Dive Brief:
- The Attorney General of New Mexico has sued Circle K and U.S. affiliates of FEMSA for selling flavored disposable e-cigarettes that have resulted in “childhood nicotine addiction” across the state, according to a lawsuit filed with the First Judicial District Court in Santa Fe on Tuesday.
- In a press release on Tuesday, the New Mexico Department of Justice said the convenience retailers, along with two distributors, “willfully distributed and sold flavored disposable vape products in blatant disregard for public health and safety.” Such products are marketed with bright packaging and sweet or fruity flavors “that are particularly attractive to minors,” according to the announcement.
- The lawsuit claims that Circle K and FEMSA affiliates Emprex Proximity and Southwest Convenience Stores violated the New Mexico Unfair Practices Act, which prohibits businesses from using deceptive or misleading methods in trade or commerce.
Dive Insight:
New Mexico isn’t Circle K’s largest market, but the retailer still has around 100 convenience stores in the state, roughly half of which are in Albuquerque, according to the lawsuit. Although most of those sites are franchise-based, Circle K’s corporate team is named as a defendant since it controls the sourcing, approves advertising and trains select personnel for these sites, the lawsuit notes.
The lawsuit comes about two weeks after Alex Miller, President and CEO of Circle K parent Alimentation Couche-Tard, called nicotine an “area of strength in the U.S.” during the company’s latest earnings call. It’s not clear how the lawsuit in New Mexico might impact the retailer’s approach to this category.
“On information and belief and based on the franchise agreements, Circle K is aware that its franchisees are selling flavored disposable e-cigarettes in New Mexico, and not only has failed to stop these sales, but has approved the brands being sold,” the lawsuit states.
Meanwhile, although most FEMSA c-stores in the U.S. stores are located in Texas, the retailer has a smaller number of locations in New Mexico, as well as Arkansas. While FEMSA is currently rebranding its 240 sites across the three states to its Oxxo banner, many still operate under the DK and Alon brands formerly owned by Delek US Holdings.
The lawsuit alleges that FEMSA entities Emprex Proximity and Southwest Convenience Stores sold flavored disposable e-cigarettes across Oxxo, Alon and DK-branded c-stores “in numerous locations, including stores located within walking distance of high schools, middle schools and youth sports complexes.”
Only around 40 vaping products have been approved by the U.S. Food and Drug Administration for marketing, and none of the items are fruit-flavored.
New Mexico’s attorney general is seeking several remedies, including civil penalties of $5,000 per violation from each retailer, restitution and “disgorgement of ill-gotten profits,” along with attorney’s fees.
Representatives from Couche-Tard did not respond by press time when asked to comment on the lawsuit. A spokesperson from FEMSA declined to comment.
Circle K and FEMSA are not the only retailers who’ve run into trouble with the sale of unapproved vaping products to and around kids. 7-Eleven was hit with a $1.2 million fine in Washington, D.C. for selling vapes and e-cigarettes in 16 c-stores located within a quarter mile of middle and high schools in the city.
