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Investing.com -- The U.S. Postal Service has barred New York-based Demand Vape from using its business shipping services after receiving evidence the company distributed unregulated e-cigarettes, letters reviewed by Reuters show.
The action deals a blow to a multi-billion dollar industry that has cut into Big Tobacco’s sales.
The letters, not previously reported, show USPS acted after New York City’s Law Department provided proof that Demand Vape’s shipments violated laws, including a local flavour ban.
The move could benefit tobacco giants such as Altria (NYSE:MO) and British American Tobacco (LON:BATS) (NYSE:BTI), which have long fought against unregulated vapes, many imported from China.
Unregulated vapes lack the U.S. Food and Drug Administration’s authorization required for legal sale in the United States. In a July 15 letter, USPS said it revoked Demand Vape’s mailing exception after finding the company shipped products without FDA approval and in violation of the flavour ban.
“Your local Buffalo BME Office will not accept any packages from… Demand Vape that contain ENDS products,” the letter read.
Demand Vape said it complies with applicable laws and is contesting the decision, describing the sector as a “regulatory grey zone” with few FDA-authorised products.
“We reject any characterisation that paints Demand Vape as anything other than a transparent, lawful and reputable business,” it said.
Under a 2021 law, the agency is barred from mailing vapes to consumers, internationally, and in most other cases, with exceptions for compliant business-to-business shipments. USPS has shared with New York City officials a list of other vape companies holding mailing exceptions so they can be reviewed.
British American Tobacco estimates the U.S. unauthorised vape market was worth about £6 billion ($8.05 billion) in 2023. It is facing increasing pressure from import tariffs, port seizures and FDA enforcement, including letters sent in May to 24 U.S.-based distributors.
Demand Vape, one of the largest U.S. e-cigarette distributors, sells to roughly 5,000 retailers in 49 states. City attorneys told USPS they provided invoices showing sales of products specifically flagged by the FDA as illegal.