Vape payment gateway news – updated 05/16/2020 –
This page contains regularly updated information on vape e-commerce based on what we hear from clients, colleagues, and payment industry experts.
As always, perform your own due diligence on any services before you sign up, and please get advice from an attorney before launching an e-cigarette business.
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5/14/20 – FDA news and developments regarding flavored e-liquid
The e-cigarette and vape community has been in an uproar for some time now about the FDA pushing for a ban on all flavored e-liquid except for tobacco and menthol. This has caused some payment processors to back out of the market and others to increase the level of scrutiny their new account underwriter’s place on e-liquid businesses that sell items with nicotine.
We won’t dive into the arguments here. However, the verdict did fall on something of a compromise.
Legislators concluded that convenience stores and other retailers could no longer carry or display cartridge-based e-cigarettes or vaping pods in flavors other than menthol and tobacco. The reason we highlighted these words is that the FDA will allow self-contained, flavored, disposable e-cigarettes, and flavored e-liquids used in open vaping systems sales to continue… with a few conditions.
Vaping360 reports that:
“products introduced after Nov. 8, 2016 (and all prefilled pods and cartridges containing flavors other than tobacco and menthol, no matter when they were first introduced) must receive FDA marketing approval (an approved PMTA) before they can be sold. Every single vaping product, including hardware and all e-liquid (even tobacco-flavored and unflavored), is subject to the PMTA requirement.”
Additionally, the FDA will postpone the PMTA deadline by another four months (until September 9, 2020) for manufacturers of vaping products, as a natural consequence of the impact of COVID-19.
It’s important to note that there is a grace period of 120 days for guidelines to change, and it’s unlikely that this is the last we’ll hear on this topic. We’ll keep an eye on the situation and continue to send updates as they’re available.
In terms of the ability to accept credit cards online for e-liquids, the market has tightened, with many banks looking to avoid any regulatory issues. There are, luckily, still a handful of stable and affordable vape processors out there that can assist site owners that use popular site builders like WordPress, Wix, Squarespace, and Shopify.
5/1/19 – iQOS: a new tobacco heating product entering the tobacco and vape high-risk market
Tuesday saw a new development in the high-risk market that demands attention. Phillip Morris International’s new and unique dry tobacco vaporizer, called IQOS, was approved for sale in the United States by the FDA. This is a potentially massive development, but it’s still too early to see where this will go.
However, for us working in high-risk payment gateway recommendations at Tasker Payment Gateways, this is big news. A whole new category of products is being introduced to the market, a hybrid between traditional cigarettes and vaporizers (which have boomed in popularity over the last ten years).
Let’s dig into what this product is, take a look at the story, and discuss where the dry tobacco vaporizer is likely to be positioned in the high-risk market. Here is what we know so far:
What is this new tobacco device?
As we mentioned earlier, this new product is a hybrid between a traditional, combustible cigarette and a vaporizer. This is maybe not surprising as its creators, Phillip Morris International (PMI), and its sister company Altria, specialize in the two industries, respectively. Altria owns a 35 percent share of the vape giant Juul, and Phillip Morris is one of the world’s largest tobacco manufacturers.
Effectively, the device heats a stick of tobacco in a “Juul-like” device. The IQOS product includes an electronic heater blade that warms the tobacco stick. As a result of the heating chamber, with temperature settings, it doesn’t actually burn the tobacco. This is an entirely new “heated tobacco product.”
Flavors and approach like smoking cigarettes
The device offers two “tastes” – either standard tobacco “non-flavor,” or menthol (if a menthol stick is used). It then releases a nicotine-laden vapor that is similar in taste and nicotine level to a traditional cigarette.
What makes the “heat not burn” tobacco device different from a portable vaporizer?
This heat-not-burn tobacco device is similar to vaporizers in that it’s a pen-shaped electronic device. It also comes with a battery pack – improving the device’s battery life – that gives off a little bit of a stylistic throwback to a cigarette case. It’s trying to distinguish itself in style and appeal from vape products.
Another aspect that sets this type of product apart is that the heated tobacco-stick system tastes like tobacco. However, compared to traditional cigarettes and cigars, it has fewer harmful chemicals.
It’s also distinct from vape products in that it contains real tobacco with nicotine, as opposed to liquid nicotine extracts suspended in an e-liquid.
Where is this product likely to be positioned in the high-risk market?
While Phillip Morris is petitioning the FDA for permission to label the product as a “reduced-risk alternative to smoking,” this is still in the pipeline. However, it’s very much being seen as an alternative to regular cigarettes, allowing cigarette smokers to find a way to wean themselves off smoking. However, the FDA has ruled that the product is still under the “cigarette” category.
This is significant for a couple of reasons that we’ll discuss below.
Advertising and marketing restrictions
As the IQOS product is still under the cigarette label, those who sell (or plan to sell) this product need to submit advertising and marketing plans for review. This also means that various warning labels need to be included, warning customers that nicotine is addictive.
Federal and legal restrictions
While it’s not extremely clear at this point what will happen in the future, as of now, pretty much the same legislation and restrictions will apply to this type of heated tobacco product as to regular cigarettes. This will pose some real marketing challenges, but it doesn’t make the sales process impossible. Let’s reiterate: these are very early days for a brand new product type. Before we can make any assumptions on the scope and implementation of selling this product, we need to see where it settles within the high-risk market.
What’s the scoop on this new tobacco device?
To sum it all up, Phillip Morris International got FDA approval for the sale of its new product called IQOS on Tuesday, April 30, 2019.
Among the distinct elements of the FDA’s filing was that the product is different from both cigarettes and vaporizers.
One of the main reasons for distinguishing the IQOS heat-not-burn tobacco device from a vaporizer is in no small part due to the media storm surrounding vape usage among teenagers. We covered this in late 2018 if you want to read more about this back-and-forth from the FDA regarding vape sales you can scroll further down this page.
However, the IQOS product is very much categorized as a tobacco product and is considered a type of cigarette, even though it releases fewer toxic chemicals and carbon monoxide (seeing as the tobacco stick isn’t lit). This is a win for PMI, as they now enter the market with a tested product that has performed well in Japan and Italy, among other places, so far.
“The FDA’s decision to authorize IQOS in the US is an important step forward for the approximately 40 million American men and women who smoke,”
“Some will quit. Most won’t, and for them, IQOS offers a smoke-free alternative to continued smoking.” Smoke-free smoking… It sounds intriguing.
Where does that leave us?
These are still very early days to land on any clear-cut assumptions about what this product means for the high-risk cigar and vape market overall. However, it certainly looks to be an interesting development, as it’s positioned right down the middle between cigarettes and vaporizers.
For us, this is an essential change for several reasons, most pressingly as we have a vast number of vape and premium cigar clients that we offer high-risk payment gateway and merchant account recommendations to. While we can only speculate at this time what might work for the sale of IQOS products, we look forward to seeing how this dry tobacco vaporizer development unfolds soon.
It’s too early to recommend high-risk payment gateways for the IQOS device as of yet, but if you need a high-risk payment gateway for vape or premium cigar sales, we’re here for you. Simply fill out our contact form, and we’ll be in touch as soon as possible.
12/5/18 – Are we seeing the next step in the CBD and vape market?
Altria is in talks about buying the Canadian marijuana producer Cronos Group. As some of you might know, Altria is the tobacco giant behind Marlboro (among others).
On top of this, it’s also been reported that Altria is considering expanding its business into the vape market as well by acquiring the controversial vape powerhouse, Juul Labs. Seeing such a commercial giant move into these burgeoning markets would be a very interesting development.
What would this mean for the vape and CBD industries?
Altria’s buy-in of Juul and Cronos Group is not completed or finalized, so we can only speculate at this point. It is fascinating news, however, and the introduction of the tobacco giant’s strength could be an up-and-coming development from a lobbying standpoint. If you’ve been following our articles on the vape industry, you’ll know that there’s been quite some back-and-forth on regulation for vape products and sales.
What to expect for vape e-commerce sales
We recently reported on the FDA’s actions regarding vape sales, both for e-commerce sites and brick-and-mortar stores (below). In a nutshell, there’s been a crackdown on flavored e-juice sales. For e-commerce sites, it’s important to choose carriers that perform ID checks on delivery.
With Altria stepping into the picture, however, the vape and e-liquid market would get the benefit of their experience influencing regulators of highly scrutinized products. Juul has grown very quickly over the last year and a half and managed to reach “decacorn” status faster than Facebook did.
In other words, while the financial muscle of Altria might not be the biggest draw here, it should help align the production of e-juice with the FDA. Ideally, this would result in a less-turbulent environment for selling vaporizers and e-liquid online.
What to expect for CBD online sales
Over the last couple of years, there’s been quite a lot of movement in the legal CBD sales market, and there are now plenty of ways for American and Canadian merchants to sell CBD products online. We’ve helped many legal hemp oil and CBD merchants find high-risk payment gateways and merchant accounts. From our perspective, if Altria acquires or buys a majority share of Cronos Group, this could be a substantial development for the industry as a whole.
It would be a significant change both here and abroad, which can only help provide some stability and experience to the still-new industry. While Cronos Group is by no means a small company themselves, seeing the American tobacco giant diversify into the CBD industry would still be a big change.
Altria aims for a big move into the CBD and vape business
We want to be careful not to overanalyze this potential move. That said, one of the biggest American tobacco giants moving into these industries would be quite a vote of confidence for such relatively new markets. For most of our clients, the big question would be what this might mean for CBD and vape e-commerce site owners.
From what we can see, Altria ought to provide some experience and weight on the production side of things, rather than becoming a competitor of niche and specialty sites. In other words, a highly experienced manufacturer of high-risk products is about to enter the market for both vape and CBD products. This should help stabilize the market, but only time will tell. It certainly looks to be a move in the right direction for both industries, ideally leading to it being easier for high-risk merchants to sell their products online.
High-risk payment gateway recommendations for your vape or CBD site
We hope that those of you who sell CBD products or vaporizers and e-juice online are as positive as we are about this development. This could prove to be a very good move overall for all high-risk-business owners in these regulated industries.
If you’re looking for a high-risk payment gateway and merchant account recommendation, we’re always available for a talk about your business. We have a wide network of industry contacts and can find the best fit for your needs. We’ve helped hundreds of merchants set up vape, legal hemp oil, and CBD product payment gateways. Feel free to get in touch; we’re always available for a no-commitment talk about your high-risk payment options.
If you would like to learn more about accepting credit cards for CBD on WooCommerce, Wix, Squarespace, or Shopify, please check out our “Selling CBD Online 101” page.
07/20/17 – House moves to reduce FDA burden on vape and premium cigar merchants
Although our specialty lies in helping online merchants with their payment gateways and high-risk merchant account options, we are often asked for our take on bigger issues that affect our clients. Issues, such as pending FDA regulations, can affect both merchant types dramatically. Because of this, we are especially in tune with the news as it relates to the FDA and Congress.
At the moment, there seems to be good news for both industries coming from Congress. This is especially true of the House Committee on Appropriations as it relates to the proposed regulatory burdens placed on these two regulated industries.
On the whole, the news coming from Congress seems to be especially good as it relates to the proposed regulatory burdens placed on regulated online industries such as vape and cigar. This is especially true when it comes to regulations proposed or enacted by the House Committee on Appropriations.
Electronic cigarette FDA grandfathering proposed for products currently on the market
The United States House Committee on Appropriations recently voted on the part of the 2018 agriculture appropriations bill that particularly affects vape retailers. This component of the bill eliminates the requirement that vape products put on the market after 2007 be forced to go through the expensive and difficult FDA approval process. Republicans and some Democrats voted down committee members who attempted to block the loosening on vape regulations. Although some Democrats voted against this attempt, the vote was mainly split along party lines. Diverging from his party stance, Rep. Sanford Bishop (D-Georgia) was a co-sponsor of the proposal and stated, “E-vapor products are 95 percent less harmful than combustible cigarettes.” You can read more about this story in this great piece by the Convenience Store News website.
What does this FDA move mean for the vape market?
This policy move gives the e-cigarette and vape market breathing room and time to mature as an industry. It follows what has happened in England where the Royal College of Physicians advised the UK government that it is;
“in the interest of the public to promote the use of e-cigarettes…as widely as possible as a substitute to smoking.”
This regulatory move will enable vape merchants to sell new products without having to jump through hoops that are as inhibiting or overly complicated as initially feared.
Will premium cigars be spared from FDA regulations by the House?
In addition to loosening regulations against vape e-commerce, the House Committee on Appropriations is also making changes to legislation that will affect premium cigar sellers. Certain language within the agriculture funding bill would dramatically loosen proposed FDA restrictions on premium cigar sales.
The CRA (Cigar Rights of America), an industry trade group, released a statement that in part read;
“Congress continues to recognize the unique differences between premium cigars, and this language is a symbol that any effort by FDA to regulate them would run contrary to the intent of Congress.”
What does the FDA regulation mean for online vape and premium cigar merchants?
With loosening regulations on two high-risk-associated industries, it is clear there is room for opportunities and growth. These changes will likely encourage businesses and entrepreneurs who want to enter the high-risk online vape or premium cigar market.
While vape and more traditional tobacco sales alike are growing industries, any online merchant wishing to sell these products needs to be aware of the relevant regulations and restrictions imposed by the government. Since these laws and regulations are often changing, it’s important to do your research and be apprised of your legal obligations when selling these products online.
Although we cannot offer legal advice, we will be able to assist you in maneuvering the card-processing payment gateways available for your online vape and premium cigar business. Of course, should you need it, we are happy to recommend and connect you with industry-relevant lawyers based on customer recommendations. We hope that this information offers a good starting point for you and your business.
01/24/17 – FDA Vape Regulations – Are You Selling Drugs? –
Legal spotlight: FDA, CDER, and electronic cigarettes
Below is a great update on vape products and the CDER from Attorney C. William Turnbow, Esq., of Turnbow Law Firm. We here at Tasker Payment Gateways provide payment gateway and e-commerce products, series, advice, and recommendations; we do not offer legal advice, so please, if you are looking for an attorney’s advice on your new or existing business, feel free to reach out to our friends at Turnbow Law Firm directly.
The Center for Drug Evaluation and Research (CDER)
CDER is a division of the US Food and Drug Administration (FDA) and is tasked to ensure that safe and effective drugs are available to improve the health of people in the United States. It regulates over-the-counter and prescription drugs, including biological therapeutics and generic drugs. Drugs and medical devices are defined as;
“articles (other than food) intended to affect the structure or any function of the body.”
Under this broad definition, according to the CDER, “drugs” do not only include medicines but also fluoride toothpaste, antiperspirants, dandruff shampoos, and sunscreens.
Tobacco products are explicitly excluded from CDER’s definition of a “drug.” However, in 2011, the US Court of Appeals for the District of Columbia ruled in Sottera, Inc. v. FDA, that nicotine-containing products that are marketed for “therapeutic purposes,” for example, to quit smoking (cessation), can be considered drugs and thus regulated through the CDER. The key is what the product’s intended use is, which is defined by its marketing. If the intended use involves the diagnosis, cure, mitigation, treatment, or prevention of a disease, there is an argument that the nicotine-containing product should be designated as a “drug.”
There are currently five types of FDA-approved nicotine-based therapies on the market as smoking cessation aids – the nicotine patch, gum, lozenge, spray (Rx only), and inhaler (Rx only). There are also two FDA-approved non-nicotine-based therapies (both by Rx only): bupropion (Zyban) and varenicline (Chantix).
The process to become approved as a “drug,” according to the CDER and the FDA, is extensive and time-consuming. If you feel your product may qualify as a “drug” in that it is being marketed for smoking cessation or other therapeutic purposes, contact TurnbowLawFirm.com. They can begin the application process and ensure your marketing and labeling campaign is compliant with the law.
Disclaimer: The information above is for informational purposes only and should not be construed as legal advice. We are not lawyers – you must seek the advice of a qualified lawyer.
01/24/17 – Legal spotlight: Vape merchants – are you operating within the rules?
The update below was written by C. William Turnbow, Esq., a California business attorney whose firm specializes in assisting small businesses with their legal needs. Frequently, our e-cigarette and vape e-commerce payment gateway clients tell us of the pains they have in figuring out how to get and/or stay compliant with the seemingly yearly changes in the laws regulating their products. Their frustration is completely understandable, as the information they need is often scattered throughout multiple sources. Therefore, we have asked Mr. Turnbow to write some articles to assist e-cigarette and vape retailers and/or manufacturers to more easily navigate the complex and ever-evolving rules and regulations of their industry. This article provides information specifically regarding the US Food and Drug Administration (FDA). We hope it is of use.
If you have any questions about the following information or have any other legal business needs, please do not hesitate to contact Will Turnbow at TurnbowLawFirm.com. Our e-commerce clients have found him fast, reasonable, and well versed in their industries.
If you are looking for high-risk payment gateways, merchant account recommendations, chargeback mitigation, or general e-commerce advice, please contact us at Tasker Payment Gateways here.
ELECTRONIC NICOTINE DELIVERY SYSTEMS (ENDS)
As of 2016, the FDA, through the Center for Tobacco Products, regulates the manufacture, import, packaging, labeling, advertising, promotion, sale, and distribution of ENDS, including components and parts, but not accessories.
“software or an assembly of materials intended or reasonably expected to alter or affect the tobacco product’s performance, composition, constituents, or characteristics; or to be used with or for the human consumption of a tobacco product.”
In basic English, that means:
- A glass or plastic vial container of e-liquid
- Certain batteries
- Cartomizers and clearomizers
- Digital display or lights to adjust settings
- Tank systems
- Drip tips
- Flavorings for ENDS
- Programmable software, etc.
You are considered a retailer if you sell ENDS and/or its components or parts. If the FDA classifies you as a retailer, you must satisfy the following requirements:
- Check photo ID of everyone under age 27 who attempts to purchase e-cigarettes and other ENDS
- Only sell e-cigarettes and other ENDS to customers age 18 or older
- Cannot sell e-cigarettes and other ENDS in a vending machine or self-service display unless in an adult-only facility
- Cannot give away free samples of e-cigarettes and other ENDS, including any of their components or parts
Beginning on May 10, 2018, additional laws come into effect, for example:
- Cannot sell or distribute e-cigarettes or other ENDS without a health warning statement on the package
- Cannot display advertisements for e-cigarettes and other ENDS without a health warning statement, etc.
You are considered a manufacturer if you make, modify, mix, manufacture, fabricate, assemble, process, label, repack, relabel, or import any ENDS and/or their components or parts. You can be both a retailer and a manufacturer. If the FDA classifies you as a manufacturer, you must satisfy the following requirements:
- Report user fee information
- Pay user fees
- Register your establishment and submit a list of products, including labeling and advertisements
- Submit tobacco health documents
- Submit ingredient listing
- Apply to market your tobacco product via one of three pathways: Substantial Equivalent (SE), SE Exemption, or Premarket Tobacco Product Application (PMTA)
- Include required warning statements on packages and advertisements
- Submit warning plans for smokeless tobacco and warning plans for cigars
- Submit quantities of harmful and potentially harmful constituents
- Submit a Modified Risk Tobacco Product Application if you would like to market your product as having reduced risk or harm
As you can see, there are numerous regulations just to become compliant with the FDA, and the above is not an exhaustive list. Additionally, be sure to seek guidance in satisfying the requirements of your local state government agencies, which may vary by jurisdiction.
If your product is marketed for therapeutic purposes (e.g., to help people quit smoking), then it is regulated through the Center for Drug Evaluation and Research (CDER), which has different rules. Please click here for more information.
Disclaimer: The information above is for informational purposes only and should not be construed as legal advice.
Additional comments from Tasker Payment Gateways LLC
Beyond the general information listed above by Attorney Turnbow, we want to remind you to be extremely diligent in terms of your images and marketing. Do not market in a way that attracts the interest of children, and do not violate the trademarks of other companies. Be smart and consult an attorney. Also, take serious steps to make sure your customers are of age. If you are looking for a third-party age verification service, we have heard great things about AgeChecker.net.
6/8/16 – OMB Eliminates Part of Crushing FDA Vape Rule –
Flavored electronic cigarette language deleted from Final Deeming Regulation
This week the White House Office of Management and Budget (OMB), to the complete surprise of many – but not to insiders – removed the language in the FDA’s final rules that would have prohibited any US merchant, either online via a payment gateway, or retail, from selling any flavored vape product without costly, lengthy FDA approval.
By all accounts, the folks at the FDA are very disappointed that the OMB took action to strike this rule, and are likely bracing for new changes due to pending lawsuits and pressure from constituents.
Need more information?
We try hard to stay up on the news and help keep clients, partners, and even non-clients up to date, especially in terms of how rapid industry changes affect online vape merchants and other high-risk merchants’ ability to set up payment gateways, accept credit cards, process data, and mitigate risk.
Please contact us anytime with any questions or fill out the short form below to get started accepting credit cards on Wix, Squarespace, WooCommerce, Shopify, BigCommerce, or Magento.
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