Russia is getting set to introduce a single regulator for the alcohol, tobacco and nicotine industries. The Ministry of Finance announced in February that it would submit a bill to the parliament this month to establish the regulator.
Speaking at a press conference in Moscow on illegal cigarette sales, deputy finance minister Georgy Golovanov said that the functions of the existing alcohol market regulator (Rosalkogolregulirovanie, or RAR) will be expanded to oversee the new categories.
Evgeny Fedotov, founder of tobacco consultancy Fedotov Group, told TobaccoIntelligence: “This step will have a positive impact on the market, since today the regulatory functions are currently scattered.”
He said that at present multiple departments are involved in regulating and controlling the industry, including the ministries of Agriculture, Health, Industry and Trade, and Finance, as well as various agencies, such as the Federal Service for the Oversight of Consumer Protection and Welfare (Rospotrebnadzor).
“Introducing a single regulator will allow the systematisation of the lawmaking process and monitoring of the implementation of existing norms,” Fedotov said.
In search of more effective control
Authorities as well as industry members have been signalling the need for a single regulator for the vaping industry for years. In 2018, the federal antimonopoly service wrote to the government saying that setting up a separate regulator for the tobacco and vaping industry would help shape a unified state policy and establish more effective control of alternative tobacco products.
The president of industry body Alliance of Participants of the Russian Market of Electronic Nicotine Systems, Lev Grigoriev, said: “This measure has been overdue for a long time. I expect that given the situation with the budget deficit in the country, the bill may be considered at the spring session of the State Duma [lower chamber of parliament] in April and will be signed into law before the end of this year. The sooner this happens, the sooner the industry will become more organised and money will start flowing into the budget.”
In addition to introducing a single regulator for the tobacco and alternative products industries, the draft law provides for introducing licensing for tobacco product and electronic device manufacturing, Grigoriev said, as well as monitoring and control of the equipment used for manufacturing, and confiscation of equipment if illegalities are found.
The bill is also to introduce criminal liability for illegal trafficking of nicotine-containing products and electronic devices.
Putting a stop to bad actors and unethical practices
Grigoriev said that for the legal industry, the establishment of the new regulator and tightening control over production and distribution are positives. “This year in general promises a lot of good news for conscious players,” he said, mentioning the introduction of adequate, in his opinion, excise rates last year and mandatory labelling of electronic devices and liquids introduced for manufacturers and importers since 15th December 2022. Labelling will become mandatory for wholesale distributors from 1st April, and for retailers from 1st December.
The lack of effective control over production and sales, as well as the existing moratorium on unscheduled business inspections that was put in force in 2020 amid Covid-19, allows many dubious players to sell low-quality products, including those with an excessive nicotine content, both at prime retail locations and via e-commerce marketplaces, despite the fact that online sales are prohibited by law.
The advent of a new regulator with clearly defined functions and tested procedures should prevent such practices. “As a result, conscious players with a long-term vision and strategy will be able to adjust to the new norms, and unethical ones will simply leave the market,” Grigoriev said.
Industry watchers noted that RAR, formed in 2009, has strong administrative resources, methodology, and a staff of specialists who actively work with retail outlets and are strict on violations. They added that individuals who will be responsible for the new categories have already been identified within the agency but are yet to be appointed officially.
– Ksenia Kondratieva TobaccoIntelligence contributing writer
Photo: Simon Berger