National Prosecution Expert: Operating Vaping Devices Without a License Should Be Punished as Illega

In judicial practice, there is significant debate regarding whether operating e-cigarettes without a license can be classified as illegal business operations—

Distinguishing Types of Unlicensed E-Cigarette Operations

Basic Case Facts

Between August 2017 and October 2020, Xie and others procured e-cigarette cartridges from Guangzhou, Shenzhen, and other locations for sale without obtaining a tobacco monopoly license. They were later caught by law enforcement officers from the police and the tobacco monopoly bureau, with a total of 11,430 units of the relevant brand of heated non-combustible cartridges seized. After identification, these cartridges were confirmed to be genuine IQOS cigarettes; according to the price assessment by a certain city's tobacco monopoly bureau, the total value of these cartridges amounted to 2.754 million yuan. It was also discovered that Xie and others were selling e-liquid vaporizing e-cigarettes.

Issues for Discussion:

1. The impact of distinguishing e-cigarette types on the classification of actions.

2. Whether unlicensed operation of e-cigarettes can be classified as illegal business operations.

3. Understanding of "national regulations" in illegal business operations.

In recent years, e-cigarettes have gained popularity globally, and the number of cases involving unlicensed e-cigarette operations has surged, leading to significant debate over whether they can be classified as illegal business operations. On November 10, 2021, the State Council issued Order No. 750, announcing the revised "Implementation Regulations of the Tobacco Monopoly Law" (hereinafter referred to as "the Regulations"), which added provisions stating that "new tobacco products such as e-cigarettes shall be implemented in accordance with the relevant provisions of this regulation for cigarettes." On March 11, 2022, the National Tobacco Monopoly Bureau issued the "E-Cigarette Management Measures" (effective from May 1, 2022) (hereinafter referred to as "the Measures"). Before the revision of the Regulations, there was already controversy regarding the classification of unlicensed e-cigarette operations, and after the revision, the debate continues, posing a challenge for judicial practice.

[Controversial Views]

The aforementioned case involves two types of e-cigarettes: one is heated non-combustible e-cigarettes, and the other is e-liquid vaporizing e-cigarettes. There are differing opinions on how to classify similar cases: one view holds that both heated non-combustible e-cigarettes and e-liquid vaporizing e-cigarettes should not be classified as illegal business operations, arguing that e-cigarettes differ from traditional cigarettes, and prior to the revision of the Regulations, e-cigarettes were not included in the category of monopolized and sold items, and the relevant documents from the National Tobacco Monopoly Bureau are merely departmental normative documents; the revised Regulations only state that they are to be "implemented by reference." Therefore, they cannot be classified as illegal business operations. Another view argues that heated non-combustible e-cigarettes are inherently tobacco products, and operating such e-cigarettes without a license constitutes illegal business operations; while operating e-liquid vaporizing e-cigarettes without a license prior to the revision of the Regulations does not constitute illegal business operations, it does after the revision.

[Legal Analysis]

The author believes that clarifying the following three issues will help resolve such problems:

Clarifying the types of e-cigarettes. E-cigarettes are mainly divided into two categories: one is heated non-combustible (with solid cartridges), and the other is e-liquid vaporizing (with liquid cartridges). Heated non-combustible e-cigarettes consist of cartridges and devices, with cartridges made of tobacco sheets wrapped in cigarette paper and equipped with filter tips, resembling traditional cigarettes. The core material of heated non-combustible e-cigarette cartridges is tobacco sheets, which come from tobacco leaves and are made from a combination of tobacco leaf scraps, stems, and by-products into uniform sheets. E-liquid vaporizing e-cigarettes are electronic devices that deliver vapor through atomization, also consisting of cartridges and devices, with cartridges containing vaporizing substances and other components that can be fully or partially atomized into aerosols, generally in liquid form, primarily composed of nicotine and various flavor additives.

The main difference between heated non-combustible and e-liquid vaporizing e-cigarettes is that the former's core material is tobacco sheets, while the latter's core material is nicotine (extracted from tobacco leaves). The tobacco sheets, cigarette paper, and filter tips in heated non-combustible e-cigarette cartridges are essentially the same as those in ordinary cigarettes, with the primary difference being the method of consumption; the latter is consumed through combustion, while the former is consumed through heating without combustion. Therefore, the true meaning of e-cigarettes in the tobacco professional field does not include heated non-combustible types, but considers them as ordinary tobacco products. The e-cigarettes referred to in the Regulations and the relevant documents from the National Tobacco Monopoly Bureau do not include heated non-combustible types. E-liquid vaporizing e-cigarettes differ significantly from ordinary cigarettes in both composition and appearance. Clarifying the distinction between heated non-combustible and e-liquid vaporizing e-cigarettes is a prerequisite for accurate classification.

Clarifying "national regulations." Illegal business operations are administrative offenses, and according to the principle of administrative offense attribution, whether unlicensed operation of e-cigarettes can be classified as illegal business operations depends on the existence of prior administrative regulatory basis, specifically reflected in Article 225 of the Criminal Law's "violating national regulations." Article 2 of the Tobacco Monopoly Law, enacted in 1991, states: "The tobacco monopoly products referred to in this law are cigarettes, cigars, cut tobacco, re-dried tobacco leaves, tobacco leaves, cigarette paper, filter tips, tobacco strands, and tobacco-specific machinery." Articles 3 of the Regulations revised in 1997 and 2021 (both are State Council orders) state: "Cut tobacco in tobacco monopoly products refers to products made from tobacco leaves, re-dried tobacco leaves, and tobacco sheets processed into strands, crumbs, or granules." These two documents belong to regulations and State Council orders, which are considered "national regulations" in criminal law, and this point is undisputed. According to these normative documents, for heated non-combustible e-cigarettes, the tobacco paper, tobacco sheets, and filter tips undoubtedly fall within the category of tobacco monopoly products. Therefore, whether before or after the revision of the Regulations, heated non-combustible e-cigarettes are considered tobacco monopoly products, and unlicensed operations, if serious, constitute illegal business operations.

As for e-liquid vaporizing e-cigarettes, prior to the revision of the Regulations, they were not categorized as monopolized and sold items, nor were there other "national regulations" that classified them as restricted sale items. Therefore, unlicensed operation of e-liquid vaporizing e-cigarettes before the revision of the Regulations does not constitute illegal business operations. The revised Regulations clearly state that "new tobacco products such as e-cigarettes shall be implemented in accordance with the relevant provisions of this regulation for cigarettes." This "implementation by reference" is a legal fiction, not a choice of whether to implement or not, but rather a requirement to implement. In other words, after the implementation of the revised Regulations, unlicensed operation of e-liquid vaporizing e-cigarettes, if serious, can constitute illegal business operations. Some may argue that this could lead to the "pocketing" of illegal business operations. This concern is unnecessary; on one hand, the core regulatory object of illegal business operations is monopolized and sold items, and tobacco is the primary monopolized and sold item; on the other hand, the main components of e-liquid vaporizing e-cigarettes, nicotine and various flavor additives, are harmful to human health, and the addition of additives to create various flavors and shapes, such as milk tea cups and beverage bottles, poses a significant temptation to teenagers, making it legitimate to include them in the regulatory objects of illegal business operations. The "pocketing" limitation of illegal business operations focuses on Article 225, Section 4 of the Criminal Law and other types of restricted sale items; cigarettes (whether traditional or e-cigarettes) have always been the core regulatory object of illegal business operations.

Clarifying the understanding of illegality. The prohibition error (illegality recognition error) of administrative offenses can exclude liability and affect the determination of intent. For heated non-combustible e-cigarettes, the cartridges, whether in appearance or filling, do not fundamentally differ from ordinary cigarettes, which would not lead to a general misunderstanding. Therefore, unlicensed operation of such e-cigarettes, if serious, can be classified as illegal business operations without obstacles. For e-liquid vaporizing e-cigarettes, their appearance bears almost no resemblance to traditional cigarettes; from the perspective of cartridge composition, they do not contain tobacco leaves or cut tobacco, making it difficult for the general public to recognize them as cigarettes. Therefore, prior to the revision of the Regulations, unlicensed operation should not be classified as a crime, and after the revision, a certain transition period should be set for publicity and awareness. The Regulations were revised on November 10, 2021, and the accompanying Measures were issued on March 11, 2022. On September 28, 2022, the National Tobacco Monopoly Bureau notified provincial bureaus that as of October 1, 2022, market entities engaged in e-cigarette production and operation must obtain a tobacco monopoly license. The period from November 10, 2021, to October 1, 2022, is essentially a transition period, during which unlicensed operation of e-liquid vaporizing e-cigarettes should not be classified as illegal business operations.

Combining the aforementioned case, the e-cigarettes sold by Xie and others without a license were all heated non-combustible e-cigarettes, and even if they occurred before the revision of the Regulations, they should be classified as illegal business operations; the sale of e-liquid vaporizing e-cigarettes by Xie and others occurred before the revision of the Regulations and should not be counted as illegal business operations.

(The authors are the director of the Legal Policy Research Office of the Nanjing People's Procuratorate in Jiangsu Province and a national prosecution expert, as well as the deputy head of the Second Criminal Division of the Henan Provincial High People's Court.)

Reference for Similar Cases

1. Whether before or after the revision of the Regulations, unlicensed operation of heated non-combustible e-cigarettes, if serious, should be classified as illegal business operations.

2. During the transition period before the revision of the Regulations and after, unlicensed operation of e-liquid vaporizing e-cigarettes should not be classified as illegal business operations; after October 1, 2022, unlicensed operation, if serious, should be classified as illegal business operations.