Vape companies that operate in the US face new challenges due to amendments made to the Prevent All Cigarette Trafficking (PACT) Act.
At the end of 2020, as the latest COVID-19 relief bill was signed into law, the PACT Act was amended. This essentially expands the PACT Act to cover e-cigarettes and all vaping products.
This seems directly related to the CDC reporting an uptick in vape and ecigs among high school-age students. The fear being these products, many with nicotine in, could get a new generation addicted to the cancer-related drug and smoking.
While there is no mention of hemp or cannabis in this new law, that doesn't mean it is exempt. The "All vaping products" scope is vast. It will likely apply to companies that manufacture and sell cannabis vaping products or supplies. It will apply to all e-cigs, e-cigars, electronic pipes, vape pens, refillable vaporizers, and any part, component, or accessory of such a device.
The PACT Act initially passed under the Obama administration in 2009 was itself an amendment to the Jenkins Act of 1949. This required interstate shippers to report all cigarette sales to the state tobacco tax administration and was brought about to combat illicit sales and tax avoidance. Sixty years later, when the PACT Act came into force, the FDA, at the same time, gained authority over all tobacco products under the Tobacco Control Act. Under the PACT Act, the US Postal Service (USPS) was prohibited from delivering cigarettes and smokeless tobacco products directly to consumers.
So what will this mean for dry herb vapes, CBD oil, and cannabis concentrate vapes?
It will require interstate shippers to report sales to state tobacco tax administrators in order to combat illicit sales and tax avoidance.
The PACT Act also requires sellers to be registered with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), file a monthly report with the state tobacco tax administrator, and any other local or tribal entity that taxes the sale of cigarettes.
The PACT Act also prohibits the use of the U.S. Postal Service ("USPS") to deliver cigarettes and smokeless tobacco products directly to consumers.
The United States Postal Service published its proposed changes clarifying regulations in this regard. You can visit the public register to see the proposed changes, and comments are available on this until March 22nd. While we don't think it will change the outcome, we would recommend concerned parties add their comments on this page. Vape companies and their customers should anticipate the mail ban going into effect on April 27th, 2021, however many shipping firms will deny postage before then.
(You may view the text of the proposed edits to Publication 52 at https://pe.usps.com.)
Historically business to business deliveries have been exempt from the USPS ban on deliveries, but businesses intending to use them for these deliverers would need to submit an application to the USPS Pricing and Classification Service Center first as well as complying with several other shipping and deliveries requirements.
However, with all this paperwork will come extra costs, and some carriers such as FedEx and UPS have already announced they will cease all deliveries of any vaping products as of March 1st and April 5th, respectively.
The new legislation will also require all other postal delivery services to check IDs to verify age on delivery. All this will add to the cost and burden placed on couriers, which is why FedEx and UPS are withdrawing their services to these goods.
If companies are required to submit a monthly report to the tax department of each state, they make a sale with the customer details on it, then selling vapes online, at least to the end consumers, will not be viable for many.
Many vaping advocates, particularly those who consider e-cigs as a useful cessation device for smokers, see this as yet another attempt to demonize nicotine vaping. And while lawmakers may not intentionally be targeting the cannabis industry, it's clearly going to have an impact. Figuring out the applicable local and state taxes in every state a company sells its products in is going to pose a real challenge by itself. Dealing with 20, 30, or 50 different state tax authorities would likely put many off selling. But that's a moot point as without any effective delivery options, companies won't be able to ship to end customers anyway, even if they are compliant with all the other regulations.
This US Bill banning vape products being mailed to end customers is likely to cause severe disruption. We are uncertain how or if we will be able to continue serving end customers with our Lookah vape products.
In order to comply with the new laws, Lookah has been investigating options such as using expensive technology to verify customers and handle the excessive extra paperwork this ban will generate. Even If we can accomplish this, we expect severe disruption for the next few months at the very least.
We are working hard to find an alternative private shipping company as all the major shipping firms have or will shortly withdraw shipping services for such products.
We would also advise all Lookah business accounts holders, Stores, and wholesalers to log into their accounts and check they have all the required data updated.
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