Chris Allen

Welcome to the fifth season of State AG Pulse. In this season, we’ll be digging into the weekly state AG news to bring you our insights on the impact of state attorneys general across a broad range of industry sectors. From technology to healthcare and telecommunications to consumer financial services, state attorneys general continue to wield extraordinary influence, not only in their own states, but also on the national stage. Now, on to this week’s episode.

Hello and welcome everyone to today’s episode of State AG Pulse. I am Chris Allen, a partner in Cozen O’Connor’s State Attorneys General Practice. Welcome. And I am joined here today by my colleague, Emily Yu, an associate in our practice. Welcome back to the show, Emily.

Emily Yu

Hey Chris, thanks for having me back.

Chris Allen

We are happy to have you. And today, we’re going to be discussing a more narrow issue, I think, than our last episode where I talked with practice Co-Chair, Dustin McDaniel and our colleague, Grace Garver, about the role of AGs given the transformations and reshaping of the government under the Trump administration. So today, what we’re going to talk about is a particular action that was taken by a coalition of Republican state AGs involving Chinese e-cigarettes. And don’t turn off the podcast. I know if you are not a Chinese e-cigarette company, I promise there’s plenty of stuff in here for you. Because I think what we’re going to do is we’re going to use this as a way of discussing and explaining how state AGs take very seriously their responsibility to police companies, particularly those that have an impact on consumer health and on welfare. So let’s start though with this letter. Emily: Iowa AG Brenna Bird, led a letter with 25, I think. You can correct me on that, of her colleagues.

Emily Yu

Yeah 27 states – and Guam.

Chris Allen

27 states and Guam. Welcome Guam to the party. Guam does have an AG. We often talk about DC and the states here, but the territories actually all have their own AGs too. So anyway, what did they do? What did Brenna’s coalition say?

Emily Yu

So today’s letter was sent by this Republican AG coalition to not one, not two, but a whole litany of federal leaders and agencies, including the Department of Justice, Commerce, Health and Human…….

Chris Allen

Headed by former Florida AG, Pam Bondi.

Emily Yu

Of course, Health and Human Services, Homeland Security, other federal leaders, also the FBI, the FTC, the FDA, and Customs and Border Protection. So about half the federal government was the recipient of this letter from the AGs who are asking for their help in ramping up enforcement efforts against Chinese e-cigarette companies. To really get the background on why this is such a big issue now and why AGs have turned their attention to it, we have to go back a few years to the beginning of the crackdown on flavored tobacco products. Now, the biggest enforcement effort in this area to date was, of course, against Juul. And they entered into a multistate settlement, settled separately with a few other states to address their problem of flavored e-cigarettes. Now, Juul no longer sells flavored e-cigarettes, but that opened the door for all these companies, including a lot of Chinese e-cigarette companies that are not nearly as large of names, and as the letter outlines, these e-cigarette companies that are manufacturing e-cigarettes in China and importing them in, they’re constantly changing names, they’re changing places where they operate out of. It makes them much more elusive actors than a big company like Juul, who really was the first company that the AGs cracked down on. So now instead of one big actor in this field, you have many smaller actors. And though they be small companies, they have established a really wide-spread entire supply chain here in the US. And so that’s the subject of the letter here from the AGs.

Chris Allen

Yeah, it’s interesting because I remember years ago when China was really starting to get its economic footing, a huge issue was, and still is, counterfeiting an IP theft. And so you had coalitions of Republican and Democrat AGs trying to work with the federal government to combat Chinese counterfeit pharmaceuticals, Chinese counterfeit pirated software, pirated movies. And it’s always tricky because we talk a lot on this podcast about the expansive authority of AGs, but they have to rely on their federal counterparts when they try and take on these issues of public health.

Emily Yu

That’s right, Chris, I think the timing of this letter is particularly interesting. Up until now, we haven’t really seen AGs or federal regulators really turn their attention to this.

But with everything going on with the tariffs, trade with China generally is drawing a lot of attention. And I think even though the e-cigarette issue has been one that’s been focused on by others in the industry for a very long time, AGs and federal regulators are really turning their attention to it now.

Chris Allen

Yeah, it’s a rough time generally to be a company that’s either doing business in China or with China or touching China in any way. I think you’re right to point this letter out because it really does show a lot of different things. You know, one of them is this whole playbook that the Chinese tobacco companies are using in terms of the AGs will regulate a product like you mentioned, Juul, they reached massive settlement agreements with Juul that regulated all kinds of aspects of its business. They’ve been working with other tobacco companies, but then you have others come in and the moment they’re regulated, they change their formulation, they change their name, they change how they ship their product. For example, you saw this in the early days of cannabis where the AGs back before legalization, would go after sellers of THC and those sellers would say, no, it’s not THC, it’s Delta 7 or Delta 8. And then they’d regulate Delta 8 and they say, no, no, no, it’s Delta 9. And so by tweaking the cannabinoid molecule just a little tiny bit, they’d be able to avoid regulatory scrutiny. You know, we mentioned Pam Bondi at the beginning of this as one of the addressees of the letter. And I remember when she was the Florida AG, one of the things her office actually kind of did was used a unique regulatory power the Florida AG had just to say, look, anything in this space, any type of chemical in this space, we’re not going to list the chemicals, we’re just going name anything here as unlawful. And I believe that actually withstood a court challenge against that kind of sweeping exercise of regulatory authority.

Emily Yu

Yeah, Chris, to piggy off your point just now, I’m thinking of this situation that’s going on here where the attention shifted from a larger company in the US to all these smaller companies as a sort of regulatory whack-a-mole where you hit one of them on the head and then what do you know, another one pops up. And I’m sure once they hit the Chinese e-cigarette companies on the head, something else is going to pop up. And I think that’s just, as you’ve mentioned earlier, in the nature of AGs’ regulatory scope and prowess to constantly be the mole-whacking chasers, I suppose, for lack of a better phrase.

Chris Allen

Yeah, that’s, that’s right. Interestingly, what it also, what that usually leads to, if the AGs find that situation, what they’ll eventually try and find is the choke point. And so I don’t know where the choke point is with Chinese e-cigarette companies, but you know, during the opioid epidemic, they stopped going after the pharmacists and the physicians that were filling those prescriptions, and they started going after the manufacturers themselves.

And so, you know, it may be a sign for if you’re an importer or you do work for Chinese companies that are trying to sell their products in the U S you may be under scrutiny now, even more than you currently are, because the AGs are going to look for and they are going to find the weakest link in the chain. They’re very creative. They have a lot of power and you know, this letter should be sending a warning signal to a lot of different people that this is going to be another area where the AGs are not going to stop. They’re going to figure out a way to address this issue.

Emily Yu

While the specific situation we’re talking about here is related to Chinese e-cigarette companies. I think any company that does business internationally or any company that does deal with a massive supply chain should be paying really close attention to all the different parts of its operations because I think this letter goes to show that AGs are looking at every step of a business’s operations and any one step, even if it’s not under the direct purview of the company, could come under scrutiny.

Chris Allen

That’s always been a hallmark of state AG priorities is, if you’re doing something that’s impacting a consumer’s physical health, their financial health too, but mainly their physical health, that is an industry that is going to absolutely 100 % be targeted. So for example, I remember representing the dietary supplement industry years ago and they do wonderful work and it’s very important work, but you have some bad actors starting to push some dietary supplements and they, AGs, came down on them like a hammer because that was something you’re putting in your body. It’s impacting your health and the claims and the representations that you make about that is something that just like you’re, you’re basically painting a bullseye on yourself. It may be lucrative. It may even be a very important thing to be doing, but you better make sure your ducks are all in a row. I mean, look at, look at Kellogg, like Kellogg, one of the largest, if not the largest breakfast cereal manufacturers in the country, the Texas AG just this week went after them asking what they had disclosed to consumers with respect to representations about artificial dyes and other additives that they put in their breakfast cereals. And obviously that’s mirroring things that are being raised by the new Health and Human Services Secretary Kennedy. But it just shows to show again, if you’re in the consumer product space and your product is something that’s going into a consumer or that you’re representing is impacting a consumer’s health, or not impacting a consumer’s health when it really is, allegedly, you are going to be scrutinized.

Emily Yu

I definitely agree that AGs are really focused on consumer health. I think another takeaway from this story in particular is: not only were the AGs concerned about enforcing against these foreign e-cigarette companies because they have not applied for any type of regulatory clearance for the products they’re selling, but they’re also concerned about the fact that the products that are coming in are marketed and geared towards children.

Emily Yu

Children’s online privacy, the effects of social media on children. These have all been some of the hottest topics in AG enforcement. So everything from children’s physical well-being to mental well-being. These are all things that AGs have been focusing on and as we can see continue to focus on and I can’t see that focus disappearing anytime soon or dying down at all in the near future.

Chris Allen

I am so glad you raised that point. I was reading recently that Florida AG Uthmeier, the new attorney general there, I think he’s, don’t remember if it was a CID or an inquiry, but he’s asking questions now of Roblox with respect to their children’s privacy practices. You know, that’s something that’s particularly near and dear to my two school-aged children. So I’m actually kind of excited to tell them that something Daddy does pertains to their everyday life, which I’m sure they’ll smile and say, yeah, and then go right back to playing Roblox. it reinforces your point that, you know, if you’re talking about consumer health, if you’re talking about things that relate to children, if you’re talking about… if you’re talking about something that represents seniors, is another area. There’s just particular hot-button topics that if you touch those you are inviting AG scrutiny.

Emily Yu

I’ve never seen a letter like this one before where the entire first page of the letter is the address line. So I think it really goes to show that this new administration and AGs in trying to figure out ways to work with this administration are trying to find as many federal partners, where they can, to focus on these issues of shared concern. And I think we should only expect to see more of this, especially from Republican AGs, trying to find as many partners with similar goals and enforcement priorities in the federal administration to work on things like this issue we’re talking about here.

Chris Allen

I think that’s right. I think part of that may be attributable to the fact that this does involve China, as you pointed out, which, I think the Trump administration is taking a whole government approach to China.

We’ve also talked about the connections that State AGs have, particularly Republican AGs with this administration and just how many people have come from either the state government or specifically the AG world into this administration. And I can tell you having been at RAGA meetings, I know you were at some of those RAGA meetings, the Republican AGs in particular are talking a lot about how they plan to harness those lines of communication, to strengthen those lines of communication, to accomplish their policy goals. That’s absolutely right.

Emily Yu

And one other thing I wanted to add. While we focused and this letter itself, of course, focuses on Republican AGs urging this administration to act, I wanted to also mention that Democratic AGs are focused on this issue as well. There were no Democratic AG signatories on this letter, but other stories we’ve recently covered in our State AG Report include enforcement actions from the New York AG’s office, the DC AG’s office; coordinated but separate efforts from the Connecticut AG’s office and I believe it was 10 AGs offices there. So this is an issue that’s drawing a lot of AG attention from both sides of the aisle, but they are taking actions in more individualistic ways that are more along party lines. So it’s also interesting to see here where there are issues where both sides of the aisle are working on. I feel like those are kind of feel few and far between nowadays, but the framing of how they’re all taking action in these issue areas, but doing it separately and having their own messaging points, I think is an interesting one for us to keep following.

Chris Allen

I think you’re right about that. I’m wondering if part of that is the letter, especially the opening, talks about how wonderful the Trump administration was, both the current and the former Trump administration. Do you think – this is my hypothesis – maybe that was intended by Republican AGs to prompt action to get the administration to pay attention to this issue. And you can kind of understand why a Democrat AG might not want to sign on, if even really just for that language. This may be a place where either consciously or subconsciously the Democrats were like, okay, if the Republicans want to try and do this by getting on the Trump administration’s good side, by praising their activities, let’s let them do that. We’re not going to do that for various reasons, but it doesn’t mean they don’t share the same objectives and goals. I don’t know, that’s my hot take on that. What do you think?

Emily Yu

I definitely see very clearly from the way the letter is written why Democratic AGs may not have been inclined to sign onto it. I think it’s also been interesting to see the enforcement actions that Democratic AGs have been taking, as I mentioned earlier, and how those are more focused on the more local level. So it was enforcement against companies, usually in those states, either retailers or manufacturers within the US, within those states where the AGs are taking enforcement action. And the scope of this letter seems to be more internationally minded. At the heart of it, they are concerned about the same types of products, same types of issues, unregulated flavored tobacco that targets children. But they seem to have taken different approaches on how to address even this very specific issue. So that’s always an interesting point to look at is, how even when different AGs approach the same issue, they do so in such drastically different ways.

Chris Allen

That’s a good point. think maybe we’re saying the same thing and slightly differently, which is when it comes to working with the administration, which you kind of have to at the federal level in order to address something that’s of international concern, Republicans probably have a better avenue of approach there because of the close connections with the Trump administration, because of the political alignment. Whereas again, I think Democrats would share this goal. But to your point, again, this kind of goes back to the idea that they can be working together even when they don’t appear to be working together because the Republicans are taking the international aspect of this because they can. Whereas the Democrats are focusing more on the domestic market through their individual and sometimes coordinated enforcement actions.

So we’ve talked about a lot today. thank you for finding a really interesting letter for us to talk about. One thing I want to close on though is, we talked about, we talked about some takeaways that I think anybody can have from this. You brought up the excellent point. If you have a foreign supply chain, it’s not just the trade issues coming out of the Trump administration you have to be thinking about. You also have to be thinking about whether that creates potential exposure to state AGs either through an advocacy letter like this or also through potential enforcement action using their own power.

And I think the other takeaway we talked about is, you know, if you are marketing a product that either pertains to consumer health or welfare or something that consumers take into their bodies, or you’re targeting a particularly vulnerable group, minors, the elderly, etcetera, that is another thing that is likely, almost certain, I think, to draw AG attention eventually down the line. Do you have any other takeaways that you think we should be, make sure we raise for the listeners about this?

Emily Yu

I think another major takeaway that’s demonstrated by this letter is I believe we’ll see a lot more of Republican AGs finding new and increasingly expansive ways to work with this administration. So for all of our listeners whose businesses have previously been concerned with state AG enforcement, now we’re going to have to turn our scope even broader to “Okay, I’m concerned about state AG enforcement, but how many different federal regulators or entities or agencies or leaders are also going to be pulled in by the state AGs to join them in these efforts?” So just expanding the scope of enforcement and regulation from the state level and linking that a lot more to the federal level, at least from Republican AGs for the next few years.

Chris Allen

Good point. That’s been something that’s been raised at every RAGA meeting I’ve been to. I was in Nashville for the National Association of Attorney Generals meeting and even though that was bipartisan, they were talking about ways they could work with their federal counterparts. So yeah, that fantastic flag there. Well Emily, I’ve enjoyed this. This has been a fun conversation.

Emily Yu

Thank you for having me on and thank you for letting me choose this letter to speak about today.

Chris Allen

Always a pleasure. We’ll see you on one of our future podcasts, I’m sure. And thank you everyone for joining us for this episode of State AG Pulse. I am Chris Allen, a partner in the State Attorney General practice at Cozen O’Connor, and we look forward to talking to you next time. Take care.

Chris Allen

You have been listening to State AG Pulse brought to you by Cozen O’Connor’s State AG Group and the State AG Report. Please leave us a five star rating and of course tune in again in two weeks for our next episode. Thank you so much for joining us.