Regulatory Update 3 - Organic Vape Juice - E Liquid - Kai's Virgin Vapor, A Private Vape Club

Online Sales and FDA Hysteria

October 03, 2018

    Coming on the heels of our report from the week of September 17th, unfortunately we have even more bad news from the FDA.  While attending a panel discussion on electronic cigarettes hosted by Axios, a US news website, Scott Gottlieb, head of the FDA, revealed that banning online sales of e-liquid is one of the moves “on the table” as part of the FDA’s crackdown on teen vaping.

    “One of the things we’re looking at is whether or not we should change our regulations to address how these products are being sold, particularly how they’re being sold online,” said Gottlieb.  “We have two problems – one with appeal – they are too appealing to kids and the other is access – they are too accessible to kids and we think the online portal is one of the reasons why they’re so accessible.”

    Gottlieb said that, in the future, e-liquids and electronic cigarettes may be treated like cigarettes which are banned from online sales.  The result would be the shut down or severe restriction of all current vape websites.

    In our opinion, another result could be a sharp increase in e-liquid prices.  Without the ability to sell retail, many e-liquid manufacturers would only be able to reach customers by working with resellers.  Selling wholesale offers drastically tighter margins which would likely force many manufacturers to raise their prices in order to be able to afford to stay in business. Worse, we suspect that many e-liquid companies would simply go out of business, unable to successfully make the transition quickly enough to stay afloat.

    While we strongly support keeping vapes out of the hands of teens, is a total ban really necessary?  The fact is, while cigarettes aren’t sold online, alcohol is.  Anyone with a credit card can sign up with a wine club and get convenient monthly home deliveries straight from the vineyard.  Anyone that is of legal drinking age, that is. In today’s technologically advanced era, it is completely possible to age verify online customers and, in fact, Kai’s Virgin Vapor already does this so we know it is feasible.  

    Age verification services work in the background to confirm the age of online shoppers using publicly available databases that include name, address and/or credit card information.  On the rare occasions that these systems are unable to verify, our service flags us and we reach out to our customers to perform a second step.  A birth date or the last four digits of a social security number will usually do the trick.  In addition, the United States Postal Service as well as most carriers such as FedEx and UPS offer an “age verification on delivery” service where the customer must show I.D. at the time of delivery in order to receive their package. 

    These systems are readily available and they work. In fact, I would submit that they work even better than relying on brick and mortar stores to check I.D.  As we saw in our regulatory update in mid-September, part of the reason the FDA is moving to crack down on teen vaping is due to the results of undercover sting operations they conducted over the summer.  These operations revealed that major retailers such as Walgreens, 7-Eleven and Shell gas stations were illegally selling electronic cigarettes and e-liquids to minors leading to a slew of FDA warning letters and fines. 

     The reason is obvious.  These stores have a financial interest in making the sale and, because of this, are often willing to look the other way rather than properly verifying a customer's age.  Age verification on delivery services from the USPS on the other hand are conducted by what is known as "a disinterested third party."  That is, the USPS has no financial stake in making a sale and therefore can be trusted to accurately check I.D. and decline to deliver if the customer is underage or is not the individual the package is addressed to.  That, quite simply, is not only as foolproof as checking identification in a brick and mortar store, it is actually a better system because the USPS won't be tempted to fudge.

    Rather than banning the convenience of online sales, we hope that the FDA will consider simply mandating that all online retailers use these services.

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