Altria Group Inc. announced on Thursday that its operating company, NJOY LLC, has filed lawsuits against 34 manufacturers, distributors, and online retailers of illegal disposable-vape products. These products are being sold in California and other states in violation of California’s flavor-ban law and federal laws regulated by the Food and Drug Administration (FDA).
According to Altria, these companies are engaging in unlawful competition with businesses that adhere to state and federal regulations.
The lawsuit seeks a nationwide injunction to prohibit the import and sale of these illicit products, as well as seeking “significant” compensatory and punitive damages.
Murray Garnick, Altria’s executive vice president and general counsel, expressed the urgency of addressing the current state of the illicit e-vapor market. “Today, we see two markets—one for those who abide by the rules and another for those who brazenly disregard them,” Garnick stated. He also emphasized the need for more action from the FDA and other regulatory bodies.
In response to the alarming increase in teenage vaping primarily associated with Juul Labs Inc., in which Altria held a partial ownership, the FDA initiated stricter regulations on flavored vapes in 2018. The initial ban targeted flavors that appealed to young people. However, in 2022, the FDA expanded the ban to include all Juul products and mandated the removal of existing products from the market.
Altria then made a significant decision in March by exchanging its minority stake in Juul for a global license to certain heated-tobacco intellectual property owned by Juul.
FDA Bans Sale of Vuse Alto Menthol e-cigarettes
Earlier this week, the Food and Drug Administration (FDA) made an important move by issuing a ban on the sale of Vuse Alto menthol e-cigarettes. This decision comes as Vuse Alto had recently surpassed Juul as the top-selling vaping product in the United States. Reynolds American is the company that sells Vuse Alto.
British American Tobacco Files Complaint with International Trade Commission
Last week, British American Tobacco PLC filed a complaint with the International Trade Commission. The complaint alleges that makers of the most popular disposable vapes are engaging in unfair imports.
“We continue to believe that there will be meaningful enforcement actions in the next 12 months to remove illegal disposables,” stated Jefferies analyst Owen Bennett.
Unapproved Imports from China and U.S. Companies in Crosshairs
The foreign companies targeted in the Altria lawsuit are all based in China, while the American companies are operating in various states such as Arizona, California, Delaware, Florida, Michigan, Minnesota, New Jersey, New York, and Texas.
Among the notable brands involved in this dispute are Breeze, Elf Bar, EB, EB Create, Esco Bar, Flum, Juice Box, Lava Plus, Loon, Lost Mary, Mr. Fog, and Puff Bar.
Lack of FDA Premarket Approval
NJOY Files Lawsuit in California
The lawsuit filed by NJOY is currently being addressed in the United States District Court for the Central District of California.
Altria’s Stock Performance
In terms of stock performance, Altria has experienced a 6% decline so far this year. Comparatively, the S&P 500 has seen a 12.5% decrease.