Vaping vs. Big Tobacco: The Future of the Vaping Industry

vaping vs. big tobacco legal battle

Current Legal State of the Vaping Industry

Despite their rapid rise to fame, development and implementation of regulations on the vaping industry have been quite slow. In the past several years, the vaping community has enjoyed a lenient legal environment. However, the federal government has taken into its hands the task of regulating the industry, leaving many vapers and vaping businesses with a yet uncertain future looming over them.

What is Vaping?

A vape is a battery-powered device that holds eLiquid which contains nicotine, flavorings, and bases that turns into vapor when heated. Vape eLiquids contain varying strengths of nicotine, but they don’t produce harmful combustion products like toxins and tar that cause harm to the human body and the environment. 

The vape first entered the Chinese market in 2004 and was first introduced as a medical delivery device. It later evolved when it entered the western market and is now largely known for its sophisticated cigarette-like look with many features and controls including, but not limited to, creating thicker vapors and operating at higher wattages.

The first few vapes took the form of a traditional cigarette. These were disposable devices which when the juices ran out, are no longer useful. The newer vapes feature refillable cartridges / tanks and rechargeable batteries to allow users to use the device over and over again.

vaping vs. big tobacco what is vaping

Vaping vs. Smoking Tobacco

Vaping is marketed as the healthier alternative to smoking. According to the CDC, smoking causes more than 500,000 deaths annually and leads to a plethora of preventable diseases. Since vapes provide users the ability to control their nicotine consumption, it is also helps traditional cigarette smokers to gradually kick their nicotine addiction. In fact, the Public Health of England reported that vaping is 95% safer than smoking traditional cigarettes.

Although vapes also contain nicotine, they are not yet federally considered to be tobacco products. The industry has come to a crossroads. The industry is facing numerous issues about vaping’s ability to reduce tobacco related harm and addiction. The lack of studies on its long-term health effects and its seemingly tempting appeal to lure people into getting a dose of nicotine in a glorified cigarette form are now being questioned.

With the public health at stake, it does seem like that the vaping industry is being pushed in different directions and since it’s been largely unregulated over the years, the industry is now facing new challenges as the federal, state, and local governments take new measures to put it under control. With the changes coming to the regulations on the vaping industry, vaping business owners, vapers, and the general public speculate where all these new laws will take them.

The vaping industry is fast-growing with sales jumping from $20 million in 2008 to $2.5 billion in 2014. According to Wall Street Journal analysts, sales of e-cigarettes might even surpass that of the traditional cigarettes in just ten years' times. In fact, some huge tobacco companies like Altria and R.J. Reynolds are now rolling out their own e-cigarette lines into the retail market. The rising number of vaping products and the competitive landscape now make vaping a more affordable hobby which the federal government fears will become even more tempting to the youth.

Previous Vaping Industry Regulations

This is not the first time that the government has tried to regulate the vaping industry. In 2009, the Family Smoking Prevention and Tobacco Control Act was passed which aims to steer Americans away from the dangerous habit and consequences of smoking. The same act also provided the FDA the authority to regulate the manufacturing and distribution of tobacco products. A tobacco product has been defined as any product (part or whole) “made or derived from tobacco that is not a drug, device, or combination product.”

The FDA has tried to restrict and regulate the vaping industry by treating e-cigarettes and vapes as a combination drug / device tobacco product, resulting into a messy lawsuit between Sottera Inc. and the FDA in 2008-2010. In 2011, the FDA announced that it will deem e-cigarettes as tobacco products, meaning, e-cigarettes will be regulated the way tobacco products are being regulated. This looming regulation intends to add vapes, e-cigarettes, and other nicotine delivery devices to the already regulated tobacco items like cigarettes, tobacco, cigars, and snuff.

The next few years went by filled with speculations as to where these deeming regulations would lead the vaping industry. Finally, in 2014, the FDA announced a set of proposed regulations where e-cigarettes are concerned, including banning sale to minors, free sampling, and requiring a warning label to accompany these devices. Other legal issues have sprouted since then, including the imposition of tax on e-cigarettes and regulating their use in the public and workplaces.

Vaping Legal Issues

The announcement of this proposal has made the vaping industry become very speculative. The general public is now faced with mixed messages as to whether these proposed regulations are going to help people quit smoking or lure them deeper into nicotine addiction.

Regulating E-cigs as Tobacco Products

The first step that the government took to initiate the regulation was to have the FDA deem vapes and e-cigarettes as tobacco products. The passage of the Family Smoking Prevention and Tobacco Control Act in 2009 gave the FDA the right to regulate tobacco products, but the courts did not see e-cigarettes under this category. Therefore, the FDA had to consider e-cigarettes as tobacco products in an event called a “deeming regulation” process. In 2014, the FDA has already submitted the proposal and is now waiting for the decision from the Office of Management and Budget.

Therefore, there are no country-wide regulations for the vaping industry as of yet, although state and local legislations have already been passed or are currently pending in different parts of the country. Meaning, you’ll find that laws and policies when it comes to the manufacturing, selling, and using of e-cigarettes will depend on which state that you are currently in.

Currently, North Dakota, New Jersey, and New York have already passed their anti-vaping legislation laws while the rest have pending legislation and are still safe for vaping, for now.

Minimum Age Purchase

The FDA has vehemently lobbied to regulate sale of traditional cigarettes to minors and it also intends to do so with e-cigarettes and vapes. According to a report by the CDC, use of e-cigarettes among youth rose dramatically from 4.5% to 13.4% from 2013 to 2014. Both the FDA and CDC see this as a growing cause of concern with Tom Frieden, CDC director saying “Adolescence is a critical time for brain development. Nicotine exposure at a young age may cause lasting harm to brain development, promote addiction, and lead to sustained tobacco use.”

The FDA’s first move to reduce use of e-cigarettes and vapes among the youth is to impose a minimum purchasing age, ban the display of e-cigarettes in store counters, and to make e-cigarettes available in vending machines only in venues where minors are not allowed. “These staggering increases in such a short time underscore why the FDA intends to regulate these additional products to protect public health,” says FDA’s director for Center for Tobacco products, Mitch Zeller, J.D.

Right now, most of the states have a minimum purchasing age of 18 while only 19 years old and above can purchase e-cigarettes in the states of Utah, New Jersey, Alabama, and Alaska. California is aiming to push the minimum purchasing age to 21.

This law is not surprising to the vaping community and business owners. They even extend their appreciation towards it as a means to help protect public health by preventing and delaying teenagers’ introduction to nicotine as long as possible. Vape business owners have already put age verification processes for online sales and focus on advertising their products for crowds that are mostly adults. The minimum age purchase of vaping products is at least a common ground for business owners and the federal government.

Tax on E-cigarettes

But tax is another matter and there’s a huge disparity of opinions when it comes to taxing vaping products and e-cigarettes.

Citing that kids are “price sensitive” as the primary reason, increasing the selling price of these products through excise tax is deemed by the government as a good way to prevent kids from purchasing and using vapes. The proposed 92% of tax in e-cigarettes will nearly double the selling price of e-liquids and make e-cigarettes and vapes even more expensive.

However, the CASAA and the vaping industry are highly opposed with this proposed legislation. Not only will this drive them out of business, but it also defeats the purpose of making a healthier smoking alternative affordable for most people. It might also entice vapers and smokers to buy from black markets where prices are cheaper than in legitimate and regulated stores.

The Tax Foundation also sees that putting a tax hike on the industry will impede the public from getting a healthier alternative to smoking saying that “vapor products have the potential to be a boon to public health by acting as a less risky alternative to traditional incinerated cigarettes.” The Tax Foundation also added that Minnesota was the first state to impose tobacco tax on e-cigarettes at 95% of the wholesale price in 2012. Some states have also followed this step, but tax rates and taxation methods vary from state to state.

“A sound approach to the taxation of vapor products would avoid discriminating between disposable and rechargeable vapor products, would avoid extending punitive tax rates from traditional cigarettes to vapor products, and would not hinder consumer opportunities for the use of vapor products as a method of smoking cessation,” the Tax Foundation added.

No Free Sampling

Sampling is an integral part of selling and marketing of vaping products for brick-and-mortar stores. Vaping store owners think that this legislation can gravely hurt their business and may even drive them out.

For instance, the House Bill 2546 which was passed last year in Oregon implies that sampling and testing of e-liquids inside vaping stores and lounges is now prohibited. Vape business owners contend that the inability to get their products sampled and tested in store will drive customers to purchase mainly online.

“We didn’t oppose the Clean Air Act,” says Matt Minahan, lobbyist for Northwest Vapors Association. “These shops are ­willing to go through the permitting process, stay 1,000 feet away from schools, and ban sales to minors. The state needs to let consumers test the product, to keep it from being marketed mainly online,” Minahan adds.

While it may be understandable to ban free sampling in music festivals, car racing, and other events where the youth may gather, banning free sampling inside actual vaping stores will drive business down and might give way for a black market to flourish.

Vaping Ban in Workplaces and Public Areas

There is no formal regulation whether vaping should be allowed in workplaces, but certain states have already banned vaping in workplaces and public areas. Since vapes emit a smokeless aerosol and produce no combustion, vaping in public areas has been loosely tolerated. However, there are no solid studies on the impacts of inhaling second-hand aerosol to bystanders. Apart from that, there is fear that normalizing vaping in areas where smoking are prohibited might impress that vaping is “like smoking” and lead the youth to believe that consuming nicotine through vaping is acceptable.

In California, vaping is not allowed inside workplaces / hospitals, inside government offices, and 20 feet away from government-owned buildings and vehicles. Section 13 of SB 648 also bans using e-cigarettes inside air carriers and railroads. Meanwhile, Connecticut applies the same prohibitions in vaping for traditional cigarette smoking and vaping is not allowed even inside e-cigarette physical stores.

The Issue on the Grandfathering Date

While the vaping community waits and wonders about where these proposed regulations will take their businesses, they all worry about one big thing: the grandfathering date. Vaping business owners believe that this date has the huge potential to destroy the whole industry.

The Grandfathering date simply implies which companies and products get to stay in the market and which do not when these regulations are finalized. The FDA has imposed a grandfathering date of February 15, 2007. This means all the products that has been in the market on or before this date gets to stay without having to deal with so much legal stress, but those that were marketed after this date will have to go through a web of legal complexities to remain in the market.

The FDA may also ask companies to comply with a Pre-Market Tobacco Application wherein they are allowed to sell their products for two years and be able to file for PMTA for each of them within this period. If the two-year grace period has expired and no PMTAs have been filed, vaping business owners will have to be banned from further marketing and selling their products. Resolving the issue on the grandfathering date and complying with PMTA can be a very costly and time-consuming process for the vaping industry.

Vaping vs. Big Tobacco Wrapup

The federal government and vaping industry are on the same side aiming to create a healthier atmosphere for the public and reduce the harm of tobacco cigarettes. Pro-vaping are certainly happy to see people vape instead of smoke, but the lack of research especially on the health impacts of vaping put many policy makers at unease. It is important that all parties reach a common ground and that the health and safety of the public is upheld, above all.

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