October 23, 2013

You’ve heard the saying, “if it ain’t broke, don’t fix it.” But the Food and Drug Administration and many in Congress may be doing just that to the e-cigarette industry. So far it has been pretty successful, so… here’s a surprise… the FDA wants to regulate it, and many in Congress – sensing a potential new revenue pot –want to tax it like regular cigarettes are.

What exactly are e-cigarettes?

They vary by brand, but they look like cigarettes, do not burn tobacco, and deliver nicotine and flavor as a vapor. Starter kits usually cost somewhere between $20 to $200. E-cigarette manufacturers say they are essentially harmless, especially when compared to the toxins in real cigarettes. Of course, that is what you’d expect them to say. Because of this claim, they believe their industry should at least get friendlier government handling than the tobacco industry has gotten.

The FDA on the other hand says not enough is known about the effects on human health. The Centers for Disease Control is concerned because the use among middle and high school students is rapidly rising. Although they cannot point to actual harm as yet, they worry the use of e-cigarettes might create a stepping stone for young users to graduate to real cigarettes.

Growing Industry

Meanwhile, the e-cigarette industry is growing at phenomenal speed with sales doubling each year. The expectation is that sales could reach $2 billion by the end of 2013.

The health questions do need to be answered, though. One FDA study cited by the Washington Post said e-cigarettes release carcinogens and toxic chemicals. However the study does concede these replacements still might be safer than regular cigarettes, which release tar, carbon monoxide, hydrogen cyanide and other poisons. E-cigarettes do none of that.

Who Wants Regulation?

Attorneys general from about 40 states are asking the FDA to ask them to regulate the marketing of e-cigarettes to kids. Opponents of smoking accuse the makers of e-cigarettes of glamorizing smoking, which draws young people in. Plus, there is the question of where people will be allowed to smoke e-cigarettes. Will users be regulated to the far corners of parking lots like regular smokers now are?

Actually, some makers of e-cigarettes (many of whom also produce regular cigarettes) are okay with some degree of regulation. Why? Because like most successful endeavors, a lot of me-too producers rise up, selling cheaper, but lower quality copies. Yet overall, e-cigarette makers are lobbying heavily to hold off the regulators. For example, the makers of Newport cigarettes bought Lorillard tobacco in April of this year, for $135 million. Last year, they spent $2.35 million lobbying against regulation, and are will likely spend more this year.

The FDA hoped to tackle these questions this month, but of course the government shutdown has slowed their efforts.

Love or Hate It

Congress is a jumble of people, some who never met a tax they didn’t love and others who never met a tax they didn’t fight. But the overarching feeling we get from Congress is, if an industry — like e-cigarettes– is profitable, regulate and tax it till it isn’t.

Photo: planetc1