As we have previously reported, on December 27, 2020, Congress amended the Prevent All Cigarette Trafficking (PACT) Act to apply to e-cigarettes and all vaping products (referred to in the legislation collectively as “Electronic Nicotine Delivery Systems” or “ENDS”). Under the amended PACT Act, these products are subject to the same federal and state registration, reporting requirements, and delivery restrictions as traditional cigarettes, including the prohibition on the use of the United States Postal Service (USPS) to deliver products directly to consumers.
The USPS has historically maintained an exception to this ban for tobacco products “mailed only … for business purposes between legally operating businesses that have all applicable State and Federal Government licenses or permits and are engaged in tobacco product manufacturing, distribution, wholesale, export, import, testing, investigation, or research …” (the “B2B Exception”) See 18 U.S.C. § 1716E(b)(3)(A)(i). In a proposed rule published on February 19, 2021, the USPS stated its intention to maintain this “business purposes exception” for ENDS. Over 16,000 comments were received during the comment period.
- In advance of the final rule, on April 19, 2021, the USPS published guidance detailing the information required in an application for exception from the non-mailability provisions of the PACT Act for ENDS products. The guidance indicates that the final rule is still expected to be published, and become immediately effective, on or about April 26, 2021 (i.e., 120 days after the amendment was enacted).
- Although the guidance leaves it for the final rule to confirm whether, and under what circumstances, the B2B Exception will actually apply to ENDS, it provides details about the scope of information that may be required in B2B Exception applications. The guidance does state, however, that “[w]hether any ENDS mailers may ultimately be allowed to use the exceptions remains to be determined.”
- Although the guidance states that the Agency will not accept applications prior to the publication of the final rule, the Agency did include prospective recommendations for what to include in an application. The guidance recommends including electronic copies of all relevant license and permit documentation for the applicant and for each addressee that they intend to ship to. The guidance also recommends companies start gathering relevant information now, and suggests preparing a spreadsheet that contains the following information with respect to each sender and each recipient:
- Address
- The Postal Service retail or business mail acceptance office(s) where each intended sender would tender shipments
- The Postal Service retail office(s) where each intended recipient would retrieve shipments
- A description of the business or governmental entity (e.g., battery manufacturer, retail store, wholesale distributor, testing laboratory)
- For each permit or license, the issuing jurisdiction; the permit or license number; the expiration date (if any); and the activity covered by each current permit or license (e.g., general business operations; sale or manufacture of tobacco products or ENDS)
- The brand name and a description of each product intended to be shipped by each sender or to each addressee
- Whether any identified products or other intended shipments from each sender or to each addressee contain lithium batteries, nicotine, CBD, or tetrahydrocannabinol (‘‘THC’’)
- For products containing nicotine or THC, the intended quantity of the product per shipment and the concentration of nicotine or THC
- For products containing CBD with a THC concentration not exceeding 0.3 percent, whether the CBD derives from hemp
- The guidance also includes recommendations applicable to entities that engage in testing, investigation, or research, as well as non-PACT Act prohibitions on the use of the U.S. mail applicable to CBD products, hazardous materials, and controlled substances and drug paraphernalia.
- In anticipation of the flood of any applicable exception applications that can be expected upon the publication of the final rule, the USPS recognized the need to contemplate changes to its application process in the event that the exceptions are extended to ENDS. Ultimately, the Agency cautions that applicants should expect review of their applications to require substantial processing time, as the review requirements for ENDS sellers are likely to be far more complex than for traditional cigarette and smokeless tobacco sellers.
It would behoove ENDS manufacturers and distributors relying on the mail (or DHL, FedEx or UPS) to deliver products to their business partners to seek out alternative delivery options.
If you have any questions regarding PACT Act compliance for ENDS, contact Azim Chowdhury (chowdhury@khlaw.com). For more information about our Tobacco and E-Vapor Practice visit https://www.khlaw.com/evapor.