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Despite FDA deeming regulations, e-cig market is booming

Posted by Matt Rowland on

When the FDA deeming regulations were first announced in May of 2016, the vaping industry went into immediate panic mode over concerns of all the bad press.  Would vapers turn to Black Market retailers or return to conventional smoking altogether?  Luckily, according to at least one highly regarded Wall Street Analyst, the market isn’t just holding its own.  It’s booming.

Bonnie Herzog of Wells Fargo Securities and a contributor to Fox Business News says that profits from e-cigs and vaping technology were in a slight decline entering into the FDA’s grace period which ended on August 8.  However, in the weeks since, revenues from e-cigarette sales have spiked by a whopping 16 percent.  Annual sales are also on the rise by double-digit percentages.

Vape shops transition to the new FDA deeming regulations

Herzog believes that the slight dip in profits is at least partially due to vapers stocking up on e-juices and vaping technology prior to the FDA deeming regulations going into effect.  Meanwhile, manufacturers were pushing to get their new products and upgrades out on the market to avoid having to undergo the million-dollar Pre-Market Tobacco Application (PMTA) process post-deeming regulations.  Greg Conley of the American Vaping Association seems to agree with Herzog’s assessment.

“Those that were paying attention knew that if they didn’t get their products out by Aug. 8, they would not be able to continue to market. That was the period for new products to come out.”

(Related Article: WALL STREET ANALYST: FDA DEEMING REGS ARE ‘GOOSE’ THAT LAYS THE GOLDEN EGG)

Conley goes on to state that local vape shops are facing another sort of transition.  As per the new FDA deeming regulations, retailers, distributors, importers, and manufacturers can no longer provide free samples of e-liquids.  Furthermore, shop employees can no longer build coils or install upgrades to equipment for their customers either.  With all of these changes in how a vape shop provides excellent customer service, there is a period of adjustment occurring that hopefully will even itself out in the long run.

“There’s an adjustment going on because many of the common everyday things vape shops do for customers are considered ‘manufacturing’ and they will not have a license to continue that practice. That includes things like screwing in a coil and putting in a battery. The FDA thinks that’s manufacturing a product. Vape shops already have had to turn away customers,” says Conley.

Still, even with this period of adjustment, sales are up and business is booming once again.  In fact, Herzog predicts a U.S. vaping market worth approximately $4.1 billion by the end of 2016, if the current trend remains consistent.  However, even Herzog cannot predict what’s coming down the path regarding additional FDA regulations.

Just last week, the FDA proposed a new deeming rule that may result in the new requirement for e-cig manufacturers to undergo a clinic trial process.  So, profits look good…for now.  But for how long?

(Related Article: AUGUST 8 PROHIBITION & THE FDA E-CIG REGULATIONS: VAPING BRACES FOR ‘INDUSTRY FREEZE’)

(Related Article:  NEW FDA DEEMING RULE PROPOSED: CLINICAL TRIALS FOR E-CIGARETTES)


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