New restrictions on the sale and delivery of electronic cigarettes and vaping products | Farella Braun + Martel LLP
The Prevention of Online Sales of Electronic Cigarettes to Children Act significantly and materially changes the way businesses sell and ship electronic cigarettes and tobacco and cannabis vaping products and components. The law was enacted on December 27, 2020 and is an amendment to the Cigarette Trafficking Prevention Act 2009 (PACT).
While the PACT Act created restrictions on the delivery of cigarettes to consumers, the 2020 Amendment expands the definition of “cigarette” to include an “electronic nicotine delivery system” or FIN. The amendment defines ENDS as “any electronic device which, through an aerosol solution, delivers an aroma of nicotine or any other substance to the user who inhales the device”. It further lists examples of what ENDS include: electronic cigarettes, electronic hookahs, electronic cigars, vape pens, advanced rechargeable personal vaporizers, and electronic hoses. It is important to note that examples include “any component, fluid, part or accessory of [an ENDS] device. . . regardless of whether the component, fluid, part or accessory is sold separately from the device. ”
Collectively, the scope of the amendment is incredibly wide and it impacts businesses outside of the tobacco industry. Since the amendment defines FINS to include an electronic device that delivers “nicotine flavor” or “any other substance”, the amendment applies to cannabis vaping products and any component, liquid, part. or accessory related to these products.
The amendment provides two narrow exceptions to exclude products approved by the Food and Drug Administration and marketed and sold only for the purpose of “sale as a smoking cessation product” or “for any other therapeutic purpose”.
The amendment applies restrictions on the sending of cigarettes under the PACT law to ENDS. This means that any product that falls under the broad definition of the ENDS Amendment, including tobacco and cannabis vaping products and components, will no longer be able to be shipped directly to consumers through the United States Postal Service (USPS). . Under this amendment, the USPS has until April 26, 2021 to promulgate regulations to clarify the enforceability of the ban on posting ENDS, and the ban does not take effect until after the promulgation of the ENDS. regulations. Therefore, this restriction would take effect no earlier than April 26, 2021.
Under the PACT Act, there are a handful of exceptions to the shipment of cigarettes by USPS as codified in 18 USC § 1716E. These exceptions include intra-state shipments to Alaska and Hawaii, ship-to-business shipments engaged in the manufacture, distribution, wholesale, export, import, testing, investigation or research of products of the tobacco, shipments by individuals for non-commercial purposes (including return of goods to the manufacturer), limited shipments by manufacturers to adult smokers for consumer testing and limited shipments by federal agencies for health purposes public. On February 19, 2021, the USPS released a proposed rule that would apply all of the above exceptions to ENDS, with the exception of consumption testing. Additionally, the USPS has determined that the exceptions are not feasible as applied to inbound or outbound international mail, and therefore not all cigarettes and smokeless tobacco contained in that mail are available. without exception.
Other shipping companies have announced their intention to stop or have already stopped shipping certain vaping products. However, a careful reading of each restriction, as posted on the carriers’ websites as of the date of this article, appears to limit that shipping restriction to tobacco products. For example, FedEx and DHL ban the shipping of tobacco products, including vaporizers and e-cigarettes, but the restriction does not refer to cannabis. UPS is different in that it prohibits the shipment of “vaping products”, defined to include “any non-combustible liquid or gel, regardless of the presence of nicotine, that may be used with or for the consumption of nicotine. All associated vaping devices, products and accessories are included in this prohibition. “According to this definition, prohibited products are those that are able to provide nicotine and therefore could include cannabis vaping products.
Beyond mailing restrictions, the expanded definition of “cigarette” modification to include ENDS, and therefore cannabis vaping products and components, triggers the restrictions below from the PACT Act to apply. now to FINS sellers, as described below.
Sellers of ENDS must register with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the United States Attorney General. Specifically, the registration requirement applies to anyone who sells, transfers or ships cigarettes for profit in interstate commerce or who advertises or offers cigarettes for sale, transfer or shipment. Since the term “cigarette” is now defined to include the vaping products and components of cannabis, it appears that this requirement will apply to these sellers as well.
Sellers of ENDS must file a report with the United States Attorney General and the tobacco tax administrators of the state in which the shipment is made or advertised. This declaration must indicate the name and company name of the seller, the address of the main establishment and any other place of business, the telephone numbers of each place of business, a main e-mail address, any site address. Web and the name, address and telephone number of a government official authorized to accept service of the proceeding on behalf of the person.
In addition, no later than the 10the day of each calendar month, sellers of ENDS must file with the state tobacco tax administrator a memorandum or copy of the invoice covering each shipment made during the previous month. This should include the name and address of the consignee, the brand and quantity of the shipment, as well as the name, address and telephone number of the person delivering the shipment, classified by city / town and Postal code.
Shipping and packing requirements
Under PACT, packages containing cigarettes or smokeless tobacco were also subject to certain shipping and packaging requirements. These requirements include:
- A clear and visible statement stating “SMOKE FREE CIGARETTES / TOBACCO: FEDERAL LAW REQUIRES PAYMENT OF ALL APPLICABLE EXCISE TAXES AND COMPLIANCE WITH APPLICABLE LICENSE AND TAX STAMPING REQUIREMENTS” on the bill of lading and outside the bill of lading. shipping package on the same surface as the delivery address.
- No sale or delivery in a single sale or delivery of any packet of cigarettes weighing more than 10 pounds.
- No sale or delivery to a minor, as determined by the applicable law of the place of delivery. This requires the delivery to be signed and accepted by an adult who must provide identification confirming that he or she is at least the minimum age required to purchase the product. The seller also cannot accept an order from a person without obtaining the person’s name, date of birth and address, and without verifying this information using a commercially available database to ensure that the buyer is of legal age.
- Before sale or delivery, pay any state or local government excise tax on cigarettes, and affix any required stamps or other evidence that the excise tax has been paid. This requirement does not apply if the state or local government provides that the seller will collect excise tax from the consumer and remit the excise tax to the consumer, as long as the seller complies with the requirement.
ENDS sellers must keep for 4 years a record of any delivery sale that includes information submitted to tobacco tax administrators (recipient name / address, brand / quantity of shipment, name, address and serial number. delivery person’s phone). Records should be organized by state and within state by city / town and zip code. These records should be made available to government officials to demonstrate compliance.
Consequences of non-compliance
If a seller of ENDS does not meet the above requirements, the seller will be placed on a list that is distributed to each state’s attorney general and tax administrator, as well as to common carriers, including the USPS. , at least every 4 months. . After 60 days of distribution of the list, no one will be allowed to issue FINs for anyone on the list, with some exceptions in good faith.
There are also criminal and civil penalties associated with violating these requirements. Criminal penalties include imprisonment for up to 3 years. Civil penalties include $ 5,000 for the first violation and $ 10,000 for subsequent violations, or 2% of the previous year’s FIN gross sales.
Compliance with the amendment is complex and some aspects are still evolving.