It’s not earth-shattering news that many anti-tobacco coalitions, health advocates and government officials have taken up the cause of saving the public from electronic cigarettes. Equating the practices of the e-vapor industry to so-called villains of yore, such individuals have decried everything from flavors to advertising practices and tricking 5-year-olds into a life of nicotine addiction.
Retiring U.S. Sen. Jay Rockefeller (D-W. Va.) made such claims when “schooling” executives from NJOY and blu Ecigs during a Commerce, Science and Transportation Committee hearing last June.
“I don’t know how you go to sleep at night,” he said, likening the vaping industry’s actions to those of Big Tobacco execs of the 1950s. “I don’t know what gets you to work in the morning except the color green of dollars. You are what is wrong with this country.”
Many public-health advocates would argue the science stands in stark contrast to Rockefeller’s harsh words. About 50 specialists in nicotine and science health policy sent a letter to the World Health Organization (WHO) arguing that tobacco harm reduction and e-vapor is “part of the solution, not part of the problem.”
Heated accusations are not surprising from a politician—but politicians aren’t the only ones whose emotions are running high over potential e-vapor regulations.
Just ask Reynolds American Inc., which received many passionate responses and concerns from vaping organizations and manufacturers over one sentiment from the 119 pages of comments the Winston-Salem, N.C.-based Reynolds submitted to the U.S. Food and Drug Administration (FDA) that seemingly called for a ban on open-system vaporizers.
Reynolds, however, points out that the majority of its FDA comments focused not on banning open systems, but how to hold open-system manufacturing practices (most of which take place in China) to the same high standards of U.S.-based manufacturers.
Reynolds CEO Susan Cameron explained this stance to the Winston-Salem Journal, saying that if open systems are allowed, the FDA “should create a level playing field on which all manufacturers of non-combustible deemed product categories are subject to equal treatment. Such equal treatment will ensure that all such products meet the health and safety requirements that the FDA determines are necessary to safeguard and promote the public health.”
In a nascent sector operating in the shadow of cigarettes and currently resembling a barroom brawl, with only a few vaping companies expected to emerge, it’s not surprising to hear a bevy of hyperbole and misstatements. But it’s critical to understand the rationale behind the different positions.
“It’s essential that governing bodies at the federal, state and local municipal levels get it right the first time,” says John Wiesehan Jr., CEO of Charlotte, N.C.-based Mistic E-Cigs. “But this can only be done through fact-based discussions on e-cigs.”
Here’s a look at the facts behind some hot-button issues facing e-vapor.
‘Candy-Flavored Poisons’?
U.S. Sen. Dick Durbin (D-Ill.) was not the first to describe electronic cigarettes as “candy-flavored poisons” aimed at children, and he certainly won’t be the last. Councilman Costa Constantinides used this as the backbone of his proposal to ban flavored e-cigarettes in New York City, and American Lung Association CEO Harold Wimmer wrote an entire op-ed for CNN on the subject earlier this year.
“Big Tobacco desperately needs new nicotine addicts and is up to its old tricks to make sure it gets them,” he said. “E-cigarettes are being aggressively marketed to children with flavors like Bazooka Bubble Gum, Cap’n Crunch and Cotton Candy.”
This type of accusation seemingly ignores the fact that none of the top e-cig manufacturers offers anything resembling bubble gum, Cap’n Crunch or cotton candy flavors; two of the top three sellers (Reynolds’ Vuse and Logic Technologies Inc.’s Logic E-Cigs) come in only tobacco and menthol flavors.
According to those in the industry, the flavor issue is not about the preferences of adult smokers, who have repeatedly demonstrated a desire for flavored products, in tobacco and beyond.
“It’s evident that flavors are becoming more critical to the vapor industry, as more smokers look to e-cigs and vapor products as significant alternatives to traditional cigarettes,” says Wiesehan, citing a 2013 study published in the International Journal of Environmental Research and Public Health. Titled “Impact of Flavour Variability on Electronic Cigarettes,” the study showed the majority of surveyed adult e-cig users listed a variety of flavors as “very important” in their efforts to switch from combustible to e-cigarettes.
“Flavors are present in many adult-only products such as beer and liquor,” says a spokesperson for Trendsettah Inc., Doral, Fla., who asked to remain anonymous. “An adult consumer that has been age-verified should be free to make their own choices.”
Especially because, technically speaking, a flavor ban could effectively amount to a ban on all e-vapor products. Liquid nicotine does not have a naturally occurring tobacco flavor on its own.
“Virtually every electronic cigarette product is flavored,” wrote Michael Siegel, professor of Community Health Sciences at the Boston University School of Public Health, in his Tobacco Analysis blog. “The ‘tobacco’ type of electronic cigarette is actually a flavored product, since flavorings are generally used to create that ‘tobacco’ taste.”
CONTINUED: Taxes & Addicts
Taxes Favor Cig-Alikes?
Tobacco and e-vapor manufacturers are probably accustomed to harsh words from anti-tobacco groups or even from legislatures. But from their retail partners? That’s unexpected.
Yet this has been the reality at times with e-cigarette taxation. During last summer’s CSP Tobacco Category Review Meeting, one retailer argued that a recently enacted North Carolina tax blatantly favors cig-alikes over e-liquids. The measure imposes a 5-cents-per-milliliter tax on all e-vapor products, meaning a $6 10-ml bottle of e-juice is taxed at 10 times the rate of a $10 disposable e-cig (which typically has less than 1 ml of liquid nicotine).
Supporters of the North Carolina model argue that it is not unlike taxes on cigarette packs vs. cartons: consumers pay more taxes on a carton of cigarettes not because the tax structure is biased against cartons, but because there’s more tobacco and nicotine in a carton of cigarettes than in a pack.
Others say it’s not about an e-liquid or e-cigarette bias, but establishing a reasonable tax structure for the potentially reduced-harm nicotine products in the e-vapor segment. This is why both the National Association of Tobacco Outlets (NATO) and Reynolds did not oppose North Carolina’s tax: A low per-milliliter tax is much more reasonable than taxing e-vapor products at the same high tax rate established for cigarettes or other tobacco products.
“Applying the state’s tobacco tax rate does not recognize that electronic cigarettes are vastly different from a traditional, combustible cigarette,” Briant says.
“People hear that we’re ‘pushing’ for a tax, but what we’re really doing is supporting a reasonable taxation and definition of this category,” agrees David Riser, vice president of external relations/trade marketing for Reynolds.
These sentiments echo those expressed by David Abrams’ letter to the WHO, which stated “excessive taxation of low risk products relative to combustible tobacco deters smokers from switching and will cause more smoking and harm than there otherwise would be.”
Unfortunately, North Carolina has been the exception. The majority of the 11 states that proposed e-cig taxes in 2014 looked to apply an existing cigarette or OTP excise tax to the segment, as Minnesota has already done, Briant says.
“Minnesota’s current 95% tax on e-cigarettes is exorbitant and has resulted in retailers not selling a significant number of e-cigarettes,” he says. “Rather, adult residents can simply go online to purchase e-cigarettes to avoid not only the 95% OTP tax, but the state’s 6.875% sales tax.”
The combination of taxes effectively doubles the price of cig-alikes, e-liquids and all e-vapor products in Minnesota. It makes the extra 50 cents tacked onto a $6 bottle of e-juice in North Carolina look a little more appealing.
Indeed, e-liquid manufacturers such as Mistic and Trendsettah weren’t opposed to the North Carolina proposal.
“The state’s decision to tax e-cigs at a much lower rate than traditional cigarettes is indicative of the growing distinction between e-cigs and traditional tobacco,” Wiesehan says. “Other states and local municipalities across the U.S. can use North Carolina’s new tax law on e-cigs as a precedent for proposing their own levy policies.”
“A sensible tax policy will help move the vaporizer industry forward,” says the Trendsettah spokesperson. “A reasonable tax policy will also help eliminate the black market of unregulated and untaxed tobacco products.”
‘New Generation of Addicts’?
In April, 11 senators and congressmen released a report on their “comprehensive investigation of e-cigarette marketing tactics.”
“This report provides clear evidence that e-cigarette manufacturers are marketing to kids and teens using tactics that would be illegal if these were traditional cigarettes,” outgoing U.S. Sen. Tom Harkin (D-Iowa) said in a press release. “[They] are investing millions of dollars to create a new generation of nicotine addicts.”
As with taxes, many vaping companies argue that the overall risk continuum should be considered when determining what advertising restrictions should be enacted on the industry.
“I think electronic cigarettes should be allowed to do things that cigarette companies can’t,” says Miguel Martin, president of Pompano Beach, Fla.-based Logic Technologies Inc. “It shouldn’t be a free-for-all. My issue with TV, particularly something like the Super Bowl, there’s a large youth audience that can come in contact with that material. Moving imagery finds its way onto the Internet in a way that you really can’t restrict.”
The problem with blanket advertising restrictions is that, as a relatively new segment amid a lot of hearsay, the e-vapor industry has a lot of educating to do.
“Since there is much misinformation about e-cigs in the marketplace, advertising and marketing are effective strategies to educate adult smokers on the attributes of e-cigs and vapor products,” says Wiesehan, “as long as they are done according to approved guidelines for age-restricted products.”
A far cry from the “they’re going after our kids” accusations of Sen. Harkin and others, many vapor manufacturers are voluntarily abiding by these age-restricted product guidelines set by the U.S. Federal Trade Commission (FTC). Logic, for example, does not run TV ads, but it does run radio spots using the alcohol standard: Seventy percent of the audience must be over the age of 21. Likewise, Mistic runs only print ads in publications for which 85% of the readership is over 18.
“Our marketing programs, most of which are trade and digital in nature, are highly data-oriented and extremely targeted, allowing us to focus on our core demographic: existing adult smokers,” says the Trendsettah spokesperson.
In fact, the very report Harkin said proved e-cig manufacturers were targeting children showed that the majority of companies would actually support some kind of marketing restrictions.
“Exposure of an adult-oriented product to people underage or non-smokers is not good policy, but it’s also not good business,” Martin says.
Whether a retailer or manufacturer is an advocate of strict open-system restrictions or a more flexible regulatory environment, TV ads or smaller in-store promotions, a modest tax structure such as North Carolina’s or no taxes at all, it’s important for the industry as a whole to focus on the facts instead of getting wrapped up in a battle of words.
Or, as Riser of Reynolds says, “working to support reasonable and responsible legislation on these particular products.”
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