PACT Act & the Vape Industry
What is the PACT Act?
Let’s talk about the PACT Act. The PACT Act was first passed into law in 2009, with the goal of reducing illicit cigarette sales, especially online. It stands for Preventing All Cigarette Trafficking, and the PACT Act amended the 1949 Jenkins Act which requires all cigarette companies shipping across state lines to report their sales. When online sales became increasingly popular with the rise of the internet, the 2009 amendment was necessary.
When PACT was passed into law in 2009, it prohibited USPS from delivering cigarettes and smokeless tobacco products directly to their consumers. Additionally, the act:
- Required those selling tobacco products to register with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) and the tobacco tax administrators of the state where a shipment is made
- Requires tobacco companies to file a monthly report with the state tax tobacco administrator and any other local or tribal entity that addresses the sale of tobacco product
- Mandates the ATF keep an updated list of non-compliant people who fail to comply with the PACT Act. ATF distributes this list to common carriers, USPS, credit card companies, and others to maintain enforcement
The 2020 amendment was supposed to prevent online sales to children
When the PACT Act was amended in 2020, the goal was to prevent the online sale of e-cigarettes to children. Fair and reasonable, no arguments there. With a conservative name like “Preventing Online Sales of E-Cigarettes Act”, who could complain?
The modification included non-nicotine products, lumping in cannabis vaping products
However, the original definition of “cigarette” was modified in the new bill to include all electronic nicotine delivery systems (ENDS), even if there’s no nicotine in the product! Here’s the specific definition per the new legislation: “any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device,” including “an e-cigarette; an e-hookah; an e-cigar; a vape pen; an advanced refillable personal vaporizer; an electronic pipe; and any component, liquid, part, or accessory of a device described [above], without regard to whether the component, liquid, part, or accessory is sold separately from the device.”
This definition applies to products without nicotine too, despite the “N” part of the ENDS acronym representing nicotine, which means our cannabis and hemp vapes are at risk. This means CBD vapes, delta-8 THC, and more.
Lawmakers were given just a few hours in December of 2020 to dive into more than 5,000 pages of legislation before casting their votes. This bill is part of a larger one, the COVID-19 Relief bill, along with other unrelated issues snuck into the bill. Remember, the legislation doesn’t just impact the vape itself. According to the law’s new language, even accessories like batteries will be hammered by the restriction of online sales.
How will this impact the vaping industry?
The vaping industry narrowly recovered from the 2019 Vape Crisis, where dozens of people died due to poorly manufactured vapes with harmful chemicals. Just one year later, shipping and logistics were impacted by none other than COVID-19, which affected all industries: including vaping.
Now, effective around March 28th, the vaping industry is likely to be squashed by new federal restrictions. At very least, online sales will be reduced. We already lived in an online-sales friendly world, so throw in stay-at-home orders to reduce COVID transmission… and there will be a large majority of companies that lose half their customer base, and many e-commerce only companies will lose everything when their customers are forcibly removed.
The original PACT Act only forbade USPS from delivering the products by mail, though there are other mail carrying services who will do it. Effective April 1st, “UPS will not transport vaping products to, from, or within the United States due to the increased complexity to ship those products”, reads a USPS press release on the subject. FedEx released a similar statement, saying the mail-delivery company will no longer permit “electronic cigarettes, vaping liquids, and other vaping products in the FedEx global network.” The only exception is for B2B transactions through USPS “between legally operating businesses that have all applicable State and Federal Government licenses or permits and are engaged in tobacco product manufacturing, distribution, wholesale, export, import, testing, investigation, or research….” The only requirement? Submit all documentation proving you’re in compliance with state and federal law. Great! There’s just one problem: zero high-THC cannabis companies are in compliance with federal law because high-THC cannabis is still federally illegal.
What vaping companies can do
Here’s how companies can remain compliant under the detrimental PACT Act:
- Any person or entity selling tobacco-related ENDS-based products must register with every individual tobacco taxing agency in each state they want to sell products, as well as places they want to advertise. Currently, 28 states tax tobacco products, so you’ll need to register in over half the country, so companies will need to learn 28 new sets of regulations for each individual state to remain compliant.
Due to the new responsibilities of vaping companies to remain compliant, most of them will need to hire an attorney. There is almost no way business owners can keep on top of changing regulations in 28 states, as well as their company’s day-to-day needs. This is another issue with the legislation: small businesses suffering through COVID are forced to shell out more money just to stay compliant. Additionally, vaping consumers are restricted from purchasing the products that work for them. There are many disabled individuals who rely on vaping cannabis, and don’t leave the house due to their disability, so they order online.
Here’s what you can do as a vaping business in the meantime:
- Chat with an experienced attorney about your options
- Diversify your product portfolio to include non-ENDS related products
- Contact your representative and continue sharing how this crushes your small business