According to the FDA, electronic cigarettes are battery operated devices the turn nicotine or other chemicals into a vapor that is inhaled by the user.

Products already on the retail market, such as Lorillard, Inc. s /quotes/zigman/511272/delayed/quotes/nls/lo LO 1.17% top selling product blu, may have to go through the FDA approval process before they are able to continue selling on the market.

We see e cigarettes as a new product segment for the industry and if there are regulations, they should be reasonable and workable and acknowledge that e cigarettes are a very different kind of product than traditional tobacco products like cigarettes, said Tom Briant, executive director and legal counsel at the National Association of Tobacco Outlets, Inc.

Organizations such as the tobacco association and the Smoke Free Alternatives Trade Association, which lobbies for e cigarette manufacturers, said regulation of electronic cigarettes should be in a different category than that of tobacco cigarettes, since they are different products.

What we re advocating for is a separate framework for regulating this product, said Cynthia Cabrera, the smoke free group s executive director. When the Family Smoking Prevention and Control Act was passed in 2009, there was no evidence that Congress intended to include e cigarettes. Adding them to this regulation under that law is just not appropriate.

Analysts project that sales of electronic cigarettes could reach between $1.7 billion and $1.8 billion by the end of 2013 as sales of traditional tobacco cigarettes stay flat. We continue to expect consumption of e cigs could surpass consumption of traditional cigs within the next decade, Wells Fargo analyst Bonnie Herzog said in a report.

The Big Three tobacco companies Altria Group Inc. /quotes/zigman/294903/delayed/quotes/nls/mo MO 0.37% , Reynolds American Inc. /quotes/zigman/334469/delayed/quotes/nls/rai RAI 0.10% and Lorillard are still new to the market, with April 2012 marking Lorillard as the first big tobacco firm to enter the e cigarette business. Small businesses, Cabrera said, command about 60%of the market and drive technological advancements for the industry. Stiffer regulation, she said, could quell the innovation of the smaller companies that dominate the industry.

Stifling innovation would have a negative impact on consumers as well as companies entering or already in the market, Cabrera said. Those are the true entrepreneurs and embody the spirit of innovation.

Large companies have the finances to withstand the extra costs that tighter oversight might bring, Cabrera said. In a letter to the FDA last month, Marlboro maker Altria offered support for regulation. But the company also asked for flexibility and defended the need for innovation in the industry.

The FDA should reject the call by some to both stifle innovation and adopt a one size fits all approach to regulating tobacco products, said James Dillard, Altria senior vice president of regulatory affairs, in the letter. Such an approach does not reflect the harm reduction potential of lower risk products and could have the real world consequence of preventing new forms of tobacco products from playing an important role in harm reduction.

Uncertainty over the regulation makes small businesses such as Michigan based Purebacco wary about expanding its operations. Purebacco CEO Dan Walsh has been apprehensive to move forward with business. This guy is responsible for 18 % of employment of his county in Michigan, Cabrera said.

Earlier this week, Cabrera and officials from 24 smoke free company members lobbied on Capitol Hill to voice their concerns about the impending regulation.

Of course, some health advocates are fighting in favor of the rules.

The American Lung Association is very concerned about what s in e cigarettes and what their impact to public health may be, said Erika Sward, assistant vice president for National Advocacy at the American Lung Association. We don t know what s in them, we don t know what the harms of them may be, and that s why it s so important that FDA begins its oversight of these products.

The FDA passed sent its proposal to the Office of Information and Regulatory Affairs for review on Oct. 1, right after the partial government shutdown ended. The review could last upwards of 90 days before it is issued and opened for a public comment period.

Tobacco companies bet on electronic cigarettes – cbs news

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Updated 9 21 a.m. Eastern Time

Tobacco companies are now embracing electronic cigarettes to help offset the loss of traditional cigarette smokers even as the U.S. Food and Drug Administration prepares to put forth regulations that could put the skids on the nascent e cigarette industry.

The MarkTen electronic cigarette. Altria

The nation’s largest tobacco company, Marlboro maker Altria Group Inc., announced plans for the release of its electronic cigarette, the “MarkTen,” at an investor meeting today. The company’s Nu Mark branch will be introduced first in Indiana in August consumers will have the option of disposable or rechargeable models, and classic or menthol flavors the experience, executives said, “closely resembles the draw of a cigarette.”

Last week, the second biggest U.S. tobacco company, Reynolds American, announced that it would bring its “VUSE” electronic cigarette to Colorado in July ahead of a planned national rollout. Reynolds American CEO Dan Delen, whose company sells Camel and Pall Mall cigarettes, says he is committed to “transforming tobacco” as part of an effort to make the product less harmful.

And the third largest U.S. tobacco company, Lorillard Inc., last year acquired “Blu” e cigarettes, which make up about one third of the electronic cigarettes sold at U.S. convenience stores, according to a Wells Fargo Securities estimate cited by the Wall Street Journal.

The industry’s embrace of e cigarettes, which are also known as vapor cigarettes, comes as Americans move away from traditional cigarettes. In 1965, according to the Centers for Disease Control, 42 percent of men and women over 18 years old were smokers in 2010, only 19 percent smoked. (There are roughly 44 million adult smokers in the U.S. today, and another 12 million that use other forms of tobacco.) While the industry has been able to look to overseas markets for growth in recent years particularly in the Asia Pacific region health concerns have prompted increasing efforts to curtail smoking across the globe, including in Russia and China.

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Millions of Americans have used electronic cigarettes. Advocates say they’re a safe and an effective alternative to cigarettes, but the Food and …

“This industry is in decline, whether people want to admit it or not,” said Jack Russo, an analyst with Edward Jones and a tobacco industry expert. Electronic cigarettes, he said, offer tobacco companies a rare opportunity to introduce new products something they have largely been prevented from doing in recent years by the government and “maybe look like the good guys for a change.”

It isn’t just the traditional tobacco industry that is betting on e cigarettes. Silicon Valley entrepreneur Sean Parker is part of a group investing $75 million in NJOY Inc., which makes one of the leading electronic cigarettes. Parker said he hopes “the clever application of technology might someday obsolete the combustion cigarette and all the harm it causes.” NJOY has deployed singer Courtney Love and other celebrities in an effort to help make its product seem cool.

Electronic cigarettes turn nicotine liquid into an inhalable vapor eliminating combustion which is why the act of “smoking” an e cigarette is sometimes called “vaping.” There is now a raging debate about the health risks posed by the battery powered devices, which are made to look like real cigarettes (or perhaps a pen).

The FDA warns that e cigarettes could lead young people to use conventional cigarettes and says it is not yet known if they are safe on their own, with some expressing concerns about a chemical called Propylene Glycol that is found in many e cigarettes. Three U.S. states have already banned the use of e cigarettes in enclosed public spaces. Former U.S. Surgeon General Richard Carmona, who has joined the board of NJOY, has said that more study is needed but that e cigarettes represent a potential tool to move people off traditional cigarettes, which are widely considered to be more harmful.

While there are now more than 200 models available, the e cigarette industry remains tiny compared to the overall tobacco industry e cigarettes totaled about 0.5 percent of the overall domestic tobacco market last year. But it is far from negligible. Last November, the company Euromonitor estimated that $2 billion had been spent on e cigarettes globally in 2011, stating that the industry has seen “booming growth” in just a few years. According to the CDC, about one in five adult U.S. smokers at least tried an e cigarette in 2011.


The industry’s growth could be stymied domestically by the FDA, which says it plans to regulate electronic cigarettes though it has offered no hints as to what that regulation might look like. Under the Tobacco Control Act, the FDA cannot currently regulate e cigarettes, unless the manufacturers make therapeutic claims. (That’s why you don’t now see e cigarettes marketed as a way to stop smoking traditional cigarettes.) But the FDA has the legal right to add categories to the tobacco products it regulates after going through certain procedural steps, including a public comment process. It plans to begin that comment process later this year and eventually issue regulations on electronic cigarettes and other unregulated tobacco products.

Regulation is not the only threat to the industry Electronic cigarettes could eventually face the same sort of high levels of taxation that now curtail sales of traditional cigarettes. There are also questions about whether the typical user will consume e cigarettes at anything approaching the rate of traditional cigarettes, and whether current non smokers will be willing to take up the product.

“It’s far too early to be calling this the next horizon. There’s still a lot of question marks,” said Russo. He went on to describe the move by traditional tobacco companies to embrace e cigarettes at this time “almost a desperation type behavior,” adding that “all the potential good news could be squashed down the road by taxation, regulation, you name it.”

For e cigarette makers, however, it’s full speed ahead.

“Our mission is to ‘obsolete’ cigarettes,” Craig Weiss, chief executive of NJOY, told the Financial Times earlier this year. “We think of ourselves as the digital to their analogue.”