Last year marked several milestones for the electronic-cigarette and vapor category. Most important, the U.S. Food and Drug Administration’s (FDA) finalization of its deeming rule brought e-cigarettes and other previously unregulated tobacco products under the FDA’s jurisdiction and set critical requirements for manufacturers and retailers to keep products lawfully on the market and to operate in a regulated environment.
Also, state and local governments continued to enact local laws and regulations affecting the category, with a heavy focus on retailer registration and licensing, packaging and labeling requirements, flavor restrictions and tax.
Knowing the current requirements, those on the horizon and the opportunities to engage on regulations yet to come will be an important priority in the new year for everyone in the retail industry.
Prepare for a New Landscape
In August, the FDA asserted its regulatory authority over the e-cigarette and vapor category via its finalized deeming rule. This rule defines the landscape for the entire category today, in the next two years and beyond. This watershed change from regulators has some brass-tacks takeaways for the industry as a whole:
FDA review and approvals. The industry must prepare to navigate a new, lengthy process to obtain required FDA approval for any vapor product to remain on the market after August 2018. The process is a costly one, and applications must be prepared for each individual product at the SKU level. Any products for which an application has not been filed with the FDA as of Aug. 8, 2018, can no longer be sold.
Know who’s planning for compliance and who’s not. Compliance with the FDA means strong trade partnerships will matter more than ever for retailers selling vapor products. It is crucial for retailers to take stock of this new environment and partner with companies that are investing the time and resources to remain in the category over the long run. (Logic is taking all necessary steps to navigate and comply with this process for a robust portfolio of products.)
The silver lining: SKU management and growth opportunities. Despite the likely disruptions amid this transition, the changes are expected to bring some upside for retailers. The FDA has acknowledged this will lead to some consolidation in the industry, meaning fewer SKUs to manage for retailers and reliably higher-quality products for consumers. Suppliers who commit to building consumer trust and brand loyalty will create growth opportunities for retailers in a category that still projects considerable growth over the coming years.
Issues to Watch
At the local level, 2016 also saw many state and local governments enacting vapor product laws and regulations of their own. While the FDA’s new regulations provide the category with some uniformity, local governments have (and are expected to continue) enacted laws addressing taxation, product use in public places, age of sale, retailer registration and flavor restrictions, among others.
The result of this reality is a patchwork of regulation that can vary by state or even town, making it all the more important for retailers to establish trade partnerships that prioritize compliance and have an open dialogue about regulation.
At the same time for retailers, the saying “All politics is local” is extremely important. On many of these issues, participating in the debate as a local community member can help shape regulation into something that is more sensible to comply with. This is true whether the proposal is in the state legislature or your local city council. Logic supports our partners in retail and their engagement efforts to try to produce results that properly reflect the public interest and do not overburden businesses with costly, time-consuming regulation.
It’s clear that the landscape for vapor products in 2017 will be vastly different than in 2016 and continuously evolving. It is critical to retailers’ individual businesses to note and act on these changes and find e-cigarette partners who plan to comply and who also make responsibility a two-way street with retailers. Being proactive in compliance not only puts suppliers and retailers at the forefront to capitalize on the growth opportunities afforded in this newly regulated environment, but it also means potentially avoiding costly mistakes.
Kevin Roberts is director of regulatory affairs and communications for Logic Technology Development LLC. Reach him at firstname.lastname@example.org.