Vape firms pivot amid FDA crackdown, restructuring to sidestep enforcement

As U.S. authorities intensify their crackdown on unauthorized e-cigarette products, several vape companies are altering their business models and corporate structures—efforts that are complicating regulatory enforcement.

The U.S. Food and Drug Administration confirmed that it is closely monitoring instances where firms change product labeling or shift operations offshore in order to avoid detection. For example, Chinese vape giant Heaven Gifts has transferred the U.S. operations of its Lost Mary brand to a British Virgin Islands (BVI) firm, Wonder Ladies Limited, after the FDA banned several companies, including those linked to Elfbar, from importing products in 2023. Lost Mary remains widely available in the United States, with its packaging now displaying the BVI firm's name and address.

Similarly, Texas-based Ludicrous Distro, operating as American Vape Company, has ceased selling its own unlicensed Esco Bars and now exclusively distributes unauthorized devices from third parties. A representative from Ludicrous Distro declined to elaborate on the shift, but maintained that the company has consistently sought to comply with evolving FDA policies despite ongoing regulatory confusion.

The FDA’s efforts to restrict unauthorized vaping products have been hampered by funding limitations and recent staff dismissals amid broader federal downsizing initiatives. To date, the regulator has authorized only 34 tobacco- and menthol-flavored vape products - exclusively from major tobacco firms - even as numerous unapproved products, including brands like Elfbar, Lost Mary, and Esco Bars, continue to dominate the U.S. market.

Industry competitors are also taking notice. British American Tobacco has launched complaints with the U.S. International Trade Commission against various vape brands and associated manufacturers, naming several BVI firms - including Wonder Ladies and others tied to Heaven Gifts - as part of alleged unfair competition and patent infringement cases. Representatives from BAT have declined to comment on the matter.

While companies like Heaven Gifts insist that their corporate restructurings are lawful and do not intend to sidestep FDA regulations, critics argue that such maneuvers serve to obscure accountability and protect revenue streams from enforcement actions. A former official at the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives suggested that distancing vape brands from their manufacturers via offshore entities could become a widespread tactic.

As U.S. regulators grapple with these evolving strategies, the ongoing enforcement challenge highlights the broader difficulties in policing a rapidly changing market where unauthorized products continue to thrive despite stringent rules.