The U.S. Food and Drug Administration proposed new rules on electronic cigarettes Thursday, including requirements to list the ingredients of the liquids vaporized, restrict sales to adults and carry warnings that nicotine is addictive.
Local stores such as Hollywood Smokin’ in Northfield said the rules make sense. Retailers saw federal regulation as inevitable with the growth of the nearly $2 billion industry. This is a growing segment of the smoking market that is expected to surpass traditional tobacco sales over the next decade.
“I believe in most of the things they are requiring,” said Kim Betesh, of Margate, owner of Hollywood Smokin’. “The labeling and banning online sales. There are some good purposes to regulation.”
This week the Federal Registry published 241 pages of rules the FDA proposed to regulate alternative tobacco products.
Health-advocacy groups such as the American Cancer Society and the American Medical Association praised the proposal.
The agency is looking at whether flavorings such as vanilla or cherry used in most electronic cigarettes encourage children to use the products. This standing federal prohibition is the reason cigarettes sold in the United States are not flavored.
But Betesh said flavor is a big part of the appeal of vapor cigarettes.
“I could see that perspective if you put out bubble-gum or Skittles flavors. But if you make e-cigarettes taste like regular cigarettes, people will never have that ‘ah-ha’ moment when they realize they hate the taste of cigarettes,” she said.
That’s the reaction many of her customers have when they use e-cigarettes to quit smoking, she said.
“The person who picks up the regular cigarette and goes, ‘That’s disgusting. What was I doing?’” she said.
Responding to today’s FDA announcement, one customer at Hollywood Smokin’ bought up $300 worth of the juice used in the vaporizers with diminishing levels of nicotine. Many customers use e-cigarettes as part of a smoking-cessation effort, Betesh said.
Of more concern to local stores is the likelihood of the state imposing tobacco-like taxes on these non-tobacco products.
New Jersey was the first state in the country to ban the use of electronic cigarettes in public places and workplaces and to ban the sale of the devices to minors. Now the state Legislature is considering a bill that would tax electronic cigarettes the same as traditional tobacco products and require licensing of retailers complete with a background check and $50 annual fees.
Cigarette taxes are a big business in New Jersey — so big the state Department of Treasury has a special Tobacco Interdiction Program to root out people who sell untaxed, bootleg cigarettes. The state collected $21 million in taxes on wholesale sales of tobacco last year.
New Jersey already charges one of the highest retail taxes on cigarettes in the nation — $2.70 per pack. New York is highest at $4.35, according to the Campaign for Tobacco-Free Kids. Missouri is lowest at just 17 cents per pack.
Jeff Higgins, of Somers Point, sells one brand of e-cigarette at his premium cigar shop, Ocean Cigars, in Ocean City.
The prospect of an exorbitant state tax could drive e-cigarette customers to buy the products tax-free online instead of at their local stores, he said.
“I’m thinking about expanding,” he said. “But I don’t know where this tax situation is going to go.”
At stores like Seagars in Middle Township, customers must be 19 or older to buy electronic cigarettes, Office Manager Dana Pancoastcq said.
Seagars sells a wide range of tobacco and electronic-cigarette products.
“We card everyone,” she said. “In New Jersey you can’t sell tobacco products to anyone under 19.”
Pancoast said she supports improved labeling so consumers know more about the ingredients in the products.
“We have no issue with doing that. It’s a good idea,” she said.
Bonnie Herzog, an analyst with Wells Fargo Securities who follows the e-cigarette and tobacco industries, forecasts the nation’s second-largest tobacco company, Reynolds American Inc., could have e-cigarette revenue of $5.2 billion by 2023, compared to $3.1 billion for tobacco cigarettes. She expects rivals Lorillard and Altria will see half their revenue from traditional cigarettes vanish in less than a decade.
Electronic cigarettes are popular with people who want to cut down on their smoking, Pancoast said. Labels show how many milligrams of nicotine each bottle contains so customers can step down their nicotine consumption.
“We’ve seen people go from high nicotine to zero,” she said. “It’s helped them get off combustible tobacco. We see the beneficial uses.”
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