WASHINGTON, D.C. – With The Hill reporting that FDA regulations on vapor products and e-cigarettes may be “imminent,” now is the time to buy stock in tobacco companies. That’s the advice of Bonnie Herzog, a stock analyst and managing director of Beverage, Tobacco & Convenience Store Research for Wells Fargo Securities.
“As a reminder, regulation of the e-cig/vapor industry is broadly positive for the big tobacco manufacturers since it will increase the barriers to entry and likely entrench them even further,” Herzog wrote to investors yesterday (PDF). Herzog’s comments were spurred by a tumble in tobacco stocks that followed the release of The Hill’s report on Monday. The pending final rule is expected to require every vapor product that has come to market since February 15, 2007 (the ‘predicate date’) undergo a retroactive ‘premarket’ approval process. No vapor products being sold now were on the market in 2007, so all vapor products will have to go through this process to remain legally available for sale.
The agency’s economic analysis of the rule predicts that the cost of such approvals will be so high that approximately 99% of products on the market will not even be put through the application process (PDF).
In reaction to the report, the American Vaping Association, a leading advocate for the benefits of vapor products, is asking members of the House Appropriations Committee to support an amendment to the FY 2017 Agriculture Appropriations bill to modernize the predicate date for vapor products.
The committee, which supported a similar change last year, is likely to hear the bill and amendment on
Wednesday Tuesday of next week.
“Wells Fargo is absolutely correct to state that the proposed FDA regulations will benefit tobacco companies,” says Gregory Conley, President of the AVA. “Without a change in the February 2007 predicate date, the FDA’s proposal will destroy thousands of small businesses and hand over the vapor industry to Big Tobacco.”
“Changing the predicate date will not stop the FDA from regulating vapor products,” Conley continued. “The FDA will be free to set rigorous product standards and require disclosure of all ingredients in products already on the market. The FDA just won’t be able to set technology back a decade by banning tens of thousands of products for no reason other than the inability of small manufacturers to pay huge fees.”
The AVA remains hopeful that Republican and Democrats will come together and recognize that a change in the predicate date is necessary and timely.
“The vapor industry and its consumers are not asking for special treatment,” said Conley. “We are asking that the FDA not treat vapor products far worse than they do Big Tobacco’s deadly cigarettes.”
About the American Vaping Association
The American Vaping Association is a nonprofit organization that advocates for fair and sensible regulation of vapor products, otherwise known as electronic cigarettes, with the goal of maximizing the number of adult smokers who use these products to quit smoking. The AVA was founded by Gregory Conley, a consumer and industry advocate with a long track record of advocating for vapor products dating back to 2010.
We are dedicated to educating the public and government officials about public health benefits offered by vapor products, which are battery-powered devices that heat a liquid nicotine or nicotine-free solution and create an inhalable vapor. The AVA is not a trade group and does not speak for any particular businesses, including our industry sponsors.
You can learn more about AVA and vaping by visiting the AVA website. You can also find us on Facebook and Twitter.