Vape payment gateway news – updated 02/21/2022 –
This page contains regularly updated information on vape e-commerce based on information 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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02/21/2022 FDA’s approval of vape product eases vape friendly payment gateway and merchant account approvals
The impact of a decision last fall has greatly smoothed the path for new and existing vape websites, delivery services, and retail shops when it comes to vape payment gateways and merchant account approvals.
For the first time in history, the FDA officially authorized the marketing and sale of a vape product in the United States. In October 2021, manufacturer R.J. Reynolds received authorization to sell its e-cigarette Vuse Solo, along with its tobacco-flavored cartridge. The company had also requested authorization to market other flavored cartridges along with it, but this request was denied.
This decision by the FDA has affected payment processors in a positive way. We are seeing vape website owners approved relatively quickly and easily for payment processing as long as the claims and marketing on their websites are fully in line.
Marketing in a way that entices children to vape must be avoided at all costs
As we’ve discussed before, one of the biggest concerns about allowing the sale of e-cigarettes is that cartridges with flavors, especially those related to candy or other sugary foods, could appeal more to teens and induce more younger people to start using tobacco products. The FDA’s decision was influenced by data that R.J. Reynolds provided which showed that some people who were heavy smokers were more likely to quit using tobacco products or reduce their use after switching to e-cigarettes. In seeking FDA approval, manufacturers of e-cigarettes must demonstrate that their products are “appropriate for the protection of the public health.”
This approval is controversial and surprising to many, but it opens the door for more businesses to begin marketing and selling these e-cigarettes within the boundaries of tobacco marketing guidelines, though still influenced by the PACT Act, as discussed below.
Vape friendly payment processing is somewhat straightforward in early 2022
This decision will also allow us to more easily place online vape merchants with reliable payment gateways and make recommendations for stable and affordable merchant accounts. If you are looking for payment processing, check out our guide for vape and e-liquid payment gateways. If you have questions about how to accept payments online, or if you just need some free and friendly advice, reach out to us any time.
09/01/2021 Don’t read too much into the FDA’s denial of 55,000 vape marketing applications – it was for 3 companies total
You will see the headlines “55,000 vape manufacturer’s marketing applications denied by the FDA,” but what you will not find in the headline is that all of those 55,000 applications were submitted by a total of 3 manufacturers.
As we have discussed below over the years, the FDA was granted the authority to review all vape products on the market since 2007 to ensure that they have a benefit to adult smokers that outweighs any risks to both adults and children. Also, as we have detailed on this page in the past, the FDA has effectively banned non-traditional flavors in cartridges and prefilled devices. Some of the applications declined had flavors like Apple Crumble and Cinnamon Toast Cereal!
Flavors that could attract the interest of children have already been effectively prohibited by all major US credit card processors for years, so we expect the impact of these 3 companies’ declined applications to be negligible in terms of merchant account approvals for vape businesses.
We do expect many more declined FDA marketing applications down the road as the standard for approval is high. This quote is from Mitch Zeller, J.D., director of the FDA’s Center for Tobacco Products.
“The burden is on the applicant to provide evidence to demonstrate that the marketing of their product meets the statutory standard of ‘appropriate for the protection of the public health.’ If this evidence is lacking or not sufficient, the FDA intends to issue a marketing denial order, which requires the product to be taken off or not introduced to market.”
PACT Act still a bigger current threat to vape merchant processing applications
Even with more denials on the way, the biggest challenge for online vape sellers is still the looming implementation of the PACT Act and its impact on web-based merchants and retailers hoping to receive shipments. Although the rule banning the shipment of effectively any vape-related device has yet to be formalized, industry insiders are still bracing for what they consider its inevitable rollout at some point down the road.
B2B vape merchants working on their PACT Act exemption applications – as well as all other vape businesses – should secure qualified legal advice to avoid legal or regulatory issues down the road.
Note: If you would like some free friendly advice from a merchant account and payment gateway expert who specializes in vape payment processing, please contact us any time. You can also read the news feed below and check out our Vape Payment Gateways and Merchant Accounts Guide to learn more about processing credit card payments for vape products online.
FDA press release: https://www.fda.gov/news-events/press-announcements/fda-denies-marketing-applications-about-55000-flavored-e-cigarette-products-failing-provide-evidence
USPS Delays Regulations: https://www.leechtishman.com/insights/blog/usps-delays-regulations-but-severe-restrictions-on-mailing-vaping-products-loom/
04/30/2021 Is it time for B2B vape sites to work on their PACT Act exemption applications?
The USPS’s proposed rules for the implementation of the vape mail ban include exemptions – or what they refer to as exceptions – for vape companies that ship B2B products or vape products intended for testing.
Since electronic nicotine delivery systems (ENDS) were added to the definition of “cigarettes” under the PACT Act, the US Postal Service has been working on implementing the final rule that determines whether or to what extent ENDS products may continue to be shipped through the mail.
Certain exceptions, such as for business-to-business sales, are clearly outlined in the proposed rules (see 03/29/2021 update). As such, business-to-business vape merchants who plan on continuing to use the postal service will need to apply for approval first.
While waiting for the rule to be cemented into final regulation, many business owners might, understandably, wish to get a head start on submitting their application for an exception to allow them to continue to send ENDS products through the mail.
We expect many payment processors to require proof of application at some point this year in order for B2B vape websites that ship via the USPS – as opposed to local couriers – to be able to accept credit cards.
B2B vape mail ban exception applications cannot be submitted yet but you should still prepare
The USPS is unable to accept early applications before the final rule is set in stone. The postal service anticipates a large volume of applications due to how decentralized the vape industry is in comparison to the tobacco industry, which the PACT Act historically covers.
So, while the USPS is contemplating options for streamlining the way they administer applications, the expected volume may, unfortunately, cause the application process to take longer than usual.
Any business that plans to apply for a B2B PACT Act exception should compile the necessary documentation now, so they have it ready when the time comes to submit it.
Here is a link to the USPS PACT Act exemption form 4615 that B2B businesses have historically used: https://about.usps.com/forms/ps4615.pdf
Below are the documents and information B2B vape merchants should have on hand so they can submit an application as quickly as possible, once the USPS opens the floodgates.
According to the proposed rule on the Federal Register:
Prospective applicants for the business/regulatory purposes exception should prepare a spreadsheet that contains the following data elements with respect to each sender and recipient address that they intend to identify in their exception application:
a. Business or governmental entity name.
c. The Postal Service retail or business mail acceptance office(s) where each intended sender would tender shipments.
d. The Postal Service retail office(s) where each intended recipient would retrieve shipments.
e. A description of the business or governmental entity (e.g., battery manufacturer, retail store, wholesale distributor, testing laboratory).
f. 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).
g. For each sender or addressee engaged in testing, investigation, or research, the entities authorizing the conduct of such activities; the expiration date (if any) of such authorization; and a brief statement of the subject of each authorization (e.g., health effects of flavor substances, medical effects of cannabidiol (“CBD”), battery safety testing).
h. The brand name and a description of each product intended to be shipped by each sender or to each addressee.
i. Whether any identified products or other intended shipments from each sender or to each addressee contain lithium batteries, nicotine, CBD, or tetrahydrocannabinol (“THC”).
j. For products containing nicotine or THC, the intended quantity of the product per shipment and the concentration of nicotine or THC.
k. For products containing CBD with a THC concentration not exceeding 0.3 percent, whether the CBD derives from hemp.
If you have any questions about accepting credit card payments for vape sales online, please check out our Vape and e-liquid payment gateways information page.
03/29/2021 Are wholesale vape shipments exempt from the PACT Act mail ban?
According to the Federal Register, which is the official online register of the United States government, the proposed US Postal Service rules do exempt business to business vape sales from the USPS shipping ban as outlined in the updated PACT Act. This is terrific news for online vape wholesalers.
The language in the updated rules is below. Keep in mind, the changes to the law add vape into the cigarette language, so the references below to cigarettes would also apply should the rules be implemented as written.
Current Mailing Restrictions on Cigarettes and Smokeless Tobacco
Currently, 18 U.S.C. 1716E bans the mailing of cigarettes and smokeless tobacco except in narrowly defined circumstances, as described below.
- Noncontiguous States: Intrastate shipments within Alaska or Hawaii;
- Business/Regulatory Purposes: Shipments transmitted between verified and authorized tobacco industry businesses for business purposes, or between such businesses and federal or state agencies for regulatory purposes;
- Certain Individuals: Lightweight shipments mailed between adult individuals, limited to 10 per 30-day period;
- Consumer Testing: Limited shipments of cigarettes sent by verified and authorized manufacturers to adult smokers for consumer testing purposes; and
- Public Health: Limited shipments by federal agencies for public health purposes under similar rules applied to manufacturers conducting consumer testing.
Applicability of Exceptions
The existing Noncontiguous States, Business/Regulatory Purposes, and Certain Individuals exceptions appear to be articulated in terms that can apply to ENDS as well as to cigarettes and smokeless tobacco. As such, the proposed use of the umbrella term “tobacco products” in the rules for each exception would automatically apply all such existing rules to ENDS. Commenters are nonetheless invited to identify any potential anomalies or other problems that this approach might create and to recommend solutions for such problems.
Tasker Payment Gateways LLC offers vape merchant free advice and helpful recommendations. If you would like to learn more about setting up an online vape payment gateway to accept credit cards for your vape store, please contact us.
03/29/2021 – Vape processing in 2021- PACT Act drives interest in online vape delivery
Since Congress made sweeping changes to how vape products can be sold and shipped, online e-commerce vape and e-liquid websites have been working incredibly hard to figure out their next steps.
For retail vape stores that also have an online presence, one step that many are taking to mitigate the damage to their business caused by the PACT Act is to offer online ordering and face-to-face deliveries.
The updated PACT Act, detailed below, created huge liabilities for online vape stores and also caused the elimination of nearly all major shipping services, either directly, as in the USPS, or indirectly, as was the case with UPS or FedEx.
How can online vape retailers supply customers if they can’t ship using the post office, FedEx, or UPS?
Many vape retailers and online stores have responded by switching from direct to consumer, traditional online fulfillment to a model where customers order online but then schedule a local delivery directly with the vape store.
The pandemic opened up many vape retailers’ eyes to the possibility of online ordering and local delivery. Many alcohol businesses, marijuana dispensaries, and cigar shops began to offer online ordering with local delivery once their retail locations closed down to in-person traffic in early 2021. Vape merchants hamstrung by new regulations are rapidly following suit.
Vape payment gateways: https://taskerpaymentgateways.com/electronic-cigarette-online-processing/
PACT Act and the US Postal Service: https://tobaccoreporter.com/2021/03/15/u-s-mail-ban-forcing-vape-shops-out-of-business/
UPS exits vape shipping: https://www.ups.com/us/en/help-center/packaging-and-supplies/special-care-shipments/tobacco.page
Federal Express tobacco policy encompasses vape: https://www.fedex.com/en-us/shipping/guidelines-for-shipping-tobacco.html
02/23/2021 – Does the PACT Act (vape mail ban) impact B2B vape wholesalers?
Historically, the PACT Act, which arrived originally on the scene in 2009 as an update to the Jenkins Act of 1949, did, in fact, exempt B2B sales. At that time, though, the act did not encompass online vape sales.
Azim Chowdhury, a partner at the law firm Keller and Heckman since 2010, specializes in tobacco, drug, and food law. Mr. Chowdhury wrote an excellent article in reaction to the 2021 Act on the National Law Review website. He stated the following:
“The PACT Act has historically exempted businesses-to-business deliveries from the USPS ban. Specifically, the USPS ban does not extend to tobacco products “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….” See 18 U.S.C. § 1716E(b)(3)(A). Companies seeking to use USPS for business-to-business deliveries must first submit an application to the USPS Pricing and Classification Service Center and comply with several other shipping, labeling, and delivery requirements. The Postal Service’s yet-to-be-published clarifying regulations could address whether business-to-business deliveries will remain permitted for ENDS.”
Attorney Chowdhury’s comments suggest to us that the USPS portion may still be a bit up in the air for B2B vape sites. Still, he makes no mention of the B2B impact of other provisions of the act, which include registration with the US Attorney General, along with other onerous regulations as they relate to online sale and shipment of all vape-related goods, including such benign items as batteries. You can read the complete article on The National Law Review website.
How does PACT impact B2B credit card processing for online vape businesses?
As of the writing of this update, payment gateways and merchant account providers are still approving vape credit card processing applications, although we do expect a significant tightening of the approval process very soon.
02/03/2021 – The Prevent All Cigarette Trafficking Act will permanently change the online vape business
Congress has recently passed the expanded Prevent All Cigarette Trafficking Act or Jenkins/PACT act, which severely impacts website owners that sell vape products. Because this act is so new and does not kick in until late March, we strongly encourage anyone currently selling or planning on selling vape products to site with a qualified attorney immediately.
Due to the complex restrictions and ever-changing regulatory environment, we feel that qualified legal counsel is essential. We also expect payment processors to react to this new law rapidly and feel that online merchants should plan on possible payment processing restrictions related to selling vape online.
Please reach out to us directly for an update on what we are hearing from payment processors, brokers, software companies, and independent merchant account salespeople.
Here is an article on what vape merchants need to know from the well-renowned legal blog, JD Supra. Some of the highlights are; a ban on shipping vape through the postal service, which comes on the heels of online vape bans from DHL, FedEx, and UPS; complex sales tax provisions; requirements that all sellers must register with the Attorney General of the United States via the ATF and also with various state tobacco tax departments.
We will work to stay up to date on this topic and post updates as they become more clear.
The FDA’s renewed focus on ENDS product review enforcement means that vape merchant processors are reviewing applications a bit more carefully.
However, the renewed focus on retailers’ need to ensure they only sell legal tobacco products does raise some new questions – specifically, will this have an effect on the sale of premium cigars via the internet?
Avoid cigarette-like products when selling cigars online
While selling cigars is a shifting landscape, cigars can be sold online. That is, as long as they are not “cigarette-like.”
The FDA refers to the approved products as “premium cigars.” Premium cigars must have the following qualities:
- Wrapped in whole tobacco leaf with a tobacco binder
- Contains at least 50 percent (of the filler by weight) long-filler tobacco (i.e., whole tobacco leaves that run the length of the cigar)
- No filter or tip
- Does not have a flavor other than tobacco
- Contains only tobacco, water, and vegetable gum
- Falls in line with “premium” weight classifications (at least 6 pounds per 1,000 units)
However, there are payment gateways and merchant accounts that used to accept premium cigars that no longer do. This is because cigars brought to market after August 8, 2016, must go through the same type of review process as vape products (as we reported below on 09/10/20). The good news is that there are still great alternatives out there for cigar e-commerce site owners. It’s just important to set up your premium-cigar-friendly processing early and correctly.
What we recommend for online cigar shop owners
We advise cigar website owners to start the payment gateway and merchant account application process at least a few weeks before they need to launch, or earlier if possible. This allows for some back-and-forth and gives you time to properly test the payment processing.
The good news for cigar merchants is that there is a lot of grandfathering involved (due to the length of time most cigars have been on the market, unlike vape products). As a result, thousands of products are already cleared and verified ready for sale.
09/10/2020 – FDA to publish ruling on PMTAs and their effect on your processing options
Selling vape products and e-liquid can be very straightforward – or it can be confusing. It all comes down to the products you sell, whether the FDA received a Premarket Tobacco Product Application (PMTA) for the product(s) and their ruling. This will undoubtedly influence which products different payment processors will accept in the future. If you’re having a hard time finding affordable, stable payment gateways and merchant accounts for your online vape shop, please read on below or contact us here.
The FDA’s review and publishing of PMTAs’ impact on vape payment processing
There’s been an important development in the vape e-commerce space, as the FDA is about to publish their review of a massive number of the PMTAs they received. The implication here is that this will clearly outline what products are legal to sell going forward.
We expect that this will inevitably influence processors, as the list will serve as a basis for determining which electronic nicotine delivery systems (ENDS) they allow online merchants to process credit cards for.
What can we expect, and when?
While the FDA is under a court order to assess company-submitted data and applications within the next year, in order to decide what products and flavors can be legally sold, there are some immediate consequences.
For example, the agency states that applications that are complete and accepted may continue to sell their products for a year. This implies a running course of product reviews that may lead to further reviews or rejection – ultimately impacting what processors can process payments for.
In short, there will be some uncertainty in the year to come for processors and online vape shoppers alike, as the FDA rules on pods and refillable-tank vaping products.
Keep informed and get expert advice
At Tasker Payment Gateways, we help vape business owners accept credit cards online, and we’ve served a variety of high-risk business types since 2002. As this situation develops, our biggest recommendation to vape e-commerce store owners is to keep informed and do not hesitate to get advice from legal and payment experts. While we can’t offer legal advice, we can certainly help with the latter.
Our connections in the high-risk credit card processing and payment gateway space make us uniquely situated to understand the landscape – even as it shifts. If you need to ensure you’re able to accept payments online through your payment gateway, don’t hesitate to get in touch. We’ll be able to find the payment gateway and processing options that work best for your unique business.
07/17/2020 – Vape flavors – whether disposable, e-liquid, or pod – and manufacturing affect your ability to accept credits cards
Finding affordable, stable payment gateways and merchant accounts for the online sale of vape products and liquids can be very simple – or a bit more complex – depending on the type of product you sell, what flavor it is, and who makes it.
Your vape product matters, and so does the manufacturer when it comes to online payments
Because online vape/e-cig payment processing is continually changing, this week we gathered the latest information from underwriters, agents, and processor representatives.
Below, we describe their take on which products are simple to set up with a payment gateway and which take a little more expertise and finesse.
Are disposable vapes, flavored or otherwise, easy to get payment processing for?
Yes, generally speaking, disposable e-cigarette (ENDS) merchant accounts are very straightforward as long as the seller is not also the manufacturer.
Due to FDA regulations and pending enforcement action, the ability to set up a merchant account for a disposable e-cigarette manufacturer requires more steps and complexity than it would for an online reseller.
Accounts for vape/ENDS manufacturers are available. They simply take more work to establish.
Disposable-ENDS-website owners are able to obtain reliable payment processing even if they offer flavored e-cigs. Flavored products must be marketed carefully, though. It is essential that no marketing appears appealing to children.
Are pre-filled e-liquid “pods” easy to get payment processing for?
Yes, pre-filled-pod sellers can obtain payment processing easily. Pre-filled flavored pods that insert into devices – like Juul-compatible pods – can only be tobacco or menthol-flavored though.
Are bulk e-liquids, even flavors, still easy to get payment processing for?
Yes, e-liquids or “e-juice” designed for refilling vape tanks are easily placed by qualified, experienced processors and agents.
Flavored e-liquid – beyond tobacco and menthol – is still acceptable, but the packaging cannot market to children. Candy images or cartoons are big warning flags and should never be used.
It comes down to who makes it and what the flavor is.
So, in terms of whether or not it is easy to set up processing for a particular ENDS device, flavored disposables and flavored e-liquids are very straightforward – as long as the website owner uses a certified third-party manufacturer and markets their product responsibly.
Due to regulations, flavored “pods,” though, are limited to tobacco and menthol flavors.
06/19/2020 – Vape payment gateway options for Weebly reemerge
There have been positive changes, in terms of payment processing choices, for Weebly business owners hoping to sell their vape, disposable ENDS, or e-liquids online.
This trend is welcome news. Over the past few years, many Weebly site owners have been frustrated that they cannot find any payment gateways that allow them to accept credit cards for vape and e-juice.
Why do Weebly payment gateways for vape require an extra step?
Weebly’s standard shopping cart only supports low-risk processors like Stripe, Square, and PayPal. Those “out-of-the-box” payment processors do not allow vape, e-liquids, cartridges, or disposable e-cigarettes.
We spoke to many Weebly website owners who feared that, due to these restrictions, they would have to rebuild their site on a new platform. That is not the case now.
Third-party shopping carts allow Weebly sites to integrate vape-friendly payment gateways
When the vape boom first began, Weebly allowed our partners to assist entrepreneurs with direct integrations of high-risk-friendly Authorize.Net accounts. At the time, that flexibility allowed us to recommend vape and e-juice payment processing without any additional steps or apps.
At some point, around the end of 2018, Weebly discontinued the native integration of Authorize.Net, which caused a lot of stress for new e-juice and vape sites.
For a time, it seemed as though site owners would need to scrap their Weebly site. Luckily for them, that was ultimately not the case.
Included within Weebly’s hundreds of apps are third-party shopping carts that expand the high-risk payment gateway options for Weebly sites.
Recently, we wrote an extensive article on high-risk payment gateways for Weebly. If you sell a regulated product, like vape, on Weebly, we suggest you take a moment to check it out.
06/09/2020 – Payment gateways for disposable e-cigs becoming easier to obtain
Recently, we have had a rush of inquiries from online ENDS website owners who are having trouble finding payment processing for their disposable electronic cigarettes.
Until the FDA’s push to ban flavors other than tobacco and menthol in certain delivery types, finding payment gateways and merchant accounts for pre-filled electronic cigarettes was no more difficult for a disposable e-cig site than it was for an e-juice or vaporizer site.
Over the past year, that has changed.
Why did some processors pull out of the disposable ENDS market?
Earlier this year, many processors stopped accepting new merchant account applications. In many cases, they shut down existing disposable vape accounts. Why? Because processors have a shared liability with their merchants.
If an e-cig website markets a prohibited product or illegally markets its disposables – for example, to children – then the processor has a legal responsibility to act. Payment processors that fail to perform sufficient due diligence can be held liable.
Due to the additional monitoring required to ensure that online electronic-nicotine-delivery businesses stay within the rules, many of the most popular vape payment gateways and merchant account providers no longer accept disposables.
Why are payment gateways for disposable vapes available again?
Luckily, as a side benefit to the CBD boom that has occurred in the payment gateway world, more processors are also entering the vape market too.
Quality, reliable online CBD payment processors already have heavily trained underwriters and loss-prevention teams in place.
This existing staffing allows these types of processors to expand into other related product types, like disposable vapes.
The addition of established CBD processors into the disposable-vape market means we still can refer owners of disposable-electronic-cigarette websites to payment processing solutions.
Most new payment gateway integrations work with common shopping carts like WooCommerce, Shopify, Squarespace, Wix, Weebly, and BigCommerce.
05/14/2020 – 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 underwriters 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 sales of self-contained, flavored, disposable e-cigarettes and flavored e-liquids used in open vaping systems 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.
05/01/2019 – 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.”
Flavor and sensation 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.
12/05/2018 – 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 online CBD 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.
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.
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 of 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.
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.”
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.
01/24/2017 – 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.
01/24/2017 – 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 useful.
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.
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.
We are always happy to help.