Solving the Illicit Nicotine Problem

The Issue

The market for electronic nicotine delivery systems (ENDS) products, also known as vapes, is in regulatory disarray and the market for nicotine pouch products is moving in the same direction. The U.S. market is being flooded with illicit and unregulated products, largely from China, while the FDA’s approval pathway for legal nicotine products has been arduous and opaque.

To date, FDA has received more than 26 million premarket tobacco product applications for review, but FDA has not authorized nearly enough products to meet market demand.  And FDA will not make clear exactly which products have been denied and what the status is of many products seeking approval. For responsible retailers and wholesalers, the process has created enormous confusion as they do not have the information they need to differentiate between compliant and noncompliant products. 

While the FDA’s process is ongoing, the illicit market in the U.S. has seen a dramatic expansion, as companies making and distributing illegal products knowingly violate FDA’s guidance. While FDA has stated it is working to address the problem, it is now estimated that 85% of the market in the United States is illicit products.

Retail Impact

The convenience store industry strives to comply with the law. Responsible retailers have seen a complete un-leveling of the playing field as customers are going to other stores, often small vape shops, to buy illicit products. Not only are stores losing sales of legal products, but they lose the entire basket of goods that those customers would have purchased. This rampant illicit market not only hurts law-abiding convenience stores, it undermines efforts to keep these products out of the hands of minors, creates the potential for unsafe products that do not follow regulatory standards, and reduces the tax revenues that legitimate retailers collect.

NACS Position

Retailers who are trying to do the right thing are at a competitive disadvantage as bad actors seize the opportunity to sell illicit products.

It is time for FDA to: 

• Provide regulatory clarity by publishing a product-level list of what can and cannot be on the market.
• Clear the backlog of all outstanding premarket tobacco applications and act on new ones quickly.
• Increase enforcement measures againstthose manufacturing,distributingand selling illicit products.