Since the FDA proposed regulations for e-cigarette products last year, the entire vapor industry has been holding its breath. If the rules go into effect as proposed, e-cigarette makers will have to submit applications for all products, even those on the market for the past eight years. The rules would require a multimillion dollar expenditure that would essentially put small, independent e-cigarette manufacturers – not to mention countless sellers across the country – out of business.
Who would benefit from such an outcome?
Most people who vape are former smokers who use e-cigarettes as an alternative to combustible cigarettes. In fact, there’s research that suggests vaping is a key part of a harm-reduction approach to quitting smoking. British officials have gone so far as to propose e-cigarettes be available wherever nicotine alternatives are sold, arguing it would “make a big difference to the public’s health.”
Should the FDA e-cigarette rules take effect as written, there would only be one winner: Big Tobacco.
Only deep-pocketed tobacco companies can afford compliance. While most vape businesses, including my own, believe that our young, rapidly growing industry needs to be regulated, the proposed rules are too onerous for our category to survive. We estimate that compliance can cost up to $1 million per product. We currently offer more than 500 e-cigarette products. You do the math.
The only companies able to manage costs of that scale are the tobacco businesses who have recently entered the vaping industry. Reynolds America — recently merged with Lorillard — Altria, and Imperial Tobacco Group all produce e-cigarette brands, in addition to their combustible cigarette assets.
What’s more, the regulations favor simpler technology over more technically advanced vaping products. Who would have the upper hand here? Again, tobacco companies.
What most people don’t realize is that smaller, independent vaping businesses are really technology companies. In the vaping industry, open system vaporizers (OSVs) – powerful, fully adjustable devices that provide a broad range of vaping experiences for more advanced users – are increasing in market share, growing at a far faster rate than the more basic e-cigarettes.
As with any sophisticated new technology, it’s constantly innovating as the technology advances. New OSVs are hitting the market at a rapid pace, with enhanced designs, capabilities, and features. It’s the independent vape companies who are developing these powerful new devices. And it’s these more powerful devices, incidentally, that former smokers prefer as they move away from regular cigarettes. Once the new regulations take effect, developers of OSVs will face huge obstacles bringing them to market.
The tobacco companies entering the e-cigarette industry want nothing to do with vaporizers. They’ve invested solely in basic e-cigarettes, brands like Blu and GreenSmoke.
Who has the advantage here? That’s right, it’s Big Tobacco.
There’s one opportunity for compromise in all of this: a Congressional modification (known as the Cole bill) would require compliance for new products hitting the market once the regulations go into effect, rather than retroactively applying them to eight years’ worth of products.
Without this change, the FDA’s new rules would virtually extinguish an industry with enormous potential.
The great promise of vapor technology is that it gives smokers an alternative to deadly combustible cigarettes. But the FDA’s current regulations will only profit the tobacco industry, making Big Tobacco stronger – and possibly funding America’s smoking habit long into the future.
Jan Verleur is co-founder and CEO of V2.