Week of April 14 Regulatory Intelligence Recap

Trade Press and Regulatory Summary:

• Tobacco Tax Fraud Scheme Costs California More Than $24 Million in Lost Revenue - CSP

California Attorney General Rob Bonta on Thursday announced the grand jury indictment of five suspects for selling tobacco without a license and committing tax fraud that cost the state of California more than $24 million in lost tax revenue.

The five suspects perpetuated their scheme by submitting false monthly excise tax returns to the California Department of Tax and Fee Administration or, in some cases, neglecting to file these returns altogether, according to the attorney general’s office.

• Legislature Weighs R⁠i⁠sk-Based Taxa⁠t⁠⁠i⁠on in Florida - Florida Daily

House Bill 785 and Senate Bill 1418 are in the Florida Legislature. These bills would seek to provide regulatory clarity on this issue by redefining the terms “cigarette” and “tobacco products” in Florida statutes and introducing the definition of “heated tobacco product.”

Taxing tobacco and nicotine products based on the relative harm they pose to consumers and the burden they place on public health is a smart way to reduce the negative health outcomes associated with smoking cigarettes without relying on prohibition or excessive taxation. By taxing smoke-free products less than combustible cigarettes—or, as Florida does with most of these products, not taxing them at all—lawmakers can offer a financial incentive for adults who smoke to switch to less harmful products and improve their health.

The goals of the two legislatures are to keep tax rates lower on smoke-free products compared to traditional cigarettes and to help incentivize more adults who smoke to switch to less harmful alternatives.

• All Vapes Are Flavored Vapes, Some Just Have Cigarette Flavors - Reason - Jonathan H. Adler

In order to be more accurate--and better communicate the underlying reality--I would suggest a revised nomenclature: We should refer to vaping products as either cigarette-flavored (i.e. tobacco and menthol) and non-cigarette flavored. This would be more accurate and, insofar as there are any health concerns about flavor additives, make clear that there are no unflavored products (and also that the FDA "deemed" vaping products to be tobacco products; they do not actually contain tobacco).

This change in nomenclature would also help clarify the nature of the FDA"s policy choice to only consider approving vaping products that taste like cigarettes. It might also raise further questions about the wisdom of the FDA's approach. After all, the FDA is denying smokers the ability to transition away from smoking by using products that would sever the connection between nicotine and the taste of cigarettes. The FDA is also ensuring that insofar as youth or other experiment with vaping, they are using products that taste like cigarettes.

• The FDA fired its tobacco enforcers. Now it wants them back.- Politico

Senior FDA officials asked laid-off employees in recent days to temporarily return after mass cuts decimated the agency’s ability to penalize retailers that sell cigarettes and vapes to minors, four federal health officials familiar with the matter said.

The scramble followed HHS Secretary Robert F. Kennedy Jr.’s termination of roughly 10,000 employees, which included everyone in the FDA office charged with preparing and seeking fines against stores that repeatedly violate a ban on selling tobacco to customers under 21.

The FDA typically files more than 100 complaints a week seeking so-called civil money penalties against retailers, the officials said. But after the April 1 mass firings carried out across the Department of Health and Human Services, that operation ground to a halt, effectively eradicating the agency’s main weapon against illegal tobacco sales.

You could not have done a better job of eliminating tobacco enforcement than by doing this,” said one of the officials, who were granted anonymity for fear of retaliation. “It was the perfect pinpoint strike.”

• ASSET PURCHASE AGREEMENT by and between, R. J. REYNOLDS VAPOR COMPANY, as Buyer, CHARLIE’S HOLDINGS, INC., as Seller Dated as of April 16, 2025 - Form 8K

On April 16, 2025, Charlie's Holdings, Inc. (the "Company") entered into and closed an Asset Purchase Agreement (the “Agreement”) with R. J. Reynolds Vapor Company (the “Buyer”) pursuant to which the Buyer purchased twelve of the Company’s PACHA synthetic products and related assets (the “Assets”) that are covered by a premarket tobacco application (“PMTA”) first submitted by the Company in 2022. The purchase price for the Assets was $5.0 million paid at closing, plus a contingent one-time payment of up to $4.2 million based on product sold by the Buyer during the one year following the first day of commercialization of the Assets. The Agreement contains customary representations, warranties, and indemnities by each of the parties.

• Arkansas Registry Law Includes First-Ever U.S. Personal Possession Ban - Vaping360

Like all PMTA registry bills, Arkansas Act 590 establishes a list (called a directory in this case) of vaping products that can be legally sold in the state. Manufacturers must apply to have products included on the list, pay a fee for each product or family of products, and certify under penalty of perjury that each product submitted meets the requirements for inclusion.

Unlike any other state vaping law, Act 590 also prohibits personal possession and importation of products that don’t meet state standards if the person in possession knows they are illegal. 

The Arkansas registry law is believed to be the only vaping law banning personal possession in the United States. Some countries that prohibit personal possession of vaping products include North Korea, Qatar, Singapore and Venezuela.

There is no enforcement mechanism provided, but the law provides for fines and seizure of products if confiscated. Local police do not have the power to initiate investigations, but that doesn’t mean they won’t overstep their authority and arrest someone carrying a flashy disposable.

• Vaping Increase Offsets Smoking Decline in US From 2017 to 2023 - Pulmonology Advisor

The number of US adults who were exclusively smoking cigarettes decreased by 6.8 million from 2017 to 2023, although it was offset by about a 7.2-million-person increase in the number who were exclusively using e-cigarettes (ie, vaping), according to study findings published in the Morbidity and Mortality Weekly Report.