A Florida company that was established in May won an unusual and potentially lucrative deal to be the only business permitted to stock the commissaries of the Bureau of Prisons' 118 institutions with flavored nicotine pouches.
uncertain
that → establish → pouches
The brand of 6-mg pouches being sold to federal prisoners, called "mindSHFT," is not authorized by the Food and Drug Administration to be marketed and sold in the U.S., according to a review of FDA data.
uncertain
brand → sell → data
It is also not sold commercially.
asserted
It → sell → ?
After CBS News began investigating the nicotine pouch deal and an anonymous federal employee this week emailed the Justice Department's inspector general and Attorney General Todd Blanche to raise concerns, a senior prison official on Thursday paused the arrangement.
asserted
official → begin → arrangement
The official ordered all prisons to cease procuring them until further notice, according to a Sept. 3 internal memo reviewed by CBS News.
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official → order → News
"This situation deserves immediate attention," the anonymous employee wrote in a whistleblower complaint to Blanche and DOJ Inspector General Don Berthiaume.
asserted
employee → deserve → Blanche
If an improperly authorized or contaminated product is being purchased and distributed throughout the federal system, the consequences could be extremely serious," the whistleblower warned, according to a copy of the complaint reviewed by CBS News.
uncertain
whistleblower → authorize → News
"BOP began offering nicotine pouches through institution commissaries to combat the trafficking of contraband tobacco and nicotine products by criminal organizations inside federal prisons," a BOP spokesperson said.
asserted
spokesperson → begin → prisons
"BOP has suspended all additional purchasing of these products until further notice while under review," the spokesperson added.
asserted
spokesperson → suspend → review
The decision to suspend purchasing and selling the products came about after BOP consulted with the FDA this week, and a legal review of existing inventory was still ongoing, a source with knowledge of the procurement told CBS News.
asserted
source → suspend → News
The person added that no illnesses or adverse effects have been reported by anyone who may have used the products.
uncertain
who → add → products
The company supplying the prisons with nicotine pouches, SHFT Holdings Enterprise LLC, was incorporated in Florida one week after the BOP published a nationwide "request for information" on May 15 that asked about vendors who could produce "FDA-authorized nicotine pouch products" to sell to federal prisoners.
uncertain
who → supply → prisoners
The company's domain name — https://shftholdings.com — was created on May 7.
uncertain
name → create → May
A copy of the BOP's trust fund manual approved by Bureau of Prisons Director William Marshall, also dated May 7, shows that amendments were made to permit the sale of nicotine pouches in commissaries.
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amendments → approve → commissaries
Kevin Mastaler, who is listed as the main point of contact on registration and BOP sales records for the product, contacted CBS News by email after publication.
asserted
who → list → publication
He said that SHFT "learned of the opportunity from that (May 15 Bureau of Prisons) posting and responded through the published channel."
uncertain
SHFT → say → channel
He added that SHFT "used no channel unavailable to any other respondent."
asserted
SHFT → add → respondent
"Selling like hotcakes"
The BOP never formally issued a request for proposals for bids on a provider for nicotine pouches — any RFP would be publicly available online.
asserted
RFP → sell → pouches
The BOP does not have a signed contract with the company, according to a person familiar with the arrangement.
uncertain
BOP → have → arrangement
But its trust fund chief, Adam Morrow, on July 21 informed all federal prisons in a memo that the sale of nicotine pouches "has been authorized," and the sole approved vendor would be SHFT Holdings Enterprise LLC, according to a copy reviewed by CBS News.
uncertain
vendor → inform → News
A week later, on July 29, BOP officials announced that Citibank was able to "fully process" institutional orders, and they recommended that each prison consider ordering "three tins per inmate" to ensure product availability, according to an internal memo reviewed by CBS News.
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prison → announce → News
SHFT Holdings Enterprise charged BOP $6.99 per tin, or $174.75 for five packs of 25 tins, according to internal pricing records seen by CBS News.
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Enterprise → charge → News
Inmates are charged $9.10 each, and in prisons where they have been available, they have been "selling like hotcakes," one source with direct knowledge said.
asserted
source → charge → knowledge
Federal law prohibits the sale and marketing of nicotine and tobacco-related products that are not authorized by the FDA.
asserted
that → prohibit → FDA
After questions arose about the company's claims about its nicotine pouches, BOP halted all purchasing and sales of the products after consulting with the FDA, a person close to the matter said.
uncertain
person → arise → matter
The BOP said the company told the bureau it was selling the products legally and had obtained FDA approval, the person added.
asserted
person → say → approval
Mastaler said in his email that the company "has never represented" to BOP that its product had been authorized by the FDA.
asserted
product → say → FDA
By law, anything that is sold without FDA authorization is deemed "adulterated," legal experts told CBS News.
asserted
experts → sell → News
"There has been no determination by FDA that this product is appropriate for the protection of the public health, which is required before the product can be sold," said Andrew Goldfarb, a partner at Zuckerman Spaeder and former Justice Department attorney who specializes in FDA laws.
asserted
who → require → laws
"There is no basis to think that FDA, let alone anyone who might use the product, knows what is in it, where any of the ingredients are sourced from, or the conditions in the facility where it was made," he added.
uncertain
he → be → facility
Nicotine pouches are the fastest growing segment of the U.S. tobacco market.
asserted
pouches → grow → market
Some of the brands contain synthetic nicotine that is not derived from tobacco, while others are tobacco-derived, and they deliver a jolt of energy that users describe as a mild buzz.
asserted
users → contain → buzz
The website for SHFT Holdings Enterprise describes the pouches as being a healthier alternative to cigarettes.
asserted
website → describe → cigarettes
"From toxic" to "healthy," it says.
asserted
it → say → ?
"Replacing carcinogens, tar, and smoke" with a "clean delivery format" that causes "95% less harm" than tobacco.
asserted
that → replace → tobacco
Nothing on its website or on its packaging references receiving FDA authorization.
asserted
Nothing → reference → authorization
CBS News could not determine why the Bureau of Prisons selected SHFT Holdings Enterprise to provide the product.
uncertain
Bureau → determine → product
The process to select the company occurred over many months, and no BOP officials involved in the selection have relations to this company or interest in its operations, a source familiar with the procurement process told CBS News.
asserted
source → select → News
As of Friday, there were only two companies authorized by the FDA to sell nicotine pouches: One is a subsidiary of Philip Morris International, and the other is an Altria Group subsidiary.
asserted
other → be → International
The FDA in May issued a memo saying it would exercise enforcement discretion on nicotine pouch makers, as long as the company has submitted an accepted and pending application.
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company → issue → application
…and 39 more, not listed.
The Aporia
