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As with most FDA requirements, the challenge of
meeting both national and state requirements is more
difficult for smaller operations. Larger direct-to-con-
sumer retailers like VMR have found ways to meet
the age verifications, says founder and CEO Jan Ver-
leur. But even those companies are sometimes sty-
mied by local rules like the phone call requirement
in California. “There are one or two states we don’t
sell into because we can’t get through the checkout
process,” Verleur admits.
At this point, the ability to navigate state restric-
tions on this and other tobacco-sale related matters has
become as important as having a quality product. As
Verleur notes, “We have grown very accustomed, as the
nation’s largest online retailer of vapor products, to see-
ing every form of government interference at the state
level. We have had to make concession whether it be
[for] Amazon nexus laws related to taxation, different
tax rates built in for reasons or [the] Prop 65 regulation
in California. To address different age requirements
in certain states, we have built a flexible platform that
enables us to tailor the online experience based on the
region from which you access the site, so we are pretty
set up for that now.”
And companies that sell vapor products online will
need to be “set up.” The fine for selling vapor prod-
ucts to minors ranges from $500 to $600 for the first
offense and can climb as high as $6,000 for multiple
offenses. The bottom line: Until online merchants find
ways to navigate the federal and state age verification
requirements, brick-and-mortar retailers will have a
competitive edge in selling tobacco products.
TB
VAPOR RETAIL SALES BY SECTOR AND CHANNEL
$
4.4B
E-Cigarettes
$1.4B
2017 Vapor Market
$3.0B
C-Store,
Food, Drug and
Mass Retail Channels
Online
and Other
Retail Channels
$700M
$700M $700M
$500M
C-Store,
Food, Drug and
Mass Retail
Channels
Online
and Other
Retail
Channels
Vape Shops
$400M $300M
Online
Other
Vapors/Tanks/Mods
& Personal Vaporizers
$1.8B
Online retailers, hit hardest by age verification requirements, currently
account for more than $1 billion in vapor product sales
While 97 percent
of retailers
have formal
age-verification
practices or
policies, just 37
percent report
assessing
employees on their
competency selling
age-restricted
products.
Source:: Nielsen C-Store Database, Wells Fargo Securities, LLC estimates
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