Plumes of Praise Rise From FDA Proposal

E-cigarette makers, analysts largely praise tobacco regulation moves

Mitch Morrison, Vice President of Retailer Relations

Melissa Vonder Haar, Freelance Writer

prposed e-cigarette regulations

WASHINGTON -- Fear and dread built on months of anticipation and speculation gave way Thursday to cautious relief.

When the U.S. Food and Drug Administration issued its long-awaited plan to officially take oversight of other tobacco products (OTP), including cigars, pipe tobacco and electronic cigarettes, the governmental body did not announce the ban of flavored cigars or propose growth-killing restrictions on the ascendant e-cigarette industry.

Rather, say industry analysts and tobacco makers, the FDA affected a delicate balance that ensures continued growth in electronic nicotine devices (END) while providing sensible harm-reduction barriers aimed at curbing nicotine consumption among our nation’s youth.

“Our quick take,” Wells Fargo tobacco analyst Bonnie Herzog said Thursday morning, “is that they (the proposed rules) are broadly as expected and not as restrictive as some had feared.”

She added, “They increase the barriers to entry for existing manufacturers, which is positive. However, our main concern remains around e-cig/e-vapor innovation which, if stifled, could dramatically slow down industry growth and conversion from combustible cigs, which would ultimately result in net negative public-health impact. Clearly, this would be in direct opposition of the agency's goal.”

Nik Modi, tobacco analyst at RBC Capital Markets, sees the proposed rules as a win for tobacco’s Big 3—Altria Group, Reynolds American and Lorillard Tobacco, “particularly Lorillard as the FDA did not mention rules on flavors and advertising.”

Modi also pointed to something not raised by the FDA. “We find it interesting this statement does not mention ‘vapor products’ (open systems, e-liquids, tanks, mods). As we have pointed out, … this is currently the fastest-growing category within tobacco.”

E-Cig Makers Stoked

A bevy of manufacturers specializing in electronic cigarettes and vaping products praised the FDA on taking what they considered responsible action.

Greg Doyle, COO of Metro e-cig maker Nicotek, said the FDA’s proposal “clears the air” and opens the door for the e-nicotine industry.

“I would consider the deeming regulations extremely favorable for the END industry as a whole,” he said. “The industry is receiving immeasurable credibility and exposure from a consumer standpoint, which should rapidly increase consumer demand leading to additional opportunities for Nicotek.”

NJOY, the first company to distribute e-cigs nationally via a brick-and-mortal retail network, called the proposed regulations “a critically important milestone.”

“By resisting calls to regulate ahead of—and indeed in opposition to—the science and data, today the FDA has brought NJOY a giant step closer to achieving its corporate mission of obsoleting cigarettes,” said NJOY president and CEO Craig Weiss. “They are encouraging signs that 10 years from now, this date will be remembered as the beginning of the end of the tobacco epidemic.”

Tony Gaines, chief customer office at Logic e-cigarettes, described the FDA’s proposal as “much lighter than expected,” adding, “We at Logic already have this in place, so [it’s] business as usual for a leading brand.”

Deeming Regulations

What the FDA issued Thursday is known as deeming regulations. The public now has 75 days to submit comments and, according to most experts, it could be another two years before the FDA’s final ruling takes effect.