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Michael Jordan is an associate in Troutman Pepper's Richmond office. Michael draws on a diverse range of experiences in government and private practice to help clients navigate complex regulatory issues. He focuses primarily on heavily regulated industries, such as tobacco and cannabis.

The Prevent All Cigarette Trafficking (PACT) Act, 15 U.S.C. § 375 et seq., is a federal law with two primary objectives: (1) to prevent federal and state tax evasion on tobacco products, and (2) to prevent sales of tobacco products to minors. Government agencies, increasingly concerned about cheap, untaxed products getting into the hands of underage consumers, are using the PACT Act’s enforcement tools to crack down on noncompliant companies.

If you are involved in the online sale and/or shipping of tobacco products, here are five things you need to know about the PACT Act.

Over the past decade, at least five states and hundreds of localities have passed, or attempted to pass, laws banning flavored tobacco products. To date, litigants have brought many challenges to these laws, often arguing that such bans are preempted under the federal Family Smoking Prevention and Tobacco Control Act (TCA). This argument, however, has largely proven unsuccessful — a trend that continued in January when the U.S. Supreme Court declined to hear R.J. Reynolds Tobacco Company’s challenge to California’s ban on the sale of flavored tobacco products.

In December, the U.S. Food and Drug Administration (FDA) issued warning letters to online retailers for reportedly selling unauthorized e-cigarette products. Consistent with the Center for Tobacco Products’ (CTP) recent focus, the letters target unauthorized products, which FDA states are particularly appealing to youth — including Lost Mary, Funky Republic/Funky Lands, and Elf Bar/EB Design. These warning letters follow FDA’s recent issuance of civil money penalty complaints against 25 brick-and-mortar retailers for failing to comply with prior warning letters. Those civil money penalty complaints, which we previously discussed here, continued the agency’s approach of seeking the maximum penalty approved by law.

On October 12, hemp producers and retailers notched an early win in litigation challenging the legality of Maryland’s cannabis licensing program as it applies to hemp. By way of background, the Maryland General Assembly recently passed the Cannabis Reform Act (CRA), after voters gave their stamp of approval to recreational cannabis in the state via a 2022 referendum. Rather than create a separate licensing system for hemp products, the CRA requires anyone selling a “product intended for human consumption or inhalation that contains more than 0.5 milligrams of tetrahydrocannabinol per serving or 2.5 milligrams of tetrahydrocannabinol per package” to be licensed as a cannabis business. “Tetrahydrocannabinol” (THC) is defined to include delta-8, delta-9, and delta-10 THC. This lack of distinction between hemp- and marijuana-derived products results in the inclusion of existing producers and retailers of hemp-derived THC products into the new cannabis program.

In September, the U.S. Food and Drug Administration (FDA) issued two new rounds of warning letters to online retailers, manufacturers, and distributors for reportedly selling or distributing unauthorized e-cigarette products. Notably, FDA’s most recent letters target several popular disposable flavored products, including Elf Bar, EB Design, Lava, Cali, Bang, and Kangertech, which FDA states are particularly appealing to youth. FDA also sought civil money penalties against 22 retailers for failing to comply with prior warning letters and, for the first time, sought the maximum penalty allowed by law.

On May 11, RJ Reynolds Tobacco Company, along with two convenience stores and the American Petroleum and Convenience Store Association, sued the California attorney general and district attorney for Fresno County in their official capacities, seeking declaratory relief that these California officials misinterpreted and misapplied California’s ban on flavored tobacco products and incorrectly concluded that RJ Reynolds’ new products violate this ban.