory requirements on nicotine-containing vapor products for more than three years, since August 8, 2016, including strict labeling and packaging restrictions that require vapor companies to, among other requirements, disclose all of the ingredients in the products sold.

In stark contrast, none of the products designed for THC, cannabis and any other non-nicotine substances are regulated by the FDA.

Importantly, major medical groups and governments have conclusively determined that vapor products are 95% safer than combustible cigarettes, and studies have shown that they are nearly twice as effective at helping adults quit smoking than traditional methods. 

Follow Us

Copyright © 2026 Vapor Technology Association.
All Rights Reserved.

Privacy Policy |
 Terms Of Use

Created by Black

Let’s Connect

Subscribe to VTA

Myth vs Fact

Continue to VTA