Legislation

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On December 21, 2020, as part of the omnibus 2021 Consolidated Appropriations Act, Congress passed legislation extending the applicability of the Prevent All Cigarette Trafficking (“PACT”) Act to electronic nicotine delivery systems or “ENDS.”  The legislation, called the ‘‘Preventing Online Sales of E-Cigarettes to Children Act,’’ sweeps ENDS into the PACT Act by amending the PACT Act’s definition of a cigarette to include electronic nicotine delivery systems.

On Thursday, July 30, 2020, Democratic Senator Tina Smith (D-MN) filed a new bill to federally legalize marijuana. The bill, titled the “Substance Regulation and Safety Act,” would “decriminalize and deschedule cannabis” and provide for its regulation by removing both marijuana  and tetrahydrocannabinols from the Controlled Substance Act and giving the Food and Drug Administration the authority to regulate cannabis products in the same manner, and to the same extent, as FDA regulates tobacco products.

In early April, Virginia Governor Ralph Northam signed Senate Bill 918, approving industrial hemp extract, such as cannabidiol (“CBD”), as a food, subjecting it to applicable laws and regulations.  The bill defines “food” as “any article that is intended for human consumption. . . [and] does not mean drugs as defined in [Va. Code] § 54.1-3401.” The bill establishes requirements for the production and manufacture of hemp extracts and authorizes the Virginia Board of Agriculture and Services to adopt regulations regarding contaminant tolerances, labeling, and batch testing.

In October 2019, the California Department of Tax and Fee Administration (CDTFA) issued a blatantly discriminatory Special Notice changing how the CDTFA will apply the excise tax for Other Tobacco Products (OTP) to the wholesaler’s cost basis when an out-of-state California distributor sells tobacco products to wholesalers, retailers, or consumers located in California. When a shipment is made by an out-of-state distributor to an in-state customer (retailer or adult consumer), the tax base will be the “wholesale cost” of the in-state purchaser and not the wholesale cost of the distributor.

The federal government currently imposes federal excise taxes on cigarettes, cigars, smokeless tobacco, roll-your-own tobacco and pipe tobacco. Will Congress add a tax on the nicotine used in electronic nicotine delivery systems?

That is the aim of H.R. 4742, introduced by Congressman Tom Suozzi (D-N.Y. 3d Dist.) and co-sponsored by Congressman Pete King (R-N.Y. 2d Dist.). As introduced, H.R. 4742 was titled as a bill “to amend the Internal Revenue Code of 1986 to impose a tax on nicotine used in vaping, etc.” Congressman Suozzi said in support, “Increasing the cost of vaping will have a direct correlation to decreasing the usage of vaping products.”

In a joint statement, four federal agencies in consultation with state bank regulators clarified that, as a result of the Agriculture Improvement Act of 2018 (2018 Farm Bill), banks are no longer required to file a Suspicious Activity Report (SAR) on customers “solely because they are engaged in the growth or cultivation of hemp.” The guidance was issued by the Board of Governors of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network (FinCEN), and the Office of the Comptroller of the Currency in consultation with the Conference of State Bank Supervisors.

On November 27, Massachusetts Governor Charlie Baker signed An Act Modernizing Tobacco Control into law. The new law restricts the sale of e-cigarettes and nicotine vaping products as well as flavored tobacco products.

Specifically, the law immediately restricts all flavored nicotine vaping products to licensed smoking bars where they may only be consumed on-site. Additionally, the law restricts the sale of all vaping products with a nicotine content over 35 milligrams per milliliter to licensed, adult-only retail tobacco stores and smoking bars.

On October 16, the Montgomery County Council publicly authorized its lawsuit filed in federal court on October 11, against Juul Labs and Altria Group for alleged violations of Maryland and federal law based on claims of aggressive marketing of e-cigarette products to minors.

Council President Nancy Navarro remarked, “The Council authorizes taking legal action against Juul Labs and Altria Group. This lawsuit supports our ongoing efforts to protect our community members from the public health impacts associated with e-cigarette products and vaping.