New Zealand Vaping Regulation Consultation is Open

1. We disagree with widespread bans removing product availability of eliquids containing traces of flavour sweeteners when they are compliant to international vaping product standards.
2. We disagree that consumer choice should be limited to 10ml bottles for nicotine salt eliquids based on a nonfactual notion that 30ml bottles with internationally compliant child resistance caps and liquid flow restrictions pose an unacceptable risk to consumer safety.
3. We disagree that consumers and vape support groups on social media should be banned from sharing information or advice about transitioning from smoking to vaping.
4. We disagree that general stores should be penalised for providing household essentials to local communities, further increasing their dependence on the sale of tobacco products.
5. We disagree that reputable international vape producers should be excluded from contributing to their products safety compliance and distribution within New Zealand.
6. We disagree that vape brands offering recycling programs should be banned from communicating these features and environmental benefits to consumers.
7. We disagree that consumers should pay more for vaping products because of a non-transparent compliance cost recovery model based on unquantifiable assumptions.

If you agree with what we disagree, you can have your say by emailing vaping@health.govt.nz

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Click here for the proposed regulations

Click here for the proposed product safety requirements

Regulatory proposal 1: Defining and internal area

1. Which option do you support for the definition of an internal area and why?

We support Option A and Option C

The intent of this act is  ‘to prevent the detrimental effects of other people’s smoking on the health of people in workplaces, or in certain public enclosed areas, who do not smoke or do not wish to smoke there’. 

Option A (support) - Although reliant to some extent on interpretation this is a non-prescriptive framework that takes a "reasonable person" test to defining an internal area. Having legislation that allows for common sense whilst still delivering on the intentions of the Act is good for small business compliance and for the wider public.   

Option C (support) - Similar to option (A) Has a less prescriptive approach but provides a light touch layer of guidelines to small business owners about the parameters they can operate in when defining an internal space which could help reduce the level of occasional ambiguity that tends to exists under the current approach (option A).    

Option B (do not support) - This arbitrarily deems any area with a roof regardless of size (permanent or temporary) as an internal structure. Using a "reasonable person" test, if a workplace chooses to dedicate an area for staff or patrons to vape and/or smoke, they should be permitted to make it safe and comfortable including having some protection from the weather elements.   

Option D (do not support) - An assessment tool that considers air quality as a measure to define an internal space will add unnecessary red tape, compliance and approval costs whilst at the same time over-complicating what should be a simple framework aimed at preventing the detrimental effects of other people’s smoking on the health of people in workplaces. 

2. If you support option c, or if option c were to proceed, would you support a 50 percent coverage threshold? If not, what threshold would you suggest and why?

 Given the parameters of Act are aimed at prohibiting all smoking and vaping in an internal space, a maximum permanent coverage area of 50% would be suitable in most instances. Workplaces should be permitted to provide a dedicated smoking and vaping area that has a roof and 2 walls for the comfort and safety of staff and/or patrons.

 Regulatory proposal 2: Specialist vape retailer approvals

3. Do you agree that being in a rural location should be a factor in determining whether to approve an application to be a specialist vape retailer with the lower threshold of 60 percent of sales from vaping products?

4. Are there any other criteria that should be considered when determining whether to approve an application to be a specialist vape retailer with the lower threshold of 60 percent of sales from vaping products?

5. Do you agree that regulations are not necessary at this stage? If not, what do you propose should be put in regulations?

Regulatory proposal 3: Promotion, information and advice

3.1   Display of vaping products in retail settings

6. Do you agree that the display of vaping products should not be regulated at this stage? If you do not agree, what controls do you think should be put in place and why?

3.2   Price lists given to retailers for tobacco only

7. Do you support the proposal to restrict the information allowed on manufacturers’ price lists for tobacco products?

We support the proposal to restrict the information allowed on manufacturers pricelists for tobacco products to brand name, brand variant, quantity, price and required health warnings.   

8. Is there any other information that you consider should be allowed on manufacturers’ price lists for tobacco products? If so, what do you propose?

3.3   Public health messages

9. Do you consider that other information, beyond the information that Vaping Facts already outlines, should be designated as a public health message issued by the Director-General of Health for public services and any publicly funded individuals or organisations to use? If so, what do you propose?

3.4   Vaping product information in retail settings

10. Do you support limiting information about vaping products in retail premises and on retailers’ websites to written authorised statements (other than permitted oral communications)? If not, what do you propose?

11. Do you support the proposed statements? If not, what do you propose?

12. Do you support limiting the format of these notices so that they are consistent with tobacco product notices? If not, what do you propose?

1. No lifestyle imagery 
2. No vaping product imagery (generic or branded)  

3.5   Product availability notices in retail premises

13. Do you support the proposal to align availability notices for vaping products with those for tobacco products? If not, what do you propose?

We do not support the proposal to align availability notices for products with those for tobacco products.  

Retailers are permitted to display vaping products in store, if they choose not to display them its contradictory having availability notices limited to tobacco product standards.  

Recommend 

1. Maximum of one notice per point of sale
2. Product images permitted 
3. No lifestyle imagery
4. No restrictions on text  font, colour or size
5. Must display R18 notice
6. Must display warning "Vaping products may contain nicotine which is an addictive substance"

The intent of this is to allow retailers to indicate to existing vapers and smokers what vaping products are available for purchase while ensuring it does not cross over into advertising.   

14. Do you agree there should be a requirement for retailers to display purchase age (R18) notices at each point-of-sale? If not, why not?

Do not agree there should be a requirement to display purchase age (R18) notices at each point of sale for vaping products because:  

1. There is no mandatory requirement for tobacco.
2. There is limited space available in stores and this messaging can be effectively communicated orally by retail staff and can also be displayed within product availability notices, vaping product information and product packaging.      

15. Do you support the proposed wording and presentation requirements? If not, what do you propose?

We support the proposed wording requirements.

We do not support the presentation requirements and recommend a less prescriptive approach to these notices to balance improved targeted communication whilst avoiding a crossover to advertising.  

3.7   Suitably qualified health workers

16. Do you agree that no additional category of person should be added to the definition of ‘suitably qualified health worker’? If you do not agree, which category do you think should be added and why?

We agree with the definition of "suitably qualified health worker". 

We do not agree with the scope of this Act.   

Under the Act, only a ‘suitably qualified health worker’ can provide any advice or messages to an individual or group for the purpose of supporting the individual or group to transition from smoking to vaping. 

Much of the success of vaping being used as a harm reduction tool in New Zealand is attributed to word of mouth from friends, family and social media support groups.

We believe the key reasons for this include: 

1. The reach of friends, family and social media groups is substantially stronger and more accessible than "Suitably qualified health workers". 
2. Existing tobacco smokers are more likely to trust and be open minded to what friends, family and social media support groups have to say because they are speaking to somebody with first-hand experience. 
3. Friends, family and social media support groups are unavoidable and should not be "criminalised" for sharing personal experiences and advice on transitioning from smoking to vaping. 
4. To our knowledge there are no major consumer risks or concerns in New Zealand resulting from misinformation spread by friends, family and social media support groups to warrant restrictions.  

The social media support groups in New Zealand are extremely effective at self-regulating which ensures appropriate information maintained for the benefit of consumers. These support groups also have high participation from individuals associated with responsible vape retailers, consumer advocacy groups and harm reduction research agencies.   

There is value in having "suitably qualified health workers" available to provide formal fact-based vaping information for the benefit of consumers. However, it is also critical for this part of the Act to differentiate between formal and informal advice and messages for the purposes of transitioning from smoking to vaping so friends and family can continue to share their personal experiences and social media vaping support groups can continue their contribution towards supporting smokers transition to vaping.  

Regulatory proposal 4: Packaging

17. Do you support the proposed wording of the health warning for vaping products? If not, what do you propose?

For nicotine salt e-liquids, the suitability of the proposed wording of the health warnings is dependent on S 5.2 (Product Safety Standards).  

The Governments intent is to follow the United Kingdom Packaging requirements which are based on the TPD. The primary objective of the health warning is to communicate to a consumer that nicotine is an addictive substance.  

The United Kingdom health warning consists of 72 characters whereas the proposed wording consists of 129 characters because of the addition of te reo Māori.  

"This product contains nicotine which is a highly addictive substance. 
He nikotīni kei roto i tēnei mea, he matū tino whakawara" 

If a maximum container size of 500mg nicotine proceeds I do not support the proposed wording.  

In this scenario, the majority of e-liquids containing nicotine salts would be restricted to a 10ml bottle size (most nicotine salt e-liquids available in New Zealand are sold in 30ml bottles) which means there is significantly less printing space available on the bottle.    

In order to remain compliant with the proposed health warning of 129 characters including  te reo Māori manufacturers would have 2 options.  

Option 1 
Reduce the font size to a maximum of one quarter (1/4 or 25%) of the size of current health warning text displayed on 30ml nicotine salt bottles. 

Impact: The Health Warning text becomes extremely difficult to read for a consumer, resulting in an ineffective communication to a consumer that nicotine is an addictive substance, defeating the objective of the health warning message.      

Option 2
Use more than the 32 percent area of the packaging to display the health warning.  Because of the additional text characters, in order to achieve the same readability as the UK packing requirements a surface area of approximately 64% of a 10ml nicotine salt bottle would be required.  

Impact: For manufacturers to comply with the remaining labelling requirements in Q22 onwards there would be minimal space available to display any brand information (including a small text logo). The unintended consequence of this is the commoditisation of nicotine salt e-liquids. I consider this to be more restrictive than the plain packaging requirements on tobacco.  

Nicotine Salt e-liquids play an important role for many smokers transitioning to vaping as they are extremely effective at satisfying nicotine cravings. Because nicotine salt e-liquids generally come in a higher concentration of nicotine to freebase e-liquids it is critical to ensure they are marketed responsibly, particularly when it comes to effectively communicating warnings on the addictive nature of nicotine.

Recommendation

The Act should allow a selection of health warning messages already present on vaping product labels in New Zealand, USA and Europe that clearly convey the message that nicotine is an addictive substance to consumers.  

• Option 1: "WARNING: This product contains nicotine. Nicotine is an addictive chemical."
• Option 2: "WARNING: This product contains nicotine. Nicotine is an addictive substance."  
• Option 3: "This product contains nicotine which is a highly addictive substance."
• Option 4: (best practice):  "This product contains nicotine which is a highly addictive substance. He nikotīni kei roto i tēnei mea, he matū tino whakawara" 

The key benefits of this approach vs current include

1. Reduced time and cost for industry compliance to requirements which would otherwise result in reduced range availability and increased cost to consumers. 
2. Ensures health warnings can be effectively communicated (read) by consumers
3. Does not disadvantage nicotine salt based vaping products relative to tobacco.

18. Do you agree with the proposed requirements for the health warning panel for vaping products? If not, what do you propose?

We agree with the health warning panel. This requirement is consistent with mature vaping markets internationally.

19. Do you support the proposed wording of the health warning for smokeless tobacco products? If not, what do you propose?

20. Do you agree with the proposed requirements for the health warning panel for smokeless tobacco products? If not, what do you propose?

21. Do you agree with the proposals for product presentation for vaping products? If not, what do you propose?

22. Do you agree with the safety messaging statements? If not, what changes to them do you suggest?

We agree with the safety messaging statements and appreciate the pragmatic approach of allowing "words with the same meaning"  

23. Do you agree with the proposals for product presentation for smokeless tobacco products? If not, what do you propose?

More justification from the Ministry of Health is required prior to enacting 3.(b) which prohibits product presentation suggesting that a particular product aims to reduce the effect of some harmful components of smoke.  

In the United States, the FDA has authorised marketing of the IQOS Tobacco Heating System with ‘Reduced Exposure’.  Quoting “Scientific studies have shown that switching completely from conventional cigarettes to the IQOS system significantly reduces your body’s exposure to harmful or potentially harmful chemicals.” 

24. How much time do you think smokeless tobacco product manufacturers should have before they need to comply with new packaging requirements? Please give reasons.

25. Do you agree with the proposed instructions on and in the packaging? If not, what changes to them do you suggest?

26. Do you agree with allowing track and trace markings? If not, why not?

We agree with allowing track and trace markings.  

27. Do you support the proposal to restrict the quantity of smokeless tobacco sticks in a package to 20 or 25? If not, what do you propose?

The intention of this requirement is to prevent retailers from selling smokeless tobacco sticks in smaller quantities (eg, selling a single smokeless tobacco stick).  

While it’s unlikely this restriction is needed to protect young people or non-smokers from taking up smokless tobacco sticks (there is no evidence suggesting there is a problem requiring a solution), this restriction is in line with the current product range in New Zealand and internationally.     

28. How much time do you think manufacturers of vaping products and smokeless tobacco products should have before they need to comply with new packaging requirements? Please give reasons.

The time required is largely dependent on the outcome of product safety + labelling requirements as well as the type of vaping product.    

Using timeframes based on the Tobacco Standardised Packaging (TSP) requirements for implementing the vaping product changes requires careful consideration of the difference in scale, burden on small business, complex distribution models unique to the New Zealand vaping industry and the need to differentiate between different sales channels & vaping product segments.  

Difference in Scale:

The transition to Tobacco Standardised Packaging had 300-400 unique tobacco product variants. In vaping, there are at least 10,000 unique variants (potentially as high as 60,000 including various vaping accessories).  

Burden on Small Business

The Tobacco Standardised Packaging transition was managed by 3 publicly listed multinational tobacco companies operating in an oligopoly. The New Zealand vaping industry is more fragmented making it much more competitive with upwards of 100 manufacturers / distributors at varying levels of scale; each with substantially more impacted products and less financial resources when compared to New Zealand’s tobacco industry.             

Complex distribution models

Many imported vaping products currently available for sale (devices and e-liquids) are imported and sold by multiple distributors within New Zealand. This adds an additional layer of complexity and co-ordination when transitioning products to the new packaging requirements - and requires careful consideration when assessing the proposed product notification scheme.  

Differentiation between sales channels & product segments is required.

Specialist Vape Retail stores carry an extensive range of vaping products in order to cater for a wide range of consumer needs particularly refillable vape devices, accessories and e-liquids that come in multiple nicotine strengths and flavours.

Maintaining this range requires a considerably higher stock duration compared to prefilled pod vapes and traditional tobacco products (meaning average stock holdings of products in a vape specialty store take a longer amount of time to sell through to consumers than a prefilled pod cartridge or packet of cigarettes).  

General retail outlets (Petrol Stations, Supermarkets and Dairys) have a smaller range of impacted products primarily consisting of fast selling mass market prefilled pod systems distributed by large vape wholesalers and multinational tobacco companies.  

Dependency on the outcome of product specifications and labelling requirements

Under the current proposed product safety requirements in section 5.2, many of New Zealand’s vaping products (both flavoured and unflavoured) will be prohibited for sale due to the restrictions proposed on traces of sweetener and most of the current nicotine salt e-liquids available for sale in New Zealand will need to move from a 30ml bottle to a 10ml bottle in order remain compliant with the proposed limit of 500mg nicotine content per container. 

In this scenario, Vape Manufacturers and Distributers should be given sufficient time to develop new compliant e-liquid recipes that can be used as a suitable alternative for consumers of impacted products. This is to ensure consumers can successfully continue using vaping products as a better alternative to tobacco.  

Alternatively, if a less restrictive approach is taken in section 5.2 / appendix A, the range of vaping products in New Zealand should remain relatively similar to current. In this case, vaping products sold in specialist vape stores should be allowed additional time to transition effectively.  

Recommendation

1) There is a strong requirement for different Implementation timelines for products sold in specialist vape retail and products sold in general retail that recognises:

• The difference in scale of products impacted
• The burden on small business
• The level of market disruption on consumers
• The difference in stock durations
• The potential need to develop new substitute products for those prohibited under the proposed regulations

Vaping products sold in general retail should be based on the tobacco standardised packaging timeline of 9 months to comply + 3 months to sell through.

Vaping products sold in vape specialist stores should have 24 months to comply and a further 12 months to sell through.

2) There is an urgent need for a transitional product notification scheme to enable an effective transition (no fees, no restrictions) – Also refer to recommendation in Q41.

Transitional Product Notifications should be implemented within 3 months and provides a comprehensive database to the Director General showing the full scale and specifications of all vaping products currently available for sale in New Zealand that can be used to drive informed public health decisions related to vaping.

Products on the transitional product notification scheme should be subject to S71 – S75 of the Smokefree Environments and Regulated Products Act to ensure appropriate intervention can take place if required for the benefit of consumer safety.

Regulatory proposal 5: Product notification and safety

5.1   Product notification requirements

29. Do you agree that these are the right details for the Ministry of Health to collect for each notifier? If not, what changes would you make to the details collected?

We agree that the details suggested are the right details for the Ministry of Health to collect for each notifier.  

30. Do you agree that the notifier should declare that they meet the current requirements of the Act? If not, what approach to enforcing the provisions of the Act do you suggest?

• Reduced product availability, especially if the notifier was a large retailer with limited wholesale operations outside of their owned retail network.
• Increased retail pricing to consumers, being the exclusive distributor of a popular product reduces competition.   

• Increased administrative cost and confusion for the Director General.
• Duplication of work and notification fees between notifiers.
• Heightened risk of "freeloaders" parallel importing the same product without being subject to any of the accountability intended from the notification scheme. 

1. Easier enforcement with clearer accountability
2. More effective transition with no risk of "market rights" disputes between local notifiers
3. Foreign producers (based outside of the UK) are already experienced with and actively using the UK vaping product notification scheme.
4. Foreign producers are the best subject matter expert of their products meaning they are better suited to provide information about safety than local distributors / retailers who are not directly involved in the manufacturing process. 
5. Reduces the risk of creating a scheme that drives anti-competitive behaviour
6. Products notified by a foreign producer will still be subject to S71-S75 of the Smokefree Environments and Regulated Products Act.   

31. Do you agree that these are the right details for the Ministry of Health to collect for each notifiable product? If not, what changes would you make to the details collected?

32. Do you agree that the notifier should declare that each product meets the current requirements of the Act? If not, what approach to enforcing the provisions of the Act do you suggest?

5.2   Product safety requirements

33. Do you agree with our approach of basing product safety requirements on the EU and UK legislation and guidance? If not, what approach to our product safety requirements do you suggest we use?

34. Do you agree with the product controls we are proposing to include in the product safety requirements? If not, what changes to the areas that the product safety requirements cover do you suggest?

35. After reviewing our full proposal in Appendix A, do you agree with our proposed product safety requirements? If not, what changes to them do you suggest?

We do not agree with the proposed product safety requirements on sweeteners as a prohibited substance and nicotine strength.  

Sweeteners as a Prohibited Substance

The intent of prohibited substances in appendix A is to align with the UK legislation by setting a prohibited substances list, rather than a more restrictive permitted substances list. This is a pragmatic approach that can be extended as and when substances are identified that pose an unacceptable risk to consumers.  

This intent is unfortunately contradicted in 15 (r) of appendix A which prohibits any trace of sugars or sweeteners in a vaping substance.   

Although there is limited research on the role of flavours in nicotine vaping products in relation to smoking, there is an overwhelming amount anecdotal evidence from current New Zealand consumers as demonstrated in the petition of Nancy Loucas from Aotearoa Vapers Community Advocacy.  

In response to this petition, Deputy Director-General Deborah Woodley acknowledges that flavours appear to be an important factor in vaping uptake and ongoing use for adult smokers referencing several studies from Du et al 2020,  Hajek et al 2019 and Russell et al 2018.  

A recent study (Li et al 2021) concludes the use of fruit and other sweet flavoured e-liquids is positively related to smokers' transition away from cigarettes and warns regulators to consider how flavour restriction policies may negatively impact smokers using vaping products to transition away from cigarette smoking.  

A prohibition on vaping substances containing traces of sweetener will significantly restrict availability of all vaping substances (flavoured and not flavoured) to consumers.

We estimate at least 85% of the vaping products we range (all of which are manufactured in the United Kingdom, Canada, United States and New Zealand), will be prohibited under this requirement.   

When drafting the list of prohibited substances, appendix A claims to be based on guidance from the American E-Liquid Manufacturing Standards Association, the Canadian Tobacco and Vaping Products Act and UK Vaping Legislation.

Vaping substances containing food grade e-liquid sweeteners like sucralose (not specified in appendix A) are within product standard guidelines and widely permitted for sale in Canada, the United States and the United Kingdom.  

Recommendation

Strongly recommend appendix A takes a less restrictive approach to sweeteners by specifying specific ingredients that do not fall within international product standard guidelines.    

Change from: "15 (r) sugars and sweeteners, including:"

Change to: "15 (r) The following sugars and sweeteners:" 

Nicotine Strength

Disagree with Appendix A 18. "The total nicotine content in a container must not exceed 500mg of nicotine."   

This draws off the UK legislation with the intent behind this restriction being to mitigate the against the risk of someone, particularly a child, ingesting an entire container of nicotine vaping substance and suffering significant harm and potentially death.  

Appendix A 22. rightly acknowledges the UK legislated container size limit of 10 mL would be quite disruptive to the New Zealand market, where the majority of containers have a capacity of 30 mL or more, so recommends managing risk by limiting the amount of nicotine in a container.  

UK Vaping Legislation (i.e. TPD) was created based on products which existed in 2016. Since 2016, there has been an incredible amount of innovation in vaping products (including the widespread use of nicotine salts) which now means some aspects of the safety requirements within UK legislation are less relevant to vaping in 2021 than it was in 2016.  

Key Changes Since UK Legislation was created:  

1. Introduction of Nicotine Salts allowing higher concentrations that provide nicotine absorption levels closer to those from smoking cigarettes. Nicotine salts are generally accepted as an effective alternative for long-term smokers. As a product segment, nicotine salts make up a significant proportion of the New Zealand vaping market.  
2. Improvements in Vape e-liquid packaging. In 2016, most vape e-liquids came in glass dropper bottles (the same bottles as aromatherapy products). While most had some level of child resistant protections, once opened there was a heightened of someone ingesting an entire container.   

In 2021, PET bottles designed specifically for vape e-liquids are predominantly used, becoming industry standard. These bottles come with cutting edge child resistant packaging and comply to restricted liquid flow threshold standards as required in the United States vaping standards which has contributed to substantial improvements in product safety. 

Under current industry standards, we are not aware of any instances where somebody has unintentionally ingesting an entire container (or more than 10ml) and have seen no evidence that current premixed vape e-liquid packaged in PET bottles (particularly nicotine salts) poses an unacceptable risk to consumers.  

The impact of having a 500mg maximum nicotine content per bottle on nicotine salts is that 95%+ of nicotine salt vaping products currently available for sale in New Zealand will need to transition from a 30ml bottle to a 10ml bottle.  

Under this proposal, the intended safety benefit to consumers will be outweighed by the following consumer costs.  

1. Increased production cost and plastic waste ultimately passed on to the consumer as a price increase making vaping less affordable. 
2. Reduced readability of product health warnings and instructions making it particularly difficult for messages to resonate with consumers (the surface area available for printing reduces by 67%)
3. Significant disruption to the New Zealand market. Globally nicotine salts are manufactured in 30ml bottles (except for countries constrained by outdated TPD rulings) 
4. Reduced availability of reputable imported brands that current vapers depend on as an alternative to smoking tobacco.  

Recommendation

Change from:  “18. For vaping substances sold at retail, the total nicotine content in a container must not exceed 500mg, whether it is present as free-base nicotine or nicotine salts.”

Change to:  “18. For vaping substances sold at retail, the total nicotine content in a container must not exceed 500mg for freebase eliquids and 1500mg for nicotine salts.”  

The benefits of this change include;

• Reduced burden on industry compliance 
• Reduced plastic waste
• Minimised disruption to the New Zealand Market
• Maintained affordability for consumers
• Improved readability of required Health Warning Text and product information.     

 Regulatory proposal 6: Annual reporting and returns

36. Do you support the proposals for manufacturers’ and importers’ annual sales reports? If not, what do you propose?

We do not support the proposals for manufacturers and importers annual sales reports.   

The intent behind this proposal is to have consistency between tobacco and vaping products, requiring vaping manufacturers and importers provide an annual return to the Ministry of Health showing sales related information for the previous calendar year.  

The Ministry of Health believes that by having this information it will provide them a better understanding of product demand and that will inform any future review of the regulations.  

Tobacco Annual Returns are published on the Ministry of Healths website available for the public to see. From the introduction of tobacco returns until 2015 a consolidated report analysing key insights in the interest of public health supplemented the individual Tobacco Companies returns.  

Since 2016 there has been no analysis published on tobacco returns, presumably because the Ministry Of Health has more sophisticated methods of acquiring this information (e.g. research studies like the NZ Health Survey, improved communication and information sharing between government departments / Customs office etc.)    

I agree that it is beneficial for The Ministry of Health to have access to fact based vaping information that provides them a better understanding of product demand and inform any future review of the regulations (please also refer to recommendation to introduce a transitional product notification scheme in Q41) 

I do not agree that there is a benefit in making this information publicly available and have not seen any clear rationale justifying why it is needed in the proposal. If vaping manufacturer and importers annual sales reports were to be made publicly available, their primary use outside of the Ministry of Health will be as a competitor intel database. Although this would be consistent with the approach taken in tobacco returns, it is an out-dated, unethical use of commercially sensitive information..  

Recommendation

1. The Ministry of Health should review alternative sources of information readily available through local market research and insight agencies to assist with informed public health decision making. 
2. If the readily available information from local market research and insight agencies is not suitable for requirements, the Ministry of Health should treat vaping manufacturer and importer annual sales reports as confidential & commercially sensitive information provided to them in confidence for purpose of making informed public health decisions.  

37. Do you support the proposals for specialist vape retailers’ annual sales reports? If not, what do you propose?

1. Specialist vape retailers should not be required to provide annual sales reports on the basis that the Ministry of Health can obtain an appropriate level of information from Vape Manufacturers and Importers.
2. If the Ministry of Health identifies a specific need to have visibility over information contained in the proposed Vape Specialist Retailers annual sales reports and can justify why it is critical to making informed public health decisions relating to vaping, they should work collaboratively with vape specialist retailers on an exception basis using S71 of the Smokefree Environments and Regulated Products Act if necessary.    

 Regulatory proposal 7: Fees

38. Do you agree the Ministry of Health should charge for the activities identified? If not, what activities do you suggest we charge for?

The intent is to recover the costs of establishing and operating the regulatory scheme from the industry through fees with an aim of keeping costs as low as possible while ensuring appropriate levels of safety and control for notifiable products. 

Within tobacco, manufacturers can launch new products and tobacco retailers can open new stores without the requirement of Ministry of Health approvals or fees. I do, however, appreciate the need for a tighter level of controls for vaping products.       

We do not agree that the Ministry of Health should charge for applications to be a specialist vape retailer.  

This is because the Ministry of Health is already charging approval fees for vaping premises and websites. Under S14A of the act, the Director General must not approve a person to be a specialist vape retailer unless they have satisfied the requirements for a vaping premise.  

It is unclear what additional cost drivers (if any) exist in the Director Generals decision to approve a person as a Specialist Vape Retailer, after they have already granted approval for a vape premises and vape website.    

Recommendation

Applications to be a specialist vape retailer do not incur an additional fee.

39. Do you agree with the way the fees are structured? If not, how should they be structured?

We agree with the need to have reoccurring revenue to cover the cost of providing and maintaining the scheme.

We agree with differentiating between notifications (reoccurring fees) and approvals (one off fees).

We do not agree with the proposed structure for notification fees.

Recommendation

Notifiable products that come in a range of aesthetic variants (such as colour) should be allowed to be submitted under 1 notification so long as variant details are clearly entered as specified in section 5.1 of the proposal.  

Identical replacement parts that have already been notified as part of another notified e-cigarette product should not be required to be separately re-notified if it is clear on the labelling what notified product the part is for.

This approach aligns with the UK Legislation, reduces duplicate fees and administration without putting consumer safety at risk.   

40. Do you agree with the level of each of the fees? If not, how much do you suggest the Ministry of Health should charge?

 We do not agree with the level of each of the fees.

The Vaping Regulatory Impact Statement published on the Ministry of Healths website estimates the total setup cost (taking the first 2 years OPEX + CAPEX) as being $1.46M with a relatively low ongoing cost thereafter.

As of March 5^th 2021 on the TSVS Register there are 290 Approved Vape Premises, 116 approved Vape Websites and 112 Approved Retailers.  which suggests the current fee structure for application fees will deliver $0.42M in year 1.

Approved Retailers: 112 * $1600 = $0.18M
Approved premise: 290 * $600 = $0.17M
Approved Website: 116 * $600 = $0.07M
Total $0.42M (fact based)

For notifications, the proposed fee structure expects to collect $1.4M per year in fees using an assumption of 10,000 notifiable products. The actual number of notifiable products could be considerably more (based on current market) or considerably less depending on the outcome of proposed restrictions in product standards.

Based on the assumptions the proposal is working towards, combined with the cost estimates in the Regulatory Impact Statement, there will be a significant over-recovery of cost to the detriment of vaping consumers, smokers considering switching to vaping and small businesses.

Implementing an effective and equitable cost recovery fee structure requires cost transparency and fact-based activity inputs. Fact based activity inputs can accurately be obtained by the Ministry of Health using a transitional product notification scheme (refer to Q41) 

Recommendation

1. Application fees should be used as a cost recovery mechanism for the actual setup costs of the vaping regulatory scheme to ensure the Ministry of Health can recover costs in a timely and equitable manner.
2. Notification fees should be used as a cost recovery mechanism for the ongoing operational costs of the vaping regulatory scheme.

We acknowledge these recommendations would likely lead to increased application fees verses the current proposal. However, this will enable an ongoing reduction in cost for notifications.

Creating a fair cost recovery scheme is crucial for ensuring the vaping industry can continue to effectively support adult smokers transitioning to vaping by having appropriate availability and pricing of vaping products.

 41. Do you agree with our assumptions on annual volumes of work? If not, what assumptions do you suggest we use?

We do not agree with your assumptions on annual volumes for product notifications.

There are 4 key factors influencing the number of notifiable products that make it unpractical to assess as part of a desktop exercise prior to the finalisation of regulations.

1. The number of current notifiable products in New Zealand.  
2. The number products that will remain after the proposed product standards come into force.
3. The treatment of products currently imported direct from overseas manufacturers by multiple New Zealand vape distributers. (refer to Q30 recommendation to follow UK legislation and permit overseas producers to notify products)
4. The treatment of aesthetic variants (e.g. colour) and identical replacement parts of a notifiable product.

Recommendation

To deliver effective vaping regulation, an initial transitional product notification period (no fees or product restrictions) should be granted to all vape manufacturers, importers and overseas producers who distribute vaping products in New Zealand.

The primary aim of this recommendation is to provide a comprehensive database to the Director General showing the entire range and specifications of all vaping products currently available for sale in New Zealand that can be used to drive more informed public health decisions through:

1. Accurately assessing the consequences of proposed restrictions on vaping products availability to consumers and the level of market disruption.
2. Improving the level of understanding of New Zealands complex distribution model for vaping products.
3. Creating fact-based inputs to calculate equitable notification fees.  
4. “Test run” the notification scheme.

Products on the transitional product notification scheme should be subject to S71 – S75 of the Smokefree Environments and Regulated Products Act to ensure appropriate intervention can take place if required for the benefit of consumer safety.

42. How many products do you anticipate notifying yourself?

We would anticipate notifying 700+ products based on our existing product assortment and sourcing arrangements.  If the proposed restrictions included in the product regulations are enacted in their current form, we will be limited to 10 products or less.

Scenario 1) 

Assuming no overseas manufacturer notifications permitted, multiple notifiers permitted for the same product and current product range remains.

• Anticipate notifying 700+ products

Scenario 2) 

Assuming overseas manufacturer notifications are permitted, and current product range remains.

• Anticipate notifying 450 or less products

Scenario 3) 

Assuming proposed restrictions in product regulations are passed

• Anticipate notifying less than 10 products  

 43. Are there additional issues relating to fees and charges that you would like us to consider?

Please consider our recommendations in Q40 (cost recovery principles) and Q41 (fact based inputs). 

 44. Do you agree that we should reduce fees for very low-volume products? If not, how would you suggest the Ministry of Health handles very low-volume products?

 Reduced fees for very low-volume products is a pragmatic principle I agree with if appropriately managed in a way that prevents “notification evasion sourcing schemes”.

We are unable to comment in more detail without having a clear understanding of what the cost of running the scheme is and the number of notifiable products permitted under the proposed regulations.

Please refer to recommendation in Q41 – initial transitional notification scheme.

 45. How would you suggest we define very low-volume products?

 We are unable to suggest how to define a very low-volume product without understanding what products will be permitted under the proposed regulations.

46. Do you have suggestions for the design of any provisions, including suggestions for: (a) limits on the number of products that any notifier can have fee exemptions for (b) administrative efficiency (c) any other issues that might be associated with low-volume products?

 Please consider recommendation from Q30

Recommendation
The Act should follow the notification approach of UK legislation and permit producers of vaping products based overseas to notify vaping products in New Zealand (if they choose).

The act could also consider introducing a tiered fee structure with different rates for local vs foreign entity notifiers.  

The benefit of allowing overseas producers to notify a product include:

1. Easier to enforce with clearer accountability
2. More effective transition with no risk of "market rights" disputes amongst local notifiers
3. No duplication of product notifications
4. Most overseas producers are already experienced with the UK notification scheme and are better suited to provide information about safety of a notifiable product than local distributors / retailers who are not directly involved in the manufacturing process. 
5. Reduces the risk of anti-competitive behaviours.
6. Reduced compliance impact and burden on small businesses based in New Zealand.
7. Improves the availability of safe & innovative vaping products to New Zealand consumers.