Business

E-Cigarette Industry Faces Prohibition After Crucial Rider Fails To Make Omnibus Spending Bill

A policy rider that could’ve saved 99 percent of the e-cigarette of from de facto prohibition failed to make it into the House’s omnibus spending bill released Tuesday night.

The rider would’ve changed the Food and Drug Administration‘s (FDA) rules requiring all e-cigarette products released after February 15, 2007, to undergo the costly Pre-Market Tobacco Applications (PMTA) process. This provision was vitally important to vaping businesses and advocates because the cost of the PMTA process for each individual product can run between $2-10 million.

Since e-cigarettes are a relatively new innovation and the industry has grown so rapidly, the vast majority of vaping products would fall under the FDA’s proposed rule. Further, a major portion of the market consists of small, self-proprietary business. As a result, such an enormous tax burden would likely bankrupt 99 percent of the industry.

Small vaping businesses — which typically sell dozens if not hundreds of these products in their stores — will not be able meet this financial burden, putting thousands of jobs at risk and ultimately limiting options for vapers. Indeed, the only companies that would be able to meet this financial and regulatory burden are major tobacco companies that typically stock an extremely limited range of vaping products compared to most e-cigarette shops.

Ironically, the FDA’s regulations, which are intended to safeguard public health, could have the perverse effect of helping the tobacco industry by destroying one of its largest sources of competition — independent e-cigarette companies.

“This deal protects cigarette markets,” said Gregory Conley, President of the American Vaping Association. “Congressional leaders have squandered a real opportunity to benefit both public health and small businesses across the country.”

“Without a change in the 2007 grandfather date, 99.9 percent-plus of vapor products on the market today will be banned. This is nothing more than modern-day prohibition. The FDA’s proposal is an unmitigated disaster and Congress’ failure to act will cost jobs and lives.”

The rider was not only supported by the e-cigarette industry but it also received strong backing from Americans for Tax Reform (ATR) – one of the most powerful advocacy groups in Washington D.C.

In November, ATR president Grover Norquist wrote a letter urging Congress to support the rider saying “it would simply help avoid the looming economic and public health disaster associated with status quo prohibition.”

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