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 More than a dozen AGs, including those in New York, California,
Indiana and Ohio, are using new state and local laws - some of which
they helped craft - to put pressure on the industry at all levels,
from neighborhood vape shops to big tobacco companies like Altria
Group <MO.N> and Reynolds American Inc <RAI.N>.
Much of the campaign so far has involved threats to sue violators or
appeals to a company's sense of responsibility, though some lawsuits
have been filed, too.
State actions have accelerated in the wake of government data
released in April, which showed that teen use of e-cigarettes
tripled in 2014 alone, making them more common for youngsters than
tobacco.
“The key is to avoid another generation being addicted to nicotine,”
Indiana Attorney General Greg Zoeller said in an interview.
State attorneys general played a pivotal role during the 1990s in
battling tobacco companies over conventional cigarettes.
The Master Settlement Agreement (MSA), an accord reached in November
1998 between the state attorneys general of 46 states, five U.S.
territories, the District of Columbia and the five largest tobacco
companies, resulted in significant changes to cigarette marketing
and required the tobacco industry to pay the states about $10
billion annually for the indefinite future.
FEDERAL ACTION URGED
Nearly a year ago, a group of AGs asked the U.S. Food and Drug
Administration to take a tougher line on e-cigarettes, the risks and
benefits of which are still being studied.
In April of 2014, the agency proposed banning the sale of
e-cigarettes to people under the age of 18, but did not recommend
prohibiting advertising, flavored products or online sales – all of
which help make the devices attractive to youngsters, according to
public health advocates.
The FDA proposal has been under review ever since, which has meant
that vaping remains legal for youths in states that haven't passed
laws banning it. The agency is likely to finalize its new
e-cigarette regulations later this summer, though it could be
several years before the federal rules go into effect.
Federal regulations and the 1998 Master Settlement prohibit makers
of conventional cigarettes from targeting youth and from advertising
on television, billboards and mass transit, but the rules don’t
apply to e-cigarettes.
So far, however, 46 states have passed laws banning their sale to
minors. Twelve of those states have also passed laws requiring
child-proof packaging for e-liquids and e-cigarettes, according to
the Campaign for Tobacco-Free Kids.
AGs are using these laws, as well as others not directly tied to
e-cigarettes, to force companies to drop ads appealing to teens,
switch to child-proof packaging and spend thousands of dollars on
more vigilant age verification systems for their websites and online
deliveries.
In June, New York Attorney General Eric Schneiderman announced
settlements with four companies that were not complying with the
state’s rule about child resistant packaging for nicotine liquids.
Reuters spoke with more than 10 e-cigarette and vaping companies -
including Reynolds American, which sells Vuse, and Altria Group,
which sells MarkTen and Green Smoke – that acknowledged they have
been contacted by state law enforcers or by the National
Associations of Attorneys General. Reynolds and Altria say their
brands were not in violation of local laws.
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COORDINATING EFFORTS
Some of the AGs have coordinated their efforts. One group is
pressuring certain e-cigarette manufacturers and vendors to limit
ads that appeal to teens, especially on company websites and places
like YouTube.
Ohio Attorney General Mike DeWine, along with colleagues from
several other states, sent a letter in April to privately-held
manufacturer NJOY, asking it to “immediately instruct YouTube to
restrict” access to its advertisements to adults.
NJOY said in an April letter to DeWine that more than 90 percent of
the U.S. viewers who have watched its hosted YouTube videos are at
least 18, and the company said it would suspend videos if that
figure fell to 85 percent or less.
NJOY, which previously settled a case with California over
allegations of targeting minors and deceptive marketing, would not
comment further.
California has sent letters to more than 150 e-cigarette and vaping
companies in recent years “to encourage voluntary compliance with
applicable state and federal laws," including a ban on sales to
youth, according to documents reviewed by Reuters.
The state is also pursuing companies that sell fruit- flavored
vaping liquids that appeal to teens and those that make false or
misleading statements in their advertisements. One letter sent by
the state asked a manufacturer to quit claiming that “electronic
cigarettes are one of the safest forms of nicotine available” and
that “when you exhale, you are exhaling harmless water vapor."
“Many companies have taken some or all of our recommended steps,”
said Kristin Ford, a spokeswoman for Attorney General Kamala Harris.
AGs are paying particular attention to sales on websites, a popular
source of vaping materials for teens, who trade information about
which ones require little proof of age.
Jan Verleur, CEO and co-founder of electronic cigarette company VMR
Products, said his company changed its age verification system in
some states after being contacted by a state AG. He estimated the
cost per order would increase by about 50 cents, but would not say
if VMR would absorb any of that. The company makes about half its
sales online.
“This is bad news for the smaller players and good news for the
tobacco companies, whose business model relied on mass
manufacturing, not personalized products,” said Philip Gorham, an
equity analyst at Morningstar who covers consumer products.
(Reporting by Jilian Mincer; Editing by Michele Gershberg and Sue
Horton)
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