Can I Continue To Ship My Vapor Products Under The PACT Act? – Yes, But You’d Better Hurry!
Tobacco and vapor product sellers alike nationwide have questions about navigating the recent changes to the Jenkins Act, aka the Prevent All Cigarettes Trafficking (PACT) Act and a vital lifeline for their businesses – the United States Postal Service. Known as the Preventing Online Sales of E-Liquid to Children Act, this amendment to the Jenkins Act impacts both the transport of the substances themselves, i.e., e-liquid, CBD or THC oils, Delta-8, etc., as well as electronic vaporizers, e-pipes, and e-cigs, among other electronic devices.
Whether we knew it or not, we recently lived through something of a golden age of online retail and getting tobacco and ENDS products to consumers. That golden age is soon coming to an end with the recent changes to the PACT Act.
As a vapor products business owner, you will have options after March 21, 2021, the first effective date of some aspects of the PACT Act, but capitalizing on these options will take work. As with similar federal regulation, the recent changes to the PACT Act essentially ban USPS shipments of tobacco products – including virtually all vaping products and components, whether intended for nicotine delivery or not, but with carve-outs for sellers engaged in business to business transactions.
As a business owner affected by the PACT Act, you will need to take stock of what you are selling, to whom you are selling, and where. For some of your products, it will simply not be feasible to continue selling (or even possible), the key will be identifying what products are permissible, what products are making you money, and therefore what products are worth pursuing.
For those selling permissible products, there is a Bureau of Alcohol, Tobacco, and Firearms (ATF) registration requirement – this is job-one for sellers, as this registration deadline is the first step in the new regulatory scheme and is make-or-break for getting through the remaining stages. Following ATF registration, sellers will need to prepare for USPS changes, including in-person disclosure requirements and a strict labeling framework for future shipping. The USPS changes become effective 30 days after the required ATF registration and both are strictly necessary steps which must be completed by set deadlines. There is no grace period built into any provision of the PACT Act changes.
For those readers familiar with the purpose of the original PACT Act of 1949, taxation was the catalyst then, and expanded product taxation is the catalyst now for the growing variety of novel products being shipped throughout the United States, not least e-cigarette and vapor products (whether intended to deliver nicotine or not). This means a stepped-up tax regimen which will largely be front-end, and being proactive with individual states and locales into which you intend to ship. This also means becoming familiar with every layer of government in your recipient states, and preparing a compliance strategy for a slew of new state registrations and commensurate state and local taxes in each. This component will include strict monthly reporting, advance tax payments, and stamp requirements.
The expanded PACT Act leaves little room for a piecemeal approach, with significant criminal and civil penalties for violations, sellers need to be keenly aware of PACT Act mandates and deadlines.
Those of us specializing in legal compliance for the tobacco and vapor sectors recognize that this latest round of regulation presents daunting challenges, leaving many sellers wondering whether they should close up shop. Part of our mission is to help sellers determine where their time and money are best spent, and to develop step-by-step strategies for tackling an ever-changing compliance landscape. The PACT Act changes are no different, and as always, those who invest early in process and compliance stand the best chance of not only surviving but thriving beyond Spring 2021.
Have questions related to anything you've read above? Feel free to connect with us using the Contact form at the bottom of the Home page or send us an email at email@example.com.