Last year we reported that Vermont Attorney General T.J. Donovan’s office settled with several online sellers over alleged violations of the state’s delivery sales ban of electronic nicotine delivery systems (ENDS) (the Delivery Sale Ban) and that we expected Vermont’s scrutiny to continue. As predicted, Attorney General Donovan’s office recently announced two more settlements with online sellers, resulting in a total of 23 settlements with online ENDS sellers for a total of $833,750 in civil penalties dating back to December 2020.
Vermont’s law, which became effective on July 1, 2019, bans the online sale and shipment of cigarettes, roll-your-own tobacco, little cigars, snuff, tobacco substitutes, substances containing nicotine or otherwise intended for use with a tobacco substitute, or tobacco paraphernalia. Tobacco substitute and/or substances containing nicotine include ENDS. The Delivery Sale Ban does not apply to premium cigars (defined as cigars weighing more than 4.5 pounds per 1,000).
A violation of the Delivery Sale Ban carries civil penalties of up to $5,000 per violation and potential criminal penalties. Additionally, Delivery Sale Ban violations constitute a violation of the Vermont Consumer Protection Act for which the Vermont attorney general can seek an additional $10,000 per violation, in addition to other remedies.
In these two most recent cases, one New York-based seller shipped ENDS directly to Vermont consumers and admitted to the key facts. In addition to paying the civil penalties, the New York-based seller agreed to make changes to its website by providing disclosures to Vermont consumers and attempting to notify any Vermont consumers that try to purchase ENDS on its website that the company does not ship such products to Vermont consumers. The resolution requires the seller to provide its proposed disclosure to Vermont for approval.
The other company, a Nevada-based seller, relied on a drop-shipping model in which it transferred customer orders to another business that shipped the ENDS directly to Vermont consumers on its behalf. The company admitted to the key facts and agreed to pay the civil penalties and comply with the same conditions as the New York-based seller.
Given the recent history of enforcement action on this topic, online tobacco and ENDS retailers should beware of Vermont’s Delivery Sale Ban and similar laws in other jurisdictions.