SOURCE: JIM MCDONALD via VAPING360

The United States Postal Service will issue a final rule Oct. 21 that will end delivery of vaping products through the U.S. Mail. The new USPS rule, which will take effect immediately after publication in the Federal Register, will drastically change online sales and shipping of vaping devices and liquids.

As mandated by Congress in the Preventing Online Sales of E-Cigarettes to Children Act (POSECCA), the final rule will not contain any exceptions for residential delivery of either nicotine or cannabis vaping products (except within the states of Alaska and Hawaii). POSECCA was passed with no opposition and signed into law by President Trump last December as part of the federal budget bill.

In addition to banning vape mail, POSECCA forced vape shippers to comply with the Prevent All Cigarette Trafficking (PACT) Act—a law originally passed in 2009 that until now applied only to cigarettes and smokeless tobacco. The PACT Act imposes strict requirements on shippers, and is enforced by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

The USPS rule was due on April 26 (120 days after Trump signed it into law), but USPS took the time to carefully read and respond to the comments it received during the rulemaking process. The agency got over 15,700 comments—many of them from vapers responding through CASAA’s call to action.

Much of the information in the final rule about application procedures for business-to-business shipping and product definitions is consistent with the USPS guidance document published in April. There are no real surprises in the final rule.

The USPS ban covers both nicotine and cannabis vapes

The clear language of POSECCA forced USPS to prohibit shipping any vaping product through the U.S. Mail. In its response to comments, the Postal Service says it simply doesn’t have the power to veer from Congress’ words, which don’t distinguish between the products “ENDS” are intended to vaporize.

ENDS may be an acronym for Electronic Nicotine Delivery System, but Congress is free to use that term to describe all vaping products—and it has. Despite major pushback from cannabis industry stakeholders, USPS was forced to include devices intended for cannabis in its final rule.

“USPS never asked Congress to hand them a new unfunded mandate,” American Vaping Association President Gregory Conley told Vaping360. “The reality is Congress set the overly expansive language and USPS was and is statutorily obliged to apply the law as they wrote it.”

The new rule exempts business-to-business (B2B) shipments from the mail ban, along with shipping to consumers within the borders of Alaska and Hawaii, and limited non-commercial shipping between private individuals.

The law passed in December says that the Postal Service may not deliver to a residence “(1) any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device; and (2) any component, liquid, part, or accessory of an ENDS, regardless of whether sold separately from the device.” (Emphasis added.)

Therefore, vaping devices used with cannabis oil or concentrates, and their components and parts, are banned from the mail, along with nicotine vaping products—including e-liquid. The rule also makes no distinction between products made for use with tobacco-derived or synthetic nicotine; both are prohibited.

USPS notes that products like dry herb vaporizers, intended to vape cannabis flower rather than “solutions” like e-liquid or oil, may not fit the POSECCA definition, but are already prohibited from the U.S. Mail under separate rules. They are considered drug paraphernalia intended to be used with federally controlled substances, and therefore “unmailable.”

For heated tobacco products (HTPs) like IQOS, it appears the devices may be exempt from the vape mail ban, but the refills (IQOS refills are called Heatsticks) probably qualify as cigarettes for purposes of PACT Act enforcement. Essentially, USPS punts on this question and refers questions to the ATF, which enforces the PACT Act. It’s a moot point for now anyway, because Altria doesn’t sell IQOS products online.

Exceptions: B2B, private individuals, Alaska and Hawaii

The new rule exempts business-to-business (B2B) shipments from the mail ban, along with shipping to consumers within the borders of Alaska and Hawaii, and limited non-commercial shipping between private individuals. Existing exceptions that allow cigarettes to be shipped for purposes of “consumer testing,” and testing by federal agencies and “public health researchers” were not extended to vaping products, because USPS does not believe Congress intended it.

 

There is no exception for mail shipped to or from overseas addresses—including to members of the military or foreign service workers through the Army Post Office (APO), Fleet Post Office (FPO), or Diplomatic Post Office (DPO).

B2B shipping is allowed but the process will remain difficult

USPS has simply applied its rules for business-to-business shipping of cigarettes to vaping products, as the agency indicated it would do in its proposed rule. However, using the service is an onerous process, and even if a company chooses to use USPS for shipping to shops or distributors, they will first have to be approved. The application process for B2B shipping is difficult, and is not going to be substantially streamlined or moved online, at least not anytime soon.

No one knows how long it will take for hundreds of vape businesses to apply and be approved for a B2B exemption. Remember, these rules take effect immediately. There is no grace period for compliance and no leeway for companies that have not been approved.

USPS says it is assigning additional personnel to help review B2B applications, and “will continue to explore the feasibility of digitizing the application process and may amend its rules appropriately at a later time.” But for the time being, applicants for B2B exemptions “should expect review of their applications to require potentially substantial processing time.”

There remain more questions than answers about the capabilities of the new private delivery services, simply because they haven’t been seriously tested yet.

The B2B shipping process is not intended to be convenient; indeed, it was intended by Congress to be deliberately difficult. That’s why tobacco companies use their own private systems of trucks, regional warehouses and distribution centers, and local delivery services. They don’t ship B2B packages through USPS.

Vape industry B2B shippers, for example, will be required to personally deliver outgoing packages to a post office counter or business mail acceptance location, a process that isn’t practical for an e-liquid manufacturer sending 100 cartons of bottled vape juice to stores or distributors three or four times a week. There are exacting requirements for companies receiving deliveries too—and that’s after the process of applying and constantly updating applications with new delivery recipient and licensing information.

Because of the red tape imposed by POSECCA and the PACT Act, vape companies shipping B2B may decide it is more effective to deal with the headaches of finding or creating private shipping networks, as we described earlier this year.

“Since we anticipate it will take the USPS months or years to move businesses through the application process to allow B2B sales,” says the AVA’s Conley, “further supply chain issues among independents will likely follow.”

Exceptions for “certain individuals”

The final USPS rule will retain the provision allowing private individuals to ship a limited number of lightweight packages to another person during any 30-day period. The transactions cannot be commercial; no money may change hands. (The current rule for tobacco allows 10 packages weighing less than 10 ounces each.)

This exception can also be used to return “damaged or unacceptable” products to a manufacturer or seller, although it does not include the seller sending a replacement product to the consumer in exchange.

Intrastate shipping within Alaska and Hawaii

The rule allows businesses in Alaska and Hawaii to ship to consumers within the borders of their states. Shippers must still follow all the rules of the PACT Act, and they cannot ship to out-of-state customers.

The PACT Act and private delivery services

In addition to requiring USPS to issue regulations prohibiting vapes from being mailed, POSECCA forced all vape products into the existing Prevent All Cigarette Trafficking (PACT) Act (which is an amendment to the much older federal Jenkins Act). Those laws were originally passed to eliminate U.S. Mail delivery of cigarettes, mainly to combat tax avoidance by mail-order (and later online) sellers.

The PACT Act imposes strict rules on shippers of vaping products, no matter which delivery service carries them. It also backs up the law with Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforcement, and penalties that include fines and prison sentences.

The law requires online sellers to:

  • Verify age of customers using a commercially available database
  • Use private shipping services that collect an adult signature at the point of delivery
  • Register with the ATF and the U.S. Attorney General
  • Register with state and local tax administrators in all states and localities where business is done
  • Collect and pay all applicable local and state taxes, and affix any required tax stamps to the products sold
  • Each month, a list of all transactions must be sent to each state’s tax administrator that includes the names and addresses of each customer sold to, the quantities and type of each product sold, and the name, address, and phone number of the person delivering the shipment to the recipient

Soon after the passage of POSECCA, FedEx announced it too would no longer carry vaping products—presumably to avoid inadvertent PACT Act violations, which it has dealt with before. FedEx was soon followed by UPS. (DHL had already made rules against shipping vapes before the law’s passage.) FedEx has since made some exceptions for certain companies, but can’t be counted on as a delivery choice for most online vape sellers..

Since early this year, some private delivery services have begun trying to capture a chunk of the online vape shipping market. As of now, there are still large swaths of the country that are not covered by private delivery options—although that may change now that the Postal Service is finally prevented from shipping vapes to residential addresses.

The PACT Act was applied to all vape product shipping in March, but most online sellers have continued shipping products via USPS, since they knew the vape mail ban would not take effect until the final rule was published. There remain more questions than answers about the capabilities of the new private delivery services, simply because they haven’t been seriously tested yet.

Now that the final USPS rule is here, we will see a trial by fire. Online vendors will have no choice but to use the private services, even though they aren’t sure how well they’ll work. Vaping consumers and businesses are about to discover how much they have depended on the U.S. Postal Service.