In mid-September, the Food and Drug Administration (FDA) began issuing warning letters to retailers for improper sale of a host of newly “deemed” tobacco products included within the parameters of the FDA’s August 8, 2016 final “rule.” Under the rule, a number of additional products, such as cigars and e-liquids (including virtually all forms of electronic cigarettes), now come within parameters of the federal government’s Family Smoking Prevention and Tobacco Control Act (i.e., the Tobacco Control Act).

The Tobacco Control Act generally provides the FDA with the authority to regulate cigarettes, cigarette tobacco, roll-your-own tobacco, smokeless tobacco, and any other tobacco products that the Agency deems to be subject to the law by regulation. Such tobacco products may not be sold to individuals under the age of 18. Retailers that do so face stiff penalties.

Nationwide Inspections

Through its Center for Tobacco Products (CTP), the FDA continues to expand its nationwide inspection procedures to catch retailers that ignore the law. For example, in recent years, the CTP has commissioned special inspectors – some of which are third-party contractors. These inspectors are tasked with conducting undercover buying, advertising, and labeling inspections at tobacco retailers. Following their inspections, the inspectors file reports with the FDA. If the FDA determines that there is evidence that a retailer is violating the Tobacco Control Act’s youth access restrictions, it issues the business a warning letter. Since the establishment of the inspection program, the FDA has conducted more than 660,000 inspections and issued more than 49,000 warning letters.

Multiple Violations Bring Steeper Penalties

If retailers commit multiple violations over the span of one or two years, the CTP may levy civil money penalties. Fines can be as high as $11,000. If a retailer is cited for five or more repeated violations within a three-year period, the CTP may institute a no-tobacco-sale order, prohibiting sales for an initial period of 30 days. Depending upon the number of violations, the penalty can include a permanent prohibition on the sale of tobacco products.

E-Cigarette and Cigar Industries Fighting Back

As reported recently in The New York Times, both the e-cigarette industry and cigar makers have hired high-profile lobbyists and others in an effort to fight the new rule, contending that the Deeming Rule will actually hurt public health by forcing a large share of e-cigarette companies out of business. E-cigarette manufacturers argue that their products are easily differentiated from true tobacco products and should not be regulated as such. The FDA acknowledges that e-cigarettes are not as harmful as regular cigarettes, but counter that some of the products contain toxic chemicals like diethylene glycol, an ingredient also used in antifreeze.

FDA’s New Rule is Representative of Regulations that Wisconsin Businesses Encounter

Until this gets sorted out, the FDA rule is in place and retailers must be careful about sales. Industry experts suggest checking the ID of anyone who looks younger than 30, since even one sale to an underage person can generate a warning letter from the FDA. Legal experts point out that the rule is just one of many that must be observed by anyone selling retail products. Maneuvering through the regulatory minefields generally calls for assistance and guidance from experienced attorneys.

The Milwaukee business litigation firm of Kerkman Wagner & Dunn has more than 50 years of combined legal experience representing business owners in Wisconsin in both state and federal courts. Our firm has big firm talent and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.

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