Despite popular belief, flavored nicotine vapor products are still readily available in a Food and Drug Administration (FDA)-created gray market. Unfortunately, the FDA’s actions could open the door for states to raise taxes down the road. If that sounds too crazy to be true let me explain.
A gray market is similar to the concept of a black market in that the products being sold are not strictly speaking legal, but instead of finding items through back channels, the deep web, or the back of a truck, the illicit items can be found by the general public readily available in brick and mortar stores, or reliable websites. Another distinction worth noting in this case is that retailers are likely following other legal requirements for these products, like age restrictions and collecting some taxes.
Since 2016, the FDA has sought to ban or block through the rulemaking process the sale of flavored tobacco products, including vapor products such as peach Juul or melon Vuse that were officially removed from the market in 2020. The FDA created a new application process, known as premarket tobacco applications, for companies seeking to sell such products and required all e-cigarette manufacturers to remove their products from the market until they were approved for sale by the FDA. More than 500 companies were able to file applications for more than 6.5 million products, submitting the required scientific evidence demonstrating that their product was less harmful than combustible tobacco. Since the application deadline, the FDA has approved only 20 e-cigarette products out of millions of applications.
While the large manufacturers like Juul and Vuse complied with the FDA, other flavored disposable vapor products have remained on the market without FDA approval. Disposable products have seen a boon in the last three years, growing from 2 percent to a staggering 33 percent share of the U.S. market, according to a Reuters review of retail sales data.
Responsible U.S. businesses who followed the process as required by the FDA and removed their products from circulation are being punished and the FDA is doing little to curb the gray market availability of bad actors who are knowingly subverting the law in order to turn a profit.
The truth of the matter is that e-cigarettes like reusables or disposables are valuable cessation devices that have been proven to assist adults in reducing or altogether stopping their combustible usage, which has significant health advantages. According to the most recent study released in 2022 by Public Health England, vaping is “at least 95 percent less harmful than smoking.” Driving this point further, a 2021 study conducted on San Francisco’s ban on flavored tobacco sales yielded higher odds of minor students' usage of combustible tobacco.
The FDA continues to overregulate and push policy that leads to gray markets, bad actors, and worst of all, increased youth combustible usage. At a time when states are exhausting their COVID relief dollars and looking to boost revenue, this situation shows that they'd be better off with reasonable regulations and lower taxes, incentivizing the use of less harmful e-cigarettes. Instead, states will likely attempt to raise taxes – either on tobacco products or elsewhere – in order to close budget shortfalls. This would be especially problematic during these uncertain economic times.
Most of this blame, of course, lies with the FDA. If the FDA’s aim in requiring all vapor products to reapply for approval to be on the market is to truly reduce youth usage rates, then they need to enforce their rules while providing a true track to approval for responsible companies to continue to innovate in the space. Instead it’s created an enormous mess and, as usual, taxpayers will likely be left holding the bag.