USPS Crackdown on Illicit Vape Shipments May Benefit Big Tobacco

The USPS is cracking down on distributors of unregulated vapes using its services for business shipments. This crackdown could benefit tobacco giants Altria and British American Tobacco, as it reduces competition in the e-cigarette market. The USPS has been writing letters to these distributors, warning them that their shipments are not permitted. This move could lead to an increase in sales for traditional tobacco companies.

The U.S. Postal Service (USPS) has initiated a crackdown on distributors of unregulated vapes using its services for business shipments, according to letters reviewed by Reuters. This action could significantly benefit tobacco giants such as Altria and British American Tobacco by reducing competition in the e-cigarette market.

The USPS has been sending letters to major distributors, including Demand Vape, warning them that their shipments are not permitted. The letters indicate that the distributors are shipping vapes lacking authorization from the U.S. Food and Drug Administration (FDA) and violating local flavor bans. Demand Vape, one of the largest U.S. e-cigarette distributors, has been contesting the revocation, stating that the industry operates in a "regulatory grey zone" with only a small number of FDA-authorized products meeting consumer demand [1].

The FDA has authorized only 39 e-cigarette products, but unauthorised devices are widely available. USPS is restricted from mailing vapes directly to consumers and internationally, except for domestic shipments between businesses that comply with relevant laws [1]. Other large carriers, such as FedEx and DHL, also have restrictions on shipping vapes, further limiting the options for unauthorised vape distributors [1].

The crackdown by USPS could lead to an increase in sales for traditional tobacco companies. The unauthorised vape market was estimated to be worth around 6 billion pounds ($8.05 billion) last year, but it is increasingly under pressure due to U.S. import tariffs and seizures at ports [1]. The FDA has also written letters to 24 U.S.-based middlemen as part of a crackdown in May, leading to empty shelves in vape stores [1].

The move by USPS to revoke mailing exceptions for distributors like Demand Vape could further damage U.S. vape businesses. Demand Vape sells to some 5,000 retailers in 49 states, according to 2024 filings in a NYC lawsuit against the company [1]. The evidence provided to USPS included copies of invoices showing Demand Vape's sales of unauthorised e-cigarettes, including brands flagged by the FDA as illegal to sell [1].

References:
[1] https://www.yahoo.com/news/articles/exclusive-usps-blocks-shipping-illicit-050255689.html
[2] https://finance.yahoo.com/news/exclusive-usps-blocks-shipping-illicit-050255340.html