Game Changer, California, e-cig explodes, e-cigs harmful?, Future Regulation

E-cigs could be a game changer

The tobacco industry has long searched for a holy grail – a product that would give nicotine addicts their fix without also causing disease and death.

The jury is still out on whether e-cigarettes could be that change. Public health groups are highly skeptical, but few doubt that the technology represents a potential sea change.

Some industry observers view e-cigs as potentially the most disruptive force to hit the U.S. tobacco industry since the invention of the cigarette rolling machine.

The market potential for e-cigs has become big enough that major tobacco companies are now entering the category, and even the world’s largest tobacco leaf company has announced plans to become a supplier of nicotine for e-cigs.

While still only a small portion of the overall $80 billion U.S. cigarette market, e-cig sales could surpass traditional cigarette sales within the next decade as cigarette sales continue to decline while e-cig sales grow.

Analysts with Goldman Sachs wrote in late 2012 that if the e-cig market takes off, “there is potential for a big shake-up in the tobacco hierarchy.”

Altria Group consumer research shows that about 50 percent of adult cigarette smokers are interested in alternative products.

California city governments pondering what to do about E-cigs

Seal Beach, Calif., recently passed a 45-day moratorium halting any new e-cigarette and smoke shops from opening in the small beach community.

With fresh memories of how rapidly marijuana dispensaries multiplied and generated controversy, many cities want to slow the spread of electronic cigarette stores until they can figure out the ramifications.

For Jim Basham, Seal Beach's director of community development, the distinguishing line between pot dispensaries and vaping outlets is a bit blurry. He's seen e-cigarette stores evolve into hemp shops — and draw with them a ragtag crowd.

"You have other folks with different intentions," Basham said, "and you can have secondary adverse effects, like crime."

In August, Temple City passed a zoning ordinance that keeps all smoke shops, including those that sell only e-cigarettes, at least 1,000 feet from parks and schools. About a month earlier, Duarte passed an urgency ordinance that temporarily halted any new shops from opening there. And the city of Pico Rivera passed an ordinance that treats the vapor devices like traditional cigarettes.

Some city officials said they want more information about the devices and their health effects.

"I'm not saying you're going to die and go to hell if you use them," said Pico Rivera Councilman Gregory Salcido, who backed the city's decision to treat the devices as regular cigarettes. "But we don't know enough about them, and as a result we're going to cover our bases."

E-cig exploded, Atlanta woman claims

One Atlanta woman claims she's happy to be alive after a very difficult electronic smoking experience.

As WSB-TV reports, Elizabeth Wilkowski is sure that what she experienced was no ordinary event.

"I didn't hear a boom. It wasn't a pop. It was a kaboom!" she said.

Wilkowski claims that she had simply plugged the e-cigarette into her computer's USB port in order to charge it.

This particular e-cigarette was a Seego EHit, manufactured in China.

Are e-cigs harmful? Nobody knows for sure

The jury is still out on whether vaping is dangerous. And there are still plenty of conflicting opinions.

“People are inhaling some type of chemical vaporized compound into their lungs without really knowing what's in it," said Dr. Mike Feinstein, a spokesman for the American Lung Association.

Last year, the American Lung Association issued its own warning about e-cigarettes: “This is a buyer stay-away, a buyer health hazard, potentially."

Dr. Robert Greene, who treats lung cancer patients at Florida’s Palm Beach Cancer Institute, said the product is potentially a health hazard. “There really is no information about whether they're safe or not, and that's part of the problem," said Greene.

He says with no real data on e-cigarettes, the three-year-old tobacco alternative may actually be more harmful that traditional cigarettes.

"The doses of nicotine that you get could conceivably be higher than what you would get in a typical cigarette," said Greene.

According to the Tobacco Vapor Electronic Cigarette Association, e-cigarettes contain just five ingredients, all approved by the FDA. Recently, the FDA announced it will begin to regulate e-cigarettes as a tobacco product.

Future of e-cigs hinges on regulation

There’s been little research done on e-cigarettes, but among those studying the devices is Dr. Greg Connolly, professor of public health at Harvard University.

The future of e-cigarettes, Connolly said, hinges on how the FDA approaches regulation of them.

"This could be a tool — if it's regulated correctly — to help end dependence on cigarettes and nicotine. This is probably the best quitting device known to man," said Connolly, who co-authored an early study on e-cigarettes.

But they just as easily could become a means to hook more people on nicotine, he said.

If the technology continues to develop...they could become even more addictive than the conventional cigarette — that's frightening," Connolly said.

Connolly plans to publish research on a set of habit-forming compounds, or so-called "super juices," that have been in conventional cigarettes like Merit and Marlboro since the late 1970s — and that he has found to be present in some popular e-cigarettes.

These super juices — which aren't present in nicotine gum or patches — could help make e-cigarettes a more effective quitting aid because they would deliver the kick of a regular cigarette, Connolly said. And like the patch, he said, users could wean themselves off nicotine by stepping down the dosage — that is, provided e-cigarettes are regulated such that graduated doses of nicotine are required to be availed.

But Connolly, who has served on FDA's Tobacco Products Scientific Advisory Committee, said the agency does not seem poised to regulate e-cigarettes as a quitting aid. Rather, he said, FDA seems headed toward regulating them as tobacco products, which would leave the companies free to market the highest allowable dosages and essentially assure an ongoing supply of addicts or customers.

"FDA seems to be poised to ban Internet sales, which is exactly what (big tobacco companies) want," Connolly said. "That will only destroy competition and hand the market over to (the big three companies) whose only mission is to make the most addictive product they can."

The three major companies are Lorillard, Philip Morris, and Reynolds American.


Johnson campaign first to condemn FDA vaping regs

October 4, 2016



Libertarian presidential candidate Gary Johnson’s campaign has now officially gone on the record condemning the FDA’s regulation of the vaping industry.

To date, no other candidate has weighed in on the issue.Gary Johnson

“In the first debate, voters listened to two candidates dance around the American economy,” said Jim Wallace, national director of the Johnson-Weld campaign. “What you’ll never hear from those candidates is how the economy is being killed by excessive regulation. That just doesn’t make any sense.”

He said that he believes vaping is about to be regulated out of existence.

“The vaping industry currently counts about nine million customers, producing about $4 billion a year in annual sales,” he said, citing figures from industry sources. “With the excessive regulation recently introduced by the FDA, as many as 12,000 vaping businesses will be put out of business.”

The regulations require manufacturers to go through a costly pre-market approval process estimated to cost as much as $300,000 to $1 million per SKU. Most believe that such regulations will simply crush the industry, regulating it out of existence.

“As Gov. Gary Johnson has said, the free market and entrepreneurial spirit should be encouraged, not destroyed,” Wallace said. “Nowhere is this more obvious than the vaping industry.”

Corey Noles is the Editor in Chief of VAPE Magazine. He is also the owner of Inked Up E-Liquid Co. and Busted Knuckle Vapor Fluids. Contact him at

Downloaded Forms May Not Be Enough In Business Formation

October 25, 2016




I’m consistently surprised by the number of business owners I talk to, especially in this industry, who haven’t formed a business entity. A business entity is a legal entity, such as a corporation or a limited liability company (“LLC”), under which a business is operated. If you’re doing business on your own without a business entity, then you’re operating as a sole proprietorship, even if you use a trade name or “dba.” The differences here are substantial and well worth understanding.

Let’s say that you own and operate a vape shop. A customer comes in to pick up some new juice, and your giant chandelier falls on his head. Or maybe he slips, cartoon-style, on an inconveniently discarded banana peel. Or maybe he buys some hot-garbage- flavored juice and yaks so hard after the first hit that he ends up in the hospital with a torn oblique thinking that his appendix burst. Either way, something has happened, and you’re now facing a lawsuit. Business owners hate it, but the reality is that lawsuits are just a fact of life for anyone operating a business these days, and the vapor products industry is, despite the fact that it’s full of some of the world’s most laidback people, sadly no exception.

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Now, let’s make things a little bit worse. The plaintiff wins the lawsuit, and the shop owner is looking at a substantial judgment. If the shop owner was operating as a sole proprietorship, then the plaintiff could satisfy that judgment against the shop owner himself. That means that the owner’s savings account, house, car, wages, and so forth are all theoretically at risk. If, however, there was a validly formed, properly run corporation or LLC in place, then only the assets owned by that business entity would be available to satisfy the plaintiff’s judgment. This is the single greatest advantage to forming a business entity, and it’s called “limited liability.”

Many people I talk to understand the concept of limited liability, but what they don’t always understand is that it’s not automatic. It’s not enough to just form a corporation or LLC and call it a day. You actually need to run it properly and adhere to various formalities if you want it to work for you. If you don’t, someone who sues you can “pierce the corporate veil” and go after your assets personally, meaning that you aren’t getting the single greatest benefit – limited liability – out of your business entity.

Piercing the veil, in addition to being a pretty decent name for a metal band, is a concept whereby courts disregard the corporate entity and impose liability directly on the business owner. Exactly when and where the corporate veil gets pierced depends on the state, the judge, and the facts of each case, but there are some general guidelines to keep in mind.

In general, courts are more likely to pierce the corporate veil and hold you personally liable if the corporation feels like a sham entity set up purely to shield you from liability.

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In making this evaluation, courts look to a variety of different factors. One of the biggest factors is whether you the business owner actually treat your corporation like it’s a real, separate business. Do you have separate bank accounts for the corporation? Do you keep separate records and only pay the businesses’ bills from the corporate checking account? Or do you co-mingle your personal money in the same account as the corporation uses, paying your personal mortgage from the corporate account? It’s crucial to maintain the corporation at all times like it is truly what’s running the business, not like something that you just set up in case you get sued.

Another factor that courts look at when deciding whether to pierce the corporate veil is whether corporate formalities were followed. Did you have the right number of meetings every year?
Were minutes taken? Do you have by-laws, articles, officers, and a board of directors? Are you making the required annual payments to your state’s Secretary of State?

Have taxes been filed for the corporation? Formalities like this can seem minor, and may even feel silly in a corporation with only a few officers or shareholders, but they can be a lifesaver if you ever get sued.

At the end of the day, the point is that businesses entities can be extremely useful, but it isn’t enough to just form one using downloaded legal forms and walk away hoping for the best. It’s crucial to talk to an attorney who can advise you not only how to form the entity, but also how to operate it so that you actually get the benefit of that entity. Otherwise, you’re just crossing your fingers and hoping for a banana-peel-free floor.

Minnesota State Fire Marshal Suggests Fire Deaths Down As More People Vape


In 2015, the number of fire-related deaths in Minnesota was much higher than what was witnessed over the last two years, but the state has seen a drastic reduction in fire deaths this year, and it could be due to fewer people lighting up as more of them turn to vaping.

Minnesota State Fire Marshal Bruce West says that as the colder months approach, the rate of fire-related incidents that can result in fatalities tends to spike as residents turn to heat sources that have the potential to cause great harm, like space heaters and ovens.

However, West stresses that the most common risk comes from lit cigarettes that when left unmonitored could cause fires that can grow uncontrollably, resulting in the destruction of personal property and a loss of life.

“The number one cause of fire related deaths continues to be careless smoking. The number one identified cause. So people either quitting smoking or moving to vaping, that could be one of the underlying reductions in this,” West told MPR News. “That’s something that we will definitely take a look at.”

For a more complete look at this story, click here for the MPR News article.

D-Day: August 8, 2016 Deeming Rule in effect – Now What?



By Patricia Kovacevic

The entire vaping industry is painfully aware by now that the Food and Drug Administration (FDA) Final Rule, deeming tobacco products to be subject to the Federal Food, Drug and Cosmetic Act, went into effect on August 8.

What are some of the rule’s implications for manufacturers, importers, retailers and consumers? As the industry feels that the rule is vastly inadequate and disproportionately onerous on manufacturers of vaping products, given the tobacco harm reduction potential of these products, what can still be done to redress this situation?

In brief, the rule will enable the FDA to review new tobacco products not yet on the market (and, one must add, review and possibly take off the market many of the current, newly regulated products); help prevent misleading claims by tobacco product manufacturers, evaluate the ingredients and manufacturing of tobacco products, and communicate the potential risks of tobacco products, according to the FDA.

Notably, the rule does not meet societal expectations to impose product standards. Those must be issued pursuant to separate rulemaking, and the rule does not impose an obligation on the FDA to communicate relative risks of the newly regulated products versus conventional combustible cigarettes.

Additionally, the rule fails to distinguish among finished products, spare parts and other elements, imposing the same very onerous pre-market review requirements on practically anything and everything sold to consumers. This includes items that can be bundled or used with, or as a replacement part, or enhancement of, a newly regulated product.

What Can Retailers Expect to See After August 8?

The first type of activity the FDA will engage in will be retailer inspections, typically through subcontracted state authorities. As of August 8, age verification becomes mandatory, and automated self-service units may only be placed in age-verified, adult-only venues. Thus, retailers will be inspected openly or anonymously to ensure age verification is conducted at the point of sale, and that minors do not manage to buy products. Online retailers are required to have suitable age verification in place—though the FDA will not suggest any particular provider or age verification scheme, and thus can expect that FDA agents will attempt to make purchases on behalf of underage individuals.

Retailer violations will typically be noted in warning letters. Numerous examples of warning letters to retailers of conventional cigarette products may be found at

If a retailer receives a warning letter, the retailer may contact the Center for Tobacco Products (CTP) if he or she would like more information—though more information will not necessarily be provided.

The FDA requires that the retailer respond to the warning letter within 15 working days, in writing, by mail or email, and include an explanation of the steps the retailer will take to correct the violation(s) and prevent future violations. For example, the retailer could submit that he or she would retrain employees and remove the problematic items, etc. The retailer must also provide their current contact information, and the FDA may also recommend training. While retailer training is not mandatory, the FDA provides a few resources for retailers wishing to train their sales staff.

It is expected that the FDA will conduct a flurry of retailer inspection activities on an ongoing basis, as this is the most visible and easiest type of enforcement the FDA can undertake promptly.

With respect to manufacturing activities at the retail level, it may be an objective of retailer inspections as well, though personally I suspect more senior CTP staff might become involved with such inspections. This is due to the level of detail and documentation that might be required to conclude a manufacturing violation has actually taken place.

What Can Manufacturers Expect to See After August 8?

The FDA may inspect manufacturers at any time after August 8, however, the deadline for manufacturers and importers (which fall within the definition of a manufacturer) to file a facility registration and product listing is December 31, and therefore, the FDA is not likely to have the necessary information as to where and what to inspect before that date.

Our view is that manufacturer inspections might start early in 2017. There is still considerable confusion as to whether foreign based manufacturers will be inspected. The FDA surely has that authority and at an industry conference call in May, their CTP director suggested all is fair game in the industry.

Foreign manufacturers should require clarifications from the FDA on this topic. The FDA routinely inspects Chinese and Indian facilities engaged in manufacturing of other FDA regulated products, such as drugs and devices.

In any event, a robust inspection preparation plan and possibly mock inspections will help manufacturers navigate

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the very first FDA inspections with less disruption. Initial FDA visits may only seek to establish a benchmark for future inspection, however, do expect extensive requests for document production during those early inspections.

Deeming Rule Deadlines and the Future

There are various compliance deadlines for manufacturers, retailers, importers, and distributors. The FDA captured those in a rather comprehensive document available on their website at:

Notably, the next deadline refers to the most onerous requirement, which is submitting a pre-market tobacco product application (PMTA). This may very well signal the beginning of the end for many in our industry.

As we all know, when the FDA issued the Deeming Rule, it also published a draft guidance entitled, Premarket Tobacco Product Applications for Electronic Nicotine Delivery Systems (ENDS), and therein lies the rub. While the guidance is supposedly “non-binding”, we all know the FDA always follows its own guidance and allows itself to request, in fact, much more information than what is listed in the guidance.

Those of us with a long history of engagement with the FDA, and having successfully navigated similar requirements, understand the complexity of the information and studies required in support of a PMTA and find that time, availability of research facilities, and cost might render the PMTA pathway available to only a few.

It is also blatantly unfair that the FDA will take products off the market as of August 8, 2019 if they fail to review the respective PMTA applications duly filed by August 2018 because of the FDA’s own speed of review. Namely, a leading official at the CTP clearly stated in a recent webinar that, if FDA does not get around to reviewing a PMTA application by August 8, 2019, it will order the respective product off the market and continue reviewing the PMTA at its leisure—while the manufacturer presumably shuts down its operation and goes home, waiting indefinitely for some sort of resurrection.

Given the expected enormous number of potential PMTA applications (our estimate, not the FDA’s), there are likely not enough scientists in the entire FDA to review them before the extended compliance deadline of August 8, 2019.

It’s not all doom and gloom, though. Given sufficient resources and more time, a good faith PMTA may be submitted, but few companies will have the know-how, resources, and willingness to engage in such multi-million dollar undertakings that can ultimately lend themselves to improbable outcomes.

So what has been done, and can be done, to ensure the industry’s survival, give hope to smokers who want less risky products, and avert a tobacco-harm-reduction catastrophe?

Promptly and upon publication of the Deeming Rule, Nicopure Labs filed the first and to this day, the fastest moving lawsuit against FDA in Washington, D.C. Circuit Court.

A coalition of companies joined that lawsuit within a matter of weeks, and the respective plaintiffs’ motions for summary judgment have been filed already. The complaint challenges the rule in its entirety and also selected provisions of the rule. Several interested entities have moved to file amicus briefs in support of the plaintiffs and at least one in support of the defendant. Several other separate lawsuits were filed by other newly regulated manufacturers, and one even on behalf of consumers.

We believe Nicopure et al. v FDA et al. will provide the earliest resolution and clarity to our industry, one way or another, which was our goal all along. I am as curious as you, the reader, to find out whether our hard work and sacrifice will pay off in this case, but predictions are never appropriate in litigation. Let’s just say that we have faith in the justice system as our last resort.

In addition to litigation, which might provide complete or partial relief to the industry as early as 2017, various advocacy and industry groups are working towards the goal of having certain elements of the rule changed, to ensure that products on the market as of August 8, 2016, do not need to undergo any form of pre-market review by the FDA, while preserving FDA’s ability to inspect, receive ingredient information, require pre-market review of future new products and generally monitor the industry.

Those efforts are underway and may yield results in early 2017 as well. These two types of initiatives, litigation and legislative changes, are at present what we all need to focus on.

Until one, or both initiatives bear fruit, please make sure you comply with all applicable provisions of the Deeming Rule and be cooperative with the FDA as much as practicable.

We will regroup in the first part of 2017 to assess outcomes. Stay focused and positive in the meantime. Also, to quote Longfellow, “Perseverance is a great element of success. If you only knock long enough and loud enough at the gate, you are sure to wake up somebody.”

Patricia Kovacevic is the general counsel and chief compliance officer at Nicopure Labs, the leading e-liquid manufacturer of brands Halo and eVo, and the first company to challenge the FDA Deeming Rule.


Flight Delayed At Sea-Tac Airport After Vape Pen Catches Fire


Planes at the Seattle-Tacoma International Airport. Photo courtesy of Port of Seattle.

A United Airlines Flight scheduled to depart Seattle-Tacoma International Airport for Houston, experienced delays Sunday when a man’s vaporizer caught fire in his checked luggage.

While loading the man’s luggage onto the plane, Komo News reports that the airport’s baggage handlers noticed smoke escaping from the bag.

Firefighters at the scene put out the flames and the crew determined that the cause of the fire was the passenger’s vape pen which was connected to a charger.

The owner later identified his fire-damaged luggage after being escorted from the plane, according to Komo News.

The Federal Aviation Administration (FAA) strictly prohibits batteries of any kind to be stowed away in travelers’ checked baggage due to safety concerns, and vapor products are no exception to this rule.

For the Komo News article, click here.

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