ALEXANDRIA, Va.—NACS has filed an amicus brief (PDF) in the US Court of Appeals for the DC Circuit in support of JUUL’s petition for a stay of the US Food and Drug Administration’s (FDA) marketing denial order (MDO) of JUUL products.
Last Thursday, the FDA issued MDOs for all JUUL products currently sold in the US, and the notice called for removal of JUUL products from the US market.
“If allowed to take effect, the Order threatens NACS members with harm independent of the harm JUUL describes in its stay application,” wrote NACS in the brief. “The order saddles retailers and distributors with inventory they cannot sell and contracts they cannot fulfill, waylaying a substantial portion of their business practically overnight.”
NACS argued that the immediate removal of JUUL products would “wreak havoc” on an entire industry, upend an important segment of the economy, endanger countless jobs and impedes small businesses’ ability to operate.
JUUL makes up about a third of the market share of e-cigarettes, and such a central market figure necessarily relies on vast supply chains to move inventory.
“There is no doubt that the Order freezes retail sales of millions of JUUL units in inventory. Those units will take up retail backroom space and gather dust absent a stay,” wrote NACS. “This is not costless: JUUL acknowledges that its products ‘are meant to be used soon after purchase’ before ‘the flavor or quality decrease[s].’ And the retailers saddled with this unsellable product foot the cost of storage and may have to absorb the entire cost of purchasing those products.”
The FDA’s MDO also questions if certain contractual obligations are economically feasible. The contracts binding manufacturers, distributors and retailers to one another can last years and cost millions of dollars.
“By effectively banning JUUL products overnight, the Order has injected chaos into those relationships and left the uncertain parties as to their rights, obligations and duties,” NACS wrote.
By removing JUUL products from the market, retailers and distributors will also suffer losses due to the black market that will quickly develop in counterfeit products, NACS said.
“That means fewer customers coming through the doors of legitimate stores to purchase not only e-cigarettes, but other products as well,” wrote NACS. “The number of customer ‘trips’ made to a convenience store and the ancillary purchases they make in addition to their primary purchase during those trips are essential elements to the profitability of these stores.”
NACS urged the FDA to stay its MDO on JUUL products because of the harm it could cause retailers and distributors of JUUL’s products.
“That harm further tips the balance in favor of a stay. There is no sufficient justification to impose on NACS members with regard to contractual obligations and unusable inventory and force upon them storage costs and lost revenue from a range of products in addition to e-cigarettes. These consequences are obvious, immediate and ongoing,” wrote NACS.
The FDA’s decision on JUUL appears to be part of a sweeping crackdown on tobacco products in the US
The FDA said that it remains focused on its regulatory oversight of e-cigarettes and other ENDS. So far, the agency has made decisions on about 99% of the nearly 6.7 million products for which applications were received by the Sept. 9, 2020, deadline, including issuing marketing denial orders for more than one million ENDS products.
To date, the FDA has authorized 23 ENDS products.
Last week, the Biden Administration published plans for future potential regulatory actions, including a proposed standard by the FDA that would establish a maximum nicotine level in cigarettes and certain other combusted tobacco products.
The FDA recently released two proposed tobacco product standards: One bans menthol as a characterizing flavor in cigarettes, and the second bans all characterizing flavors, including menthol, in cigars.