8OHM1, LLC d/b/a Digital Smoke / Digital Smoke, LLC, DAB TB9230 (2025)

INITIAL DECISION

On July 22, 2024, the Center for Tobacco Products (CTP) served an Administrative  Complaint (Complaint) on Respondent, 8OHM1, LLC d/b/a Digital Smoke / Digital Smoke, LLC (Digital Smoke) at 3033 Washington Boulevard, Ogden, Utah 84401, and filed a copy of the Complaint with the Food and Drug Administration’s (FDA) Division of Dockets Management.  CTP seeks to impose a $20,678 civil money penalty (CMP) against Respondent for impermissibly manufacturing, selling, and/or distributing new tobacco products that lacked the required premarketing authorization, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. §§ 301 et seq.

Respondent denies the allegations in the Complaint, offers defenses, and argues that a lower CMP would be appropriate.  For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(k) and conclude that a CMP in the amount of $20,678 is appropriate.

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I.    Background and Procedural History

Respondent does business under the name of 8OHM1, LLC d/b/a Digital Smoke/Digital Smoke, LLC.  As noted above, CTP served a Complaint on Digital Smoke on July 22, 2024, asserting that it failed to obtain the required premarket authorization for its new tobacco products, which caused them to become adulterated and misbranded while they were held for sale after shipment of one of more of their components in interstate commerce, in violation of 21 U.S.C. § 331(k).

On August 20, 2024, Respondent timely filed an Answer via the Departmental Appeals Board’s (DAB) Electronic Filing System (E-File).  Civil Remedies Division (CRD) Docket (Dkt.) Entry Nos. 3, 3a, 3b, 4.  In its Answer, Respondent denied the allegations in the Complaint and argued that the requested CMP was too high.  Id.

On August 28, 2024, I issued an Acknowledgment and Pre-Hearing Order (APHO) that established a deadline for discovery and a schedule for pre-hearing exchanges between the parties.  CRD Dkt. Entry No. 6.  In response, on September 25, 2024, CTP filed a Joint Status Report stating that the parties would engage in further settlement discussions.  CRD Dkt. Entry No. 7.

On November 18, 2024, CTP filed a hearing brief, a list of witnesses and exhibits, and 15 proposed exhibits, including the direct written testimony of two proposed witnesses.  CRD Dkt. Entry Nos. 8, 8a – 8p.  Respondent did not file a pre-hearing exchange.

The parties appeared at a pre-hearing conference (PHC) in this matter on January 31, 2025.  CRD Dkt. Entry No. 11.  At the PHC, Respondent had no objection to the admission of CTP’s proposed exhibits.  Id. at 2.  As a result, CTP Exhibits (Exs.) 1-15 were admitted into the record.  Id.  Respondent also indicated it did not intend to cross-examine either of CTP’s witnesses.  Id.  Respondent stated at the PHC that it may have declarations from possible witnesses, and documents it may wish to submit.  Id.  Respondent was referred to Paragraph 13 of the APHO for the procedures for supplementing a pre-hearing exchange.  Id.  Respondent did not submit any motion to supplement its pre-hearing exchange by the set deadline.  As a result, the record is considered closed and this decision is based on the written submissions, in accordance with the provisions of 21 C.F.R. § 17.21(c)(5).

II.      Evidence

The following are CTP’s 15 proposed exhibits, which I admitted into the record without objection at the PHC, marked as CTP Exs. 1-15:

• CTP Ex. 1: Declaration of James Bowling (CRD Dkt. Entry No. 8b)
• CTP Ex. 2: Declaration of Frankie K. Graves (CRD Dkt. Entry No. 8c)

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• CTP Ex. 3: April 2024 Narrative Report (CRD Dkt. Entry No. 8d)
• CTP Ex. 4: April 2024 Establishment Photo (CRD Dkt. Entry No. 8e)
• CTP Ex. 5: April 2024 Form FDA 482 (CRD Dkt. Entry No. 8f)
• CTP Ex. 6: Digital Smoke TRLM NG Registration (CRD Dkt. Entry No. 8g)
• CTP Ex. 7: April 2024 Photographs of E-Liquid Manufacturing Components   (CRD Entry No. 8h)
• CTP Ex. 8: April 2024 Photographs of E-Liquid Flavors Menus (CRD Dkt. Entry No. 8i)
• CTP Ex. 9: Perfumer’s Apprentice - The Flavor Apprentice Online Screenshot  (CRD Dkt. Entry No. 8j)
• CTP Ex. 10: Liquid Nicotine Wholesalers Online Screenshot - PG and VG (CRD Dkt. Entry No. 8k)
• CTP Ex. 11: The Flavor Apprentice Online Screenshot (CRD Dkt. Entry No. 8l)
• CTP Ex. 12: November 2023 Warning Letter (CRD Dkt. Entry No. 8m)
• CTP Ex. 13: Utah Secretary of State Records of Digital Smoke 8OHM1 (CRD Dkt. Entry No. 8n)
• CTP Ex. 14: Firm WL Response 8OHM dba Digital Smoke (CRD Dkt. Entry No. 8o)
• CTP Ex. 15: Receipts for E-Liquid Components (CRD Dkt. Entry No. 8p)

As noted above, Respondent did not file a pre-hearing exchange.

III.   Issues

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

1. Whether Respondent manufactured, sold, and/or distributed new tobacco products that were adulterated and misbranded because they lacked the required FDA marketing authorization order, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(k); and, if so,
2. Whether the CMP amount of $20,678 sought by CTP is an appropriate amount, pursuant to the provisions of 21 C.F.R. § 17.2 and 21 U.S.C. § 333(f)(9)(A).

IV.    Applicable Law

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 manufacturers from selling any “new tobacco product” without authorization from the FDA.  21 U.S.C. § 387j(a); 21 U.S.C. § 387a(b) (delegating the FDA the authority to determine what constitutes new tobacco products).  A new tobacco product is any tobacco product that

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was not commercially marketed in the United States as of February 15, 2007.  21 USC 387j(a)(1).

The TCA requires new tobacco products to have a premarket authorization in effect.  21 U.S.C. § 387j(a)(2).  Alternatively, the manufacturer of the product 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 manufacturer may submit a report, in response to which the Secretary of Health and Human Services (Secretary) may issue an exemption order.  21 U.S.C. § 387e(j)(3).

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).  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(a)(6).

V.      Analysis

As relevant herein, 21 U.S.C. § 331(k) includes as a prohibited act, the “alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to a . . . tobacco product . . . if such act is done while such article is held for sale . . . after shipment in interstate commerce and results in such article being adulterated or misbranded.”

CTP alleges that Respondent violated this section of the Act by failing to obtain the required premarket authorization for its new tobacco products, causing them to become adulterated and misbranded while they were held for sale after interstate shipment of one or more of their components.  CTP cites as support for this allegation, the direct written statement of Frankie K. Graves, the FDA-commissioned Inspector who conducted the inspection on April 19, 2024 at Respondent’s establishment.  CTP Ex. 2.

Inspector Graves stated that during the inspection, he observed evidence of e-liquid product manufacturing at the establishment, as well as components for manufacturing e-liquids, including Liquid Nicotine Wholesalers Glycerin (VG) and Liquid Nicotine Wholesalers Propylene Glycol (PG) solutions, flavoring, bottles, labels, and a menu of products available for purchase in a customer accessible area.  CTP Ex. 2 at 2.  See CRD Dkt. Entry 8 at 10-11.  The Inspector also stated that the most responsible person during the inspection, Brock Shepherd, the Manager, confirmed that, upon a customer’s request, the establishment would manufacture e-liquid products in the desired flavor.  CTP Ex. 2

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at 2-3.  Inspector Graves indicated he observed an employee of the establishment manufacturing an e-liquid product for a customer and completing a transaction to sell that product to the customer.  Id. at 2.  The Inspector’s statements are corroborated by photographs showing e-liquid components, including VG and PG solutions, The Flavor Apprentice flavors, and e-liquid flavor menus.  CTP Exs. 7, 8.

CTP also cites as support for its allegation of a violation of 21 U.S.C. § 331(k), the Declaration of James Bowling, Deputy Division Director for the Division of Enforcement and Manufacturing in the Office of Compliance and Enforcement, CTP, FDA.  CTP Ex. 1.  In his statement, Mr. Bowling indicated that the liquid nicotine observed during the April 19, 2024 inspection, “are used in the manufacture of numerous tobacco products, including being observed to be used in the manufacture of e-liquids during the April 19, 2024 inspection at Digital Smoke / Digital Smoke, LLC, and are fulfilled in Arizona and shipped to Respondent’s establishment in Utah.”  Id. at 4.  Mr. Bowling reported that there was no record of the e-liquid products observed during the April 19, 2024 inspection having an approved FDA premarket authorization order, substantial equivalence order, or a found exempt order in effect on April 19, 2024.  Id.  Finally, Mr. Bowling stated that Respondent’s e-liquid products were not commercially marketed in the United States as of February 15, 2007.  Id.

Respondent does not directly contest this evidence.  Instead, it argues that there were two separate businesses involved.  In its Answer, it asserted that 8OHM1 LLC is the manufacturing company, which is located in the same building and produces the product to sell to Digital Smoke/Digital Smoke LLC, which then sells the product to the consumer.  CRD Dkt. No. 3b at 1.  Respondent also does not dispute that its e-liquid products were not commercially marketed in the United States as of February 15, 2007.  Id. at 1-2.  It acknowledged that 8OHM1 LLC did receive components used in manufacturing tobacco products from outside Utah but indicated that Digital Smoke/Digital Smoke LLC did not.  Id. at 1.

Respondent stated that 8OHM1 LLC did submit a PMTA application but had not yet received a response, whereas Digital Smoke did not submit such an application and it was purchasing the finished products from 8OHM1 LLC.  Id. at 2.  It does not dispute that its e-liquid products did not have a substantial equivalence order or found exempt order in effect.  Id.  Rather, it asserts that 8OHM1 LLC had “been waiting in limbo for years on the PMTA submissions and have yet to receive a response other than that they had been received” and “if the FDA would have responded to our answer to the original warning, or provided any letter asking us to stop operations we would have complied immediately.”  Id. at 2.

Respondent’s first argument is, essentially, that there were two separate businesses in operation here; 8OHM1 LLC, which manufactured the tobacco products, and Digital Smoke/Digital Smoke LLC, which purchased the tobacco products from 8OHM1 LLC

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and sold them to the public.  However, the record does not support such an argument.  On October 12, 2017, Respondent registered Digital Smoke with the FDA, identifying its address as 3033 Washington Blvd, Ogden, Utah 84401 and listing its operations as blending, labeling, manufacturing, packaging, and storing.  CTP Ex. 6 at 1.  That registration identified 8OHM1 as the owner and operator of Digital Smoke.  CTP Ex. 6   at 2.  Moreover, Respondent’s own business correspondence dated November 14, 2023 includes the letter heading of “8OHM1 D/B/A Digital Smoke” and is signed by “Brian Bunn Owner/Operator Digital Smoke LLC.”  CTP Ex. 14.  These documents make clear that 8OHM1 LLC is doing business as both Digital Smoke LLC and Digital Smoke.

If, in fact, there were two separate business entities, Respondent could have provided documentation of this in the form of incorporation documents or other business records.  If Digital Smoke/Digital Smoke LLC was purchasing tobacco products from 8OHM1 LLC, the manufacturer, one would assume there would be purchase orders, payment records, or other documentation of these purchases.  No such evidence was submitted by Respondent.  Thus, the existing evidence supports a conclusion that 8OHM1 LLC is doing business as both Digital Smoke LLC and Digital Smoke.

As noted above, Respondent acknowledged that its e-liquid products were “new” products because they were not commercially marketed in the United States as of February 15, 2007.  CRD Dkt. No. 3b at 1-2.  It also acknowledged that the components used in the manufacturing of the tobacco products were from outside Utah.  Id. at 1.  Therefore, the final question is whether Respondent’s tobacco products were adulterated and misbranded because they lacked the required premarket authorization.  Respondent does not contest CTP’s assertion that it did not have the required premarket authorization for the tobacco products it manufactured.  Instead, it notes that 8OHM1 LLC had submitted PMTA applications for its products and had yet to receive a response from the FDA.  CRD Dkt. No. 3b at 1-2.  It argues that it never received any official denial and has “been waiting in limbo for years on the PMTA submissions and have yet to receive a response other than that they have been received.”  Id. at 2.

I have no reason to doubt Respondent’s statements regarding the lengthy delay it has faced and can understand the resulting frustration.  However, it was notified in the warning letter dated November 2, 2023 that it was unlawfully marketing new tobacco products lacking premarket authorization.  CTP Ex. 12.  When it continued to manufacture such products in the face of this notice, even while waiting for an answer to its written response, it violated the Act.

Upon weighing the evidence, I conclude the FDA never issued a marketing authorization for Respondent’s new tobacco products.  I also find that there is no dispute that Respondent did not apply for a substantial equivalence order or an exemption order from the Secretary.  I further find that Respondent’s new tobacco products were manufactured using at least one component that traveled in interstate commerce.  Therefore,

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Respondent’s new tobacco products are adulterated and misbranded and violate section 331(k) of the Act.

VI.     Appropriateness of the CMP

When determining the appropriate amount of a CMP, 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 take into account “the nature, circumstances, extent and gravity of the 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).

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

As noted above, 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 USC 387f(d).  Respondent was in the business of manufacturing and selling this highly regulated and dangerous product.  It received a written warning dated November 2, 2023 that the “FDA has determined that you manufacture, sell, and/or distribute to customers in the United States e-liquid products without a marketing authorization order, including: Melon Mint Gum.”  CTP Ex. 12 at 2.  It was also notified in that letter that “[i]t is your responsibility to ensure that all of your tobacco products comply with each applicable provision of the FD&C Act and FDA’s implementing regulations.”  Id.  Yet, after it received this warning that it was in violation of federal law, it continued to manufacture and sell other “new tobacco products” without verifying their legality.  Respondent’s failure to comply with federal tobacco law is serious in nature and demands a proportional CMP amount.

2. Respondent’s Ability to Pay and Effect on Ability to do Business

In evaluating this factor, I have considered Respondent’s arguments that it is a small business with one location, and it does not have the liquid or hard assets to pay a fine of this magnitude.  CRD Dkt. No. 3b at 3.  However, it has not provided any evidence documenting its financial situation.  As a result, since I must base my decision on the evidence of record, I cannot find that Respondent has established an inability to pay.

In considering the effects of the CMP on Respondent’s ability to continue to do business, I note that Respondent could continue to sell authorized tobacco products.  However, Respondent reports that it set a date to close its business as of August 24, 2024, which was shortly after it was served the complaint in this matter.  CRD Dkt. No. 3b at 3.  As a result, the issue of its ability to continue to do business is moot.

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3. History of Prior Violations

There is no indication in the record of any prior violations of 21 U.S.C. § 331(k) resulting in a CMP.  However, Respondent did receive a warning letter dated November 2, 2023, advising that it was in violation of federal law for manufacturing and selling a new tobacco product without marketing authorization.  CTP Ex. 12.  Thus, Respondent was on notice that it was in violation of 21 U.S.C. § 331(k) but continued to manufacture and market its new tobacco products after this warning.

4. Degree of Culpability

As noted above, Respondent received written notice that it was in violation of federal law by manufacturing and selling “new tobacco products” without obtaining a marketing authorization order.  This notice was contained in the warning letter dated November 2, 2023, which contained the directive to “take prompt action to address any violations that are referenced above, as well as violations that are the same as or similar to the ones stated above and take any necessary actions to bring your tobacco products into compliance with the FD&C Act.”  CTP Ex. 12 at 2.  Yet, while Respondent did reportedly contact the FDA for guidance, it continued to manufacture and sell these same products, without any apparent modification to its business practices while it waited for a response from the FDA.  Thus, I must find that this degree of culpability does not merit a reduction in the CMP. 

VII.    Conclusion

For these reasons, I enter judgment in the amount of $20,678 against Respondent, 8OHM1, LLC d/b/a Digital Smoke/Digital Smoke, LLC, for manufacturing, selling, and/or distributing new tobacco products that lacked the premarketing authorization required by the Act, 21 U.S.C. §§ 301 et seq.  Pursuant to 21 C.F.R. § 17.11(b), this order becomes final and binding upon both parties after 30 days of the date of its issuance.