DISCLAIMER: This article is not intended to constitute legal advice. The information and content provided in this article are for general information purposes only. As noted in this article, laws change quickly and the information in this article may not constitute the most up-to-date legal or other information.
The United States Postal Service(USPS) says businesses should be prepared for the implementation of The PACT Act and its amendments titled Preventing Online Sales of E-Cigarettes to Children Act.¹ On April 19th, 2021, the USPS posted a notice that the final ruling is still forthcoming, determining whether electronic nicotine delivery systems (“ENDS”) may continue to be mailed pursuant to certain statutory exceptions that are currently administered through an application process.² While one might think that vape products without nicotine would be ok, that is not the case. The impact this will have on the vaping industry is significant. With bipartisan support, the Preventing Online Sales of E-Cigarettes to Children Act passed, adding Vape products, including any part, accessory, or device used for vaping, to a list of other tobacco products that face strict shipping regulations. While the USPS has not promulgated the new laws, an announcement is expected at any time.
Does this mean that online vape retailers should close their doors? No, but it does mean that they need to be prepared to comply with the new regulations. It’s possible that the USPS will allow exceptions through an application process, but this has yet to be determined. As vape retailers anxiously await the USPS to make a formal announcement, there are some things you can do now to better prepare for the expected changes.
- Register with the U.S. Attorney General and ATF by completing the Alcohol, Tobacco, Firearms, and Explosives (ATF) PACT Act Registration Form and submit the registration information via e-mail to PACTActregistrationinbox@atf.gov or via mail to:
Bureau of Alcohol, Tobacco, Firearms and Explosives
Alcohol and Tobacco Enforcement Branch
99 New York Avenue, NE., Mailstop 6.N-509
Washington, D.C. 20226 USA
- Register with each state and local tax administrator where business takes place or advertisements and offers are distributed.
- Ensure you are capturing the required data for the reporting that must be turned in to the tobacco tax administrators for each state you do business in. The report is due no later than the 10th day of each calendar month. You must turn in a report for every state you do business in. Copies of the memorandum or invoice must also be filed with the chief law enforcement officers of the local governments and Native American tribes operating within the borders of the State that apply their own local or tribal taxes on any of the products impacted by The PACT Act or any amendments of it, including the Preventing Online Sales of E-Cigarettes to Children Act.
- Properly label shipments. You will be required by the ATF to include proper labeling on any invoice or receipt and on the outside of the shipping package—on the same surface as the delivery address. The label must be clearly and conspicuously posted, and read:
“CIGARETTES/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE
PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE
WITH APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS.”
- Be prepared to change shipping providers. While the USPS has yet to announce if they will allow exceptions for shipping ENDS products, other major logistics companies have already disallowed shipping vape products. DHL, FedEx, and UPS have bans on vape products, yet some new logistics companies are stepping up in an effort to fill the shipping demands for tobacco and vape retailers. One example is X, a company that stakes its claim as the #1 shipping carrier for high growth direct to consumer brands. Another resource to consider is uShip; a shipping marketplace that helps you connect with trusted, feedback-rated service providers of all kinds who compete for your business and offer extra cargo space at a discount. No matter what route you choose, select a shipping option that offers age verification upon delivery, as this will be a requirement under the new laws.
- Ensure you maintain compliance with all local, state, and federal laws, including recordkeeping, reporting, filings, and excise tax requirements. Collect and pay all applicable local and state taxes.
- Verify the age of consumers who purchase from your business using commercially available age-verification technologies. These third-party systems match customer information against public records or other data sources to verify that buyers are above the legal minimum age to purchase tobacco products, including vape products and accessories.
While this is a highly volatile time for online vape retailers, how companies handle the tough times is an indicator of the future success they can expect. While every business requires proper planning and strategy, the vape industry has experienced rapid changes, unlike most other industries. Those changes can also affect your credit card processing solution as many merchant processors refuse to accept vape retailers as customers. Regulated industries tend to experience more chargebacks, and many processors that accept vape retailers charge them significantly higher fees and rates. Like the shipping challenges discussed in this article, your payment processing account must be with a merchant provider knowledgeable about the industry. Unity Payments is a merchant processor that specializes in meeting the demands of the vape and related industries. They are nimble and quick to respond to new legislation passed and offer features and benefits designed to help tobacco-related businesses succeed. Unlike most payment processors, Unity Payments never locks their clients into a contract nor charges a cancellation fee. They offer highly competitive rates and free statement audits so you can know your savings before you decide to change providers. If you’re interested in learning more about how Unity Payments can help you, submit an online application or call them at (321) 972-9838.