E-liquid and the Tobacco Master Settlement Agreement?

[mitsuhashi]

My company is planning to start the first e-cig business in a remote island in the U.S., and we've been trying to clear up all the legal issues that may hamper our long-term, and possibly even our short-term, chances as a viable business.

Recently, we asked a lawyer to research and give us an opinion on some of the legal issues that may or may not affect e-cigarettes' importation and sale here. Current anti-tobacco and anti-smoking laws are geared toward cigarettes, roll-your-own, snuff, etc., probably like all other parts of the U.S. had been until e-cigarettes became an issue. As our island had never had an issue with e-cigarettes due to near non-existence of vapers, we are trying to make sure that we are steering clear of pitfalls designed for cigarettes.

To get to the point, the last few paragraphs of our attorney's opinion mentioned Tobacco Product Manufacturers (TPM) as part of the Tobacco Master Settlement Agreement (TMSA). He advised that our Chinese e-liquid supplier should either be paying into the escrow fund, or, if we are the "first purchaser anywhere for resale in the U.S. of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States", we would be the TPM responsible for paying into the fund.

I disagree with this because 1) it doesn't look like any other state is requiring Dekang/Hangsen/E-liq/etc. to pay into the escrow fund as part of the TMSA, 2) it doesn't look like e-liquid retailers who sell Chinese liquids are paying into the escrow fund as TPMs, and 3) since the TMSA is based on cigarettes and not e-cigarettes.

BUT, I need help finding a reputable source, or a very strong logical argument that I could use to help steer our attorney in the right direction. Any veterans familiar with these issues?

Thanks a lot for the help, in advance.

-mitsuhashi

 

[rolygate]

E-Cigarettes and associated products such as the refills are not legally tobacco products at present. There was a legal ruling in the Sottera and NJoy vs FDA case that implied that they were, as against pharmaceutical products. However it requires that the FDA issue a deeming notice asserting that e-cigarettes are tobacco products, before they can be legally treated as such.

This will probably take place after the election. If the deeming regulation is passed unchallenged, e-cigarettes will then legally and officially become a tobacco product. Various opinions have been expressed as to the likely outcome if that happens, ranging from a worst-case scenario in which ecigs are basically banned due to application of extreme provisions of such a regulation, through to the same conditions applying as apply to cigarettes (no advertising, no web sales, etc).

There will be considerable opposition to the FDA if/when the time comes, so just now it is impossible to see what the outcome might be.

Your attorney needs to read Judge Leon's ruling in the FDA case as that is what the current situation is based on. Ecigs aren't a medical product, but they aren't properly a tobacco product until their status is confirmed by subsequent regulations (in this case an FDA notice). Just now they are in a no man's land.

http://www.e-cigarette-forum.com/fo...ads-everything-relevant-njoy-vs-fda-case.html

Go to the Court Dockets / Updates thread, last page, and read the PDF of Judge Leon's Final Order, which says:
1. The FDA cannot seize imports.
2. The FDA cannot regulate ecigs as medicines.
3. The FDA can regulate ecigs as tobacco products under the FSPTC Act 2009. (This will require them to issue a declaration stating they deem that ecigs are tobacco products and will be regulated as such.)
4. If ecig marketers make therapeutic claims, the FDA can treat those products specifically (and only those) as medical products. This means if you make health claims of any kind, the FDA can take you down.

So at present ecigs are essentially unregulated in any form in the USA. The same applies in its territories unless there is some form of local exception. After the election the probability is that this will change. However there will be an almighty battle (again), and so there is a possibility that the FDA may avoid that by doing nothing for the time being. While before, there was a limited amount of funding for legal opposition to the FDA's plans to remove ecigs (finding the $0.5m needed was hard), now the situation has changed and if it cost $5m to oppose them, then that funding would be available.

There is a very wide range of opinions about all the possibilities.