Vape sellers: Flavor ban will put us out of business

Vaping

Michigan e-cigarette retailers have circled Oct. 2 on their calendars.

That’s the day a 14-day clock stops ticking for them to stop selling flavored nicotine e-cigarette products under emergency rules issued last Wednesday by the Michigan Department of Health and Human Services.

Gov. Gretchen Whitmer ordered the move in the wake of a nationwide outbreak of lung illnesses that has caused more than 500 hospitalizations and seven confirmed deaths as of Thursday. Use of the devices and the candy and fruit flavor they feature has also become an epidemic among teenagers.

Retailers that have opened hundreds of dedicated “vape” stores across the state say the ban amounts to putting them out of business.

Users of e-cigarettes inhale vapor from a heated liquid, often containing nicotine, instead of smoke. That liquid comes in a huge variety of flavors, from cotton candy to a traditional “tobacco” flavor. Many believe they are safer than combustible tobacco, but they haven’t existed long enough to put that to the ultimate test.

The Centers for Disease Control and Prevention has estimates that 27 percent of teenagers have used e-cigarettes, double the share who have tried regular cigarettes.

Under the rules, selling a flavored vape product, aside from tobacco flavor, could result in a misdemeanor charge, punishable by a $200 fine and up to six months in jail. The ban is effective for 180 days, which can be extended another six months.Industry view

Retailers such as Troy-based Wild Bill’s Tobacco, which operates more than 100 stores that sell flavored vape products, said the move by the governor “hijacked the legislative process” by not allowing businesses a voice.

Paul Weisberger, vice president and legal counsel for the retailer, said more than 800 retail shops statewide are dedicated to selling vape products, including 10 standalone Mr. Vapor shops owned by Wild Bill’s. There are an additional 100 vape liquid manufacturers across the state, Weisberger said in an interview.

Weisberger said hundreds of retail outlets would close because of the ban, and thousands of jobs would be lost. He estimates more than 5,000 employees are supported by the flavored-nicotine vape industry in the state.

Wild Bill’s employs more than 600 and generates 20 percent to 25 percent of its $150 million in annual revenue from vape products, President Mike Samona said.

Mark Slis, owner of Houghton-based 906 Vapor, testified to the House Committee on Oversight on Sept. 12 that the ban will end his business.

“If the governor’s order stands and flavors are banned, I will immediately go out of business and file for bankruptcy,” Slis testified. “No question.”

A coalition of small businesses and business associations is still deciding whether to file a legal injunction against Whitmer’s emergency ban on flavored-nicotine vaping products. The group, called Defend MI Rights Coalition, is joined by the Small Business Association of Michigan.

Spokeswoman Andrea Bitely declined to comment on the group’s plans to fight the ban.

“Our big concern is about the precedent that’s being set,” Bitely said. “Today it’s vaping, but what comes tomorrow? Is Coke for adults, but (Faygo) Red Pop a brand for kids? Are we going to be able to have Rice Krispies, but not Rice Krispie Treats cereal? Maybe people are in favor of a flavored-vape ban, but what if the next governor decides they don’t like guns or abortion?”

Brian Calley, former lieutenant governor of Michigan and president of SBAM, said the group joined the Defend MI Rights Coalition not in support of vaping but because they believe Whitmer is breaking the rules of governance.

“Vaping is just the issue that came up,” Calley said. “The policy position could apply regardless of the subject matter. Either the regular administrative rules should be followed or the legislative process should be utilized to put a set of rules or laws that go through the regular process. It’s one thing if an issue doesn’t go your way in the end, but at least you were heard.”

Samona and Weisberger said Wild Bill’s supports increased regulation of the vaping industry, but believes a slower process will allow the industry to adapt to any new rules.

“If you’re vaping, you’re not going to die while we work through a legislative process,” Weisberger said. “If that’s the case, then where are the bans on cheeseburgers and Bloomin’ Onions or alcohol and cigarettes?”

The rules that Wild Bill’s supports include: limiting vape sales to adults-only stores or a requirement to keep vape products behind the counter out of sight at other stores like gas stations; bans on advertising; mandatory point-of-sale verification systems; and increased funding for education on the dangers of vaping. Many of these rules would benefit stores like Wild Bill’s and Mr. Vapor because children under 18 years old are not allowed inside.

“Education and enforcement would soften the blow,” Weisberger said. “We agree that teen vaping is a problem, so let’s work to get it down. … Educate teachers and administrators on the issues with using cigarettes and e-cigarettes.”

Growing concerns

Whitmer said the health concern is too important to wait.

“For too long, companies have gotten our kids hooked on nicotine by marketing candy-flavored vaping products as safe,” Whitmer said in a statement Wednesday. “That ends today. This bold action will protect our kids and our overall public health.”

The cause of the outbreak of lung illnesses still hasn’t been conclusively identified. The CDC says many of the cases involved people who used black-market marijuana-based vape products, but no single product has been linked to the outbreak. Some patients have reported using only nicotine products, the CDC says.

As of Thursday, 530 hospitalizations and seven deaths — none in Michigan — have been identified by health officials. On cases for which sufficient data is known, two-thirds of the cases were in people 18-34 years old. Sixteen percent were in people under 18.

The CDC has advised that e-cigarette users should not buy vaping products off the street and has advised young people and people who don’t use tobacco products not to start using them.

Changing business

Vaping, which began cropping up in the U.S. about a decade ago, has changed the tobacco business as fewer people smoke cigarettes because of health concerns and social stigma.

Wild Bill’s executives believe vaping is safer than traditional combustible cigarettes and has worked to transition roughly 100,000 smokers from smoking to vaping, Samona said.

Vape products also produce a higher margin for Wild Bill’s. Samona said many of those customers would return to smoking cigarettes, not transition to tobacco-flavored vape products.

“About 97 percent of our vape customers buy flavored vapes, not tobacco flavoring,” Samona said. “Not even 1 percent of those people would start buying tobacco flavor. Flavors are critical to keeping adults off cigarettes.”

The other worry, he said, is that Michigan’s flavored-vape ban will simply push users to the black market from either do-it-yourself manufacturers or out-of-state retailers.

“Half the kids are buying online today,” Samona said. “Banning them will force them to the black market from a basement manufacturer, and that solves nothing.”

President Donald Trump has proposed a federal ban on flavored e-cigarettes, and New York officials approved that state’s ban Tuesday.


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Frank Crooms

Frank Crooms publishes business news content on our website. His ability to read numbers and make sense of complex business issues puts him at a remarkably knowledgeable spot. Through his content, he describes the upswing and downswing of the business sector, and the progress of the commercial industry in the nation, with respect to the world.

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