Legal Liability Boundaries of E-cigarettes

Regulatory Framework Evolution and Core Principles

China’s regulatory approach to e-cigarettes has undergone significant evolution since 2016. The State Tobacco Monopoly Administration (STMA) first classified heated tobacco products (HNB) as tobacco专卖品 (tobacco monopoly products) in 2016, requiring compliance with the Tobacco Monopoly Law. By 2021, the revised Tobacco Monopoly Law Implementation Regulations explicitly extended regulatory scope to all electronic nicotine delivery systems (ENDS), including vape pens and cartridge-based systems. This legal parity with traditional cigarettes established the foundation for subsequent enforcement.

The Administrative Measures for E-cigarettes (2022) introduced a licensing system mirroring tobacco regulations. Enterprises must obtain three types of permits: production licenses for manufacturers, wholesale licenses for distributors, and retail licenses for point-of-sale operators. These permits are non-transferable and require annual renewal, with strict geographical distribution controls to prevent market saturation. For instance, retail outlets cannot operate within 100 meters of educational institutions, and online sales are prohibited except through the national e-cigarette trading platform managed by the STMA.

Criminal Liability Risks in Production and Distribution

Unlicensed Operation and Product Compliance

The most prevalent criminal charge arises from operating without proper licenses. According to Article 225 of the Criminal Law, unauthorized production, wholesale, or retail of tobacco monopoly products constitutes illegal business operations. This applies to all e-cigarette components, including e-liquids, cartridges, and devices. In a 2024 case in Wuwei, Gansu Province, a criminal syndicate operating three unlicensed production facilities and six distribution centers faced charges after authorities seized 293,400 cartridges and 165 kg of e-liquid, with total illegal proceeds exceeding 110 million yuan.

Product quality violations also trigger criminal liability. The National Standard for E-cigarettes (GB 41700-2022) mandates:

• Prohibition of non-tobacco flavors (e.g., fruit, dessert)
• Nicotine concentration limits (≤20 mg/g)
• Child-resistant packaging requirements
• Clear labeling of health warnings

Manufacturers producing devices allowing users to modify nicotine levels or add unauthorized substances face prosecution under Article 140 of the Criminal Law for producing/selling counterfeit or substandard products if sales exceed 50,000 yuan. In 2025, a Shenzhen-based company was fined 2.3 million yuan and its executives sentenced to prison for producing vape pens with hidden compartments enabling THC oil injection.

Intellectual Property and Tax Violations

Counterfeiting remains a critical enforcement area. Using registered trademarks without authorization on e-cigarette packaging or devices constitutes trademark infringement under Article 213-214 of the Criminal Law. In 2023, a cross-province operation manufacturing fake “悦刻” (RELX) cartridges faced charges after distributing 900,000 counterfeit units across 30 provinces, with estimated losses to the brand owner exceeding 80 million yuan.

Tax evasion through smuggling presents another liability avenue. The Customs Law and Criminal Law Article 153 impose penalties for undeclared imports. In 2024, a Hong Kong-based syndicate using “ant smuggling” tactics (splitting large shipments into smaller parcels) to evade duties on 12 million yuan worth of imported e-cigarette components was sentenced to combined prison terms totaling 18 years.

Public Health-Related Criminal Charges

Narcotics Trafficking Risks

The most severe penalties apply to e-cigarettes containing controlled substances. Following the 2023 scheduling of etomidate (a sedative) as a Class II psychotropic drug, distribution of vape pens laced with this substance triggers Article 347 of the Criminal Law (drug trafficking). In a 2025 case in Nanchang, a retailer selling etomidate-infused cartridges received a 4-year, 10-month prison sentence and 50,000 yuan fine for targeting minors through school-area stores.

The 2021 ban on synthetic cannabinoids (e.g., K2, Spice) in e-liquids has led to numerous prosecutions. Authorities in Hangzhou dismantled a 2023 operation producing 15,000 cartridges containing AB-CHMINACA, a Schedule I substance, resulting in 12 arrests and seizures worth 3.2 million yuan.

Youth Protection Violations

Strict liability applies to sales to minors under Article 225 of the Administrative Measures for E-cigarettes. Retailers failing to verify age through ID checks face administrative penalties, but repeated violations or large-scale distribution to underage buyers escalate to criminal charges. In 2024, a Beijing vape shop owner received a 2-year suspended sentence for selling 237 illegal transactions to customers under 18, with proceeds used to finance other criminal activities.

The prohibition on flavored products serves as a preventive measure, as research shows 78% of minor users prefer fruit/dessert flavors. Enforcement agencies conduct regular sting operations using underage decoys, with 1,243 retailers penalized nationwide in 2025 for violating age verification protocols.

Emerging Compliance Challenges in Global Trade

Cross-Border Regulatory Conflicts

Chinese exporters face complex compliance landscapes in target markets. The EU’s Tobacco Products Directive (TPD) requires:

• Nicotine content ≤20 mg/ml
• Maximum cartridge volume of 2 ml
• 6-month pre-market notification
• Plain packaging with health warnings covering 65% of surfaces

Failure to comply results in product seizures at borders. In 2025, EU authorities destroyed 4.2 million yuan worth of Chinese-made disposable vapes in Rotterdam for exceeding nicotine limits, while U.S. Customs confiscated 1.8 million units in Chicago for missing PMTA (Pre-Market Tobacco Application) approvals.

Supply Chain Traceability Requirements

The STMA’s mandatory product tracing system assigns unique identification codes to all e-cigarette components, enabling full lifecycle tracking from production to sale. This system, integrated with the national e-cigarette trading platform, automatically flags unlicensed transactions. In 2024, a Dongguan manufacturer faced license revocation after authorities traced 37,000 unregistered devices sold through unauthorized channels back to its production line.

The system also combats counterfeiting by verifying component authenticity. When a Hangzhou distributor attempted to sell 12,000 cartridges with duplicated trace codes in 2025, the platform’s blockchain-based ledger immediately alerted regulators, leading to a rapid takedown of the operation.

Future Regulatory Trends and Industry Adaptation

Technological Enforcement Upgrades

The STMA plans to launch a smart监管 (smart regulation) platform in 2026, leveraging AI and big data to:

• Monitor production capacity in real time to prevent unauthorized expansions
• Analyze transaction patterns to detect tax evasion and smuggling
• Cross-reference retail data with school locations to enforce zoning restrictions
• Flag abnormal inventory fluctuations indicating counterfeit production

This system will integrate with local market supervision bureaus’ inspection databases, creating a national enforcement network with sub-hour response times to violations.

Sustainability Standards Integration

Building on the 2025 ban on non-recyclable packaging, upcoming regulations will mandate:

• Biodegradable materials for single-use components by 2027
• Energy efficiency standards for rechargeable devices
• Carbon footprint labeling for all products
• Manufacturer take-back programs for used devices

These measures align with China’s 2060 carbon neutrality goals while addressing global concerns about e-waste. The STMA estimates full implementation will reduce industry-wide emissions by 38% by 2030.

International Regulatory Harmonization

China is actively shaping global e-cigarette standards through the WHO Framework Convention on Tobacco Control (FCTC). At the 2025 FCTC Conference of the Parties, Chinese delegates proposed:

• Unified nicotine concentration caps at 15 mg/ml
• Global ban on all non-tobacco flavors
• Minimum legal purchase age of 21
• Standardized child-resistant packaging protocols

These proposals reflect China’s domestic regulatory experience and aim to create level playing fields for Chinese exporters while curbing youth access worldwide.