Neo Enterprises NC, Inc. d/b/a Neo Tobacco and Vape, DAB TB9098 (2025)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks a $19,192 civil money penalty (CMP) against Respondent Neo Enterprises NC, Inc. d/b/a Neo Tobacco and Vape.  Specifically, CTP alleges that Respondent Neo Tobacco and Vape received in interstate commerce an electronic nicotine delivery system (ENDS) product that lacked the required premarketing authorization and offered such product for sale, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(c).  For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(c) and conclude that a civil money penalty in the amount of $16,313 is appropriate.

I. Background and Procedural History

CTP began this matter by serving an administrative complaint (Complaint) on Respondent at 9330 Center Lake Drive, Suite 140, Charlotte, North Carolina 28216, by United States Postal Service, and by filing a copy of the Complaint with the FDA’s

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Division of Dockets Management.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 1, 1b.

On December 20, 2023, Respondent through counsel timely filed its answer to the Complaint.  CRD Dkt. Entry No. 3a.  On December 28, 2023, I issued an Acknowledgment and Pre-Hearing Order (APHO) establishing deadlines for discovery and the parties’ pre-hearing exchanges.  CRD Dkt. Entry No. 4.  On January 29, 2024, CTP filed a Status Report stating that the parties had been unable to reach a settlement and that CTP remained willing to engage in settlement discussions but, “absent an executed settlement agreement, intends to proceed to a hearing.”  CRD Dkt. Entry No. 5.  On February 27, 2024, Respondent filed a document identified as “Exhibit 1 – Notification to Employees of Requirement to Review Daily FDA Mail.”  CRD Dkt. Entry No. 6 (R. Ex. 1).

On March 13, 2024, CTP filed a Motion to Compel Discovery, asserting that Respondent had not responded to its Request for Production of Documents as required by the APHO and the regulations.  CRD Dkt. Entry No. 7.  On that same date, CTP also filed a Motion to Extend Deadlines requesting a 30-day extension of “any deadlines, including the March 18, 2024 due date for CTP’s pre-hearing exchange . . . .”  CRD Dkt. Entry No. 8 at 2.  On March 18, 2024, I issued an Order advising Respondent that it had until April 2, 2024, to file a response to CTP’s Motion to Compel Discovery.  I also warned that if Respondent failed to respond, “I may grant CTP’s motion in its entirety.”  CRD Dkt. Entry No. 9 at 2; see also APHO ¶¶ 20-21; 21 C.F.R. § 17.32(c).  In my Order, I also extended the pre-hearing exchange deadlines.  CRD Dkt. Entry No. 9 at 2.  Respondent failed to respond to CTP’s Motion to Compel Discovery or my March 18, 2024, Order, or otherwise comply with CTP’s Request for Production of Documents.

On April 11, 2024, I issued an Order granting CTP’s Motion to Compel Discovery and ordered Respondent to produce responsive documents to CTP’s Request for Production of Documents by April 24, 2024.  I warned:

Failure to [comply] may result in sanctions, including the issuance of an Initial Decision and Default Judgment finding Respondent liable for the violations listed in the Complaint and imposing a civil money penalty.

CRD Dkt. Entry No. 10 at 1-2.

On May 17, 2024, CTP timely filed its pre-hearing exchange, consisting of a pre-hearing brief (CTP PH Br.), a list of proposed witnesses and exhibits, and eight proposed exhibits.  CRD Dkt. Entry Nos. 11, 11a-11i.  CTP’s pre-hearing exchange included the written direct testimony of two proposed witnesses, James Bowling, Deputy Division Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA, and Jazmyne Satterfield, an FDA-commissioned officer with

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the state of North Carolina.  CRD Dkt. Entry Nos. 11b, 11c (CTP Exs. 1, 2).  Counsel for Respondent did not submit a pre-hearing brief or include the written direct testimony of any witnesses.

On July 31, 2024, I held a pre-hearing conference (PHC) with both parties participating.  See CRD Dkt. Entry No. 15 (Order Following PHC).  During the PHC, I went over various procedural matters, including the parties’ pre-hearing submissions and proposed exhibits (CTP Exs. 1-8; R. Ex. 1).  Respondent through counsel raised an issue regarding a proposed exhibit (CTP Ex. 7, Warning Letter dated May 25, 2023) submitted by CTP as part of its prehearing exchange.  Specifically, counsel questioned whether the proposed exhibit at issue pertained to Respondent’s business establishment.  Id. at 1.  I gave the parties until August 30, 2024, to file any objections to the other party’s exhibits, and until September 13, 2024, to file a response to any objections.  Id. at 1-2.

At the PHC, I also discussed the purpose of an oral hearing and asked the parties whether a hearing was necessary in this case.  CRD Dkt. Entry No. 15 at 2.  Respondent stated it did not wish to cross-examine either of CTP’s proposed witnesses.  Id.  Since Respondent did not submit any testimony or identify witnesses that could be cross-examined by CTP, I advised the parties that no hearing would be held and I would decide the case based on the administrative record.  Id.  I also stated that the parties would have an opportunity to file final briefs before I made my decision.  Id.

On August 1, 2024, I issued an Order memorializing the issues discussed at the PHC and establishing deadlines for final briefs.  CRD Dkt. Entry No. 15.  The parties were given until September 13, 2024, to file final written briefs and until September 30, 2024, to file response briefs.  Id. at 2.  Neither party submitted a final brief or responded to any of the additional deadlines established in my August 1, 2024, Order.  Therefore, on September 25, 2024, I issued an Order closing the case record and advising the parties that the case would be decided based on the administrative record.  CRD Dkt. Entry No. 16.

On September 27, 2024, CTP filed a Motion to Stay Case and Notice of Pending Settlement (Motion to Stay).  CRD Dkt. Entry No. 17.  In the Motion to Stay, CTP advised that “payment is forthcoming from Respondent, and is due on or before November 11, 2024,” and requested a stay for 60 days “so that Respondent can pay the agreed-upon civil money penalty, and CTP can process the payment.”  Id.  Pursuant to 21 C.F.R. § 17.19(b)(17), I granted CTP’s Motion to Stay the proceedings and gave CTP until November 29, 2024, to file a Notice of Settlement Agreement (NSA).  CRD Dkt Entry No. 18.  In my Order, I also informed the parties “[s]hould the NSA not be filed by the November 29, 2024, deadline, I will move this case forward to issuance of an Initial Decision.”  Id. at 2.  To date, an NSA has not been filed.

Therefore, the record is now closed and this matter is ready for a decision based on the administrative record.  See 21 C.F.R. §§ 17.41, 17.45(c), 17.19(b)(11), 17.19(b)(17).

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II. Evidence

Both parties filed proposed exhibits, which are without objections from the opposing party.  Therefore, I admit CTP Exs. 1-8 and R. Ex. 1 into the record.  Specifically, CTP submitted the following eight exhibits, marked as CTP Exs. 1-8:

• CTP Ex. 1: Declaration of James Bowling (CRD Dkt. Entry No. 11b);
• CTP Ex. 2: Declaration of Jazmyne Satterfield (CRD Dkt. Entry No. 11c);
• CTP Ex. 3: August 2023 Narrative Report (CRD Dkt. Entry No. 11d);
• CTP Ex. 4: August 2023 TIMS Assignment Form (CRD Dkt. Entry No. 11e);
• CTP Ex. 5: August 2023 Photographs of the Elfbar Honeydew Pineapple Orange ENDS Product (CRD Dkt. Entry No. 11f);
• CTP Ex. 6: August 2023 Form FDA 482 (CRD Dkt. Entry No. 11g);
• CTP Ex. 7: May 2023 Warning Letter (CRD Dkt. Entry No. 11h); and
• CTP Ex. 8: Imiracle PMTA Submission, Form FDA 4057 (CRD Dkt. Entry No. 11i).

Respondent submitted the following exhibit, which was marked as R. Ex. 1:

• R. Ex. 1:  Notification to Employees of Requirement to Review Daily FDA Mail (CRD Dkt. Entry No. 6).

III. Issues

There are two issues for me to decide in this case:

1. Whether Respondent received in interstate commerce an ENDS product that lacked the premarketing authorization required under the Act, specifically an Elfbar Honeydew Pineapple Orange ENDS product, and offered such product for sale on August 31, 2023, in violation of 21 U.S.C. § 331(c); and, if so,
2. Whether the $19,192 CMP proposed by CTP is appropriate, considering any mitigating or aggravating factors I find in this case.  21 C.F.R. § 17.45.

IV. Applicable Law

To prevail, CTP must prove Respondent’s liability by a preponderance of the evidence.  The United States Supreme Court has described the preponderance of the evidence standard as requiring that the trier-of-fact believe that the existence of a fact is more probable than not before finding in favor of the party that had the burden to persuade the judge of the fact’s existence.  In re Winship, 397 U.S. 358, 371-72 (1970); Concrete Pipe and Prods. of Cal., Inc. v. Constr. Laborers, 508 U.S. 602, 622 (1993).

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CTP has the burden to prove Respondent’s liability and appropriateness of the penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  Likewise, Respondent has the burden to prove any affirmative defenses and any mitigating factors by a preponderance of the evidence.  21 C.F.R. § 17.33(c).

In 2009, Congress enacted the Family Smoking Prevention and Tobacco Control Act (TCA) to regulate tobacco products.  21 U.S.C. §§ 387 et seq.  The TCA prohibits selling any “new tobacco product” without authorization from the Food and Drug Administration (FDA).  21 U.S.C. § 387j(a); 21 U.S.C. § 387a(b) (delegating to FDA the authority to determine what constitutes new tobacco products).  A new tobacco product is any tobacco product that was not commercially marketed in the United States as of February 15, 2007.  21 U.S.C. § 387j(a)(1).

The TCA requires new tobacco products to have a premarket authorization in effect.  21 U.S.C. § 387j(a)(2).  To obtain premarket authorization, manufacturers of new tobacco products are required to submit a premarket tobacco application (PMTA) to the FDA for approval to sell their products.  21 U.S.C. § 387j(b)(1).  Alternatively, the product manufacturer may submit a substantial equivalence report, in response to which the FDA may issue an order finding the product is substantially equivalent to a predicate tobacco product.  21 U.S.C. § 387e(j).  Or, the product manufacturer may submit a report, in response to which the Secretary may issue an exemption order.  21 U.S.C. § 387e(j)(3).

The TCA directs FDA to review PMTAs to determine whether “permitting such tobacco product to be marketed would be appropriate for the protection of the public health.”  21 U.S.C. § 387j(c)(2)(A).  Absent an approval from the FDA, the new tobacco products are considered adulterated and misbranded if they lack the required FDA marketing authorization order, substantial equivalence order, or an exemption order.  21 U.S.C. §§ 387b(6) and 387c(6).

Under the Act, “[a] tobacco product shall be deemed to be misbranded if, in the case of any tobacco product sold or offered for sale in any State, it is sold or distributed in violation of regulations prescribed under section 387f(d).”  Under 21 U.S.C. § 387c(a)(6), a new tobacco product is misbranded if a “notice or other information respecting it was not provided as required” under the substantial equivalence or substantial equivalence exemption pathway, including a substantial equivalence report or an abbreviated report.  21 U.S.C. § 387c(a)(6).

Under the Act, a tobacco product is adulterated if it has not obtained the required premarket authorization.  21 U.S.C. § 387b(6)(A).  Thus, when a manufacturer does not submit a PMTA for its ENDS products, or when a manufacturer submits a PMTA for its ENDS products and receives a denial order, the products are adulterated.  21 U.S.C. § 387b(6)(A).  The adulterated and misbranded ENDS products in turn violate the Act.

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The Act prohibits the receipt in interstate commerce of any tobacco product that is adulterated or misbranded and the delivery or proffered delivery thereof for pay or otherwise.  21 U.S.C. § 331(c).  FDA may seek a civil money penalty from “any person who violates a requirement of this chapter which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A) (2012).  Penalties are set by 21 U.S.C. § 333 and 21 C.F.R. § 17.2.

V. Analysis

CTP alleges that Respondent received in interstate commerce and offered for sale an Elfbar Honeydew Pineapple Orange ENDS product that required FDA premarket authorization, in violation of 21 U.S.C. § 331(c), on August 31, 2023. CRD Dkt. Entry No. 1 ¶¶ 15, 19.

In its Answer, Respondent through counsel admitted that it received the Elfbar ENDS product in interstate commerce (CRD Dkt. Entry No. 3a at 2-3 ¶ 19), but denies that the Elfbar ENDS product was delivered or proffered for pay, or displayed for sale at Respondent’s business establishment (Id. ¶¶ 15, 19).  Respondent asserts that “the subject product was stored in an area of the establishment where products were not offered, advertised, or showcased ‘for sale’”.  Id. ¶ 15.  Respondent also disputes that it received a Warning Letter dated May 25, 2023 and asserts that the CMP sought by CTP should not be assessed.  Id. at 3 ¶¶ 20, 24.  Specifically, regarding receipt of the Warning Letter, counsel contends that “Respondent regularly received and continues to receive voluminous amounts of correspondence from CTP and/or FDA regarding statutory and regulatory updates and information.  The volume of information is burdensome to small business owners to sift through and fully comprehend.”  Id. ¶ 20.  Respondent’s counsel also argues “Respondent owned the subject store only since 2017 and Respondent was not advised by its wholesale suppliers that the ENDS product is a ‘new tobacco product’.”  Id. at 2 ¶ 16.

CTP’s case against Respondent relies on the written direct testimony of James Bowling, Deputy Division Director, Division of Enforcement and Manufacturing, Office of Compliance and Enforcement, CTP, FDA, and Inspector Jazmyne Satterfield, an FDA-commissioned officer with the state of North Carolina.  CTP Exs. 1, 2.

Regarding the unauthorized product, CTP submitted the sworn declaration of Deputy Division Director James Bowling.  CTP Ex. 1.  In his official capacity, Deputy Division Director Bowling has personal knowledge of CTP’s tobacco record keeping, registration process, and new tobacco product premarket authorization requirements.  Id. ¶ 3.  Deputy Division Director Bowling confirmed that a search of the Tobacco Registration and Product Listing Module Next Generation (TRLM NG) did not reveal any registered establishments containing the name “Elfbar” or any listed product named “Elfbar Honeydew Pineapple Orange” in North Carolina or elsewhere in the United States.  Id. ¶ 6.

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Additionally, Deputy Division Director Bowling confirms that the Elfbar Honeydew Pineapple Orange ENDS product observed for sale during the August 31, 2023 inspection, is manufactured in China by Guangdong Qisitech Co., Ltd. for Imiracle (Shenzhen) Technology Co., Ltd., also in China.  Id.  Deputy Division Director Bowling confirmed that Guangdong Qisitech Co., Ltd. does not have any registered tobacco production facilities in the state of North Carolina.  Id. ¶ 9.  Further, Deputy Division Director Bowling confirms that Elfbar Honeydew Pineapple Orange ENDS products were not commercially marketed in the United States as of February 15, 2007.  Id. ¶ 11.  FDA did not have any record of an FDA marketing granted order in effect for the Elfbar ENDS product at issue, a Substantial Equivalence Order or an abbreviated report requesting a Found-Exempt Order.  Id. ¶¶ 12-13.

Respondent did not object to Deputy Division Director Bowling’s declaration or wish to cross-examine him at a hearing.  Therefore, I find Deputy Division Director Bowling’s statements about the Elfbar Honeydew Pineapple Orange ENDS product and its manufacturer credible with respect to the question of whether it had marketing authorization, or if the manufacturer was registered for business in the United States for its new tobacco products.  I also find that the Elfbar Honeydew Pineapple Orange ENDS product is adulterated and misbranded as its manufacturer did not obtain FDA’s required premarket authorization.

Deputy Division Director Bowling’s declaration also supports a finding that the unauthorized product was received via interstate commerce, as the product manufacturer is based in China.  Id. ¶ 9.

As to Respondent’s possession of the unauthorized product, CTP relies on the sworn declaration of Inspector Jazmyne Satterfield.  CTP Ex. 2.  In the declaration, Inspector Satterfield states that, on August 31, 2023, at approximately 12:45 PM, a compliance check inspection was conducted at Respondent’s business establishment.  CTP Ex. 2 ¶ 4.  During the inspection, Inspector Satterfield observed that the establishment “offered for sale FDA-regulated tobacco products and had a sales display containing tobacco products, including an Elfbar Honeydew Pineapple Orange [ENDS] product, available for sale.”  Id. ¶ 6.  Photographs were taken by Inspector Satterfield of the business establishment, as well as the unauthorized product and its placement within the establishment.  Id.; see also CTP Exs. 3-6 (Inspector Satterfield’s narrative statement; Tobacco Inspection Management System (TIMS) Assignment Form for August 2023; photographs of the establishment site and Elfbar ENDS product; and Form FDA 482 dated August 31, 2023).  The inspection was recorded in FDA’s TIMS record system and a Narrative Report was created.  Id. ¶ 7.  Respondent did not object to Inspector Satterfield’s declaration or wish to cross-examine her at a hearing.  Therefore, I find Inspector Satterfield’s statements regarding what she observed during the August 31, 2023, inspection of Respondent’s business, including that the establishment had a sales

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display containing tobacco products, including an Elfbar Honeydew Pineapple Orange END product, to be credible.

Based on the uncontroverted testimony of Deputy Division Director Bowling and Inspector Satterfield, as well as the corroborating photographs, reports, and other evidence submitted by CTP, I find that the Elfbar Honeydew Pineapple Orange ENDS product offered for sale at Respondent’s establishment on August 31, 2023, previously traveled in interstate commerce before Respondent’s receipt and delivery, or proffered delivery, of such tobacco product for pay or otherwise.  See 21 U.S.C. § 331(c); see also United States v. Sullivan, 332 U.S. 689, 696 (1948) (holding the Act applies “to articles from the moment of their introduction into interstate commerce all the way to the moment of their delivery to the ultimate consumer”).  I also find the ENDS product was adulterated because it lacked the FDA premarketing authorization and was not exempt from this requirement.  21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).  Finally, I find that the ENDS product at issue was misbranded under 21 U.S.C. § 387c(a)(6) because there was no substantially equivalent determination as required by 21 U.S.C. § 387e(j).  Therefore, I conclude Respondent’s actions constitute violations of the Act that warrants the imposition of a CMP.

VI. Civil Money Penalty

Having determined that Respondent is liable under the Act, I conclude that I have the authority to impose a civil money penalty under 21 U.S.C. 333(f)(9)(A).  In its Complaint, CTP sought to impose the penalty amount of $19,192 against Respondent.  CRD Dkt. Entry No. 1 ¶ 1.  In its pre-hearing brief, CTP continued to assert that a $19,192 civil money penalty is appropriate.  CRD Dkt. Entry No. 11 at 8-12.  With regard to the CMP sought, Respondent seeks “that no fine be assessed against [Respondent] because [it] did not offer for sale an ENDS product that lacked premarketing authorization and did not knowingly offer such product for sale.”  CRD Dkt. Entry No. 3a at 3 ¶ 24.

In determining whether a $19,192 civil money penalty is appropriate, I must consider any aggravating or mitigating circumstances and the factors listed in the Act.  21 C.F.R. § 17.34(a)-(b).  Specifically, I am required to consider “the nature, circumstances, extent and gravity of the violation or violations and, with respect to the violator, ability to pay, effect on ability to continue to do business, any history of prior such violations, the degree of culpability, and such other matters as justice may require.”  21 U.S.C. § 333(f)(5)(B); 21 C.F.R. § 17.45(b)(1)-(3).  Respondent must prove any mitigating factors by a preponderance of the evidence.  21 C.F.R. § 17.33(c).  For the following reasons, I conclude that a $16,313 civil money penalty is appropriate based upon the record evidence, applicable law, and aggravating and mitigating circumstances in this case.

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A. Nature, Circumstances, Extent and Gravity of the Violations

The Family Smoking Prevention and Tobacco Control Act was enacted for the purpose of authorizing regulation of tobacco products for the “protection of the public health.”  21 U.S.C. § 387f(d).  There is no dispute that Respondent was in the business of selling a highly regulated and dangerous product.  See generally 21 U.S.C. § 387 note (Findings and Purpose).

CTP argues Respondent’s violation is particularly serious because CTP previously issued a warning letter to Respondent on May 25, 2023, citing Respondent for offering for sale ENDS products that lacked the required marketing authorization.  CRD Dkt. Entry No. 11 at 9; see also CTP Ex. 7.  The warning letter notified Respondent that during an inspection on March 1, 2023, an FDA inspector observed Respondent offering for sale ENDS products lacking premarket authorization.  CTP Ex. 7 at 1.  The warning letter explained the sale of such products was prohibited and warned Respondent to take action to correct the violation.  Id. at 1-3.

In its pre-hearing brief, CTP notes that the warning letter specifically advised Respondent that future violations could result in enforcement action, “including, but not limited to, civil money penalties, seizure, and/or injunction by FDA.”  CRD Dkt. Entry No. 11 at 9.  CTP also notes the warning letter stated that “all new tobacco products on the market without the statutorily required premarket authorization are marketed unlawfully and are subject to enforcement action at FDA’s discretion.”  Id. at 9-10.  CTP contends that by continuing to sell prohibited ENDS products after receiving the warning letter, Respondent has demonstrated an “unwillingness or inability to correct the violations.”  Id. at 10.

Respondent’s counsel contends that “Respondent has no recollection of receiving a warning on or about May 25, 2023 or at any time regarding new tobacco products.”  CRD Dkt. Entry No. 3a at 3 ¶ 20.  However, Respondent does not dispute that CTP may have issued the warning letter.  In the subsequent inspection on August 31, 2023, Inspector Satterfield found ENDS products, specifically, an Elfbar Honeydew Pineapple OrangeENDS product, on display.  CTP Ex. 2 ¶ 6.  Respondent’s continued marketing and selling of new tobacco products demonstrates it did not comply with federal tobacco law, which is serious in nature and demands a proportional civil money penalty amount.

B. Ability to Pay and Effect on Ability to Continue to Do Business

Respondent does not present any arguments or evidence regarding its ability to pay the CMP sought, or the effect imposition of the CMP would have on Respondent’s ability to continue to do business.  Respondent only asserts that the Complaint should be dismissed and “no fine should be assessed.”  CRD Dkt. Entry No. 3a at 3 ¶ 24.  I am limited by the evidence documented in the administrative record.  Respondent has not provided for my

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consideration any documents, such as profit and loss statements, bank statements, reports of its assets and liabilities, or any similar documentation to support a claim that it is unable to pay the full penalty amount, or that payment of the CMP would affect its ability to conduct business.  Therefore, I cannot find Respondent has established an inability to pay or to continue to do business.

C. History of Prior Violations

There is no indication in the record of any prior violations of section 331(c) of the Act resulting in a CMP.  However, CTP argues that Respondent “has a history of violating the Act’s requirements” based on the May 25, 2023, warning letter.  CRD Dkt. Entry No. 11 at 11.  CTP contends a CMP of $19,192 is appropriate in this case because Respondent’s history demonstrates an “unwillingness or inability” to comply with the law.  Id.

As discussed above, I have already found that the warning letter helps to establish the nature, circumstances, extent, and gravity of the violation.  However, I do not agree with CTP that the warning letter also establishes a significant history of prior violations.  Indeed, the letter was not a final agency determination and did not result in any penalties imposed against Respondent.  See CTP Ex. 7 at 3 (“Please note that this warning letter does not constitute final agency action . . . .”).  Further, Respondent did not have the opportunity to request a hearing or otherwise dispute the violations alleged in the letter.  I also note that Respondent has identified steps it has taken since the August 31, 2023 inspection to reduce the likelihood of future violations, which suggests it is willing and able to comply with the law moving forward.  See CRD Dkt. Entry No. 6.

In sum, this is Respondent’s first violation resulting in a CMP.  Respondent also appears to be making an effort to ensure future compliance with the law.  As a result, I find that Respondent does not have a significant history of prior violations or a substantial likelihood of committing future violations, which is a mitigating factor that supports a reduction in the penalty amount.

D. Degree of Culpability

Based on my finding that Respondent committed the violation alleged in the Complaint, I find Respondent fully culpable for offering for sale new tobacco products that were adulterated and misbranded, in violation of the Act.  The Act places a heavy burden on retailers who choose to sell prohibited tobacco products because of their highly dangerous and addictive nature.  See 21 U.S.C. § 387 note.  Although Respondent claims to have taken steps to reduce the likelihood of future violations, I find that those actions do not absolve Respondent of its responsibility as a retailer of tobacco products.

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E. Other Matters as Justice May Require

The Act gives me discretion to consider any other evidence or arguments to mitigate the amount of the CMP.  See 21 U.S.C. § 333(f)(5)(B).  As noted above, CTP is requesting the maximum penalty amount permitted by the regulations.  See 45 C.F.R. § 102.3 (2022); 87 Fed. Reg. 15,100, 15,103 (March 17, 2022).  In assessing the appropriateness of CTP’s request, I find that justice requires me to consider the full range of available penalties in light of the specific facts and circumstances of the case, separate and apart from the factors discussed above.  In doing so, I note that the overall purpose of a CMP is to promote compliance with the law and deter future violations.  Therefore, a CMP should be significant, but not overly punitive.

Here, the record reflects Respondent is a small retailer with no history of prior violations resulting in a CMP.  In addition, Respondent has participated in these proceedings, appears to be taking this matter seriously, and has identified steps it is taking to reduce the likelihood of future violations, including creation and implementation of new policies and practices for regular searches for updates in tobacco regulations and law and daily mail review for incoming CTP/FDA correspondence.  See CRD Dkt. Entry No. 6.  However, as a retailer engaged in the sale of tobacco products, Respondent should have been familiar with the applicable law and known which products it was permitted to sell.  Further, CTP previously warned Respondent about similar conduct and the potential consequences of continuing to offer unauthorized ENDS products for sale.  See CTP Ex. 7.

After weighing these factors and evaluating the entire administrative record, I find that imposing the maximum penalty would be overly punitive and would not serve the interests of justice.  However, I also find that Respondent’s conduct was serious and warrants a proportional penalty.  Therefore, I conclude that reducing the amount by fifteen percent, but still imposing a substantial CMP of $16,313 is appropriate in this case under 21 U.S.C. §§ 333(f)(5)(B), (f)(5)(C), and (f)(9).

VII. Conclusion

For the reasons stated above, I impose a civil money penalty against Respondent Neo Enterprises NC, Inc. d/b/a Neo Tobacco and Vape in the amount of $16,313 for receiving in interstate commerce an ENDS product that lacked the premarketing authorization required under the Act and offering such product for sale.  Pursuant to 21 C.F.R. § 17.45(d), this order becomes final and binding upon both parties after 30 days of the date of its issuance.