E-cigarettes May Face the Strictest Regulation Yet — What Should Industry Players Do?

On March 22, the Ministry of Industry and Information Technology released the "Decision on Amending the Implementation Regulations of the Tobacco Monopoly Law of the People's Republic of China," which contains only one sentence:

In the appendix of the draft regulations, a new Article 65 is added: "New tobacco products such as e-cigarettes shall be subject to the relevant provisions regarding cigarettes in these regulations."

The e-cigarette industry is about to face the strictest regulation, which is undoubtedly the case. The question is how the specific regulatory details will differ from the current situation.

At this stage, many practitioners may feel a sense of panic, especially those who sell e-cigarettes through special channels.

From my personal perspective, we can consider the following aspects:

First, will the e-cigarette industry be taxed in the same way as tobacco? Will the prices of e-cigarettes increase?

Second, will a tobacco license or tobacco supply channels be required? This would end the situation where e-cigarettes are casually displayed everywhere, such as in small shops, barbecue stalls, street vendors, milk tea shops, cinemas, and bars.

Will individual sellers, such as those in micro-businesses, violate the law and face administrative or legal penalties?

Third, will manufacturers need production licenses? This relates to whether many small brands can obtain production licenses and continue production, which may lead to the disappearance of many small brands.

Fourth, will they be included in tobacco supply channels? If so, many e-cigarette distributors will cease to exist, replaced by tobacco supply channels.

Fifth, will there be a limit on production? Currently, e-cigarette brands, especially the leading brand RELX, are often out of stock due to a wide variety of flavors. If a limit on production is implemented, will this mean that shortages will become more pronounced in the future?