How The PACT Act Affects Your Smoke Shop

While the vape and smoke shop industry continues to gain popularity, business owners and product sellers must operate within a new legal landscape to remain in good legal standing. Congress recently changed the Prevent All Cigarette Trafficking (PACT) Act to include vaping devices. Since these recent amendments were added in the final days of 2020 as part of a consolidated Covid-19 relief and budget bill, they seemed to fly under the radar of many business owners.

The requirements of the PACT Act extend to all Electronic Nicotine Delivery Systems (ENDS), which are defined as any electronic device that delivers nicotine, flavor, or any other substance through an aerosolized solution that is inhaled from the device. In this definition, ENDS covers all vaping products, regardless of if the substance inhaled is nicotine. This means that hemp, CBD, and cannabis companies that manufacture, sell, or ship vaporizers or vaporizer parts across state lines should carefully consider the PACT Act and their legal obligations as a business. 

While we recommend that businesses and product sellers review the PACT Act thoroughly, we will highlight three critical parts.

Registration Requirements Of The Amended PACT Act

Any person that sells, ships or transfers ENDS in interstate commerce for profit must first register with the Alcohol, Tobacco, and Firearms Bureau (ATF) and the tobacco tax administrator in the shipping state. This registration requirement applies to delivery sellers and manufacturers and distributors shipping across state lines.

An important caveat of this registration requirement is that it only applies when the destination state taxes ENDS, so cannabis companies must determine what states tax ENDS and whether tax exemptions exist in those states for hemp, THC, or CBD devices. 

Reporting  Requirements Of The Amended PACT Act

Any person or company that transfers, sells, or ships ENDS for profit in interstate commerce must report all the shipments made to the state tobacco administrator during the previous month. Sellers must collect and retain customer data for four years, including each person’s city, town, and zip code. Again, these reporting requirements are only applied when the destination states tax ENDS.

Shipping Restrictions Of The Amended PACT Act

Last but not least, the added amendments instruct the U.S. Postal Service to prohibit shipments of all vaping products through the mail to residential addresses. This restriction does not extend to business-to-business tobacco shipments between authorized and verified tobacco industry businesses. 

However, the U.S. Postal Service extended the business-to-business exception for ENDS products and implemented the retail mail ban in the spring of 2021.

Conduct A Thorough Review Of The PACT Act 

We highly recommend that all smoke shops and vape companies conduct a thorough review of the PACT Act to ensure operations are within the legal boundaries of the amended document.