As 2023 draws to a close, several countries around the world have successfully passed and implemented a series of legislation pertaining to the e-cigarette industry. Many of these laws are set to take effect in 2024. The journey from proposal to implementation of these new regulations has involved extensive discussions and debates. How have brands, manufacturers, consumers, and civil society organizations responded to these impending changes, which will come into effect on January 1st?
As we usher in the beginning of a new year, 2FIRSTS presents the latest round of industry regulatory outlook.
Restricting Brand Publicity Exposure
The United States, being the largest e-cigarette market globally, is seen as a trendsetter in the industry. Starting from 2024, e-cigarettes, which have previously enjoyed differentiated regulatory treatment, will also be subject to market marketing restrictions similar to traditional tobacco products.
Starting from January 1, 2024, the state of New York in the United States will enforce stricter marketing restrictions on e-cigarettes and vaping products. These restrictions include prohibiting the use of e-cigarette brand names, logos, or any other identifiers on any product other than the actual e-cigarette. Furthermore, businesses will be prohibited from providing gifts related to the purchase of e-cigarettes. Additionally, e-cigarette brands will not be allowed to sponsor events such as sports competitions and concerts.
In addition to marketing tactics, the United States will also reduce the exposure of e-cigarettes to teenagers by implementing restrictions on the product's design.
In June of this year, the governor of Texas signed a bill passed by the House of Representatives, which prohibits the use of e-cigarettes primarily designed to target minors with candy-like or fruit juice packaging. The legislation also prohibits the use of cartoon characters, symbols, or celebrity images that are intended to advertise products to underage individuals. The new law will go into effect on January 1, 2024.
Restricting Flavors's Appeal to Teenagers
Aside from appearance and packaging, taste is also widely regarded as an important aspect that contributes to the appeal of a product targeted at teenagers.
The Netherlands e-cigarette flavor ban, which was approved as early as 2021, will come into effect on January 1, 2024. This ban was originally scheduled to be implemented in June 2022, but has been delayed by 18 months. According to 2FIRSTS, the Dutch government aims to achieve a smoke-free society by 2040. The government is making every effort to reduce smoking behavior, including raising the price of cigarettes to 10 euros during its current term.
Starting this year, heated tobacco products will also face taste restrictions in more countries.
Starting from January 1, 2024, all heated tobacco products in Bulgaria, with the exception of tobacco flavor, will cease to be sold. This regulation, which was smoothly passed without any debate when approved by the House of Representatives, is included in the amendment to the country's Tobacco and Tobacco Products Act. Furthermore, the packaging of each heated tobacco product must display warnings emphasizing the associated risks during usage.
The update in this amendment is a response to the Tobacco Products Directive issued by the European Union, failure to comply with which could result in criminal prosecution for the country.
Travel Ban and Surging Tax Revenue
In addition to the segmentation of regulations from a taste and marketing perspective, several regulatory agencies from different countries have also begun implementing stricter "comprehensive measures" starting from January 1st, aiming to increase the difficulty for specific groups to acquire disposable e-cigarettes.
Starting from January 1, 2024, disposable e-cigarettes will be prohibited from entering Australia.
From the same day, the country will also relax the prescription authority for e-cigarettes, no longer limited to general practitioners; Australian doctors and nurses will have the right to prescribe e-cigarettes to patients, who can purchase them at pharmacies. This move has drawn criticism. Some observers argue that prescriptions in the country are merely a formal policy. After the ban on disposable e-cigarettes entering the country, the already limited market for legal e-cigarette businesses in Australia is expected to be further squeezed. It is reported that the compliant e-cigarette market in Australia has a market share of less than 5%.
Some countries are also opting to reverse the trend of domestic consumers using e-cigarettes by implementing tax increases.
Starting from January 1, 2024, Belgium will introduce a tax on e-cigarette liquid, amounting to 15 cents per milliliter.
The tobacco tax in Indonesia will be increased by 10%, while the excise tax on e-cigarettes will be raised by 15%. When combined, the Indonesian e-cigarette industry will now face a tax rate of nearly 30% starting this year.
The magnitude and decision-making process of the tax increase in both countries have caused controversy. Consumers and retailers in Belgium argue that this new tax may encourage consumers to revert back to traditional cigarettes, which pose greater health risks. Garindra Kartasasmita, the Secretary-General of the Indonesian e-cigarette industry association, also claims that the 30% tax is "unfair for the emerging industry composed of small and medium-sized enterprises." He further states that domestic interest groups were not adequately involved in the planning process for implementing e-cigarette taxes in 2024. The decision-making process as a whole has been described as "closed-door.
Can the regulation in packaging, marketing, and flavor effectively reverse the trend of youth e-cigarette usage? Will comprehensive "lockdown policies" and high taxes contribute to the development of a higher-quality compliant market? Can the process of introducing new regulations globally become more transparent? Will the voices of various stakeholders within the industry be better heard? We will eagerly watch and wait until 2024.
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Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn
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