E-cigarette regulation could set back small businesses

From: RepublicanAmerican


The surging popularity of electronic cigarettes is spurring growth at two Milwaukee-area companies that have emerged as important producers of the key ingredient, and is creating opportunity here and elsewhere for storefront entrepreneurs.

The local participants have jumped into a market that some believe will eclipse that of traditional smokes within a decade.

“This is one of those few times where you see a brand new industry, and it’s amazing,” said Christian Berkey, founder and majority owner of Hartland’s Johnson Creek Enterprises LLC, which describes itself as the country’s largest manufacturer of the flavored, nicotine-laced liquids that are at the heart of electronic cigarettes.

But it’s also an industry that soon could change dramatically.

To this point, it’s been more or less the Wild West, with production and sales totally unregulated. Now, though, the U.S. Food and Drug Administration is poised to step in with as-yet undisclosed rules under its authority to oversee tobacco-derived products.

That could shake up the business models of the Internet-based vendors and tiny, home-based juice-makers that have sprung up over the last few years.

It could even lead to an effective ban on e-cigarettes — something industry observers discount as a realistic possibility.

In Connecticut, the General Assembly’s Public Health Committee held a hearing in March on a proposed bill that included e-cigarettes in indoor smoking regulations for businesses and restaurants. Lawmakers did not vote on the bill in the session.

But regulations also could solidify the positions of firms, such as Johnson Creek Enterprises and Wauwatosa’s Securience LLC, that already have made the move from basement to production lab.

“Regulations will, in general, be good for our particular business,” said Don Muehlbauer, owner of Securience, which says it, too, is among the nation’s biggest manufacturers of e-cigarette liquids. “They will drive out the little players.”

E-cigarettes are battery-powered devices with a heating coil that turns a nicotine-containing liquid — the stuff Johnson Creek and Securience make — into a vapor the user inhales.

“Vaping” generalContact Michael C. Juliano at mjuliano@rep-am.com.ly is cheaper than smoking and, advocates say, safer because it doesn’t produce the tars and many of the harmful substances found in cigarettes.

Critics, however, say the vapors contain dangerous chemicals, and that research on e-cigarettes is needed.

Sen. Richard Blumenthal, D-Conn., joined with four colleagues in Washington to call on the FDA to place the same sales and marketing restrictions on cigarettes as it does tobacco products.

Blumenthal has said the e-cigarettes may have fewer carcinogens and harmful chemicals than tobacco cigarettes, but “they are still harmful.”

The e-cigarette industry has grown from thousands of users in 2006 to millions worldwide, with 200 brands to choose from.

Analyst Bonnie Herzog of Wells Fargo Securities estimates 2013 retail sales of e-cigarettes at $1.8 billion.

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