US import block on vapes could cut illegal sales by a third, BAT says

• An ITC judge ruled in BAT's favor in a patent dispute last year and recommended a general exclusion order to block infringing disposable vapes, with a full ITC determination expected in March followed by a 60-day presidential review
• BAT's CEO said the import block could reduce unregulated vapes from 70% to below 50% of U.S. e-cigarette market share, but long supply chains and large inventories will delay effects until early 2027
• The FDA is reportedly considering a different regulatory approach to vapes, potentially including flavored products, after years of rejecting most nicotine product applications

Summary

British American Tobacco (BAT) reported that a potential U.S. import block on unauthorized disposable vapes could reduce the illegal e-cigarette market by approximately one-third, though any meaningful impact is unlikely before 2027.

Key Developments:

• BAT CEO Tadeu Marroco stated the block could lower unregulated vapes from 70% to below 50% of U.S. e-cigarette sales
• An ITC judge ruled in BAT's favor in a patent dispute last year, recommending a general exclusion order on infringing disposable vapes
• BAT expects a full ITC determination in March 2025, followed by a 60-day presidential review
• The company has two active cases at the U.S. International Trade Commission targeting unregulated device imports

Market Context:

Unregulated vapes currently represent approximately 70% of U.S. e-cigarette sales, negatively impacting both BAT's vape and traditional tobacco businesses. Both BAT and Altria have spent years combating unauthorized products that dominate the world's largest smoking alternatives market.

Timeline Concerns:

Marroco cautioned that extensive U.S. supply chains and large existing inventories would delay implementation, pushing any material market impact to early 2026 at the earliest, even if the ITC ruling is favorable.

Regulatory Outlook:

The CEO suggested the FDA may consider alternative approaches to vape regulation, potentially including flavored products, after years of rejecting most nicotine product applications. The agency has recently shown interest in revising its regulatory framework.

The announcement came alongside BAT's annual results release on February 12, 2025.