As part of the Comprehensive Appropriations Act of 2021, in the latest COVID-19 relief bill signed into law on December 27, 2020, Congress amended the Prevention of Trafficking in All Cigarettes ("PACT") Act to apply to e-cigarettes And all e-cigarette products. The PACT Act, originally passed in 2009, amended the existing Jenkins Act of 1949, which requires interstate shippers to report cigarette sales to state tobacco tax administrators to combat illegal sales and tax avoidance. When it became law 60 years later—the same year, the Tobacco Control Act granted the FDA authority over tobacco products—among other things, the PACT Act prohibits the use of the United States Postal Service ("USPS") to ship cigarettes and smokeless tobacco products directly to consumer.
In addition to non-mailing provisions, the PACT Act requires anyone selling cigarettes or smokeless tobacco to register with or spread among the Alcohol, Tobacco, Firearms and Explosives Administration (ATF) and the tobacco tax administrator of the state where the goods are shipped to the destination. Advertising or offer. Delivery sellers who deliver cigarettes or smokeless tobacco to consumers also need to affix tobacco-containing labels on the packaging, verify the age and identity of the customer at the time of purchase, and use the delivery that can check the ID at the time of delivery and obtain the signature of the adult customer. (Except USPS), and keep delivery sales records within four years from the date of sale, including.
The PACT Act also requires sellers to submit monthly reports to the state tobacco tax administrator and any other local or tribal entities that tax cigarette sales. Such reports must include the name and address of the person who delivered and received the goods, as well as the brand and quantity of "cigarettes" shipped. These requirements apply to all sales of cigarettes and smokeless tobacco, including sales to consumers and sales between businesses.
The PACT Act requires ATF to maintain a list of non-compliant individuals who do not comply with the Act. Being included in the list prohibits ordinary carriers and others from delivering products sold by listed companies. ATF distributes the list to public operators, USPS, credit card companies, and other institutions to help implement the list.
The 2020 amendment to the PACT Act "Act to Prevent Online Sales of Electronic Cigarettes to Children" amended the original definition of "cigarettes" in the PACT Act to include the Electronic Nicotine Delivery System (ENDS). The term "ENDS" has a very broad definition and basically includes all e-cigarette products, liquids, components and accessories, regardless of whether they contain nicotine or not. Specifically, ENDS products are defined as "any electronic device that provides nicotine, fragrance or any other substance to the user who inhales from the device through an atomized solution", including "electronic cigarette; electronic hookah; electronic cigar; an electronic cigarette Pen; advanced refillable personal vaporizer; electronic tube; and any component, liquid, part or accessory of the [above] device, regardless of whether the component, liquid, component or accessory is sold separately from the device." (emphasis added.) According to this definition of ENDS, zero nicotine e-liquid, synthetic "tobacco-free" nicotine e-cigarettes, and CBD/THC/cannabis e-cigarette pens, etc., seem to be captured.
The above PACT Act requirements apply to ENDS that take effect 90 days from the date of promulgation or around March 28, 2021. Certain requirements (for example, labeling, weight restrictions, and age verification over 21 at the time of delivery) only apply to direct-to-consumer sales (through public carriers or private delivery services). Registration and reporting requirements apply to all sales, including business-to-business sales. Companies should plan before the effective date to ensure that they are fully compliant with existing state sales and excise taxes, licenses, and registrations. Currently, 28 states and localities impose taxes on steam products, so sellers should plan accordingly. Sellers should also review their system functions to ensure that consumption tax is collected from consumers when needed, and to obtain the correct data for the required reports.
As mentioned earlier, the revised PACT Act now prohibits the use of USPS to directly provide "ENDS" to consumers. Regarding the effective date of the mail ban, the Act stipulates that the ban on the mailing of cigarettes should be applied to ENDS on and after the date when the postal service issued a stipulation to clarify the applicability of the mail ban to ENDS. This is necessary. It will be completed within 120 days after promulgation (that is, until April 27, 2021). The postal service has not issued any clarifications in this regard, but the company should expect the mail ban to take effect around April 27, 2021.
The PACT Act has historically exempted business-to-business deliveries from the USPS ban. Specifically, the USPS prohibition did not extend to "only... mailing tobacco products for commercial purposes, which are engaged in the manufacturing, distribution, wholesale, export, and "Investigation or research..." between importing and testing legally operating companies. See 18 USC § 1716E(b)(3)(A). Companies seeking to use USPS for business-to-business delivery must first provide pricing and classification services to USPS The center submits an application and complies with several other transportation, labeling, and delivery requirements. The postal service has yet to issue clarifications that can resolve the issue of whether ENDS still allows business-to-business delivery.
Crucial to the steam industry, FedEx and United Parcel Service (UPS), the most commonly used carriers, recently announced that they will stop the delivery of all steam products. According to Vaping360, starting March 1, 2021, FedEx will begin to ban "e-cigarettes, e-cigarette liquids and other e-cigarette products in the FedEx global network." A UPS spokesperson also told Vaping360 that as of April 5, 2021, “due to the increased complexity of transporting these products, UPS will not ship e-cigarette products to, from, or within the United States.”
Without effective delivery options, compliance with the PACT Act becomes meaningless. Many steam companies are exploring arrangements with private logistics and transportation companies, as well as expensive software solutions to help comply with the requirements of the PACT Act, but the prospects for many small steam companies and online retailers look bleak.
Azim Chowdhury joined Keller and Heckman in 2010 to practice food, drug and tobacco law.
Mr. Chowdhury advises domestic and foreign companies on FDA and international regulatory compliance matters. In particular, he assisted companies in establishing licenses for food and pharmaceutical additives in the United States, Canada and the European Union, with a focus on indirect additives used in food contact materials. Mr. Chowdhury has also accumulated a wealth of expertise in the supervision of tobacco and e-vapor products, and the implementation of...
Galen Rende is a law graduate in our food and drug practice department.
Only approved to practice in Maryland. Practice is limited to matters before the FDA and its subsidiary matters.
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