E-Cigarette $10 Billion Market in Limbo

May 19, 2014
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E-cigarette manufacturers are worried about the impact that new government regulations may have on the budding industry. In April, the Food and Drug Administration released a plan that would have the government review the safety of e-cigarettes and their ingredients. Despite not having conducted any research on e-cig safety, the FDA has banned the sale of unregulated tobacco products, including e-cigs, to minors.

The unclear status of e-cigarettes has caused a patchwork of regulation throughout the country, and even within the same states. While some state and city officials allow for the use of e-cigarettes in public spaces, others have decided to regulate them like traditional tobacco products. In early May, New York City and Chicago banned the use of electronic cigarettes in public places like bars and restaurants.

E-cigarette companies are frustrated by, what they believe, is an unjustifiable regulation for a product that has not been properly tested by the FDA. US patent attorney and CEO of NJOY, an e-cigarette company, stated, “They state and local health departments don’t have the scientific expertise.” Weiss questions the logic behind limiting a market that could have significant health benefits and prevent the nearly 480,000 deaths caused by traditional tobacco use per year. “It makes no sense to regulate ahead of that scientific research,” he concludes.

Advocates for e-cig regulation claim that early regulation can prevent the public perception that smoking is a desirable activity. They fear that a lack of regulation will make e-cigarettes a trendy stepping stone to traditional tobacco products for teens and young adults.

Opponents of e-cigarette regulation argue that stricter rules on the product will deter smokers, who want to quit, from trying a healthier alternative to traditional tobacco products. Lori Abiuso is a long time smoker from New Jersey. “Using e-cigs stops me from bringing cigarettes when I go out with my non-smoking friends, or places like Disney World with few smoking sections.”

The Center of Disease Control reports that of the 44 million Americans that smoke, over 70 percent of them would like to quit. This has generated a profitable market for e-cigarette manufacturers, who market their product as the healthy alternative to smoking. The e-cig industry is projected to generate more than $10 billion in revenue by 2016, if government regulations do not smother the growing industry.

For now, the fate of e-cig profits, and possibly the lives of millions Americans, hang in limbo until the FDA conducts the long overdue scientific research on e-cigarettes. “All we’ve ever asked,” Weiss adds, “is that the FDA do the research.”

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

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Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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