New Law Restricts Online Sales of Hemp and CBD Vapes
Online sellers of hemp vapes and CBD vapes are implicated in a new federal law that places stringent requirements on retailers of vaping products.
Introduction- The Vaping Crisis Culminates in a Highly Restrictive New Law
Do you remember the vaping crisis of 2019? Although it may seem like a distant memory to most of us, the crisis resulted in a new law that places stringent regulations on sales of hemp and CBD vape products in the US. This includes restrictions on mailing vapes. You need to be aware of this new law if you produce, distribute, or sell vapes in any form.
According to the US Centers for Disease Control (CDC),“as of February 18, 2020, a total of 2,807 hospitalized … cases or deaths [related to vaping were] reported to the CDC….” Although the main culprit for the hospitalizations and deaths was eventually identified as vitamin E acetate, an additive or cutting agent in some THC-containing vaping products, the panic and confusion sparked by the crisis fueled an already growing movement to regulate and restrict many forms of vaping, including vaping products that do not contain vitamin E acetate. The movement primarily wants to restrict underage access to vapes that contain nicotine. It scored a big victory with the recent enactment of the Consolidated Appropriations Act, 2021 (the “Appropriations Act”), which includes provisions that significantly impact producers and sellers of most types of vaping products. Unfortunately, the new law broadly implicates retailers of hemp and CBD vapes that do not contain any nicotine, tobacco, or vitamin E acetate.
The Act- An Overview
The Appropriations Act, signed into law on December 27, 2020, appropriates billions of dollars in federal funds to numerous agencies and programs. Its 5593 pages covers a wide variety of issues, from coronavirus relief to education to retirement plans to unemployment insurance. The provisions related to vaping are buried in a three-page section starting on page 5136. You can read the provisions below or by clicking here.
The Appropriations Act addresses vaping in two sections. The first section amends an existing law regarding online sales of e-cigarettes to children in several important ways. The second section places significant restrictions on mailing vaping products.
The Act, Part 1- Amendments to the Jenkins Act
The Appropriations Act first addresses vaping by making amendments to the Jenkins Act, originally enacted in 1949. These amendments, collectively entitled, “Preventing Online Sales of E-Cigarettes to Children Act”, become effective ninety days after the Appropriations Act becomes law, namely March 27, 2021.
The Jenkins Act is a federal law requiring any person who sells and ships cigarettes across a state line to a buyer that is not a licensed distributor to report the sale to the buyer’s state tobacco tax administrator. The Appropriations Act amends the Jenkins Act to include “Electronic Nicotine Delivery Systems (ENDS)” among the tobacco products that are covered by its provisions. An ENDS is defined as: “any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device.” It includes the following:
(i) an e-cigarette;
(ii) an e-hookah;
(iii) an e-cigar;
(iv) a vape pen;
(v) an advanced refillable personal vaporizer;
(vi) an electronic pipe; and
(vii) any component, liquid, part, or accessory of [an ENDS] without regard to whether the component, liquid, part, or accessory is sold separately from the device.
An ENDS does not include a product that is—
(i) approved by the Food and Drug Administration for—
(I) sale as a tobacco cessation product; or
(II) any other therapeutic purpose; and
(ii) marketed and sold solely for a purpose described in clause (i).
This comprehensive definition is not limited to products containing tobacco or nicotine. It specifically includes “any component, liquid, part, or accessory” of an ENDS. There are no exemptions for hemp and CBD vapes. The definition also includes a battery, whether sold with or without a vaping cartridge or e-liquid.
The Act, Part 2- Non-Mailability of ENDS
The Appropriations Act also requires the US Postal Service (USPS) to promulgate regulations within 120 days “to clarify the applicability of the prohibition on mailing of cigarettes… to [ENDS].” The effective date of the prohibition on mailing ENDS shall be the same date that the USPS issues its regulations. We can expect to see USPS regulations soon.
How Will the Appropriations Act Affect Hemp and CBD Retailers?
The Appropriation Act applies to all companies that mail hemp vapes, CBD vapes, and all other vaping products to consumers. (It applies to producers of marijuana vaping products, though it is already illegal to mail them since they are federally illegal.) The practical effect of these provisions is to bring sellers of ENDS within the purview of the Jenkins Act and one of its subparts, the Prevent All Cigarette Trafficking (PACT) Act. PACT imposes stringent rules on online sellers of cigarettes, and now ENDS. From a practical standpoint, this means that online retailers of ENDS, including hemp vapes and CBD vapes, must:
- Register with the U.S. Attorney General
- Verify age of customers using a commercially available database
- Use private shipping services that collect an adult signature at the point of delivery
- If selling in states that tax vaping products, sellers must register with the federal government and with the tobacco tax administrators of the states
- Collect all applicable local and state taxes, and affix any required tax stamps to the products sold
- Send each taxing state’s tax administrator a list of all transactions with customers in their state, including the names and addresses of each customer sold to, and the quantities and type of each product sold
- Maintain records for five years of any “delivery interrupted because the carrier or service determines or has reason to believe that the person ordering the delivery is in violation of the [PACT Act]”
Retailers who do not register and/or who do not comply with the shipping and reporting rules of PACT are subject to severe penalties, including up to three years in prison. (I am indebted to journalist Jim McDonald for his compilation of the above summary provisions. I recommend that you read his excellent article on this topic, which you can find by clicking here.) Additionally, retailers must comply with applicable state laws regarding vapes and ENDS.
Retailers of hemp vapes and CBD vapes are now subject to a restrictive new federal law. Failure to comply with it could result in serious consequences. The hemp lawyers at Kight Law Office are well-versed in the new requirements and would be happy to discuss them with you. You may schedule a consultation by clicking here.
January 5, 2021
Rod Kight is an international hemp lawyer. He represents businesses throughout the hemp industry. Additionally, Rod speaks at hemp and cannabis conferences, drafts and presents legislation to foreign governments, is regularly quoted on hemp and cannabis matters in the media, and is the editor of the Kight on Cannabis legal blog, which discusses legal issues affecting the hemp and cannabis industry. You can contact him by clicking here.