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Electronic cigarettes or e-cigarettes are a popular alternative to actual smoking. Numerous different devices are in use today which allows users to inhale an aerosol which contains nicotine and other substances, giving rise to the term “vaping.” The main component of an e-cigarette is a liquid filled cartridge known as an e-liquid. The e-liquid is a mixture of nicotine, which has been extracted from tobacco, and a base usually made of propylene glycol, plus different flavorings, colorings, and other chemicals. There are currently over 500 different brands with nearly 8000 flavors of e-cigarettes. Unlike traditional cigarettes, e-cigarettes use a battery to energize a heating element which heats the e-liquid, releasing a chemical filled aerosol which the user inhales. E-cigarettes do not produce smoke and the users expel a small cloud of water vapor with very small traces of other chemicals.
The first e-cigarette was developed in Beijing, China by Hok Lin, a pharmacist, inventor, and smoker. In 2003, after his father died from lung cancer, Mr. Lin developed the device while working for Golden Dragon Holdings, which after the success of Mr. Lin’s device changed their name to Ruyan, which means “like smoke.” Within three years, the e-cigarette was available in European markets and the U.S. market soon followed. As expected, there were many controversial moments as organizations such as the World Health Organization demanded all e-cigarettes be removed from sale in 2008 and other governments worldwide claimed they were just as dangerous as or more dangerous than regular cigarettes. Ruyan conducted a detailed quantitative study to demonstrate that e-cigarettes were much safer than conventional cigarettes and that toxin and carcinogen levels were below harmful levels. The world turned against the e-cigarette and it was banned in many large countries and the FDA made a formal notification that any attempt to import e-cigarettes into the United States would result in the shipments being turned away at the ports.
E-cigarettes and the FDA
The rationale used by the FDA was that the devices appeared to be a combination drug-device product that would require approval and listing with the FDA. Shortly thereafter, the group Action on Smoking and Health (ASH) filed a petition calling for regulation of electronic cigarettes. Smoking Everywhere, a counter organization filed a Federal complaint seeking an injunction against the FDA to cease and desist on trying to stop the importation of e-cigarettes stating that the FDA had no standing on electronic cigarettes since they were a tobacco product, which the FDA holds no oversight on. Other groups participated in the early battle leading to testing by the FDA to understand the actual facts. During the process, President Barack Obama stepped in and approved The Family Smoking Prevention and Tobacco Control Act 18, which now granted the FDA, power to regulate the tobacco industry. The law did prevent the FDA from banning cigarettes outright, however it did allow them to ban flavored tobacco or flavored nicotine products. In addition, any new tobacco products which sought to enter the US market would now be required to meet FDA pre-market standards.
As the year 2009 progressed, legislation and scientific analysis led to the FDA releasing a report which discouraged the use of e-cigarettes and started the conversations about limiting marketing to young people. Supporters of e-cigarettes found a champion in Dr. Elizabeth Whelan, then President of the American Council on Science and Health who spoke out harshly against the FDA’s press release calling it misleading and an attempt to scare Americans into avoiding this alternative to smoking, thus staying with real cigarettes. The contest raged back and forth with California passing a bill to ban the sale of e-cigarettes in the state in October 2009, Amazon.com also stopping sales on-line, and Paypal freezing the accounts of e-cigarette vendors (but only in the United States.) E-cigarettes were on the losing side of most legislation for the next few years and appeared to be all but finished until a study printed in the American Journal of Preventative Medicine published in February 2011 provided some relief. The study reported that e-cigarettes were indeed a promising tool to help smokers quit and validated it with a six-month abstinence study showing users of e-cigarettes had a higher rate of quitting as compared to other nicotine replacement products such as the patch or gum products. Another study later that year in the journal “Addiction” showed similar levels of success. Again in October another report validated the findings.
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Despite the findings, electronic cigarettes are still banned in many states people are using them and demonstrating that they want an alternative to cigarettes. Smoke-free areas gave rise to a new type of business commonly known as a vape-outlet. Here users can buy vaping products and even sit and vape in peace as long as they are over 18 years old. Also the spirit of American individualism gave rise to much different type of e-cigarettes, some which are customizable and can be modified as needed. Young people who used to be attracted to cigarette smoking, mainly because of the advertising done to make smoking appear cool, are now seeing vaping as the thing to do. In fact the use of e-cigarettes by young people has surpassed the use of traditional cigarettes. This fact has been used negatively by the Obama administration by speculating that young people who vaped were 2X more likely to switch to regular cigarettes than people who never vaped.
E-cigarette use is at record highs in the US while traditional cigarette smoking is at a record low and dropping. Cigarette taxes on the other hand continue to rise; currently over $1.00 per pack goes to Federal taxes plus state and local taxes added as well. E-cigarettes up until 2015 were not taxed and Americans switching to vaping has put a noticeable dent in the war chests of state governments. The revenue streams generated from cigarette taxes has been exposed for the fraud it truly is; not intended to promote smoking cessation, but to fund pet projects and other spending. Tax collectors make more revenue off of cigarettes than retailers, wholesalers, famers, and manufacturers…combined. Yes, you read that right, combined. The expectation was that in 2016 taxes would become a certain part of doing business in the e-cigarette industry and that there would be a healthy amount of regulation to contend with as the Obama administration has become famous for.
Despite the fact that e-cigarettes have been shown to be 95% less harmful than cigarettes, and that people are switching, which will reduce long-term health care issues, thus reducing medical costs for everyone, the politicians are against them. Simply put, they just don’t generate the revenue cigarettes do. Fast forward to today as the FDA released their long-awaited rules but tied back to the 2009 act endorsed by President Obama; all e-cigarette products released after February 15th, 2007 will have to undergo the Pre-Market Tobacco Applications process (PMTA.) This process could cost millions of dollars per product and will take over 1700 hours for an applicant to complete. Since almost every vape product sold in America was introduced after that date, look for everyone to be subject to its daunting regulation. The cost to most business will be too high and analysts predict that 99% of companies in the vaping-related industry will not even bother to try meeting the regulations. Also added are regulations that cover all states on minimum age sale, devices such as hookahs, labelling and manufacturing processes, and just about everything else related to the industry.
Let's Just Call it What It Is
At the moment the process would allow for a two year window to comply across the industry. And as companies attempt to find ways to work around the regulations, big tobacco will be quietly waiting in the wings to follow one of several possibilities. They have deep pockets and lobbyists who can navigate the regulatory hurdles and they could step in and take over the market after everyone else fails or they can just keep the shelves stocked with cigarettes to once again tempt the youth with nicotine and since they will be the only game in town, they are sure to win. So the $3.5 billion dollar e-cigarette industry will be firmly back in the hands of people who pay the taxes and keeps government running. It’s time to call this for what it is, a hostile takeover of an industry with a corrupt government supporting the entire mess for a healthy kickback of course.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.