What’s new: China’s State Council has added e-cigarettes to the nation’s tobacco law by changing its implementation regulations.
The Nov. 26 change, which comes eight months after the release of draft changes sent e-cigarette stocks into freefall, provides long-awaited clarity for vape-makers on the legal status of the products, suggesting they will be regulated rather than banned outright.
The changes preserve the wording of the draft, meaning the industry will need to wait longer to learn how exactly their products will be regulated, and whether they will need to be licensed by the State Tobacco Monopoly Administration (STMA) in the same way as cigarette firms.
Shares of two Chinese vape giants, NYSE-listed RLX Technology Inc. and Hong Kong listed Smoore International, have nudged up a little since the announcement.
The background: Chinese e-cigarette stocks plunged in March after Beijing signaled the devices, which had always operated in a regulatory grey area, would be treated more like tobacco cigarettes. Shares of RLX lost half their value in a single day.
The one-line draft amendment to the Implementation Regulations of the Tobacco Monopoly Laws said e-cigarettes would be regulated “with reference to” controls on conventional cigarettes. That fueled speculation that China Tobacco Group, which shares staff and offices with the STMA, may be seeking to nationalize the industry, or take over distribution and sell licenses to vaping firms, or that such firms would face higher taxes on their products. Those questions remain unresolved, an industry source told Caixin.
China ratified the World Health Organization’s Framework Convention on Tobacco Control in 2005 but has not passed a nationwide indoor smoking ban, a key tenet of the convention. E-cigarette regulation has focused on controlling how they are marketed, and keeping them out of the hands of minors.
Potential long-term health impacts of e-cigarettes remain unclear, but multiple studies have linked them to cardiovascular and respiratory disease, and they have been banned in more than 40 countries.
Contact reporter Flynn Murphy (flynnmurphy@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)
Get our weekly free Must-Read newsletter.
