Breaking News – China Finalizes Management Rules for E-Cigarettes
We reported in December 2021 that China’s State Tobacco Monopoly Administration (STMA) published on its website the draft Management Rules for E-cigarettes and the updated national standard (GB) on e-cigarettes for public comment. Working with important industry members, including industry associations and manufacturers, Keller and Heckman filed comments to STMA to address and seek clarification on various issues that resulted from these publications.
On March 11, 2022, STMA announced the publication of the final Management Rules for E-cigarettes, which will take effect starting May 1, 2022. At the same time, the second draft GB standard on e-cigarettes also was published for comment by March 17. We summarize below some notable changes in the final Management Rules.
The final version deletes the definition for “e-cigarettes,” which was “an electronic delivery product that produces nicotine-containing aerosol for human inhalation.” Since the Management Rules state that e-cigarettes must comply with the mandatory national standard, one should now refer to the GB standard on e-cigarettes for the definition of e-cigarettes. Notably, the second draft GB standard removes “nicotine-containing” from the definition of e-cigarettes but at the same time adds a requirement that e-atomization materials must contain nicotine. Since the GB standard is still under development, we will continue to keep a close eye on how the potential change to the definition for e-cigarettes would impact the application scope of the Management Rules.
The final Management Rules remove product registration requirements. However, e-cigarette products, including imported products, still must pass the technical review by STMA before being marketed in China. It, therefore, appears that there has been a loosening of the regulatory requirements in this regard since a registration process is typically more onerous than a technical review. However, the details of what the technical review process will look like remain unclear. Accordingly, in line with our comments to STMA, e-cigarettes manufactured in China solely for export are not subject to product registration or technical review in China. Still, they must comply with the destination country’s laws (or China law, if the destination country has no relevant law).
Industry also expressed concerns about the prohibition in the draft Management Rules on flavored e-cigarettes. In the final version, the prohibition has been changed to “it is prohibited to sell flavored e-cigarettes other than tobacco flavors.” However, “tobacco flavors” is not clearly defined, while the draft GB standard still permits the use of various flavoring substances in e-cigarettes, like vanillin, lemon oil, etc.
Other than the above, many other requirements for e-cigarettes in China are still retained in the final Management Rules, including production licensing, purchase of leaf tobacco only from authorized companies, trading on a unified platform, etc.
Since the Management Rules for E-cigarettes will take effect soon, industry should immediately understand all the specifics so that appropriate adjustments can be made in a timely manner. We are also preparing an English translation of the Management Rules, which will be made available upon request. In the meantime, if you need any assistance from us, please do not hesitate to contact David Ettinger (ettinger@khlaw.com), Azim Chowdhury (chowdhury@khlaw.com), Eric Gu (gue@khlaw.com), or your existing contact at Keller and Heckman LLP.