The state of Wisconsin has fined one retailer nearly $13 million and others $450,000 for violating a law restricting vape sales that took effect in September and is being challenged in appeals court.
Exclusive Tobacco, a four-store chain with one location in Oshkosh, was fined twice in October for selling products not on the state-approved list that allows select brands such as Juul, Blu, Vuse and Crossbar.
The state Department of Revenue received complaints that the Oshkosh store was selling illegal products. The DOR inspected Exclusive Tobacco and found that it was selling vapes and tobacco products with an expired municipal license.
The DOR then seized all the products, including 1,244 illegal ships. The new law imposes a daily fine of $1,000 for each device not in the state directory, totaling $1,244,000.
A copy of the fine reviewed by the Milwaukee Journal Sentinel showed the fine was multiplied by 10 for the 10 days that passed between a warning and when the DOR returned to seize the products, totaling more than $12.4 million that Exclusive Tobacco now owes the state.
The DOR then received another complaint that the Oshkosh store continued to sell illegal vapes, leading to a second inspection and a $431,000 fine.
Exclusive Tobacco is appealing both fines, DOR spokeswoman Jennifer Bacon told the Milwaukee Journal Sentinel.
The DOR issued a $450,000 fine to a second retailer, Dave’z Smoke N Vape LLC of Green Bay, who was also found to be selling without a municipal license. Neither store responded to interview requests.
The DOR also issued 42 removal orders for illegal products to other stores and made 27 seizures, two of which involved retailers selling without a municipal license.
In the first weeks after the law took effect on September 1, the DOR did not issue fines or seize illegal products to give retailers time to comply. Now, Bacon said, the department is following the enforcement procedures set forth in the 2023 law.
More: Wisconsin vape sales restrictions date back to a 2023 law. Here’s what you need to know about it.
Bacon said the expired licenses did not affect the fine amounts, but rather triggered the removal of all cigarettes, tobacco and vapes. Instead, the fines were based on retailers selling vapes that aren’t among the 303 products the state allows.
The appeal case is ongoing, while vape shops must adapt or close
Most vape shops have adapted, removing the now-illegal products from their inventory and relying on other sales to make up for the loss.
But they’re still holding out hope for a court ruling that could strike down the law and put more products back on their shelves.
In September, U.S. District Court Judge William Conley denied a request to block the law. The industry plaintiff, Wisconsinites for Alternatives to Smoking and Tobacco, appealed that decision. The 7th Circuit Court of Appeals in Chicago is scheduled to hear oral arguments on December 10.
Tyler Hall, president of WiscoFAST and Johnny Vapes, told the Milwaukee Journal Sentinel that a decision is expected in late January.
Similar lawsuits have had mixed results: A federal court blocked Iowa’s vape director law in May, while Utah’s was upheld in March.
Hall and other vape shop owners say big tobacco companies lobbied for the law to push competitors out of the market. Wisconsin lobbying records show that this happened in 2023, and experts have seen the same trend in other states.
Public health advocates also question whether the approach is effective because the law took some products off the shelves but left others accessible, including to teenagers.
State officials defended the law as a “measured approach” to respond to the fast-growing industry while balancing public safety.
Xtreme Vape, formerly at 2242 Neva Road in Antigo, closed because of the new vape law, owner George Packard says. A “space for rent” sign is displayed at the headquarters on October 11.
Milwaukee-area smoke shop owners and employees interviewed in October said most of their sales are hemp-based products, so the vape law has had a limited impact on their business. However, they worried that future state regulations and a sudden change in federal law would soon ban those products as well.
More: How Milwaukee Smoke Shops Handle Wisconsin’s New Vaping Law As Confusion Persists
Other stores were not so lucky. George Packard, whose Antigo store made 90 percent of its sales in vapes, closed when the district court allowed the law to take effect.
“We had six employees and every one of them lost their job,” Packard said.
Even if the industry wooing succeeds, Packard doesn’t see itself reopening. The space will be rented to another tenant, and his employees will find other work.
“It took three days to destroy that store. We have probably $40,000 in merchandise that we can’t do anything with,” he told the Journal Sentinel in early October. “We can’t sell it, because it’s illegal.”
I hope Karnopp can be reached at HKarnopp@gannett.com.
This article originally appeared on the Milwaukee Journal Sentinel: Exclusive Tobacco fined nearly $13 million under Wisconsin vape law