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We are in a transition phase while people try to get rid of
their old, non-complying inventory so they can take home
compliant products.”
What does the future hold for the industry as a whole?
TB
recently spoke with D’Alessandris about his outlook for
vapor and EAS. Excerpts from that interview follow.
When we last spoke, you seemed to feel the
tobacco outlet/smoke shop channel was going to
prevail over the vapor shop channel. How do
you feel now?
We started to see a slowdown of vape shop openings even
before the FDA Deeming Rule came out, and even clo-
sures in some areas where there were too many vape stores.
That was in the beginning of 2016. The publication of the
Deeming Rule accelerated this trend so that now our sales
force reports store closings at a much higher rate on a week-
ly basis. We have also heard rumors of big chains that are
on the brink of closing. Our projection is that in the next
five years the number of vape stores will decrease by over 50
percent.
Some of those will convert into discount tobacco
outlets (DTOs), but many will just close shop.
What is driving that change?
We see at least five big issues affecting vape stores. First, the
way the rule is written: every single combination of liquid
containing nicotine constitutes a new tobacco product, so the
shops relying on their own products would have to fight for
each one they sell, which is financially impossible. Second, the
free sampling that was a big part of the vape shop experience
is no longer permitted. Third, the online restrictions have sig-
nificantly increased and which many vape shops consider a
key mechanism for generating awareness and sales The new
FDA rule is that you must check photographic identification
for all potential purchasers below age 26, which is very com-
plicated and expensive to do online. Fourth, FDA has ramped
up enforcement actions with respect to ensuring restrictions
are enforced to halt sales of vapor products to youth. In fact,
FDA just sent several warning letters to vape shops and com-
panies levying fines for selling vapor products to minors. That
is a big focus of the FDA. And, finally, on top of that you
see states like California taking action by implementing their
own complex regulations. These are some of the reasons the
business model of the vape store is really challenged in today’s
highly regulated environment.
Do you think predictions that the deeming
regulations will create a thriving black
market are valid?
Absolutely, yes. There is no question. Smokers and the
vaping community will do whatever it takes to continue
to procure this alternative to smoking traditional ciga-
rettes. If they can’t find options at retail, vape shops and
DTOs, they will find a way online or by getting products
from other countries. If the onerous Deeming Regulation
remains unchanged, a thriving black market seems like
an inevitable result.
ALL ABOUT
CUE
Closed-system vaping device that uses
pre-assembled, disposable cartridges
for no-mess, low-maintenance vaping;
Available in four flavor categories—
tobaccos, mints, desserts and fruits—
and three nicotine levels (0mg, 3mg
and 6mg);
Smaller and lighter than a smart-
phone and available in a variety of
vibrant colors;
Uses a sub-ohm vaporization technolo-
gy. While most traditional e-cigarettes
have a resistance of approximately
1.5 to 2.8 ohms, Cue’s vaping system
has a total measurable resistance of
less than 1.0 ohm, which translates to
more vapor production, more flavor
and more satisfaction.
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