The Trump administration will ban flavored e-cigarette pods, with exceptions for menthol and tobacco flavors

An employee picks up a Juul Labs device kit for a customer at a store in San Francisco.

David Paul Morris | Bloomberg | Getty Images

The Trump administration will ban flavored e-cigarette pods, with the exception of menthol and tobacco flavors, and flavored liquid nicotine products commonly sold in vape shops, a senior white house official told CNBC, requesting anonymity because the information is confidential.

The salvo to vape shop owners was made easier by a provision in the $1.4 trillion spending package that Trump signed earlier this month, prohibiting the sale of cigarettes, e-cigarettes, cigars and other tobacco products to people under the age of 21, the official said.

That new restriction is likely to damper teen vaping, regardless of the administration's approach to flavored pods. A report from National Institutes of Health's annual Monitoring the Future survey earlier this month said that 14% of high school seniors said they vaped marijuana in the previous month, nearly double the rate from 2018.

The decision, though, may not be strong enough for anti-vaping groups. It could not be immediately determined whether the new guidance will allow the sale of bottles used to refill vaping devices. Kids have begun to use those devices, sold in vape shops and convenience stores, to refill their vaping pods with products and flavors of their own choice.

It may have a limited impact on vaping industry leader Juul, which, under intense scrutiny, has already halted the sale of its flavors in the U.S., aside from menthol, Virginia tobacco and classic tobacco. It will likely be a blow to Juul rival, NJOY, which looked to benefit from Juul's flavor retreat with the sale its own blueberry flavors in stores.

The new guidance may be welcomed by tobacco companies, whose vaping competition will now need to abide by the same regulatory playing field, said one industry insider. Tobacco companies like Altria, PMI Group, Japan Tobacco, British American Tobacco and Imperial Brands, have faced waning sales as smokers are dying, quitting or switching to e-cigarettes.

Amid that pressure, Altria shelled out $12.8 billion investment for a stake in Juul, in hopes of capturing a slice of its once explosive growth.

The news, first reported by the Wall Street Journal citing people familiar with the matter, is expected to be formally rolled out Friday, the official said. The official cautioned that nothing is definite until the announcement has been made.

The Washington Post and The New York Times also reported the pending ban.

Deadlines and spurts of activity

The decision comes to an industry that has been on edge amid a lack of regulatory clarity and spike in teens' usage. A deadly lung illness linked to vaping has further intensified the debate. The likely culprit for those deaths may be a vitamin E acetate found in some THC vaping products.

New deadlines and spurts in activity have come from all sides.

A Federal Judge in May sided with a number of advocacy groups, including the American Lung Association, in ruling that the U.S. Food and Drug Administration had neglected its duties by delaying to deliver formal guidance on e-cigarettes. The judge gave e-cigarette companies until May 2020 to submit their products to the agency for formal review. The ruling inherently put pressure on the FDA to formalize those guidelines.

President Donald Trump, meantime, has vacillated between positions. He first suggested a federal ban on flavored e-cigarettes in September, but later retreated from that position, amid political pushback.

In the interim, Trump has heard feedback from vaping industry executives, public health advocates and small business owners worried about the impact flavored vaping ban may have on their business. The exemption for products sold in vaping shops is likely to ease those concerns ahead of the 2020 presidential elections.

Small business owners and advocates cheered the news on Twitter Tuesday night.

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“When the ban was announced on 9/11, we had little hope of actually stopping it, but vapers and small businesses pushed back and refused to give up,” tweeted American Vaping Association president President Gregory Conley.

“I can't see this as a win because the closed cartridge ban will cause more smoking, but open system vapers should be happy tonight,” Conley said.

The FDA declined to comment, while a spokesperson for the White House did not immediately respond to a request for comment.

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