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Wall Street analyst: FDA deeming regs are ‘goose’ that lays the golden egg

Posted by Matt Rowland on


Now that the FDA deeming regulations are in full swing, Wall Street analyst Bonnie Herzog of Wells Fargo Securities is publically responding to those considering investing in the future of the vaping industry.  On August 8, Herzog released a blistering report suggesting that the complexity of the new regulations significantly favors Big Tobacco over public health while simultaneously landing a massive blow to the entire vaping industry. 

Herzog is highly regarded in many financial circles for her expertise in the tobacco sector, and what she says carries a lot of weight in the New York Stock Exchange and other international markets.   And like most reputable Wall Street analysts, Herzog makes her financial recommendations based on facts rather than politics.  Her 11-page report released last Monday defines a clear and calculated predicted future of the vaping industry from the singular vantage point of a financial investor, and it doesn’t look good.


The document is entitled, “Good For the Goose, Less For the Gander,” and in this case, the vaping industry is clearly the gander.  Among the more startling assertions made by Herzog include the notion that the FDA deeming regulations provide a significant economic advantage to Big Tobacco because of their extreme focus on stifling innovation in the vaping industry.   

“First off, we believe the sweep of the new regulation has been a real blow to the broader vapor industry, particularly smaller, less well-funded players, and innovation more broadly, given the costly and time consuming requirements and because innovation will likely be stifled. While perhaps not hugely evident yet, we believe many small industry players will be forced out of business as a result which has been foreshadowed by several announced leadership departures at many companies and industry/trade groups.”

Wall Street’s Bonnie Herzog bets on Big Tobacco over Vaping

Herzog also states that it is “no surprise” that Big Tobacco companies will have very little trouble meeting the excessive regulatory demands and associated billion-dollar costs of the FDA deeming regulations.  She even specifically mentions the Altria Group, the parent company of Phillip Morris cigarettes and the e-cig Mark Ten, and RJ Reynolds, manufacturer of Camel, Salem and other conventional cigarettes along with the VUSE vapor device.  Perhaps even more frightening, she even tells investors that she expects to witness a significant decrease in e-cig sales as customers transition back to tobacco cigarettes.


“We expect to see a continued shift in consumption of e-cigs/vapor back to combustible cigs as e-cig choices become more limited — a net ‘win’ for big tobacco. This has continued to baffle us given the FDA’s public health priorities.”

“As Is, Deeming Regs Are A Clear ‘Win’ For Big Tobacco, Not Necessarily Public Health – Our main concern remains that the final deeming e-cig regs will realistically stifle innovation, which could dramatically slow industry growth by dis-incentivizing consumer conversion from combustible cigs to e-cigs. This ultimately has a net negative impact on public health, which is clearly in direct opposition to the FDA’s goal.”

These are just a few of the highlights contained within the 11-page document.  Herzog also references the pending Cole-Bishop Amendment and other specifics of the FDA deeming regulations, such as new labeling requirements and the uber-expensive Pre-Market Tobacco Application process.  Even though a large portion of the document is written in that investor-speak that is often so difficult to fully comprehend, one thing is clear.  Regarding the War on Vaping, Herzog is telling Wall Street to bet on Big Tobacco. 


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  • While Bonnie Herzog may be highly regarded on Wall Street she is completely isolated about the vaping industry. Yes, it is a grass roots movement but we forget that this is what American was founded upon. We will not lose the war on vaping, according to the CDC more than 9 million adults are vaping. That is 9 million votes in both State and Federal elections. We may take a hit in the industry but with the current lawsuits filed against the FDA I believe the vaping industry will regain its momentum.

    Chuck Huff on
  • They have a big incentive to get me back on cigarettes. When I quit and switched to vaping 3 years ago I was smoking to packs a day or more. In Minnesota my brand cost $7.50 a pack so that’s $15.00 day roughly. Today I use about $0.20 to $0.30 of e-liquid. Someone is not getting $14.70 a day from me any more. That’s $17,000 + and almost 45,000 cigarette butts.

    Michael Schoonover on
  • Big tobacco has bought and paid off the FDA and that is really sad. The UK did it the right way by announcing E Cigs as reduced harm. It could save so many people and our government just doesn’t give a crap about the people anymore. So screw Big Tobbaco and the rich bastards at the FDA.

    Dan on

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