How strictly e-cigarettes are regulated by governments is going to be a crucial factor which will influence the growth of this fledgling industry. As regulatory authorities around the world examine whether and how to regulate e-cigarettes, many commentators are predicting that there will be strong opposition to any proposed regulations.
The EU Member States, which are preparing new laws on e-cigarettes, are taking different approaches to the industry. Stances vary from complete prohibition; proposing regulating e-cigarettes as tobacco products or medicinal products and even consumer products.
Most countries, however, have waited for the revision of the EU Tobacco Products Directive to be approved, before deciding what to do. After the Directive was approved in March 2014, Member States have two years to implement the new rules at national level. The US Food and Drugs Administration (FDA) has presented proposals on e-cigarette regulation in 2014 too.
Will Regulation Preserve Or Destroy The E-Cigarette Industry?
By the beginning of 2014, most countries had limited or no regulation on quality, ingredients or safety of e-cigarettes, nor specific rules on marketing. This lack of regulatory oversight provided the e-cigarette industry with a unique and lucrative sales and marketing opportunity. As a consequence, any kind of regulation will undoubtedly impact the industry’s profit margins.
For instance, the tests required to have a brand approved as a medicine will require significant financial resources and could take a prolonged period of time. Tobacco companies with an interest in e-cigarettes (whether as developers themselves or through the acquisition of specialised companies) will have the advantage of experience, technical facilities and financial resources that the smaller and independent competitors lack. Likewise, existing products will suffer from the specific limitations on strength, size and safety that are part of the EU agreement or the FDA proposals. Again, smaller companies will have a harder time adjusting to new rules within this regulatory framework.
Lobbying to be Expected
So when it comes to lobbying against strict regulation, there are differences in lobbying strategies between the smaller e-cigarette companies and the larger tobacco companies. Some of the independent companies are explicitly anti-industry and consider the tobacco industry’s interest in e-cigarettes as nothing less than an effort to take over the rapidly growing market.
However, there are different opinions on how serious the involvement of the tobacco industry really is in the e-cigarette sector, and thus how strong the lobbying will be. Some analysts see tobacco companies industry promoting devices to quit smoking as a move to restore their discredited reputation or promote corporate social responsibility by involving in harm reduction. British American Tobacco for instance, presents its Vype e-cigarette as "a less risky alternative to conventional cigarettes" and "Harm reduction [as] crucial to the future of our business."
Other analysts argue it is a useful investment in product innovation, as part of a strategy to hold on to a declining market - at least in the more affluent Western countries. At the global level though, the e-cigarette is still only had 1%-2% of the total cigarette market by early 2014.
Related TobaccoTactics Resources
- Library of the European Parliament, Electronic Cigarettes, Library Briefing, 27 March 2013, accessed January 2013
- Toni Clarke, U.S. proposal would ban e-cigarette sales to minors, allow advertising, Reuters, 24 April 2014, accessed May 2014
- Sabrina Tavernise and Barry Meier, For E-Cigarettes, the Regulatory Battle Now Begins, New York Times, 24 April 2014, accessed may 2014
- Jacob Sullum, Will FDA Regulation Preserve Or Destroy The E-Cigarette Industry?, Forbes, 1 May 2014, accessed May 2014
- BAT, Harm reduction - Lower-risk alternatives, no date, accessed May 2014
- Walter Frick, The Big Question for E-Cigarettes: Replacement for Tobacco, or New Market? Harvard Business Review blog, 25 April 2014, accessed May 2015
- Merrill Lynch, Trial remains high; repeat usage lower, 6 January 2014, accessed May 2014