If you’re looking for doom and gloom (or a reason to shut down your vape line), this isn’t it. In this short piece we’ll give you everything a Hemp Business needs to know about the Vape Ban 2021, and how to keep your vape sales going in 2021.
Disclaimer: This is not legal advice! When we discuss the sale of Hemp / Cannabinoid Cartridges we are only referring to products that are federally legal and only contain ‘hemp derived cannabinoids’. States can differ and we encourage all kush.com users to look into your local laws & regulations for each specific sale or situation.
Are Vape Cartridges Banned as of April, 2021?
No. Vape sales are not banned with the new bill, only made more difficult when selling directly to consumers online (nearly impossible at the time being). We won’t minimize the effect that this bill will have on the hemp industry, this will force an abrupt change to the supply chain and could force millions of online CBD Vape sales into physical storefronts.
What was in the Stimulus Bill Regarding Vape Shipping & Sales?
Within the 5,500 page ‘too big to fail’ style stimulus bill was a 2 page act entitled; The Preventing Online Sales of E-Cigarettes to Children Act which amended an existing law to include all forms of vape or E-Cigarette technology with tobacco products. Unfortunately even though the bill was targeting Tobacco Vape products and intended to prevent the Tobacco Vape sales to minors, the bill also will restrict the shipment of CBD, Delta 8 THC, CBG, and other cannabinoid vape cartridges.
The law will change both Delivery Methods, and Tax Reporting for hemp businesses selling Vape products directly to consumers. As of April you will need to:
- Be responsible for Verifying the Age of Customers
- Find Private Delivery services that collect an adult signature at the point of delivery (not many national options now)
- Register with the ATF and the U.S. Attorney General
- Register with state and local tax administrators in all states and localities where business is done
- Collect and pay all applicable local and state taxes, and affix any required tax stamps
- Each month, a list of all transactions must be sent to each state’s tax administrator that includes the names and addresses of each customer sold to, the quantities and type of each product sold, and the name, address, and phone number of the person delivering the shipment to the recipient
For even more details, check out his post from MJBizDaily.com; https://mjbizdaily.com/new-law-banning-vaporizer-shipments-could-impact-cannabis-businesses/
Or this post from vaping360.com;
The Private Sector’s Response?
Not great! Even at Kush.com we were hoping the bill would only effect USPS shipping, and hemp businesses would still have other private options for direct to consumer sales. Check out this clip from The HempList Podcast recorded early January, 2021 where Chase Nobles, Founder & CEO of kush.com, discusses the bill with Boris Levchets, VP Business Development at Cannilabs;
Specifically, here’s all the mainstream private options, and their current stance:
“Effective April 5, 2021, Vaping Products are considered Tobacco Products for the purpose of this policy. UPS no longer accepts for U.S. domestic shipment, including import and export into or from the U.S., any Vaping Product, including but not limited to e-cigarette devices and e-liquids or gels, regardless of nicotine content, even if a Shipper or consignee is permitted to ship and receive Vaping Products under applicable laws or regulations.
Electronic cigarettes and their component parts, any other similar device that relies on vaporization or aerosolization, and any noncombustible liquid or gel, regardless of the presence of nicotine, that can be used with any such device. (Effective March 1, 2021)
DHL has already banned the shipment of vapor products, but hasn’t publicly made a statement. Reports online showing that DHL has banned Vape Shipments largely stem from this twitter post;
How to Sell Hemp / CBD Vapes in 2021 (Moving Forward)
Will the entire industry, and culture disappear? No, this isn’t the end, but surely a massive restructuring. Rob Knight, a Cannabis attorney, was quick to write a piece for his site breaking down how this will affect the cannabis / hemp industry, and says;
“There’s no mention of hemp or marijuana in the new law, but businesses in both sectors should be prepared to comply …. Business-to-business sales—whether for wholesale distribution or manufacturing—are exempt from the USPS shipping ban, as long as they have the necessary licenses to operate.”https://cannabusiness.law/new-vape-rules-heres-what-you-need-to-know/
Here’s a few ways & ideas that could keep your CBD or Hemp Vape Sales going into 2021;
Wholesale Vape Sales Are Allowed to Ship!
If you’re a larger extraction company that focuses on selling to licensed retail shops, don’t fret, you should be able to keep your wholesale vape orders shipping through traditional means. This bill focuses on direct to consumer sales which require age verification, but again, according to Rob Knight, a Cannabis attorney in North Carolina, “Business-to-business sales—whether for wholesale distribution or manufacturing—are exempt from the USPS shipping ban, as long as they have the necessary licenses to operate”.
More research may be needed to confirm that services will allow these wholesale shipments, but we’re hopeful that most kush.com transactions may fall under this category. (stay tuned for updates)
Build it, and They Will Come (There’s Demand)
Rick Maturo, of the Nielsen Cannabis Insights Practice is quoted saying that in 2020, $44 million CBD vape cartridges within the USA were ordered online. That’s not even touching the growing demand for Delta 8 THC Vape products, and other minor cannabinoids like CBG.
There’s enough demand to warrant a network of Retail shops or physical locations to buy vape products. Opening a retail location is no easy feat, but think about all the existing locations that currently sell tobacco products but haven’t started selling CBD vape products. Not only gas stations and smoke shops, but there’s even rumors that Amazon (with its private delivery force) may jump into the CBD game!
Check out this article for more information about potential Amazon CBD sales; https://thecbdvape.com/nielsen-predicts-amazon-entry-into-us-cbd-retail-at-mjbizcon-hemp-forum/
Consider Recreational Cannabis
There is an industry (running alongside the Hemp industry in many states), that is also not allowed to use traditional means of shipping..
Kush.com got started working around the I-502 Recreational Cannabis space in Washington State. Here we have farms and extraction companies ship cannabis products 300 miles across the state (and over mountains!) by hiring drivers on staff, or by using approved local shipping companies that spring up when there’s demand. Not only could Vape distribution take advantage of all the retail stores that exist in the cannabis space (where permitted), but the hemp industry could copy the model in states where recreational cannabis isn’t established. The new laws may displace nearly $44 million in online Vape sales from last year, but that comes with great opportunities for smaller delivery services, and retail locations to fill that demand.
The industry isn’t going away, but we could see yet another consolidation.
After talking with some kush.com users this week there was a general consensus that this Act isn’t only preventing sales to minors, but it also helps the big players gain more of the market. Here’s a quote from one of the users on Kush.com that sums up the general feeling around the industry;
Technically legal, yes, but having to register with each state’s Attorney General, collect and remit “tobacco” taxes, retain ID proof of 21+ and signature required for delivery for 5 years and allowing ATF access to premise and records without notice is a non-starter for most small D2C. Not to mention that USPS, DHL, FedEx and UPS have all said they will follow PACT and ENDS would make it virtually impossible to maintain compliance while service direct customers. Meanwhile, tobacco companies (which own JUUL and Vuse) are already in this framework of operation so it does not impact them negatively. Frankly, I think it was the tobacco lobbyists that got this one in…– Kush.com User on the 2021 Vape Shipping Ban