GRANT, Fla., Aug. 18, 2021 /PRNewswire/ -- Kaival Brands
Innovations Group, Inc. (NAS: KAVL) ("Kaival Brands," the
"Company," or "we"), the exclusive global distributor of products
manufactured by Bidi Vapor, LLC ("Bidi Vapor"), expressed its
continued and strong support of enforcement of rules and
regulations governing the electronic nicotine delivery systems
("ENDS") industry. The Company encourages retailers to comply
with applicable regulatory requirements, and to focus on youth
access prevention and promotion of compliant brands.
FDA is expected to make a major announcement in September that
could impact which companies can remain on the market.
Kaival Brands not only takes extremely seriously its commitment
to safeguard our youth, but also its capacity to provide the BIDI®
Stick, a top-quality disposable ENDS, to adult tobacco consumers
seeking a consistent vaping experience. While the Company continues
to exceed stringent Food and Drug Administration ("FDA") compliance
mandates and applauds the agency's enforcement efforts – including
140 warning letters so far this year to firms selling or
distributing more than 16,800,000 unauthorized ENDS – it remains
concerned about the numerous ENDS companies, particularly
distributors of disposable ENDS, that appear to have taken
advantage of FDA's ground-level enforcement struggles during the
COVID-19 pandemic.
On or about September 9, 2021, FDA
is expected to make a major announcement regarding its Premarket
Tobacco Product Application, or PMTA, review process that could
impact which companies can remain on the market. Kaival Brands
believes that as we approach this deadline, other manufacturers in
the industry are "dumping" non-compliant, potentially hazardous and
poorly manufactured products into the marketplace. Further, it
believes that given the potentially far-reaching consequences of
the pending FDA decisions, which the Company believes will force
many of these other manufacturers to cease production, some
retailers may be lowering their usual standards in return for
economic gain.
Kaival Brands remains committed to its high-quality product,
youth-access prevention, complying with applicable laws and
regulations, and working with like-minded retailers. "We place
enormous importance on our integrity and our brand name," said
Nirajkumar Patel, Founder and Chief
Executive Officer of Kaival Brands. "At Kaival Brands, we have
built a state-of-the-art, compliance driven, set of detailed
protocols around the quality of our product and where and to whom
we sell it. We are confident that our model is well suited
for an environment in which regulatory oversight and enforcement is
far greater than it is today. In fact, not only are we ready for
increased regulation and enforcement, we both encourage and welcome
it."
Additional Regulatory Commentary: Kaival Brands Meets with
Regulators to Push for Increased Enforcement; The Company and Bidi
Vapor Further Encourage Retailers to Comply with the Law and Focus
on Youth Access Prevention and Compliant Brands
Kaival Brands and Bidi Vapor are committed to complying with all
federal and state laws applicable to the distribution of the BIDI®
Stick ENDS, including the Family Smoking Prevention and Tobacco
Control Act ("TCA"), which amended the Food, Drug and Cosmetic Act
("FDCA"), and the Prevent All Cigarette Trafficking ("PACT") Act.
The top priority of both companies is to ensure that the BIDI®
Stick, which is it intended exclusively for adult tobacco users, is
marketed responsibly, and sold only to adults 21 and over.
Kaival Brands and Bidi Vapor are committed to these principles
notwithstanding the current environment where, because of the lack
of enforcement, companies continue to distribute non-compliant and
counterfeit ENDS products, including products that appear to target
youth. To encourage enforcement, Bidi Vapor has provided detailed
information, including verified third-party test reports, to the
FDA, Office of Compliance and Enforcement, regarding numerous
tobacco product violations from companies marketing non-compliant
products, particularly disposable ENDS. These are products that,
unlike the BIDI® Stick, were likely not on the market on
August 8, 2016, may not subject to
timely submitted PMTAs, and appear to be in violation of numerous
FDA requirements, including the FDCA's adulteration and misbranding
provisions. Beyond FDA, Bidi Vapor has met with several federal
agencies including the Federal Trade Commission, or FTC, the Bureau
of Alcohol, Tobacco, Firearms and Explosives, or ATF, Customs and
Border Protection, or CBP, and several state Attorney Generals'
offices, to alert them about the rising number of illegal and
dangerous products flooding the market.
Bidi Vapor and Kaival Brands also encourage retailers, who are
on the "front line" in the battle against youth use of tobacco and
nicotine products, to do their part to enforce non-compliant
players off the market. FDA makes clear that, "[i]f you sell
tobacco products, you must comply with all applicable federal laws
and regulations for retailers."i While most retailers
are aware of their obligations to age verify customers seeking to
purchase tobacco products, complying with the law – and being a
good corporate citizen – goes beyond simple ID checks.
Retailers must also do their part to ensure that the products on
their shelves are legal, no matter the profit margin. In fact, the
FDCA prohibits, among other things, the introduction, delivery for
introduction and receipt in interstate commerce of any tobacco
product (including ENDS) that is adulterated or misbranded. See 21
U.S. Code § 331. ENDS products that were introduced to the market
after August 8, 2016, that are not
subject to timely submitted PMTAs, whose packaging and labeling
contains inaccurate information (e.g., regarding nicotine content)
or is targeting youth, are all bases for the underlying products to
be adulterated and/or misbranded. Kaival Brands and Bidi Vapor are
committed to working with FDA to ensure that only legal products
are marketed. Toward this end, Bidi Vapor has engaged with several
well-known third-party analytical laboratories to test the nicotine
content of several disposable brands on the market and has reported
the results to FDA, along with detailed summaries of potential FDCA
violations.
By not doing the due diligence necessary to ensure that all
tobacco products stocked on their shelves are fully compliant with
all applicable federal and state laws, retailers are not just
breaking the law, but the public trust – and putting youth and
other vulnerable populations at risk. Kaival Brands is committed to
brick-and-mortar retail, which the Company believes is a stronger
age-verification distribution model compared to traditional online
retail channels for ENDS. The wholesalers and direct retailers
Kaival Brands partners with are required to sign the Company's
Wholesaler & Direct Retailer Agreement which, among other
things, requires parties to comply with all applicable regulations
and abide by Bidi Vapor's and the Company's comprehensive
age-verification procedures.ii
Direct retailers are further required to sign a Retailer Pledge
that commits them to complying with, among other things,
age-verification requirements, and adult-focused marketing, as well
as participating in the Company's mystery shopper
program.iii
Failure to comply with the agreement and/or pledge carries
immediate, material consequences, including order cancellation and
revocation of product distribution rights. To help its business
partners understand the FDA's tobacco retailer guidance, Bidi Vapor
has produced training videos for its authorized retailers. Kaival
Brands also recently announced plans to shift distribution from
smaller retailers to focus on large wholesalers and distributors,
who are more likely to take youth prevention seriously and work
with compliant brands.iv
Mr. Patel, the Company's President and Chief Executive Officer,
owns and controls Bidi Vapor. As a result, Bidi Vapor and the
Company are considered under common control and Bidi Vapor is
considered a related party.
ABOUT BIDI VAPOR
Based in Melbourne, Florida,
Bidi Vapor maintains a commitment to responsible marketing,
supporting age-verification standards and sustainability through
its BIDI® Cares recycling program. The Company's
premiere device, the BIDI® Stick, is a premium product
made with medical-grade components, a UL-certified battery, and
technology designed to deliver a consistent vaping experience for
adults 21 and over. Bidi Vapor is also adamant about strict
compliance with all federal, state, and local guidelines and
regulations. At Bidi Vapor, innovation is key to our mission,
with the BIDI® Stick promoting environmental
sustainability, while providing a unique vaping experience to adult
smokers.
ABOUT KAIVAL BRANDS
Based in Grant, Florida, Kaival
Brands is a company focused on growing and incubating innovative
and profitable products into mature and dominant brands in their
respective markets. Our vision is to develop internally, acquire,
own, or exclusively distribute these innovative products and grow
each into dominant market-share brands with superior quality and
recognizable innovation. Kaival Brands is the exclusive global
distributor of all products manufactured by Bidi Vapor.
Forward-Looking Statements
This press release includes statements that constitute
"forward-looking statements" within the meaning of federal
securities laws, which are statements other than historical facts
that frequently use words such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "forecast," "intend,"
"may," "plan," "position," "should," "strategy," "target," "will,"
and similar words. All forward-looking statements speak only as of
the date of this press release. Although we believe that the plans,
intentions, and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance
that these plans, intentions, or expectations will be achieved.
Therefore, actual outcomes and results could materially differ from
what is expressed, implied, or forecasted in such statements. Our
business may be influenced by many factors that are difficult to
predict, involve uncertainties that may materially affect results,
and are often beyond our control. Factors that could cause or
contribute to such differences include, but are not limited to,
whether the FDA extends past September 9,
2021 the current grace period for certain ENDS products,
including ours, to remain on the market pending the FDA's review of
the associated Premarket Tobacco Applications (PMTA); the duration
and scope of the COVID-19 pandemic and impact on the demand for the
products we distribute; the actions governments, businesses, and
individuals take in response to the pandemic, including mandatory
business closures and restrictions on onsite commercial
interactions; the impact of the pandemic and actions taken in
response to the pandemic on global and regional economies and
economic activity; the pace of recovery when the COVID-19 pandemic
subsides; general economic uncertainty in key global markets and a
worsening of global economic conditions or low levels of economic
growth; the effects of steps that we could take to reduce operating
costs; our inability to generate and sustain profitable sales
growth; circumstances or developments that may make us unable to
implement or realize anticipated benefits, or that may increase the
costs, of our current and planned business initiatives; changes in
government regulation or laws that affect our business; significant
changes in our relationships with our distributor or
sub-distributors; and those factors detailed by us in our public
filings with the Securities and Exchange Commission. All
forward-looking statements included in this press release are
expressly qualified in their entirety by such cautionary
statements. Except as required under the federal securities laws
and the Securities and Exchange Commission's rules and regulations,
we do not have any intention or obligation to update any
forward-looking statements publicly, whether as a result of new
information, future events, or otherwise.
i See Selling Tobacco Products in Retail
Stores, FDA,
https://www.fda.gov/tobacco-products/retail-sales-tobacco-products/selling-tobacco-products-retail-stores.
ii See Wholesaler & Direct Retailer
Agreement, Bidi Vapor, available at:
https://bidivapor.com/wholesaler-and-direct-retailer-agreement/.
iii See BIDI Vapor Retailer Pledge Terms,
available at:
https://wholesale.bidivapor.com/wp-content/uploads/2020/05/Retailer-Pledge-.pdf
see also BIDI® Stick, BIDI® Retailer Pledge US, YouTube
(Dec. 10, 2020),
https://www.youtube.com/watch?v=SVUKzzXv2yY.
iv See Kaival Brands (OTCQB: KAVL) Reports Second
Quarter Revenues of $18.1 million and
an additional $41.6 million in
consignment-based orders from Grocery Store Warehouse and C-Store
Master, available at
https://www.prnewswire.com/news-releases/kaival-brands-otcqb-kavl-reports-second-quarter-revenues-of-18-1-million-and-an-additional-41-6-million-in-consignment-based-orders-from-grocery-store-warehouse-and-c-store-master-301316746.html.
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SOURCE Kaival Brands