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Thread: Do we need to worry?

  1. #21
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    Quote Originally Posted by Jemor View Post
    The situation in the U.S. is a little different from my understanding. Some states had a huge payout from BT a few years ago and something to do with buying bonds with it that now have to be paid back from cigarette sales. I don't fully understand it, but that would make a huge difference to how they feel about vaping if they (the states involved) can't pay back the money owed.
    The US state governments won't admit they are reliant on income from tobacco, but for some of them it is certainly a big issue. They never actually expected people to stop smoking - their experts predicted smokers to keep on smoking, with a decline of only a few percent in 25 years. That over a million smokers in the states are now vapers is something of huge calamity for them.

    In 1998 the tobacco MSA (master settlement agreement) meant that the major tobacco companies had to pay a minimum of 206 billion dollars to the participating states over the next twenty five years (until 2013 iow). This was under the pretext of covering the medical costs of tobacco related disease and was distributed based on the number of cigarettes shipped to those states. All of a sudden the states had this "guaranteed" source of income, and some financial institutions went into overdrive, encouraging states to borrow money against future income from the MSA. Think high pressure sales deals, where the outcome was just too good to be true. The problem with this was that it only worked for the states if they paid it back before a certain date, and the states never paid it back, meaning that the "free money" they thought they had then has turned into a huge debt. In some cases a few hundred million they received in bond sales has turned into billions in debt. A classic case of mismanagement.

    Meanwhile the tobacco companies left are rubbing their hands with glee. They got immunity from future law suits through the MSA, and all they had to pay was a few cents per pack which they quite happily passed on to smokers. Meanwhile there is nothing to stop the tobacco companies from using the courts to obstruct payments to the states, challenge the terms of the original agreement, and generally make life hard for the states. The fact that the states got themselves into financial trouble by borrowing against the settlement amounts is of no concern to them. Tobacco companies still employ large amounts of lawyers but the focus has changed - they no longer have to spend all their time defending damage claims from individuals and governments, so they have free hand to create mayhem.

    From Forbes 2007:
    The agreement faces so many legal challenges that Ohio, with only a 5% revenue participation, is setting aside more than $2 million per year for litigation; that works out to better than $40 million a year spent nationwide by states to defend the settlement. Maybe the lawyers weren't so dumb after all!
    The rest of the Forbes article: https://www.forbes.com/2007/11/19/to...apbox_inl.html
    note: You'll only want to read all of that if you really are interested in the topic and finance generally. It's far too depressing for a normal person...
    gert, stylemessiah, ybnice and 1 others like this.
    Chris: Tobacco free since 17:00 15th March 2013.

  2. #22
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    Wow, thank you Fab.!

    I think the most sickening thing about the latest push is the sheer blatant dishonesty of the people charged with so called concern for public health-Politicians and senior public servants.

    I had a look at some of the UK forums. The UN directive now has been passed by Parliament. Probably it will affect the retailers more than anyone, the compliance requirements for them are ridiculous.

    The average UK vaper is accustomed to walking into a BandM and buying whatever they need -not any longer.
    My understanding is -Tanks must hold no more that 2ml, Nicotine must not exceed 20mg, internal batteries are not allowed. Max 10 ml bottles. Other restictions as well, thats just a few.
    Idiotic petty restrictions, probably people will just import their goods from China, what else would they do?



    It seems there is a Wordwide push to extinguish Vaping, just slowly strangle it to a slow death by regulation.
    Last edited by gert; 18-07-17 at 09:31 AM.
    fabricator4 and Mouse1 like this.

  3. #23
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    Quote Originally Posted by gert View Post
    Wow, thank you Fab.!

    I think the most sickening thing about the latest push is the sheer blatant dishonesty of the people charged with so called concern for public health-Politicians and senior public servants.

    I had a look at some of the UK forums. The UN directive now has been passed by Parliament. Probably it will affect the retailers more than anyone, the compliance requirements for them are ridiculous.

    The average UK vaper is accustomed to walking into a BandM and buying whatever they need -not any longer.
    My understanding is -Tanks must hold no more that 2ml, Nicotine must not exceed 20mg, internal batteries are not allowed. Max 10 ml bottles. Other restictions as well, thats just a few.
    Idiotic petty restrictions, probably people will just import their goods from China, what else would they do?



    It seems there is a Wordwide push to extinguish Vaping, just slowly strangle it to a slow death by regulation.
    Yes all of that is true for the EU TPD. I'm not sure about internal batteries being banned though - that one makes no sense at all.

    Some things about the tobacco MSA I didn't manage to make clear in my oversimplification of it:

    * The payments continue for perpetuity, but in ever increasing amounts, theoretically. Given the problems the MSA has caused I expect some or all of the states to put an end to the MSA in favour of increasing tobacco excise, something they should have done in the first place, if they were going to do anything. The "guaranteed over 25 years" amount was actually less than the amount the states (and the financiers) projected.

    * one of the problems of the MSA payments is that they are on a cents-per-unit basis. While the actual value of the end product has gone up with inflation, the cent's per unit value only goes up a few cents every few years. Since that can't keep up with inflation the net effect is a dwindling income for the states, against an ever increasing debt.

    * In addition to this the cents-per-unit has another trap. Unit sales are actually dwindling as the smoking rate declines, however the net $ worth of sales is increasing. Tobacco companies are laughing.

    * Payments on the bonds were only ever going to be debt free if states payed it at set amounts, basically like the 60 day interest free on a credit card. Instead the states paid back what amounts to the minimum required on the debt by law, ensuring that they never paid it back. Each administration put in the too hard basket, leaving it for the next administration to deal with - after all by the time the excrement is due to hit the rotary oscillator they would be elsewhere. I don't envy the people who have to eventually sort this out - either the feds will have to bail them out, or they declare bankruptcy and face the consequences of that (bad). My understanding is that the Feds will not offer a bail-out because they just can't afford the dollars or the precedent.

    * The MSA creates a barrier for other businesses entering the market, especially small innovative ones. Combine this with the new FDA regulations and the big four (now three) tobacco companies are very well protected.

    * There's also a smokeless tobacco MSA that was put in the place at the same time. Its main problem combined with the FDA regs is the same as the attack on vaping in that it blocks innovation such as innovation that moves away from higher risk products such as wet snuff and chew to lower risk products such as snus and dry snuff, and I guess HNB products now too.

    Only the biggest companies will be able to innovate, and that only very slowly.

    What a mess... then along comes vaping 10 years into the MSA... any wonder they took one look at us and started screaming?

    Then the situation in Australia where our government always looks at what 'merica is doing... The situations are completely different.
    Last edited by fabricator4; 18-07-17 at 10:16 AM.
    gert and Mouse1 like this.
    Chris: Tobacco free since 17:00 15th March 2013.

  4. #24
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    Saw on Facebook that Bogan Brews is expanding to the UK. Obviously the TPD is good for Australian juice vendors looking to expand internationally, as the market for 0mg juice with nic shots added by the consumer has obviously increased.
    Beware of he who would deny you access to information, for in his heart he dreams himself your master.



  5. #25
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    Quote Originally Posted by Nothingexpert View Post
    Saw on Facebook that Bogan Brews is expanding to the UK. Obviously the TPD is good for Australian juice vendors looking to expand internationally, as the market for 0mg juice with nic shots added by the consumer has obviously increased.
    I'm just wondering for how long imports to the UK will remain unmolested. I think the new directive will affect their local Bricks and mortar trade.
    Hopefully Vapers there will still be able to import, which is what they probably will want to do when the effects of the TPD eventually start to bite.
    Some European countries are cracking down on imports with excise taxes as well.
    Seems that UK Vapers were quite laid back about the coming restrictions, few people thought new regs were going to be a problem, in spite of the warning voices advising people to stock up.

 

 
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