BEIJING, March 11 (TMTPOST)— The U.S.-listed shares of RLX Technology Inc crashed as China is tightening up regulation on the booming vaping industry. RLX’s American depository receipts (ADPs) slumped as much as 43% in Friday’s morning trading and settled more than 36% lower to the lowest close since the biggest branded electronic cigarette company in China went public in January, 2021.

Source: Visual China

Earlier that day, the State Tobacco Monopoly Administration (STMA) of China released the Management Rule for E-Cigarettes. The comprehensive regulation was drafted under the Amendment to Detailed Rules for the Implementation of the Tobacco Patent Sales Law effective in last November, which for the first time placed the industry under the legal supervision in China. The new rule underlines authorities shall prohibit students in the primary school and the middle school from vaping and improve education about health risks of e-cigarettes. It bans any kind of promotion of vaping products in the country, such as forums, expositions, exhibitions. Under the new rule, companies shall apply for a license for production, retail and wholesale of any vaping products, which is similar with the existing license for tobacco manufacturers’ patent sales of tobacco products. And the proposal for initial public offering (IPO) or listing shall be reviewed and approved by administrative authorities of the tobacco patent sales under the State Council.

E-cigarettes, also known as e-cigs, e-hookahs, mods, vape pens or vapes, come in many shapes and sizes and produce an aerosol by heating a liquid. The aerosol that users breathe into their lungs and exhale can contain harmful substances including nicotine, the addictive drug in regular cigarettes, cigars, and other tobacco products.

STMA also unveiled on Friday an updated draft of national standards for vaping products to solicit public comment. The draft defines e-cigarette as an electronic delivery system that can be used by inhaling and exhaling aerosol. More importantly, the new draft, compared with the original draft last year, first specifies that aerosol of e-cigarettes shall not be deliberately tempting to minors, and their flavoring shall be nothing but tobacco, which suggests a possible major negative impact on sales since it excludes any other mainstream flavorings in the market, such as various fruits, lactobacillus and peppermint.