Sellers of traditional vapor products as well as hemp oil vapor products need to be aware of new registration, reporting, shipping, packaging, recordkeeping, and other compliance obligations imposed by the Further Consolidated Appropriations Act of 2021 (FCAA), Sellers must take steps now to comply, as the effective date is fast approaching. 

In late-March 2021, sellers of vapor products, including devices that, through an aerosolized solution, deliver nicotine, flavor, or any other substance to the user inhaling from the device, components, liquids, parts, and device accessories, will be subject to the requirements of the Prevent All Cigarette Trafficking (PACT) Act, also known as the Jenkins Act. This includes traditional vapor products delivering nicotine as well as non-nicotine vapor products, which could be construed by the government to include hemp oil vapor products. Noncompliance with the Jenkins/PACT Act risks the prospect of hefty civil fines ($5,000 to $10,000 per violation) and severe criminal penalties. 

The Jenkins/PACT Act has two primary requirements: [1] registration and reporting; and, [2] compliance with delivery sales requirements for consumer sales. There is also a prohibition on mailing vapor products that takes effect when the United States Postal Service promulgate regulations regarding the prohibition on mailing. 

Registration and reporting

Sellers subject to the Jenkins/PACT Act must register with the Attorney General of the United States via the Bureau of Alcohol Tobacco and Firearms and with state tobacco tax administrators. Also, by the tenth of each month, a report must be sent to each state tobacco tax administrator with a copy of the invoices for the previous month’s sales or alternatively a memorandum of certain required invoice information. 

Compliance with delivery sales requirements (B2C sales)

Shipping packages will have to bear a required statement, “CIGARETTES/NICOTINE/SMOKELESS TOBACCO: FEDERAL LAW REQUIRES THE PAYMENT OF ALL APPLICABLE EXCISE TAXES, AND COMPLIANCE WITH APPLICABLE LICENSING AND TAX-STAMPING OBLIGATIONS” and must weigh no more than ten pounds. The age of the purchaser must be verified through commercially available databases. Also, the shipment must be signed for and by a person who presents proof of being of legal age to purchase the products. Records must also be kept of delivery sales. 

Sellers must comply with state, local and tribal laws including any excise taxes due on the products as well as having any required licenses. In addition to complying with age-restrictions, sellers must also comply with other state, local and tribal payment obligations or legal requirements relating to the sale, distribution or delivery of vapor products, which would include sales and use tax. Notably, there are many state and local requirements that apply to such sales. 

Compliance with the Jenkins/PACT Act must be taken seriously, and the compliance deadline will be upon sellers before they know it.