Navigating the PACT Act: Implications for the ENDS Industry and Consumers

In recent years, discussions surrounding electronic nicotine delivery systems (ENDS) and their regulatory landscape have gained prominence, with the Prevent All Cigarette Trafficking (PACT) Act at the forefront of these changes. In this blog post, we'll delve into the PACT Act, what it entails, and how it impacts ENDS products. Before we go much further, dear reader, we wanted to give you a short and long version of this blog. We tried to throw in some color, but this article might read dry. If you’re a customer of ours, or anyone in the e-cigarette space for that matter, you may find the information contained within important. Should you like to know the ins and outs of this topic feel free to read the paragraphs below. However, a "Too Long; Didn't Read' version can be gathered from simply reading the emboldened bullets past the wall of text.

In March of 2010, Congress passed the PACT-Act of 2009, which was an amendment to the Jenkins Act of 1949, which required interstate shippers to report all cigarette sales to state tobacco tax regulators, the purpose of which was to combat tax avoidance and illicit sales of cigarettes. (See: Chowdhury, A. C.)  In December 2020, Congress passed the “Consolidated Appropriations Act of 2021”. An amalgamation of different acts and legislative actions labeled as a Covid-19 relief bill, which signed into action stimulus checks, the framework for Covid-19 testing centers, etc. Written on page 2,669 of this 3,126 page bill, an amendment to the PACT-Act broadened the definitions of “tobacco products” to include the definition of “an electronic nicotine delivery system” which “means any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device”. (See: United States, Congress, Committee on Appropriations) Under this broad and vague definition, all electronic aerosol devices, including those that contain no nicotine at all, are considered and taxed as if they were a tobacco product. Interestingly enough, my childhood asthma machine which plugged into an outlet and aerosolized albuterol could be defined as a tobacco product as well under this definition

In addition to all ENDS products now being taxed as tobacco products, the PACT-Act also prohibits the use of the United States Postal Service to deliver any ENDS products directly to consumers. Furthermore, the PACT-Act also requires couriers who deliver cigarettes or ENDS products to consumers to record the photo-ID and adult customer signature at delivery and keep those records for at least four years for every transaction. (See: Chowdhury, A. C) As a consequence to this, almost simultaneously, FedEx, UPS and DHL followed suit and less than a month after formal enaction of the PACT-Act also prohibited the delivery of any ENDS products. 

The main reason that big box private delivery services like UPS, FedEx, and others won’t touch any product that falls in the ENDS definition is due to the additional clerical and logistical work required to gather and maintain those records, as well as keep up with any new deeming regulations or amendments on the space. While they possibly could, the operational and logistical cost and risk just too greatly outweighs the benefit of continuing to service the market. And that, dear readers, is where we at Elevate Evolution come in! If you’ve kept up with us at all before, you know that we’re fairly tenured in the ENDS market, and with close to 30 years of combined experience in the space we’ve dealt with almost all of the abbreviated agencies in some capacity and understand how to follow the (not at all intuitive) rules deemed by the FDA and ATF. Our foremost goal is to continue to stay on the compliant side of federal regulations to ensure that we can continue to service our customers in a professional, safe and clean environment for the years to come.

Key Provisions of the PACT Act:

1. Shipping Restrictions: One of the most significant changes introduced by the PACT Act is the restriction on shipping ENDS products via the United States Postal Service (USPS). With deeming restrictions from all big-box private carriers, this means that businesses engaged in the sale of ENDS products must find alternative delivery services for shipping.

2.Age Verification: The PACT Act requires online sellers of ENDS products to implement robust age verification systems. While age verification is crucial in preventing sales to minors, it has also added an extra layer of complexity to online sales systems.

3.Tax Collection: The act mandates that sellers must register with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and state tax authorities. This is to ensure proper excise taxes are collected. Compliance with tax collection and reporting requirements can be time-consuming and costly for businesses, particularly smaller retailers.

4.Record-keeping: Retailers are required to keep detailed records of sales and submit reports to federal and state agencies.

 Consumer Impact:

1. Limited Access: Shipping restrictions and the overall regulatory landscape have reduced the availability of ENDS products compared to the Market pre-2020, potentially limiting options for those seeking harm-reduction alternatives to traditional tobacco products.
2. Price Changes: Increased taxes and compliance costs have led to higher prices for ENDS products, affecting consumers' choices and expenses compared to the market pre-2020.
3. Quality Control: Stricter regulations could, in the long run, improve product safety and quality standards. As staying in business requires more effort, it may filter those who are either incapable of complying to regulatory standards and/or are less concerned about their product and service quality out of the market.