The PACT Act Final Rule Has Been Released Prohibiting the Mailing of Cannabis/Hemp Vaporization Products. Is Your Business Ready?
By Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy
After months of delay, the United States Postal Service (USPS) has released its FINAL rule enforcing the Prevent All Cigarette Trafficking (PACT) Act, effective October 21, 2021, and unfortunately, they are indeed applying it to cannabis/hemp vaporization products. The PACT Act has now made it extremely difficult for anything related to vaporization to be mailed, either business to business (B2B) or business to consumer (B2C). Your business could be affected even if you are not mailing out products. Although this is a massive burden on the cannabis/hemp vape industry, there are ways to deal with it. NCIA remains vigilant in making sure the federal government understands this unnecessary hardship to the industry, and making sure our members are fully educated on this issue.
What is the PACT Act?
The Prevent All Cigarette Trafficking (PACT) Act went into effect June 29, 2010, applying strict regulations to the mailing and taxation of cigarettes and smokeless tobacco products, effectively banning the mailing of cigarettes unless authorized by an exception. With the rise of e-cigarettes, especially their popularity among youth, Congress decided that vaporization products should be included in those provisions. On December 27, 2020, Congress modified the definition of “cigarettes” to include Electronic Nicotine Delivery Systems (ENDS), broadly defining ENDS to include nearly all vaporization products, regardless if they contain nicotine or are used for nicotine. Specifically:
“(1) any electronic device that, through an aerosolized solution, delivers nicotine, flavor, or any other substance to the user inhaling from the device; and (2) any component, liquid, part, or accessory of an ENDS, regardless of whether sold separately from the device.”
When the USPS issued their notice of proposed rulemaking, they received more than 15,700 comments, with many expressing frustration with the broad interpretation of ENDS, so the USPS delayed issuing FINAL rules while it considered the practical application to the unique cannabis and hemp industries. NCIA was proud to submit comments with a broad coalition and to issue an action alert to get our members to express their concerns.
In the meantime, the USPS issued a guidance document (“April 2021 Guidance”) (86 FR 20287) to help prepare businesses for the final rule and what documentation will be needed to apply for an exception. The exceptions include:
Intra-Alaska and Intra-Hawaii Mailings: Intrastate shipments within Alaska or Hawaii;
Business/Regulatory Purposes: Shipments between verified and authorized tobacco-industry businesses for business purposes, or between such businesses and federal or state agencies for regulatory purposes;
Certain Individuals: Lightweight, non-commercial shipments by adult individuals, limited to 10 shipments per 30-day period;
Consumer Testing: Limited shipments of cigarettes sent by verified and authorized manufacturers to adult smokers for consumer testing purposes; and
Public Health: Limited shipments of cigarettes by federal agencies for public health purposes under similar rules applied to manufacturers conducting consumer testing.
18 U.S.C. 1716E(b)(2)-(6). These exceptions are the ONLY way to mail these products moving forward. Unfortunately, the USPS was not accepting applications for exceptions until the final rule was published, but now that it has been published, it is time to apply for an exception.
FedEx and UPS have already banned delivering these products, so they are out as an alternative.
How can it affect me?
If you manufacture, sell, or buy vapor products, you will be affected. Manufacturers and distributors who use the mail to get their products to stores for resale (B2B) will have to apply for an exception through the USPS Pricing and Classification Service Center. If you are a business receiving these products, you will have to work with the business that mails it to you to be included in their exception as a recipient. If you are a retailer who delivers vaporization products to consumers via the mail, such as online retailers (B2C), you will also need to apply for an exception. If you buy the end products as a consumer, expect an increase in price because of the extra costs placed on the suppliers.
What should I do?
If your business has ANYTHING to do with the manufacture, delivery by mail, or retail of cannabis/hemp vaporization products, including liquids, batteries, empty cartridges, etc., you should get familiar with this final rule that is in effect as of October 21, 2021. The USPS spends the time addressing potential issues or suggestions from the comments it received, so any questions of why they did something are probably answered there.
You will also want to read the guidance document the USPS issued in the Spring that details if you qualify for an exception and how to apply for it. This will require cooperation between the mailer and the recipient, so make sure you are working with your supplier/retailer to get all the necessary information.
What is NCIA doing?
NCIA remains committed to making sure our members understand all of the legal ramifications and how to continue operations despite this rule. We continue to work with our coalition partners to better understand the effects and best practices, and will share with you as much information as possible to ease the transition via blog posts and webinars.
On April 4th, Senator Schatz of Hawaii became the 12th Senate co-sponsor of the Marijuana Business Access to Banking Act (S 1726).
Ean’s overall sentiment about the experience? Hard work pays off.
Ean Seeb, Denver Relief Consulting:
It was a sense of accomplishment in that when you’re working with Congress, things are very slow-moving and we have been dealing with the banking and tax issues repeatedly since my first NCIA Lobby Days in 2013.
As far as the experience of going into a congressional office and telling them you’re working with cannabis and asking them to back or co-sponsor some legislation, back then, it was a foreign thought. Contrast that with now – to walk in and have the recognition, know what we’re doing, and three months later to see a Senator actually fulfilling the only request that we made to him, specifically, to co-sponsor this bill.
All of our efforts are not for naught. If you put your mind to it, you go to work, and you extend some effort on behalf of the industry, you can make powerful, meaningful change here. Having another Senate supporter, even harder to come by than on the House side – it’s an incredible accomplishment.
I was delighted. It’s not due to any one person individually. NCIA’s Michael Correia, Director of Government Relations, set up the meeting and put it all together. It made me feel better about working hard and diligently with a team and getting to the solution to the challenge we’re facing. Sen. Schatz can’t himself enact the banking bill, but this is one more step toward chipping away at cannabis prohibition as we know it.
Tae Darnell and Ean Seeb stand outside of Senator Schatz’s congressional office in D.C.
It was really helpful to have my fellow NCIA member Tae Darnell there. I didn’t know it at the time, but Tae wrote the draft legislation for Hawaii, so he was really well-informed on the issues we were discussing and was able to provide some good examples as to why it was important to get behind the bill.
Tae Darnell, Sensi Media:
I’ve been deeply involved with Hawaii since 2010, when I drafted the first version of the medical marijuana bill that just passed. Although much has shifted since the original version, I’ve developed close connections at the state level and have a particular affinity for Hawaii’s role in the advancement of cannabis regulation because of those relationships.
When Ean approached me about lobbying with Michael and speaking with the federal arm of Hawaii (one of those being Senator Schatz’s office), I jumped at the opportunity. I think it’s incredibly helpful to be able to share direct experience and engage conversation that personalizes the story at a federal level. I also think it helps to be able to diversify perspective. In that regard, Ean was able to share his NCIA experience as well as Denver Relief’s experience both as a dispensary and consultant. I was able to share my experience as an (almost) 10-year cannabis lawyer who assisted Colorado with HB 1284, SB 109, and A64, and also as a drafter of Hawaii’s legislation. As a co-founder of Surna and Sensi Media, I was also able to share my experience as an entrepreneur on the ancillary side.
In the end, and based on my experience as a cannabis lawyer and entrepreneur, I’m incredibly excited that the work of NCIA is able to facilitate such incredible accomplishments. The countless hours of effort, put in by so many, are rewarded when we, as an industry, are able to accomplish goals like gaining sponsorship for critical banking legislation. I think successes like these are further validation of how critical it is that we continue to aggressively support the work of NCIA. The time is now to effect change, and the nearly 1,000 member businesses of NCIA are a major catalyst for why it’s happening.
Want your voice heard in our nation’s capitol on issues affecting the cannabis industry? Join us for our 6th Annual NCIA Member Lobby Days in Washington, D.C., on May 12 & 13, 2016.
To make the most out of the Lobby Days experience, register early so that we can begin the process of setting up meetings for you on the Hill. Members who register before April 30th will be entered to win admission and travel expenses for two at NCIA’s Cannabis Business Summit & Expo, including airfare and lodging.
Editor’s Note: In January, Ean Seeb, who serves on the Board of Directors for NCIA and is co-founder of Denver Relief and Denver Relief Consulting, coordinated with NCIA’s Director of Government Relations Michael Correia to arrange personal meetings with congressional offices in Washington, D.C.
Ean Seeb speaks at NCIA’s Policy Symposium in 2015
In December, while planning for a January business trip to Washington, D.C., I realized that I should take the opportunity to use some downtime to lobby Capitol Hill offices on issues affecting the cannabis industry. I reached out to NCIA’s Executive Director Aaron Smith and Director of Government Relations Michael Correia and announced my intention. I was amazed at their responsiveness and support for my idea.
The whole planning process was quite easy. I let them know the date I was available and the focus of my trip and let the D.C. office coordinate logistics. Denver Relief Consulting has business interests in Hawaii and I wanted to focus on that state’s Congressional delegation. My goals were to update offices on medical marijuana implementation in Hawaii and ask these offices to co-sponsor The Small Business Tax Equity Act of 2015 (S. 987 & H.R. 1855), which amends Internal Revenue Code Section 280E to allow cannabis businesses in compliance with state law to take standard tax deductions and credits relating to business expenses.
The trip went very smoothly. I met up with Michael the evening before our meetings to discuss issues and logistics. Although I am well-versed on issues affecting our industry, it was really informative for me to sit down with him and discuss our focus, strategy, and talking points. We were joined by NCIA Member Tae Darnell, CEO of Sensi Media, whose background on cannabis reform in Hawaii goes back many years and was a great asset to our meetings.
We visited offices in both the Senate and House of Representatives, and each office was very informed about cannabis issues, was responsive to our concerns, and asked insightful questions. I remember back in 2013 when NCIA held its 3rd annual member lobby days. During those meetings, staffers would drop their jaws and say “You’re here to talk about what?” It was almost humorous because, back then, staffers were still in shock that cannabis issues were being brought to them. This time, one of our meetings lasted a full hour! The reception from congressional offices has evolved significantly over the past five years, and that can be attributed to the work NCIA has done on the ground.
The National Cannabis Industry Association’s 5th Annual Lobby Days in Washington, D.C.
Although our meetings were with Democratic offices, who tend to be supportive of our issues, they were still not co-sponsors of legislation that would solve our 280E tax problems. The offices really appreciated tying the issue to Hawaii and answering questions specifically related to the state and how 280E will negatively affect their constituents. Each of the offices will discuss co-sponsoring legislation in the future, and our D.C. office will continue working with them to gain their support.
I did my homework with information provided by NCIA through newsletters, packets, and the website. An hour’s worth of studying on the front end made for some really powerful and effective meetings. As an NCIA member, it was personally and professionally fulfilling to be able to leave the Capitol thinking, “Today, I made some good progress on our issues, and for our industry, through the work done with these folks.”
We love nothing more than getting our members in front of lawmakers. That’s where change happens. https://t.co/kcdYFf6oJT
I wholeheartedly encourage other NCIA members not only to go to NCIA’s 6th annual Member Lobby Days in May — but also to go to D.C. on your own. The NCIA Government Relations team will be there with you every step of the way.
As I was leaving, Michael said, “Please tell other members who happen to be traveling to D.C. that we are available for any NCIA member, at any time, who wants us to coordinate personal meetings with congressional offices.”
If you are interested in contacting NCIA’s Government Relations department to schedule meetings with Members of Congress in Washington, D.C., please email Government Relations Coordinator Michelle Rutter at michelle@thecannabisindustry for more information.
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By Rachel Kurtz-McAlaine, NCIA’s Deputy Director of Public Policy 
