BA Retail LLC d/b/a Stone Smokes / Stone Store, DAB TB9468 (2025)

INITIAL DECISION

The Center for Tobacco Products (CTP) seeks to impose a $20,678 civil money penalty (CMP) against Respondent, BA Retail LLC d/b/a Stone Smokes / Stone Store, which operated an online store at https://stonesmokes.com.  Specifically, CTP alleges that Respondent Stone Smokes / Stone Store introduced or delivered for introduction into interstate commerce an adulterated and misbranded tobacco product that lacked premarketing authorization, thereby violating the Federal Food, Drug, and Cosmetic Act (Act), 21 U.S.C. § 331(a).  For the reasons discussed below, I find Respondent violated the provisions of 21 U.S.C. § 331(a) and conclude that a reduced civil money penalty (CMP) in the amount of $7,500 is appropriate.

I.  Background and Procedural History

Respondent does business under the name Stone Smokes / Stone Store, which operated exclusively as an online retail store at https://stonesmokes.com.  CTP began this matter by serving an Administrative Complaint for Civil Money Penalty (Complaint) on Respondent at 6922 East Admiral Place, Tulsa, Oklahoma 74115, by United Parcel

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Service, and by filing a copy of the Complaint with the Food and Drug Administration's (FDA) Division of Dockets Management.  Civil Remedies Division (CRD) Docket (Dkt.) Entry Numbers (Nos). 1, 1b.  On August 17, 2025, Respondent registered for the Departmental Appeals Board Electronic Filing System (DAB E-File), filed a Notice of Appearance and a timely Answer.  CRD Dkt. Entry Nos. 3, 3a.  In its Answer, Respondent initially denied the allegations, raised some defenses, and disputed the appropriateness of the $20,678 CMP.  CRD Dkt. Entry No. 3a (Answer).

On August 28, 2025, I issued an Acknowledgment and Pre-Hearing Order (APHO) acknowledging receipt of Respondent's Answer and established procedural deadlines for this case.  CRD Dkt. Entry No. 4.  On September 7, 2024, Respondent prematurely filed its pre-hearing brief.  CRD Dkt. Entry No. 5.  On September 27, 2024, CTP filed a Joint Status Report stating that "[t]he parties have been unable to reach a settlement in this case . . . [and CTP] intends to proceed to a hearing."  CRD Dkt. Entry No. 7 at 1.

On November 14, 2024, CTP filed a Notice of Unavailability of Declarant and Unopposed Motion to Extend Deadlines, requesting "that all deadlines in this case be extended for twenty-one (21) days, to allow declarant the time to review and sign her declaration," and that CTP's pre-hearing exchange that was due November 18, 2024, be extended to December 9, 2024.  CRD Dkt. Entry No. 8 at 1.  CTP asserted that Respondent concurred with this motion and indicated that it can be identified as unopposed.  Id.  I granted CTP's motion in a November 21, 2024 order, extending CTP's pre-hearing exchange deadline to December 9, 2024, and Respondent's to December 30, 2024.  CRD Dkt. Entry No. 9.

On December 9, 2024, CTP timely filed its pre-hearing exchange, consisting of an Informal Brief of Complainant, Complainant's List of Proposed Witnesses and Exhibits, and nine proposed exhibits (CTP Exhibits (Exs.) 1-9).  CRD Dkt. Entry Nos. 12-12j.  CTP's pre-hearing exchange included the written direct testimony of three proposed witnesses, James Bowling, Deputy Division Director, Office of Compliance and Enforcement, CTP, FDA (CTP Ex. 1), Kouros Kangarli, a Consumer Safety Officer for the Division of Promotion, Advertising, and Labeling (DPAL) at the Office of Compliance and Enforcement (CTP Ex. 2), and Dara D. Hackett, Regulatory Counsel for DPAL (CTP Ex. 3).  CRD Dkt. Entry Nos. 12a-12d.  On December 21, 2024, Respondent filed a document reiterating its positions from its prematurely filed pre-hearing brief.

On February 14, 2025, I held a pre-hearing conference (PHC) in this case.  I explained my role as an impartial Administrative Law Judge, the issues to be decided in the case, and the parties' respective burdens of proof.  CRD Dkt. Entry No. 26 (Amended Summary of February 12, 2025, Pre-Hearing Conference and Order Establishing Deadlines for Supplemental Briefs); see also 21 C.F.R. §§ 17.19, 17.33.  I also discussed the record and the parties' pre-hearing submissions.  As previously referenced, CTP submitted a pre-hearing brief; a list of proposed witnesses and exhibits; and proposed

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exhibits, including written testimony, marked CTP Exhibits 1 through 9.  See CRD Dkt. Entry Nos. 12, 12a-12j.  As Respondent did not object, I admitted CTP Exhibits 1 through 9 (CTP Exs. 1-9) into the record.  CRD Dkt. Entry No. 26 at 2.  I also apprised Mr. Khan, Respondent's representative, who proceeded without counsel, of CTP's proposed witnesses:  James Bowling, Deputy Division Director, Office of Compliance and Enforcement, CTP, FDA; Kouros Kangarli, Regulatory Counsel, Office of Compliance and Enforcement, CTP, FDA; and Dara D. Hackett, Regulatory Counsel, Office of Compliance and Enforcement, CTP, FDA.  Id.  I asked Mr. Khan of his intent to cross-examine CTP's witnesses and Respondent indicated that he did not intend to cross‑exam CTP's witnesses.  Id.

I noted that Respondent filed a pre-hearing exchange consisting of two briefs, one filed on September 7, 2024, and another on December 21, 2024, each containing numerous attachments.  Id.; see CRD Dkt. Entry Nos. 5, 13.  I inquired from Respondent if the brief attachments were Respondent's exhibits.  CRD Dkt. Entry No. 26 at 2.  Respondent confirmed the attachments to its September 7, 2024, and December 21, 2024, briefs were its proposed exhibits, in addition to the attachments to its August 17, 2024, Answer.  See CRD Dkt. Entry No. 3a.  Further, Respondent stated that the exhibits demonstrate that Respondent's business is closed and that it cannot afford the proposed civil money penalty.  CRD Dkt. Entry No. 26 at 2.  I asked Mr. Khan whether Respondent conceded liability, and he admitted that the violation occurred but contested the amount of the civil money penalty.  Id.

I decided not to admit Respondent's pre-hearing exchange because it did not comply with the requirements of the APHO.  See CRD Dkt. Entry No. 4.  The APHO contained a provision that set out instructions regarding the requirements for the parties' submission of pre-hearing documents, exhibits, and witness statements.  Specifically, the APHO required the parties to file a "list of all proposed exhibits."  Id. at 5.  However, I decided to give Respondent an opportunity to refile the attachments as exhibits in compliance with the requirements of the APHO.  21 C.F.R. § 17.25; APHO  ¶ 13.  I instructed Respondent to refile the attachments to its Answer and both pre-hearing briefs as properly marked exhibits, along with an exhibit list describing each proposed exhibit by February 19, 2025.  CRD Dkt. Entry No. 25.  I also ordered CTP to file any objections to the Respondent's submissions by February 26, 2025.  Id. at 3.  Further, I stated that I would then issue a ruling on whether to admit Respondent's proposed exhibits into the record.  I instructed both parties that any clarifications or objections to my February 14, 2025 Order should be submitted within 10 days of the Order date.  Finally, the Order stated that final briefs were due on March 26, 2025.  Id.

On March 27, 2024, Respondent filed its Final Brief and documentation, identified as "Exhibit A," stating that its business domain name was no longer registered.  CRD Dkt. Entry Nos. 28, 29.  CTP did not file objections to Respondent's proposed exhibits or a Final Brief.

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On April 4, 2025, CTP filed a Motion to Extend Deadlines, requesting a 30-calendar day extension of all pending deadlines, citing that the Federal Drug Administration (FDA) experienced a significant reduction in force (RIF), including in FDA's CTP's Office of Compliance and Enforcement.  CRD Dkt. Entry No. 30.  In an April 11, 2025, Order, I granted CTP's extension request, extending all deadlines in the case by 30 calendar days.  CRD Dkt. Entry No. 31.  On May 14, 2025, CTP timely filed Complainant's Response to Respondent's Final Brief.  CRD Dkt. Entry No. 32.  Respondent did not submit a response to CTP's final brief.

As previously discussed, Respondent waived its right to cross-examine CTP's proposed witnesses and Respondent did not submit a list of any proposed witnesses.  Therefore, a hearing in this matter is not necessary.  The administrative record is now complete and closed, and this matter is ready for a decision.  I will now decide this case based on the evidence and arguments in the administrative record.  21 C.F.R. § 17.45(a).

II.  Admissions of Exhibits

1. CTP's Exhibits 1-9 are admitted into the administrative record.

On December 9, 2024, CTP submitted the following nine proposed exhibits, CTP Exs. 1‑9.  See CRD Dkt. Entry Nos. 12b-12j.

• CTP Ex. 1: Declaration of James Bowling (CRD Dkt. Entry No. 12b)
• CTP Ex. 2: Declaration of Kouros Kangarli (CRD Dkt. Entry No. 12c)
• CTP Ex. 3: Declaration of Dara D. Hackett (CRD Dkt. Entry No. 12d)
• CTP Ex. 4: February 2024 Narrative Report (CRD Dkt. Entry No. 12e)
• CTP Ex. 5: February 2024 Redacted Screenshot of Stone Smokes Stone Store Online Purchase Confirmation (CRD Dkt. Entry No. 12f)
• CTP Ex. 6: March 2024 Redacted Photographs of Bang Box BC9000 Tripple Berry Ice and RAZ TN9000 Strawberry Ice ENDS Product (CRD Dkt. Entry No. 12g)
• CTP Ex. 7: December 2023 Warning Letter (CRD Dkt. Entry No. 12h)
• CTP Ex. 8: December 2023 Warning Letter UPS Delivery Confirmation (CRD Entry No. 12i)
• CTP Ex. 9: Bang Vapes Website Online Printout (CRD Dkt. Entry No. 12j)

Respondent had until February 14, 2025, to file objections to the admission of CTP's nine exhibits.  CRD Dkt. Entry No. 25 at 3.  Respondent did not file any objections; therefore, absent any objections, I admit CTP Exs. 1-9 into the administrative record.

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2. Respondent's February 13, 2025 submissions are admitted into the administrative record.

On September 7, 2024, and December 21, 2024, respectively, Respondent filed a pre-hearing exchange consisting of two briefs, with each containing numerous attachments.  See CRD Dkt. Entry Nos. 5, 13.  During the pre-hearing conference on February 12, 2025, I decided not to admit Respondent's pre-hearing exchange because it did not comply with the requirements of the APHO, but gave Respondent an opportunity to refile the attachments as exhibits in compliance with the requirements of the APHO.  See CRD Dkt. Entry No. 4.  21 C.F.R. § 17.25; APHO  ¶ 13.

On February 13, 2025, Respondent re-filed its exhibits consistent with my Order.  CRD Dkt. Entry No. 4. CRD Dkt. Entry No. 25.  See CRD Dkt. Entry Nos. 16, 17-24 (Exhibits A – F, A, G).

• R. Ex. 1 (Ex. A: URL Domain Name Availability (CRD Dkt. Entry No. 17)
• R. Ex. 2 (Ex. B: August 2024 Discover Card Statement (CRD Dkt. Entry No. 18)
• R. Ex 3 (Ex. C: June 29, 2024 – July 26, 2024 Citi Credit Card Statement (CRD Dkt. Entry No. 19)
• R. Ex 4 (Ex. D: June 13, 2024 – July 12, 2024 Bank of America  Statement (CRD Dkt. Entry No. 20)
• R. Ex. 5 (Ex. E: December 2024 Credit Score Report (CRD Dkt. Entry No. 21)
• R. Ex. 6 (Ex. F: July 2024 Final Cut-Off Utility Notice (CRD Dkt. Entry No. 22)
• R. Ex 7 (Ex. A: Business Closure (CRD Dkt. Entry No. 23)
• R. Ex. 8 (Ex. G: 2024 Schedule C – IRS Form 1040 (CRD Dkt. Entry No. 24)

CTP did not object to the entry of the submission of these exhibits, so I have marked them as Respondent's (R.) Exs. 1-8 and admit them into the administrative record.

3. Respondent's March 27, 2025 Final Brief and submission identified as "Exhibit A" are also admitted into the administrative record, over CTP's Objection.

On March 27, 2025, Respondent also submitted a Final Brief, and an attachment marked as "Exhibit A" to show that its business is no longer operational.  See CRD Dkt. Entry Nos. 28, 29.  Respondent's final brief and "Exhibit A" reiterates and expands on the contentions made in the Respondent's Answer and other correspondence, refuting CTP's argument that its business is still operational.  On May 14, 2025, CTP filed a response to refute Respondent's contentions, and specifically argued against the admission of the attachment into this evidence into the record, citing that Respondent has "improperly submitted an additional exhibit to its Final Brief - purporting to cancel the URL for its

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website," arguing that the additional exhibit was inconsistent with my February 12, 2025 Order.  See CRD Dkt. Entry No. 25.

I overrule CTP's objection and admit Respondent's exhibit as rebuttal evidence.  21 C.F.R. § 17.39(g).  Respondent's exhibit ("Exhibit A") is a printout of a URL domain registration showing that Respondent's online business is no longer registered.  CRD Dkt. Entry Nos. 18, 29.  Because the attachment is being submitted by Respondent to directly refute CTP's ongoing contention that Respondent's business is still currently operational, I do not consider the attachment as additional evidence.  Moreover, this evidence is relevant and material mitigation evidence that supports Respondent's contentions regarding its inability to pay the CMP sought and no expectation of future violations.  21 C.F.R. §§ 17.33(a), (c), 17.34(a)-(c), 17.45(b)(3).  As CTP has already formulated arguments against Respondent on this issue, I find that CTP is not prejudiced by the Respondent's submission of this evidence with its final brief.  But see 21 C.F.R. § 17.39(d) (excluding relevant evidence if its probative value is substantially outweighed by the danger of unfair prejudice).  Finally, there is no indication that the evidence is unreliable.  21 C.F.R. § 17.39(b).

I have also considered the history of this case, especially Respondent's self-represented status, and its unfamiliarity with the administrative appeals process.  See CRD Dkt. Entry No. 25 at 2.  Notwithstanding CTP's objection, I find the ends of justice will be served to accept Respondent's submissions so that Respondent may support the contentions it has consistently made throughout these proceedings.  See 21 C.F.R. § 17.19(b)(17).  Accordingly, I consider the Respondent's March 27, 2025, submission in its entirety and admit the Respondent's supporting evidence into the administrative record, marked as Respondent's Exhibit 9 (R. Ex. 9).

III.  Issues

Notwithstanding that Respondent initially denied the allegation in its August 17, 2024 Answer to the Complaint, during the February 12, 2025 Pre-Hearing Conference, Respondent conceded that it violated section 331(a) of the Act and its implementing regulations on February 16, 2024, by selling and shipping a new tobacco electronic nicotine delivery system that lacked premarket authorization.  As such, the sole issue for me to decide in this case is:

1. Whether CTP's proposed $20,678 civil money penalty is appropriate, considering any mitigating or aggravating factors.  21 C.F.R. § 17.45(b)(3); APHO ¶ 5.

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IV.  Applicable Law

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 amended the Act to prohibit the sale of 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 order 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. §§ 387(a)(2)(A)(i), 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. §§ 387(a)(2)(A)(ii), 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, 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).  A new 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 or a Refuse to Accept letter, the products are adulterated.  Id.  Under the Act, "[a] tobacco product shall be deemed to be misbranded . . . if, in the case of any tobacco product distributed or offered for sale in any State . . . it is sold or distributed" in violation of regulations prescribed under section 387f(d).  See 21 U.S.C. §§  387c(a), c(a)(7), c(a)(7)(B).  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); see also 21 U.S.C. § 387e(j).

Adulterated and misbranded ENDS products violate the Act.  The Act prohibits the introduction or delivery for introduction into interstate commerce of any tobacco product that is adulterated or misbranded.  21 U.S.C. § 331(a).  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).  The maximum amount of penalties are set

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by 21 U.S.C. § 333(f)(9)(A) and are adjusted annually.  See 21 C.F.R. § 17.2; 45 C.F.R. § 102.3.  In this case, CTP seeks the maximum penalty amount of $20,678.

To prevail on a complaint seeking a civil money penalty, CTP must prove Respondent's liability and the appropriateness of the penalty by a preponderance of the evidence.  21 C.F.R. § 17.33(b).  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).  The Supreme Court of the United States 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).

V.  Findings of Fact and Conclusions of Law

1. Respondent admits that, on February 16, 2024, it introduced or delivered for introduction into interstate commerce a new tobacco electronic nicotine delivery system (ENDS) product that was adulterated or misbranded because it lacked premarketing authorization, in violation of section 331(a) of the Act.

CTP's case against Respondent relies on the written direct testimony of Deputy Director James Bowling, Office of Compliance and Enforcement, CTP, FDA, Kouros Kangarli, Consumer Safety Officer for the Division of Promotion, Advertising, and Labeling (DPAL), and Dara D. Hackett, Regulatory Counsel for DPAL.  CRD Dkt. Entry Nos. 12b-12d (CTP Exs. 1-3).  Consumer Safety Officer Kouros Kangarli testified that during an online purchase investigation on February 16, 2024, at approximately 10:11 AM, he observed "UP [Undercover Purchaser] A purchase a KangVape Max Disposable Vape 5000 Puffs Cherry Lemonade tobacco ENDS product, as well as a HYDE I.D. TFN Recharge Disposable 5% 4500 Puffs Strawberry B-Day tobacco ENDS product directly from the establishment's website."  CTP Ex. 2 at ¶¶ 5-6.  Ms. Hackett testified that she processed the shipment evidence from UP A's online purchase and observed that Respondent mailed a Bang Box BC9000 Tripce Berry Ice ENDS product, a different ENDS product than the ones ordered.  CTP Ex. 3 at ¶¶ 6-7.  A photograph taken by Ms. Hackett indicates that the ENDS product was shipped from Respondent's address in Tulsa, Oklahoma to a location in Maryland.  CTP Ex. 6 at 1.  Deputy Director Bowling testified that the Bang Box BC9000 Tripce Berry Ice ENDS product was made in China, "was not commercially marketed in the United States as of February 15, 2007 . . . does not have an FDA marketing granted order in effect . . . there was no record of this product having a substantial equivalence order in effect . . . [and] the Bang Box BC9000 Tripce Berry Ice ENDS products did not have a found-exempt order in effect."  CTP Ex. 1 at ¶¶ 7, 9-11.

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Although Respondent initially denied the allegations in its Answer, Respondent admitted liability for violating section 331(a) of the Act at the February 12, 2025, Pre-Hearing Conference.  21 U.S.C. § 331(a).  Respondent admitted to selling and shipping the Bang Box BC9000 Tripce Berry Ice ENDS products on February 16, 2024, and did not wish to cross-examine CTP's witnesses or otherwise challenge CTP's evidence concerning liability.  Answer at ¶ 1; CRD Dkt. Entry No. 26 at 2.  Both parties agreed that the sole issue for me to consider is the appropriate amount of the civil money penalty, in consideration of any mitigating or aggravating factors.  CRD Dkt. Entry No. 3a; CRD Dkt. Entry No. 26 at 4.

As such, I find that the ENDS product was adulterated because it lacked the required FDA marketing authorization and was not exempt from this requirement.  21 U.S.C. §§ 387j(a)(2)(A), 387e(j)(3)(A).  Under 21 U.S.C. § 387c(a)(6), the ENDS product was also misbranded because there was not a substantially equivalent determination as required by 21 U.S.C. § 387e(j).  Therefore, Respondent's actions constitute violations of law that merit a CMP.

2. Respondent has demonstrated by a preponderance of the evidence mitigating circumstances to support a reduced CMP of $7,500.

Since Respondent, Stone Smokes / Stone Store, conceded that it violated the prohibition against introducing or delivering for introduction into interstate commerce of an adulterated or misbranded tobacco product in violation of 21 U.S.C.§ 331(a), Respondent is liable for a civil money penalty not to exceed the amounts listed in FDA's CMP regulations at 45 C.F.R. § 102.3.  21 U.S.C. § 333(f)(9)(A); see also 21 C.F.R. § 17.2.  When determining the appropriate amount of a CMP, I am required to consider any "circumstances that mitigate or aggravate the violation" and "the factors identified in the statute under which the penalty is assessed . . . ." 21 C.F.R. §§ 17.34(a); 17.34(b).  Specifically, I must consider "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).  CTP has the burden to prove the appropriateness of the civil money penalty by a preponderance of the evidence, and Respondent has the burden to prove any mitigating factors by a preponderance of the evidence.  21 C.F.R. § 17.33(b)-(c).

In its Complaint, CTP seeks to impose the maximum CMP amount of $20,678 against Respondent.  CRD Dkt. Entry No. 1, ¶ 1.  In its Answer, Respondent contends that the CMP sought by CTP is too high for it to pay due to his ongoing untenable financial circumstances, resulting from him ceasing the sale of the ENDS product and shutting down the website (closing the business) in February 2024.  CRD Dkt. Entry No. 3a, at 4.  R. Exs. 1, 7.

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For the reasons explained below, I find that Respondent has established mitigating factors by a preponderance of the evidence and conclude that a reduced CMP of $7,500 is appropriate.  21 C.F.R. §§ 17.33(a), (c); 17.34.

1.  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 the Respondent was in the business of selling a highly regulated and dangerous product.  See 21 U.S.C. § 387 note.

CTP contends that Respondent's violations are particularly serious because they occurred despite earlier warnings that future violations could result in an enforcement action, and after providing Respondent with information and resources designed to help retailers to comply with federal tobacco law.  CRD Dkt. Entry No. 12 at 2-3.  CTP specifically refers to a warning letter it issued to Respondent on December 12, 2023, citing Respondent for offering for sale ENDS products that lacked the required marketing authorization order.  CRD Dkt. Entry No. 12h; see also CTP Ex. 7 at 1-2.  CTP states that the warning letter notified Respondent that future violations may lead to enforcement action, including, but not limited to, civil money penalties, seizure, and/or injunction by FDA.  Id.  Finally, CTP states the warning letter referred the Respondent the FDA website, which included information to help tobacco retailers understand and comply with FDA tobacco laws and regulations. Id.  CTP concludes that Respondent's repeated violation demonstrates its unwillingness or inability to correct the violations.  CRD Dkt. Entry No. 12.

In its Answer, Respondent claimed that it did not receive the warning letter, and only became aware of the violation after its bank account and credit card processing account was closed.  CRD. Dkt. Entry No. 3a.  Further, that such action resulted in its website being shut down since February 2024, and consequently, it is no longer in business.  See CRD Dkt. Entry No. 3a, at 4.  As such, Respondent is arguing that there will be no future violations.  I note that Respondent has made conflicting statements with regards to the timeframe of when its business closed – first, in November 2023 (CRD. Dkt. Entry No. 3a - Answer at 2), and then February 2024, but further explained that the closing of its business was a process that started in January 2023, and ended in February 2024.  Id.  However, Respondent further clarified in its Pre-Hearing Brief that its online business started in November 2023, but was already showing signs of lack of financial sustainability by the time FDA successfully placed its online order on February 16, 2024. CRD. Dkt. No. 5

Although Respondent claims that it did not receive the warning letter because CTP probably sent it to the "incorrect email address," the record reflects that CTP sent the warning letter by mail to Respondent's business address of record.  Thus, I find that Respondent received the warning letter.

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The warning letter begins by notifying Respondent that it was observed to be in violation of the federal tobacco laws and regulations and that "Our review of the website https://stonesmokes.com revealed that you offer for sale or distribution to customers in the United States ENDS products that lack a marketing authorization order: Elf Bar BC5000 Miami Mint, KangVape Max Cherry Lemonade, and Funky Republic TI7000 California Cherry."  CTP Ex. 7 at 2.  It further states: "Failure to address any violations of the FD&C Act, 21 U.S.C. § 301 et seq., or its implementing regulations relating to tobacco products including the tobacco regulations in 21 C.F.R. Parts 1140, 1141, and 1143, may lead to regulatory action, including, but not limited to, civil money penalties, seizure, and/or injunction."  Id.

However, the warning letter does not specifically identify the product as an example or otherwise signal that other flavor of the brand (such as the Bang Box BC9000 Tripce Berry Ice which resulted in Respondent's February 2024 violation) may also lack the premarket authorization required under the Act.  See id.

While CTP is correct that the warning letter states that the "violation indicated in [the] letter may not be a complete list of violations at the establishment," there was no specific visual emphasis prominently placed in its Warning Letter, to advise of such.  Therefore, I am not persuaded by CTP's arguments with regards to warning Respondent about the extent and gravity of the any future violations.  CTP. Ex. 7 at 2.

Accordingly, despite the serious nature of the violation, I find the fact that there will be no future violations, although insufficient to relieve it of liability, is a significant mitigating factor in this case, and as such find the CMP amount should be accordingly reduced.

2.  Respondent's Ability to Pay and Effect on Ability to Do Business

Respondent's principal argument against the appropriateness of the CMP amount is its inability to pay.  Respondent has stated that since filing its Answer, its business became financial untenable once FDA issued the warning letter, and that culminating factors eventually lead to the closure of its business in February 2024.  CRD. Dkt. Entry No. 3a.  Furthermore, as a sole proprietorship, his business was already financially vulnerable, and his untenable financial circumstances were further compounded by his personal health challenges.  As proof, Respondent attached his 2023 Schedule C (Profit or Loss From Business) tax form for "Stone Retail" reflecting a net profit of $23,267, after a deduction of $12,133, for car and truck expenses.  See R. Ex. 8.  I find this specific evidence serves to counter CTP's argument that Respondent has not provided sufficient financial information to support his claim of its inability to pay the full CMP amount.  CRD.  Dkt. Entry No. 12.  Specifically, CTP asserts that "[i]n order to establish inability to pay the penalty, Respondent should provide evidence as to its business income and assets, for example, . . ."  Id. at 12.  However, even though it does not patently reflect a

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financial loss, Respondent's Schedule C, does depict some evidence of financial hardship.  Further, Respondent submitted a credit score report reflecting a low score, which as a sole proprietor is relevant to the business' creditworthiness, a Final Cut-Off Notice from an electric utility company, and his credit card statements from Discover, Citi, and Bank of America showing maxed-out or nearly maxed-out credit lines with a total outstanding balance of over $36,000.  R. Exs. 2-7.  Collectively, I find that the evidence supports Respondent's assertions of its inability to pay the full $20,678 full CMP amount that CTP is seeking.

Most importantly, Respondent asserts, and has provided documentary evidence to support its claim, that it has closed its business selling tobacco products online and is no longer operating.  R. Exs. 1, 9.  Based on the evidence in the record, I find Respondent's arguments regarding its ability to pay the CMP proposed by CTP and its ability to continue to do business to be credible and persuasive.  In the absence of any conflicting documentary evidence or argument regarding Respondent's ability to pay the proposed CMP and to continue to do business, these mitigating circumstances warrant a reduction in the civil money penalty sought by CTP.

3.  History of Prior Violations

There is no indication in the record of any prior violations of section 331(a) of the Act resulting in a CMP.  CTP notes, however, that Respondent received a warning letter that it had previously violated the law and that it nevertheless continued to receive in interstate commerce and offer for sale new tobacco products that lacked the required premarket authorization, which shows an unwillingness or inability to comply with the law.  CRD Dkt. Entry No. 12.  CTP therefore proffers Respondent's repeated violation supports a penalty of $20,678.

I agree with CTP that the warning letter demonstrates a prior violation.  However, I disagree with CTP's contentions that Respondent's repeated violation in this case was based on an unwillingness or inability to comply with the law.

As discussed above, I do not agree with CTP that the warning letter also establishes a significant history of prior violations.  Respondent did not have the opportunity to request a hearing or otherwise dispute the violations alleged in the December 12, 2023 warning letter.  There is no indication in the record of any prior violations of section 331(a) of the Act resulting in a CMP.

In sum, this is Respondent's first violation resulting in a CMP.  Further, Respondent has consistently asserted with supporting evidence that Stone Smokes / Stone Store is no longer in business.  CRD Dkt. Entry No 3a.  As a result, I find that Respondent does not have a significant history of prior violations or a substantial likelihood of committing

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future violations, which is a mitigating factor that supports a significant reduction in the penalty amount.

4.  Degree of Culpability

Based on my finding that Respondent committed the violation alleged in the Complaint, I hold Respondent culpable for introducing or delivering for introduction into interstate commerce a new tobacco product that was adulterated and misbranded, in violation of the Act.  The Act places a heavy burden on retailers who choose to sell tobacco products because of their highly dangerous and addictive nature.  See 21 U.S.C. § 387 note.  Indeed, Respondent acknowledged that it has a "responsibility to check what was on FDA['s] approve[d] list and what was not . . ."  Answer at 5.  Although Respondent has submitted evidence to show that its business has since dissolved and is no longer in the business of selling unauthorized ENDS products, I find that dissolution of its business after its violation does not absolve Respondent of its culpability in violating the Act.

5.  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. 21 U.S.C. § 333(f)(5)(B).  In this case, I cannot ignore the evidence that demonstrates that this Respondent's establishment is already closed.  CRD Dkt. Entry No. 14; see also CRD Dkt. Entry No. 7.  Although CTP disputes that Respondent business is closed, CTP does not provide evidence to support its stance to the contrary.

As previously discussed, CTP has not persuasively shown that Respondent has the ability to pay the full amount of CMP of $20,678 that it is seeking.  I find that the evidence submitted by Respondent demonstrates its current dire financial condition, and as such the proposed penalty amount of $20,678 will place a significant financial strain on Respondent, especially in light of the fact that it is a sole proprietorship.  I acknowledge that even a reduced penalty will place a heavy financial burden on the Respondent.  However, having found Respondent violated the law, the CMP should be meaningful to ensure future compliance with the Act and tobacco regulations.  See CTP Ex. 7.

I have also carefully considered the remaining statutory factors, most of which support the imposition of a reduced penalty.  In determining an appropriate penalty for the violation in this case, I have considered again the purpose of the Tobacco Control Act, which was stated to be the protection of public health.  21 U.S.C. § 387f(d).  The CMP should not then be so punitive as to damage any future viability, but instead be sufficient to penalize Respondent for violating the Act and to deter it from doing so again in the future.  In particular, based on the financial evidence, I find Respondent has shown that it cannot afford to pay the requested full penalty amount.

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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.  After considering the statutory factors and record evidence, I find that a reduced penalty amount of $7,500 is appropriate under 21 U.S.C. § 333(f)(5)(B), (f)(5)(C), and (f)(9)(A).

VI.  Conclusion

For the reasons set forth above, I impose a reduced civil money penalty against Respondent, BA Retail LLC d/b/a Stone Smokes / Stone Store in the amount of $7,500, for receiving in interstate commerce, ENDS products that lack the premarketing authorization required under the Act, and offering such products for sale.  Pursuant to 21 C.F.R. § 17.45(d), this decision becomes final and binding upon both parties after 30 days of the date of its issuance.