TOB Magazine

HURDLES AHEAD FOR MIXERS

Now for the bad news: As most in the industry are

well aware, the deeming regulations place numerous

hurdles in the path of manufacturers of the newly

regulated products, from submitting ingredient lists

and registering manufacturing facilities to undergo-

ing one of two onerous and prohibitively expensive

product approval application processes to enable

products introduced to the market over the last nine

years to stay on store shelves. For most retailers,

the biggest impact—and it’s a significant one—of

these requirements will be a dramatic reduction in

the number of products available in the market. As-

suming the regulations remain in effect despite the

mounting legal challenges the agency faces, the field

will narrow considerably over the compliance period

as manufacturers who cannot afford the costly pro-

cess fold their tents.

However, retailers who have been blending pipe

tobacco or mixing e-liquid face a more pressing

concern, notes Briant. “There is a new require-

ment under the deeming regulations that requires

retailers who formulate new flavors of pipe tobacco

by blending tobaccos together and/or who mix e-

liquid nicotine flavors together to form new flavors

to be regulated as manufacturers,” he explains. This

would mean retailers would need to register with

the FDA by December 31, 2016; file a list of pipe

tobacco blends they make and an ingredient list for

each one, and possibly complete and file pre-market

approval applications. “The cost to comply with the

manufacturing regulations…could result in these

retailers ceasing to blend pipe tobacco or e-liquids.”

(See box, at top p. 34).

In fact, the FDA deeming regulations state that

the agency expects retailers to do just that—quit

blending pipe tobacco or mixing e-liquids. The

trouble is that this will put a great many of retailers

who built a business out of catering to customers

who want their own pipe tobacco or e-liquid blends

out of business. In fact, in the vape shop chan-

nel alone, a significant number of the 8,500 vape

shops that Wells Fargo’s Bonnie Herzog estimates

are operating in the U.S. market would be likely to

disappear in the deeming regulations’ wake if that

provision stands.

Even vape shops that don’t blend their own e-liq-

uids will struggle, since the range of products avail-

Actions by Altria

As the lawsuits challenging FDA’s deeming regulations continue to

pile up, Altria can already count one small victory. The company was

one of the first to take action, filing a lawsuit in defense of its John

Middleton Company Black & Mild cigar brand. Among the many re-

strictions that now apply to newly regulated products is a ban on use

of words like “light” and “mild” as descriptors. However, Altria argued

that this rule violates the First Amendment that protects trademarks

and brand names, in addition to the Fifth Amendment that prohibits

taking private property for public use without compensation.

FDA was quick to concede the point. In August, the agency in-

formed Altria that it would not enforce the provision, according

to Marty Barrington, CEO of Altria Group. “FDA has informed us

that they do not, at this time, intend to enforce that [provision]

against Black & Mild. In consideration of that, we have withdrawn

our lawsuit,” he says. “The parties have reserved their rights, but

we will continue to use Black & Mild unless something changes.”

However, the company is still engaging with FDA on multiple

fronts, among them its plans for e-cigarette subsidiary NuMark

(maker of MarkTen) and PMI’s IQOS heat-not-burn product. “On

the heated tobacco platform, our work with [PMI] in its FDA appli-

cations for pre-market approval authorization and a modified-risk

tobacco product designation remains on plan,” Barrington says.

“We are making excellent progress on commercialization plans for

the U.S. market.”

In the classic scenario of misery making strange bedfellows,

Altria has also joined the vapor business community—made up

in large part by smaller companies looking to lure away smokers

loyal to PMI brands—in protesting the deeming rule’s February 15,

2007 grandfather date. A month after the regulations were re-

leased, Altria sent 22 pages of comments to FDA making the case

that what it calls “electronic nicotine delivery devices” (ENDS) are

exactly the type of reduced-risk products that Congress intended

for the agency to support “when it empowered FDA to regulate

tobacco products” to improve public health.

“If adopted in its current form, the draft guidance may result

in many existing ENDS being forced off the market and make it

difficult for some manufacturers to develop new ENDS products,”

Altria said. “Should this occur, adult tobacco consumers will be

deprived of important product choices.” As a result, almost all

e-cigarette and vapor products would have to retroactively go

through tougher regulatory requirements to prove that they don’t

cause public harm or entice nonsmokers to consume those prod-

ucts, the report added.

“We are both complying with the regulations and we are try-

ing to influence and advocate where we think [they] can be im-

proved,” says Barrington.

TOBACCO BUSINESS INTERNATIONAL

SEPTEMBER/OCTOBER 2016