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Are reports of the death of the vapor store channel
greatly exaggerated? Some say that virtually all of the
country’s 8,000-plus vapor stores will fade away as the
FDA’s deeming regulations phase in. In fact, the FDA it-
self has reportedly predicted the demise of 90 percent of
the channel over the next few years—which may actually
be for the best, notes Norm Bour, founder of the vapor
consulting company VapeMentors.
“I don’t necessarily think that’s all bad, because the
reality is that most vapor shops are poorly run, with bad
customer service and bad management,” he says. “Also,
it’s not a commodity yet; it’s still a pretty unique product.
So this is not like a gas station where you need one on
every corner.”
Bour’s prediction? “Five years down the road, you’ll
walk into a store the size of a Walgreens and that’s where
you’ll go for your vice of choice—alcohol, tobacco,
CBD, cannabis. Everything will be highly taxed, but the
store will be run professionally.”
On the other end of the spectrum, advocates of the
relatively young vapor shop format are hopeful, if not
entirely confident, that a reprieve will deliver salvation at
the eleventh hour. “I’m optimistic,” says Schell Hammel,
founder of The Vapor Bar, who was an early pioneer
in the vapor shop arena and also works extensively with
SFATA as a vapor industry advocate. “We have legisla-
tion, lawsuits and advocates working around the clock—
there are a lot of things going at once. You don’t lose
hope until the very last day. You just can’t.”
EVOLUTION, NOT EXTINCTION
The big money, however, is somewhere in the middle—
betting on a winnowing out of the “opportunists” who
got into the game looking for a quick hit, coupled with
the need for those staying the course to adapt their busi-
nesses to the new reality.
“Realistically, the vapor store channel, which is
very fragmented, will continue to consolidate given the
regulation and the overhang,” agrees Bonnie Herzog,
managing director and tobacco analyst at Wells Fargo.
“Having said that, I think the stronger shops will con-
tinue to thrive.”
In fact, the retail field is already narrowing as vape shop
owners who profited handily by making their own e-liq-
uids come up against a harsh regulatory reality. “Supply-
ing your own liquid was where the big money was being
made at retail,” notes John Wiesehan, CEO of Ballantyne
Brands, who says the universe of vape shops has already
dropped from about 12,000 two years ago to the 8,000 fig-
ure commonly cited today. In the wake of deeming regu-
lations that are curtailing imports from China, those store
owners are now struggling to source e-liquids.
Barring a legal reprieve of some kind, survival will
require that most vape shops dramatically change both
what they sell and how they sell it—compromises that
vape owners who abhor anything Big Tobacco-related
may not be willing to make. “[If the deeming regulations
don’t get changed], you can survive by becoming strictly
retail and selling products made by Big Tobacco or by
“Retail has
transitioned to
a hybrid model
where selling
tobacco, smoke
and vape is
more prevalent
than vape-only
stores.”
—JOHN WIESEHAN,
CEO, BALLANTYNE
BRANDS.
➨
Vape shops that thrived by making and
selling their own e-liquids will need to
change their business models or face being
regulated as manufacturers by the FDA.
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