Brandon Meyer used to own a computer-repair shop in Wilmington. Seven years ago, his now-ex-wife opened up an e-cigarette business in the front of the space. It was among the first shops of its kind in North Carolina.
I'd be in the back, working on computers all day, hearing customers up front come in and tell her how much better they could breathe, how [the e-cigarettes] were helping them quit cigarettes," Meyer says.
Meyer now lives in Durham, where he owns an e-cig store of his own. The Vape Shop does steady business selling e-liquids (flavored bottles of nicotine juice); "mods" (the mechanical instruments that heat the juice, which users then inhale and blow out as a cloud of vapor); and other assorted vaping accessories.
If you visit The Vape Shop to buy juice, you have your choice between brands that the store purchases from wholesalers and brands Meyer makes and bottles himself at an off-site location. Just about anybody with an Internet connection can figure out how to make juice. It requires only four ingredients—food flavoring, vegetable glycerine, propylene glycol, and nicotine—all of which are readily available online. For many vape proprietors, mixing their own juice is where the margins are.
The margins are high, in part, because there are no licensing or compliance costs. No government body has been monitoring the products to ensure, for instance, that the juice doesn't contain dangerous levels of nicotine or hazardous flavoring chemicals.
Not surprisingly, this completely unregulated market has grown exponentially in recent years. The e-cigarette industry (which includes both the products found at vape shops and disposable e-cigs found at gas stations) is projected to surpass $4 billion in 2016. Jason Joyner, a lobbyist for the N.C. Vaping Council, estimates that there are at least five hundred vape shops in the state.
Those numbers are likely to dip, however, given the sweeping (and long-awaited) set of rules issued by the Food and Drug Administration on May 5. The 499-page document contains a variety of requirements for the e-cigarette industry, many of which, such as bans on selling to minors and childproof caps on juice bottles, were expected.
What has the industry up in arms is the FDA's declaration that any e-cigarette product that went to market after 2007 must go through the agency's approval process in the next two years. "That's ninety-nine percent of the products on the market," Meyer says. "Juices, mods, everything. The e-cigarette market barely existed in 2007. So it's pretty much everything."
Meyer's most popular juice is called East Coast Coil Oil. It comes in four different nicotine strengths: 0 mg, 3 mg, 6 mg, and 12 mg. Under the new rules, Meyer would be required to submit to the FDA applications for all strengths of East Coast Coil Oil besides the zero-nicotine product. Meyer (and several others in the industry the INDY talked to) estimates the cost of an FDA review at about $1 million. The Vape Shop manufactures roughly fifteen other flavors, each with its own nicotine strength. Do the math, and this modest store would have to spend somewhere in the neighborhood of $50 million to continue operating lawfully.
"Only the Big Tobacco companies will be able to afford that," Meyer says. "The whole vaping industry is being giftwrapped and handed over to the tobacco industry." (R.J. Reynolds, Altria, and Lorillard now own and market a variety of e-cigarette products, VUSE, Mark 10, and blu among them.)
The Puffing Monkey, in Raleigh, is in the same boat. "We're a small business; we can't afford a million-dollar pre-market FDA application," says manager Alex Lumsden. "This will shut us down, no question."
FDA spokesman Michael Felberbaum says the review costs "are likely in the low hundreds of thousands of dollars, not in the millions or tens of millions of dollars estimated by some others."
The new rules, he argues, "will result in significant public health benefits, including preventing youth initiation, helping consumers better understand and appreciate the risks of using tobacco, prohibiting false and misleading claims, and preventing new products from entering the market unless a manufacturer demonstrates that the products meet the relevant public health standard established in the Tobacco Control Act," a 2009 law that gives the FDA authority to regulate tobacco products.
Vaping is almost certainly healthier than smoking, but that doesn't mean it's harmless. The industry is so young that there's not a lot of definitive research on vaping's effects on the body. What's more, public health advocates point to a federal study that found that youth vaping jumped 900 percent between 2011 and 2015, with young people lured by flavors like watermelon and pancake. Thus, advocates contend, vaping acts as a gateway drug to more dangerous tobacco products.
Most people in the vaping industry acknowledge the need for some kind of regulation. Some juice makers have been moving toward traceability, like Smoke Crossroads in Greensboro, whose products include lot numbers, serial numbers, and bar codes. Its owner, Alan Blythe, moved from the restaurant business to the vape shop business and now is a wholesale producer of juice.
Smoke Crossroads works closely with Mother Murphy's, a Greensboro extract company that refines flavors for tobacco companies—the menthol in a Newport, or a Swisher Sweets cigar. Mother Murphy's formed a subsidiary called Alternative Ingredients to service the e-cig industry. Blythe says Alternative Ingredients' lab expertise and FDA experience (through its work with Big Tobacco companies) gives Smoke Crossroads an edge in surviving the vape Armageddon.
"I truly believe this industry needs regulation, and we knew this was coming, so we've been trying to prepare," Blythe says. "Still, we're going to have to drop our product line from eighty-five flavors down to fifteen or so."
The new FDA rules go beyond the world of vaping. Jeff Amendola runs Bull City Cigars out of a basement space on Ninth Street in Durham. He sells cigars out of a front room and rolls them in the back. His cigars are made from a variety of imported tobacco leaves with different flavor profiles: spicy, peppery, sweet, etc. There's the Torpedo, the Corona, the Indonesian, the Havana Churchill. Per the new rules, Amendola will be required to obtain market authorization for each of these products within the next two years.
"I honestly don't know how it would be possible to do that," Amendola says. "I've talked to a few people who think there might be some exceptions made for small guys like me. But I'm obviously nervous, because this is how I support myself."
The best hope for Amendola and others is a House bill currently wending its way through Congress that would prevent the FDA from using 2007 as a benchmark but rather require safety reviews for all new products. It passed a House Appropriations Committee vote in April but still has a ways to go.
"The way we see it right now, we've got about two years left, maybe three," says Lumsden, referring to the two-year window for applications, plus an additional year for FDA review. "Then, unless something changes, that's it."
This article appeared in print with the headline "Smoked Out"