Editors Note: This is a guest post.
The booming USA cannabis industry has had to overcome many hurdles to reach the position it is in. With amendments to the Prevent All Cigarette Trafficking (PACT) Act it may have hit yet another setback. In the following article we explain what the PACT act is all about, how the amendments to the act will affect the industry and those who work within it, and what the answer may be going forward. We’ll begin by explaining the act itself and its origins.
What is the PACT Act?
The PACT Act was originally passed as law in 2008. However, it has its roots in an act drawn up 60 years earlier in 1949 called the Jenkins Act. The Jenkins Act was aimed at combatting contraband tobacco. It required all carriers who were shipping tobacco or tobacco products across state lines to report the sale of such products to the relevant tax authorities. Tobacco was, naturally, a much-traded product in terms of illicit deals, hence the requirement for the act to impede on tax avoidance.
In 2009 the PACT Act amended the Jenkins Act. Additions to the act included the prevention of the U.S Postal Service (USPS) from delivering cigarettes and tobacco products. This amendment also applied to smokeless tobacco products. The Act also requires sellers of tobacco products to adhere to strict regulations including registering with the ATF (Bureau of Alcohol, Tobacco, Firearms and Explosives) and the tax authorities in the state they are shipping to or, in fact, where an advertisement for such products is displayed.
In addition, they must use a carrier who checks the identification of the recipient, and records of sales must be kept for a number of years, among other specific requirements. Originally these regulations did not apply to vaping products. That is about to change, as we will explain.
How Will the PACT Act Affect the Cannabis Industry?
The recent amendment to the PACT Act – ‘Preventing Online Sales of E-Cigarettes to Children Act’ – brings vape products under the umbrella of the act. Within the wording, the definition of ‘cigarette’ has been amended to include ‘Electronic Nicotine Delivery Systems’ (ENDS). At first glance ENDS appears not to include cannabis products. However, the Act defines ENDS as follows:
“any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device including an e-cigarette; an e-hookah; an e-cigar; a vape pen; an advanced refillable personal vaporizer; an electronic pipe; and any component, liquid, part, or accessory of a device described without regard to whether the component, liquid, part, or accessory is sold separately from the device.”
This means that USPS can no longer deliver vape products to consumers. There is some debate ongoing as to whether USPS can deliver business to business – such transactions were exempt from the original PACT Act where strict criteria were met – as the service has yet to publish its intentions.
There has been plenty of reaction within the industry, notably from online retailers and suppliers of vape products who face potential damage from the latest amendments. For example:
“The ban is going to affect cannabis industry also. We are working on a plan with alternative shippers to get our customers their weed vaporizer products, however, the shipping time and shipment fee may increase” the owner of vape4ever.com said. Vape4Ever is an established online supplier of quality vaporizer products at the leading edge of the market.
A worrying addition to the above is that two of the major US carriers – FedEx and United Parcel Service (UPS) – have announced they will no longer transport vaping products in the USA, with FedEx applying its rules from March 1st, 2021, and UPS enforcing the ban from April 5th. T
What Happens Next?
Whether the current cannabis industry growth projections – which are very healthy indeed – remain in place in the face of the PACT Act remains to be seen. The major concern is for smaller businesses in the vape and cannabis industry who face expensive upgrades to their computer systems as well as revisions to their working practices in the light of the USPS, FedEx and UPS transport bans that are coming into effect shortly.
The ACT requires the USPS to officially clarify the regulation on the carrying of ENDS by April 27th, 2021. At the time of writing there has been no such clarification, and businesses are advised to ensure compliance by that date at the latest. There will be a need for suppliers to find private logistics solutions in order to enact delivery of vape products, and many are currently investigating and organizing such solutions.
The PACT Act is a blow to a burgeoning industry that has given rise to many small outfits and provides many jobs, and it is hoped that the smaller players in the market can find a cost-effective solution to comply and enable delivery to continue.