FDA Cracks Down On Online Sales Of E-Cigarettes

For years, under federal law, it has been illegal to sell cigarettes and smokeless tobacco to minors. Under a rule finalized in May, the law now prohibits retailers from selling e-cigarettes, hookah tobacco, or cigars to people under the age of 18. Retailers now need to check a photo ID before selling any such product, which also can not be sold in a vending machine, where anyone under age 18 has access at any time. While there has been a significant decline in the use of traditional cigarettes among youth over the past decade, their use of other tobacco products continues to grow. For example, e-cigarette usage has skyrocketed, from 1.5% in 2011, to 16% in 2015, a 900% increase among high school students.

Last week, the US FDA announced it had taken action against 55 tobacco retailers, by issuing the first warning letters, for selling newly regulated tobacco products, such as e-cigarettes, e-liquids, and cigars, to minors. During compliance checks at major national retail chains, tobacco specialty stores, and online retailers, by the FDA, it was found that minors were able to purchase some of these products. The violators are first issued warning letters, before enforcement actions are pursued, including the imposition of civil money penalties, and no tobacco sale orders. Since 2009, the FDA has conducted over 660,000 inspections of tobacco product retail establishments, issued more than 48,900 warning letters, and initiated civil money penalty cases in excess of 8,290. According to the Wall Street Journal, none of the violators included vape shops. Retailers who did receive warnings included gas stations, convenience stores, and drugstores, who were most often cited for sales of cigars from brands such as Swisher Sweets, owned by Swisher International Inc., and Black & Mild, owned by Altria (NYSE:MO) , the largest tobacco company in the US.

See Our Complete Analysis For Altria

The e-cigarette market has grown into a $4 billion industry, even while public health officials have questioned the tobacco manufacturers’ claims of such products being a healthier alternative to traditional cigarettes. Such claims are felt to be drawing the youth to use or try such devices, which are also available in different flavors. According to research conducted by the University of Michigan, to determine what drives teens to use e-cigarettes, it was found that between 59% and 62% of students in the 8th to 12th grades use e-cigarettes for their flavor, with strawberry and chocolate cited as favorites. Meanwhile, about 13% of 8th graders, and 20% of those in the 10th and 12th grades, do it for the nicotine. Messages which aim to curb the use of vaporizers and e-cigarettes by pounding on their harm may not work here, as most don’t consider they are inhaling anything damaging. Hence, other rationales may be more effective, which need to be implemented in order to curb the usage of these products by the youth.

Have more questions on Altria? Have a look at the links below:

• Altria Q2 Earnings: Marlboro Volumes Fall, But Overall Market Share Remains Flat
• How Will Altria Perform In Q2 2016?
• Is Altria’s Growth Sustainable?
• What Can Lead To A 10% Downside In Altria’s Valuation In The Next Few Years?
• Which Is A Better Dividend Bet – Altria Or Philip Morris?
• Altria’s Stock Still Smoking Hot After The Brexit
• What Will Be Altria’s Revenue And EBITDA Breakdown In 2016?
• What Are Altria’s Strategies For Long-Term Growth?
• How Will Altria Perform In 2016?
• How Will The New FDA Ruling On E-Cigarettes Help Altria?
• What Is The State Of The Vapor Market In The U.S.?
• How Did The Different Segments Of Altria Perform In Q1 2016?
• Impressive Growth In The Smokeable Products Segment Helps Altria Beat Estimates
• How Will Altria Perform In Q1 2016?
• What Are Altria’s Strengths Driving Long-Term Growth?
• What Are Some Obstacles To Altria’s Long-Term Growth?
• How Will Altria’s Revenue And EBITDA Change In The Next 3 Years?
• How Has Altria’s Revenue And EBITDA Composition Changed In The Last 5 Years?
• Altria: Year 2015 In Review
• How Has Altria’s Shipment Volume, By Brand, Changed Over The Past 3 Years?
• How Has Altria’s Retail Share In Smokable Products And Smokeless Products Changed Over The Last Year?
• What is Altria’s Revenue And EBITDA Breakdown?
• What is Altria’s Fundamental Value Based On Expected 2016 Results?
• By What Percentage Did Altria’s Revenue & EBITDA Grow In The Last 5 Years?

Notes: