Tuesday, September 24, 2019

E-cig crackdown could hurt mom-and-pop 'vape shops'

Washington Post map based on Yelp data; click on the image to enlarge it.
President Trump's proposed rackdown on electronic cigarettes could hurt small, independent shops that are "the fastest-growing retail segment of the past decade, as well as the one with the highest share of employees at small businesses," Andrew Van Dam reports for The Washington Post. "Two thirds of "vape shop" workers are employed by the 93 percent of businesses with fewer than 10 employees — a higher rate than for any other retail segment."

Tobacconists (the broader category that includes the shops) have far outgrown other retail segments over the past decade, according to Labor Department data. That's because of electronic cigarettes, according to online review site Yelp; it says the shops have been the fastest-growing large retail segment since the end of 2012. Yelp's data show that the shops are concentrated in the South and West, with the highest numbers in Nevada and Oklahoma.

In response to recent deaths related to electronic cigarettes and concerns about their appeal to teens, the Trump administration recently announced it will ban most flavored e-cigarette liquids. The governors of Michigan and New York have announced similar bans, which will kick in sooner. "Vape shops in those states are reeling," Van Dam reports. "Customers are racing to stock up on flavored liquids while store owners and employees ponder an uncertain future. Refills of liquids that e-cigs heat to the point of vaporization make up the bulk of these shops’ businesses, multiple managers said — and their adult customers overwhelmingly prefer flavored options."

E-cigarettes do not produce just a vapor, which is a gaseous form of a liquid; they produce an aerosol, in which particulates are suspended. The industry has branded itself with "vape" and "vaping."

Since vape shops open mainly combustible-cigarette smokers seeking alternatives, the shops could be as disproportionately rural as smoking is, and a federal ban on flavors could hit many small-town vape shops hard. Ryan Brown, who manages one such shop in Iron Mountain, Mich. (pop. 7,000), told Van Dam the shops are a major source of support for local community events and even helped fix up the disc golf course. If the flavor ban goes through, "It’s going to affect our town," he said. "They rely on mom-and-pop stores to keep these mining towns going when the mines are gone. Imagine how much tax revenue they’re going to lose."

Mom-and-pop stores could also lose out when the Food and Drug Administration begins requiring approval for electronic-cigarette liquids already on the market, a bureaucratic step that could cost between $117,000 and $466,000. Expensive regulatory barriers could wipe out small businesses and leave only the largest vaping companies like Juul on the market, Van Dam writes.

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