Today, we’re dissecting the recent vape mail ban introduced at the end of 2020.
And explaining how it will affect your business moving forward.
Now:
We’ve shared these explanations and recommendations with major players in the industry, so we’re confident they will be useful to you.
Whether you’re new to the industry or a seasoned seller, the insights shared here are relevant to your business.
Background
On December 27, 2020, President Trump signed the “Consolidated Appropriations Act of 2021” into law, which included new provisions and amendments that would greatly impact the vape industry moving forward.
The new provision, labeled as the Preventing Online Sales of E-Cigarettes to Children Act (Vape Act), resulted in two major changes for the vape industry.
First, it required the United States Postal Service (USPS) to create regulations for a mail ban on electronic nicotine delivery systems (ENDS) being shipped through USPS to residential addresses.
Secondly, it amended the Prevent All Cigarette Trafficking (PACT) Act to now include ENDS in its list of regulated products.
This amendment to the Act has been referred to as the “vape mail ban” among consumers and businesses alike.
The broad definition of ENDS in this new law has effectively included not only nicotine vaping devices, but virtually any product that is used to vape any liquid or oil. That means vape pens, carts, liquids, and any accessories intended to operate with them are included.
Please note that nothing mentioned in this post is legal advice. If you’re a business owner who relies greatly on the sale of vape products, we recommend consulting a lawyer with experience in the industry for more specific guidance.
What Is the PACT Act?
The PACT Act is a law passed by Congress back in 2009 intended to prevent illegal tobacco sales.
Although it didn’t come into effect until 2010, the PACT Act also makes shipping cigarettes, smokeless tobacco, and roll-your-own tobacco products through the USPS illegal.
Any company whose operations fall under the PACT Act must register with the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives.
Registration with state tobacco tax administrators is required as well. Companies that sell, ship, or advertise the tobacco products listed above fall under these regulations.
The PACT Act and Vape Products
As of March 27, 2021, any company that sells or ships ENDS to customers in different states may be required to comply with the PACT Act in each state, in accordance with the Preventing Online Sales of E-Cigarettes to Children Act.
In the Vape Act, ENDS products are defined as “any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device [including] an e-cigarette; an e-hookah; an e-cigar; a vape pen; an advanced refillable personal vaporizer; an electronic pipe; and any component, liquid, part or accessory of a device…without regard to whether the component, liquid, part, or accessory is sold separately from the device.”
PACT Act Requirements
In addition to registration with federal and state agencies, the PACT Act has placed further restrictions on the sale and delivery of ENDS products.
All single sales or delivery of ENDS products, as well as the tobacco products mentioned above, must be under 10 pounds.
Sellers are also required to verify that their customers are 21-or-older with valid government ID when the order is placed and when it is delivered.
The delivery service used must not only check ID and collect an adult signature, but also maintain delivery records for at least four years after the sale date as well.
The Act also requires that a monthly report be filed with tobacco tax administrators in every state where the seller ships or delivers these products.
The reports are required to include the address and name of the parties involved in delivering and receiving of ENDS or tobacco products. Additional information required on the report includes the brand and quantity of ENDS or “cigarettes” that were shipped.
Requirements for federal agencies fall under the PACT Act as well. The ATF is required to maintain a list of persons who do not comply with the PACT Act.
Inclusion on this list means carriers will be barred from offering delivery services for products the company sells.
All PACT Act requirements mentioned above take effect for ENDS 90 days from enactment, which falls on March 27, 2021.
For specific requirements regarding PACT Act compliance, visit the ATF Prevent All Cigarette Trafficking (PACT) Act Information Guide.
While the requirement to register and report to federal and state agencies applies to all sales, including B2B, some requirements are only applicable to B2C sales. These requirements include weight restrictions and age verification on delivery.
USPS Vape Mail Ban
As mentioned above, using USPS to ship and deliver ENDS to consumers is prohibited.
The effective date for this mail ban is set to apply to ENDS once the USPS publishes its own regulations regarding how the ban will be enforced and applied.
The Act requires that the USPS publish these regulations within 120 days of the law’s enactment, which sets the deadline at April 27, 2021.
On April 26, 2021, a spokesperson for the Agency told Hemp Industry Daily that the USPS needs more time to finalize the ruling and, “…is unable to publish a final rule by today’s target date.”
Although a new date has not been set, the mail ban is expected to take effect immediately following the regulations set by the USPS.
USPS Vape Mail Ban Exceptions
Although tobacco products cannot be shipped directly to consumers through USPS under the PACT Act, exceptions have existed for B2B tobacco sales.
The specific language of this USPS exception states, “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 …”
On February 19, 2021, the USPS stated its intention to maintain this “B2B Exception” for ENDS products as well.
Ahead of the publishing of its ENDS regulations, on April 19, 2021, the USPS provided a shortlist of what information will be required to apply for exception to the ENDS mail ban set by the PACT Act.
While this guidance is subject to change when the final ruling is published, it does offer specific details regarding what information will be required to file an application for the B2B exception.
However, the guidance also states that the USPS has not yet determined whether or not sellers who ship ENDS products will be offered the exceptions at all.
The USPS will not take any applications prior to publishing its final regulations, but the agency does recommend that companies interested in applying for the exceptions prepare a spreadsheet with the following information:
- 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
In anticipation of the influx of applications for ENDS exceptions, the USPS warns that application reviews may take a substantial amount of time for processing as the requirements set in its final regulations will be quite complex.
FedEx & UPS Response
Earlier this year, the major private carriers, FedEx & UPS, announced their own bans on the delivery of ENDS products. This includes not only direct-to-consumer deliveries, but business-to-business deliveries as well.
FedEx ended shipping of ENDS products on March 1, with UPS following suit on April 5.
Smoke Drop Response
The Smoke Drop team is in active communication with industry partners, legal counsel, and regulatory agencies to remain compliant with the Vape Act and PACT Act.
At the time of writing, USPS has yet to publish its final rule regarding the vape mail ban.
As we await a ruling from the USPS, alternative delivery options are being explored as well as an automated solution for PACT Act tax compliance.
Once more information is available, we will inform Smoke Drop retailers and suppliers of any operational changes that come as a result of this legislation.
Suggestion for Online Vape Shops
Below are suggestions for any business owners with an online vape shop who fear their business is at risk due to the looming mail ban.
Explore Complimentary Product Categories
While virtually all vape products are expected to be banned by the USPS, there are a plethora of adjacent product categories that you can offer to customers. From rolling trays and grinders to water bongs and hand pipes, the vape mail ban doesn’t have to mean the end of your business.
Explore buying into these adjacent product categories to supplement any lost revenue. Wholesale is of course a popular option, but for less investment and risk, consider dropshipping as an alternative. Smoke Drop provides thousands of smoke products and accessories you can add to your current catalog with the click of a button.
Prepare to Apply for Exceptions
If you offer wholesale buying to distributors or other vape shops, consider preparing an application for the USPS B2B exceptions to the vape mail ban. There is no guarantee that the USPS will offer these exceptions, but it’s worth preparing to apply ahead of time to save at least part of your business.
TL;DR
The Vape Act was signed into law on December 27, 2020. It requires the USPS to create regulations around a mail ban on ENDS. As defined by the law, “ENDS” includes virtually all vape products and accessories. The USPS has yet to publish its regulations regarding the vape mail ban. Meanwhile, both FedEx and UPS have enacted their own vape mail bans.
In addition to USPS regulations, the Vape Act amended the PACT Act to include ENDS. The PACT Act requires any business selling ENDS to consumers to comply with its registration and reporting requirements for ENDS sales at the federal and state levels, as of March 27, 2021. These requirements for online retailers include but are not limited to:
- Age verification when the order is placed
- Registration with the ATF and U.S. Attorney General
- Adult signature at point of delivery
- Registration with state and local tax administrators
- Monthly reporting of all transactions to each state’s tax administration
The USPS may offer exceptions to the vape mail ban for business-to-business sales. It has provided some guidance regarding what information may be required on the application for these exceptions, but applications will not be accepted until the USPS’ final ruling is published. There is no guarantee that ENDS will be offered a B2B exception.
Concerned online vape shops should consider both preparing to apply for the B2B exception with the USPS, as well as venturing into new, adjacent product categories with less restrictions, such as, water pipes, rolling trays, and other smoke products.
Final Note
Although much is still up in the air regarding the USPS vape mail ban and alternative carrier solutions, we strongly urge anyone planning to continue the sale of vape products to comply with any and all regulations to remain compliant with current law.
We will continue to update this post as more information becomes available, so be sure to check back for the latest updates on the vape mail ban and PACT Act.
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