U.S. Customs agents seized 86,000 disposable vapes Wednesday at the Port of Lehigh Valley in Allentown, Pennsylvania. Customs and Border Protection (CBP) says the products were being shipped to an address in Northampton County, PA, and will be destroyed.
The shipment included 216 cartons, with the contents described on shipping manifests as “LED lights.” The devices were Alphaa Onee Plus disposables (see image below), which FDA inspectors determined “violated the Federal Food, Drug, and Cosmetic Act (FD&C Act) as misbranded consumer goods being imported by an unauthorized agent,” according to CBP.
The seizure followed an earlier CBP announcement that in a two-month period from June to August agents in Pittsburgh and Philadelphia had seized 48 separate shipments of illegal vaping products. The devices were all disposable or pod-based products with brands including Bidi, Eonsmoke, Pop, Puff, and St!k. The shipments came from China and Hong Kong, and were headed to addresses in Pennsylvania. All the seized merchandise was destroyed.
The Alphaa Onee Plus is a Chinese-made prefilled disposable device that holds 8.5 mL of e-liquid. Because it was not on the market before Aug. 8, 2016, the product violates the FDA’s Deeming Rule, which set that date as the cutoff for vaping products to be introduced without first being approved for marketing by the FDA.
All products introduced after that date must submit a Premarket Tobacco Application (PMTA) and receive approval before going on the market. The 2016 Deeming Rule modified the 2009 Tobacco Control Act (which is part of the larger Food, Drug and Cosmetic Act) to give the FDA authority over vaping products.
The Alphaa Onee Plus is similar to other recently introduced gray market disposable vaping products, intended for sale primarily in convenience stores and gas stations. Unlike black market products, which are sold in the underground economy without collecting sales and other taxes, gray market merchandise is taxed and sold through typical retail channels, but the product itself isn’t strictly legal.
The best-known of these gray market products is Puff Bar, which anti-vaping groups claimed in early 2020 was exploiting a “loophole” in FDA guidance to exist on the market. There was no loophole, which the FDA proved in July by issuing a warning letter to a major Puff Bar importer, ordering the product removed from the market. The agency cited Umais Abubaker, the owner of Cool Clouds Distribution, Inc., for selling products introduced after the 2016 cutoff date without an approved PMTA.
We found the Alphaa Onee Plus for sale to American customers on two websites for $20.99 and $21.99. Assuming it sells in stores for about the same price, the “street value” of the Pennsylvania shipment would be a little under $1.9 million (CBP says $1.72 million). Further assuming that its wholesale cost was about $4 per unit (including shipping), that would be a profit of over $1.5 million split between the distributor and retailers.
The Puff Bar business model will probably continue to be copied and repeated in the future, as legitimate manufacturers are forced to submit to the FDA’s onerous and expensive PMTA requirements. Any enterprising person with some start-up cash and spare time can become a gray market e-cigarette mogul with a little luck.
Of course, once in a while your shipments might get seized by the feds.