The e-cigarette manufacturer files for relief under Chapter 11 after its Kings 2.0 fails to perform.
NJOY Inc., the electronic cigarette manufacturer, filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code late Friday, Sept. 16, in Delaware.
The failure of NJOY’s Kings 2.0 device was behind the bankruptcy filing, according to Law360, which pointed to court filings in which NJOY President Jeffrey Weiss noted that NJOY sustained significant losses after it rolled out Kings 2.0, which was an updated version of its Kings disposable e-cigarette. Kings 2.0 rolled out near the end of 2013, but the product did not perform as expected.
The Debtor’s case was assigned case no. 16-12076 and is pending before the Honorable Christopher Sontchi in the U.S. Bankruptcy Court for the District of Delaware. The hearing is set for Sept. 20 at 9:30 a.m. EST.
The fines for tobacco regulation violations have been increased for all fines issued after Aug. 1, 2016.
A new report from the National Association of Tobacco Outlets (NATO) has revealed that 55 retailers have received warnings from the U.S. Food and Drug Administration (FDA) for selling tobacco products to a minor decoy. No fines were issued with these warnings, but the FDA has stated that the stores in question will be re-inspected to determine if further violations occur.
NATO has released a statement encouraging its member stores to remind their staff about complying with federal law, which prohibits the sale of tobacco products, including cigarettes, RYO, smokeless tobacco, cigars, pipe tobacco, e-cigarettes/vapor products and hookah tobacco, to underage youth.
In addition to performing inspections on retail stores that sell tobacco products, the FDA has announced that it has increased the monetary fines that are charged to retailers who violate the federal tobacco regulations, NATO reported. The Federal Civil Penalties Inflation Adjustment Act of 2015 allows federal agencies to adjust monetary fines for inflation once a year, and this increase was made in accordance with this legislation.
The adjusted fine amounts apply to retailers who were fined after Aug. 1, 2016.
According to the report from NATO, the adjustments to the fines are as follows:
One Violation: The fine of $0 with a warning letter remained the same.
Two Violations within a 12-Month Period: Increased from $250 to $275
Three Violations within a 24-Month Period: Increased from $500 to $550
Four Violations within a 24-Month Period: Increased from $2,000 to $2,200
Five Violations within a 36-Month Period: Increased from $5,000 to $5,501
Six Violations within a 48-Month Period: Increased from $10,000 to $11,002
Build Both External & Internal Value Using BARS Reports
The value of incorporating the BARS Reporting Program into company culture when it comes to the sale of age-sensitive products such as alcohol and tobacco is both external and internal. Sharing each and every result from the store visits provided by the BARS Program with the store manager, district supervisor and regional manager will reinforce a culture of using best practices when it comes to carding individuals purchasing these products. By consistently sharing this message, all employees will become accustomed to carding on each visit, lessening the chances of being caught in a sting.
Externally, using the BARS reporting program can provide value by allowing clients to expand their business by voluntarily implementing our program. A restaurant chain currently utilizing the BARS program was recently able to expand their liquor licenses in new locations by providing the liquor licensing board with the BARS reports, as well as a letter outlining the program and its implementation. Many of their competitors are currently on hold for expanding liquor licensing.
When it comes to reporting, our system is unparalleled, and we encourage everyone selling age-sensitive products to implement a strong culture of carding everyone as soon as possible. Not only can a sting and fines be avoided, it can help propel a business to the next level. Contact us today at 1-877-540-5500 for a complimentary consultation. Ask for David or Richard. Please reference the Tobacco Today blog when speaking to David or Richard at the Bars Program.
Remember that the FDA’s new “deeming” regulations regarding the sale and manufacture of tobacco products such as e-cigarettes, cigars, hookah tobacco, and pipe tobacco—essentially extending the regulations already placed on cigarettes to most tobacco products—go into effect August 8! We will be touching base again in the early fall, but in the meantime, we welcome any questions you might have about ensuring your compliance.
SHARON, Pa. — August ushered in a $1 hike in Pennsylvania’s cigarette excise tax to $2.60 per pack. The move pushed Pennsylvania up the ladder to the 10th highest cigarette tax in the United States. It also pushed one local convenience store out of business.
“It really hurts because you’re trying to make a buck and they keep on penalizing you,” Toby Abrutz, owner of Korner News, told WYTV. “Every time you try to get ahead, the state puts another tax on something.”
Toby and Jaque Abrutz own the c-store and say the increased tax is more than they can take. Cigarettes were their main source of business; however, the owners just can’t keep up with the tax, they explained.
“There’s just not enough business. I mean, everyone is going to start going to Ohio now to buy their cigarettes,” said their daughter Lisa. “It’s been tough for a long time and it just really pushed us over the edge.”
Meanwhile, the Abrutz family is trying to figure out how to make ends meet. “My daughter’s putting in an order today and…we decided not to order cigarettes because we are going to wait and see what this does with the business all week,” Jaque Abrutz told the news outlet.
While the Korner News flagship location is closing, the Abrutz’s other location in uptown Sharon will remain open, the report added.
Prof. Glantz Says Vaping May Be 1/3 To 1/2 As Harmful As Cigarettes
University of California, San Francisco Prof. Stanton Glantz said that even though eVapor products deliver fewer carcinogens than conventional cigarettes, agencies concerned about public health “should consider them at least 1/3 as bad as cigarettes and maybe as high as half as bad (or higher),” asserting that “the evidence that e-cigarettes substantially increase heart and lung disease keeps piling up” and “at least some of the short-term effects of e-cigarette use on [the cardiovascular system and lungs] are comparable to cigarettes,” citing separate studies by Aruni Bhatnagar of the University of Louisville, Nick Wilson of the University of Otago, and Elizabeth Martin of the University of North Carolina. Prof. Glantz cited a recent review, in which University of Louisville Prof. Aruni Bhatnagar notes that “even if the levels of acrolein in e-cigarettes are 10-fold lower than those present in conventional cigarettes, given the non-linear dose-response relationship between cigarette smoke and cardiovascular injury, it is not clear whether this would result in proportional harm reduction.” Prolonged (90 days) exposure to even low-dose (0.2 ppm) acrolein leads to non-specific inflammatory cardiac lesions, and therefore, the generation of acrolein and other aldehydes in e-cig aerosols, even in low concentrations, remains a cause for concern, according to Prof. Bhatnagar. Based on his review of the evidence, he concludes, among other things, that eVapor products “cannot be recommended as a safer alternative to smoking cigarettes.” Prof. Glantz also cited a review of studies on biological markers in vapers published by Prof. Nick Wilson and colleagues at Otago University in New Zealand, which found that vaping had smaller effects on the vascular system than smoking, but the effects were still substantial, and that smoking and vaping had the same effects on the physiological endpoint, or the ability of arteries to dilate. In another study, Elizabeth Martin and colleagues from the University of North Carolina School Of Medicine found that vaping results in the suppression of immune and inflammatory-response genes in nasal epithelial cells similar to cigarette smoke. Prof. Glantz contended that all of this accumulating evidence shows that the “evidence-free ‘expert opinion’ from group of e-cigarette enthusiasts that e-cigarettes are ‘95% safer’ than cigarettes, which was repeated uncritically by Public Health England and the Royal College of Physicians is wrong.” He said the “longer these organizations take to modify their positions on the emerging science the lower their credibility is becoming” (UC San Francisco 7/9).
Almost 4 in 5 of the world’s smokers live in low & middle incomecountries.
Only 1 in 3 countriesmonitor tobacco use by repeating nationally representative youth & adult surveys at least once every 5 years.
8 million people annually will die from a tobacco-linked disease by 2030.
The Dangers of Tobacco & its Death Toll
The number of chemicals in tobacco smoke.
The minimum number of these chemicals that are known to be harmful.
Are known to cause cancer.
Up to ½
The number of its users that tobacco kills.
The annual number of people killed by tobacco.
The number of deaths as a result of direct tobacco use through smoking.
The number of deaths as a result of non-smokers being exposed to 2nd hand smoke.
2nd Hand Smoke is Still a Major Issue
2nd hand smoke is the tobacco smoke that fills enclosed spaces where smokers burn tobacco products e.g. cigarettes & pipes. Almost ½ of all children frequentlybreathe in air that has been filled with tobacco smoke in public places.
There is no safe-level of exposure to tobacco smoke. It causes:
Coronary heart disease & lung cancer in adults.
Low birth weight in pregnant women.
Sudden death in infants.
600,000+ premature deaths annually.
1.3 billion+ people are protected by national smoke-free laws.
That is still only a little over 1 in 5 people.
Initiatives to Discourage Tobacco Consumption
National Cessation Services
Counselling & medication can more than double the chance of a smoker successfully quitting.
Only 24 countries have national comprehensive cessation services with full or partial cost-coverage to help smokers quit.
There is nocessation service in ¼ of low-income countries.
Stopping Illegal Trade
1 in every 10 cigarettes consumed globally is illegal.
Stopping the illegal trade of tobacco would generate US$31 billion for governments in annual taxes.
It would also reduce 1 million premature deaths attributable to tobacco products every 6 years in middle & low-income countries.
Increasing tobacco prices by 10%,decreases tobacco consumption by 4% in high-income countries & 5% in low & middle-income countries.
But, high tobacco taxes are rarely implemented.
Yet shockingly, tobacco tax revenues are still 269 times higher on average than spending on tobacco control.
Only 29 countries have completely banned all forms of tobacco advertising & sponsorship.
Almost 1 in 3 countries have minimal or no restrictions.
A comprehensive ban could decrease tobacco consumption by an average of 7%.
The country’s tobacco associations have filed nine counts against the FDA and U.S. Department of Health and Human Services.
On Friday, July 15, 2016, the country’s three major cigar and tobacco industry associations filed suit against the U.S. Food and Drug Administration’s (FDA’s) new tobacco deeming rule.
The Cigar Association of America, International Premium Cigar and Pipe Retailers Association and the Cigar Rights of America are asking the District Court for the District of Columbia for a declaratory injunction “vacate, set aside and enjoin the enforcement of the final rule” because it violates numerous federal statutes as well as the federal rulemaking process. The full filing details nine counts against the FDA and the U.S. Department of Health and Human Services.
“Just over one month ago, our three associations pledged to work together to develop the appropriate response to the FDA’s new deeming rule. After a thorough and detailed legal review, we are challenging this unlawful regulatory action in federal court to protect the statutory and constitutional rights of our industry and its members. The fact that all three of our organizations are acting in once voice speaks to the urgency and seriousness of this action,” said Mark Pursell, CEO of the International Premium Cigar and Pipe Retailers Association.
The complaint challenges:
FDA’s improper application of the Feb. 15, 2007 grandfather date to cigars and pipe tobacco, which subjects those products to more intrusive regulations than cigarettes and smokeless tobacco
FDA’s impermissible assessment of a tax in the form of user fees, and its allocation of these user fees only to cigars and pipe tobacco and not to other newly deemed products
FDA’s failure to perform an adequate cost-benefit analysis to take into account the effects of the Final Rule on small businesses as is required by the Regulatory Flexibility Act
FDA’s unjustified decision to require cigar health warning labels to be 30% of the two principal display panels of packages
FDA’s unlawful designation of tobacconists who blend finished pipe tobacco or create cigar samplers of finished cigars as “manufacturers,” which subjects those businesses to greater regulation than if they were “retailers”
FDA’s incorrect decision to regulate pipes as “components” or “parts” rather than as “accessories”
“The FDA ignored the law to craft these expansive and sweeping regulations and cannot justify many of the arbitrary and capricious regulations it purports to enact,” said Glynn Loope, executive director of Cigar Rights of America. “This lawsuit is a specific and detailed challenge to the FDA’s unprecedented assertion of rulemaking authority. “We are acting in one voice to protect the legal rights of our industry at all levels, from the manufacturer, the community retail tobacconist, to the adult patrons of cigars.”
“We all worked in good faith to inform and educate the FDA on the unique nature of our industry, its members, and our consumers. We hoped the FDA would craft a flexible regulatory structure that accounted for the uniqueness of our industry. Instead, we got a broad, one-size-fits-all rule that fails to account for how cigars and premium cigars are manufactured, distributed, sold and consumed in the U.S. The FDA exceeded its statutory authority and violated the federal rulemaking process when crafting this set of broad and sweeping regulations. This challenge asserts nine violations of federal law and rulemaking authority. We are asking the court to enjoin the enforcement of this unlawful regulatory scheme. We are confident that when the court reviews our case on its merits, we will prevail,” Cigar Association of America president Craig Williamson said.
Boston University School of Public Health Prof. Michael Siegel said that since Nicopure Labs last month filed the first legal challenge to the FDA’s new deeming regulations, four more lawsuits have been filed against the agency, all of which, he claimed, present “strong and solid” arguments against the deeming regulations, including that the FDA, by applying the Tobacco Control Act of 2009 to eVapor products, exceeded the “very limited and specific scope of authority” that it was granted by Congress under the Act; the agency failed to conduct a proper cost-benefit analysis; its regulatory scheme lacks a rational basis; and the regulations infringe upon the free speech rights of companies by prohibiting them from making “truthful, non-misleading” claims about their products without any legitimate government interest in doing so. Prof. Siegel said that Lost Art Liquids, LLC has sued the FDA under the Administrative Procedure Act (APA), the Regulatory Flexibility Act, the First Amendment, and the Fifth Amendment. “Vapor products are technology products, not tobacco products,” according to Lost Art Liquids’ Co-Founder and COO Ryan Thomas, who said the TCA was created to regulate products like cigarettes and smokeless tobacco products, not eVapor. West Virginia House Del. Larry Faircloth (R-Berkeley) has filed a lawsuit against the FDA under the APA, the First Amendment, and the Tenth Amendment. Faircloth claims, among other things, that the FDA’s ban on new product introductions after August 8, 2016, is “arbitrary and capricious.” Faircloth also contends that the FDA failed to quantify the benefits of the regulation and “grossly” underestimated the costs, pointing out as an example the agency’s estimate that only 750 pre-market tobacco applications would be required, while, in reality, there are single companies that would have to file as many applications alone. Another lawsuit filed by a coalition of eVapor associations, including the Right to Be Smoke-Free Coalition, the American E-Liquid Manufacturing Standards Association, and the American Vaping Association, has challenged the deeming regulations under the APA, the Regulatory Flexibility Act, the First Amendment, the Fifth Amendment, and the Fourteenth Amendment. In addition to making allegations similar to those made in the other lawsuits, this lawsuit also challenges the grandfather date, the pre-market authorization process, the ban on allowing customers to try e-liquid flavors in adult-only vape shops, the application of the “tobacco product” definition to component parts of vaping devices that do not meet that definition, and the entire modified risk clause, Prof. Siegel noted. Altria subsidiary John Middleton, which makes the Black & Mild cigar brand, has filed a lawsuit, claiming that the deeming regulations’ ban on the use of terms such as “light” and “mild” violates the First Amendment because it restricts free speech without any legitimate government interest and violates the Fifth Amendment because it represents an expropriation of private property without compensation. Altria argues that the Black and Mild brand name, which has been around for more than 40 years, conveys information about the product’s “taste and body,” rather than its safety. Prof. Siegel said that all of these lawsuits are seeking an injunction against enforcement of various aspects of the regulations or seeking to overturn the regulations in their entirety (tobaccoanalysis.blogspot.com 6/27).
For more Michael Siegel analysis review his blog roll on the right side bottom blog roll of the tobacco today site.