The U.S Vape Market

The United States is one of the leading markets for Vapes. The US contribution to the global market (USD 18.13 billion) was approximately 40% i.e. USD 7.3 Billion in 2021 and is expected to clock a growth rate of 29.2% CAGR from 2022 to 2030.

Legal Requirement for Selling Vape Pens in US

The Preventing Online Sales of E-Cigarettes to Children Act significantly and profoundly changes how businesses sell and transport e-cigarettes, tobacco and cannabis vaping goods, and components. This Act is an amendment to Prevent All Cigarette Trafficking (PACT) Act,2009, and came into effect in 2020. Whereas, the latter put restriction on the distribution of cigarettes to customers, the former now include Electronics Nicotine Delivery System (ENDS) as well

The Act further lists down inclusions in ENDS. They comprise non-disposable and disposable e-cigarettes, e-cigars, e-hookahs, vape pens, electronic pipes, and advanced refillable personal vaporizers and electronic pipes. It also includes any other accessories or components, parts, or e-liquids.

The amendment has two restricted exclusions that exempt items that are FDA-approved for, marketed, and sold only for, “sale as a tobacco cessation product” or “any other therapeutic purpose.”

Mailing

As per this amendment, mailing of ENDS, vaping products and, components, directly to consumers through the United States Postal Service (USPS) will be prohibited. Other shipping companies have announced their intent to stop or have already stopped shipping certain vaping products

Registration

It is mandatory for the sellers of ENDS to register with the U.S. Attorney General and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). The registration requirement specifically applies to anybody who sells, transfers, or ships cigarettes for profit in interstate trade, as well as anyone who markets or offers vape pens for sale, transfer, or shipping.

It further mandates sellers of ENDS to submit a statement with the US Attorney General and the tobacco tax administrators of the state where the shipment is manufactured or marketed. It must also include the seller’s name, trade name, address of the principal place of business and any other location, telephone numbers, e-mail, any website addresses along with the name, address, and telephone number of an agent in the state authorised to accept service of process on behalf of the person.

Also, by the 10th day of each calendar month, dealers of ENDS must file a memorandum or a copy of the invoice covering each shipment made during the previous month with the state’s tobacco tax administrator.

Shipping and Packaging

The restriction on shipping and packaging are:

1. Clear statement mentioning “CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS,” to be placed on the bill and shipping package on the same side where the shipping address is mentioned
2. Selling or delivering cigarette package weighing more than 10 pounds is prohibited in a single delivery
3. There should be no selling or delivering to an underage person. Thus, delivery must be signed and accepted by an adult after providing identification proof.  The seller should also accept orders after confirming the age of the person by collecting the necessary details and comparing them with any available database.
4. Pay any cigarette excise tax imposed by the state/local government before sale or delivery, and affix any stamps or other evidence that the excise tax has been paid.

Maintaining Records

Seller of Vape products must maintain a record of every delivery sale for four years, including the information (such as name and address of recipient, brand and quantity of shipment and details of delivery person) supplied to the tobacco tax administrators.

What Happens on Non-Compliance?

In the case of non-compliance, the seller will be included in a list that is provided to the attorney general and tax administrator of every state, and common shippers including the USPS, at least every 4 months. After 60 days, they will not be allowed to deliver ENDS.

Also, violations of these regulations may potentially result in criminal and civil fines. Criminal sanctions include up to 3 years of jail term. Civil fines include $5,000 for the first offense and $10,000 for successive offenses, or 2% of total ENDS sales for the previous year.