E-cigarette retailers worry about legislative changes

Electronic cigarettes went from obscurity to a $2.5 billion industry in the U.S. in the last five years, and Mount Baker Vapor has followed a similar trajectory.

The Bellingham company’s website went live in August 2011, hit 100 orders three months later and reached 1,000 orders the next spring. Now, Mount Baker Vapor has more than 130 employees and ships nicotine-infused liquid and other products as far as Australia, Europe and Japan.

The industry is mostly unregulated, but more than 20 states are currently considering bills regarding e-cigarettes or “vaping” products.

Washington legislators are considering several bills, including one proposed by Gov. Jay Inslee aimed at curbing the increase in teenagers using e-cigarettes.

The legislation filed on Inslee’s behalf, House Bill 1645, would regulate the products at a rate that Mount Baker Vapor and other local companies say would kill the local industry and have the unintended effect of making vapor products harder to get for adults who use them as an alternative to cigarettes.

The bill originally proposed a 95 percent tax on all vapor products — the same rate applied to tobacco products. As of this week, the tax has been taken out altogether, but that could change as the bill is amended or another bill emerges.

Mount Baker Vapor representatives said even a small tax could force them to move out of state. They compete with businesses across the U.S., and currently only Minnesota and North Carolina impose an excise tax on vapor products.

“We’ve had a backup plan since last year,” said Kenny Davis, Mount Baker Vapor’s chief of government affairs. “I think most businesses in the state of Washington have a backup plan.”

The company is one of the larger vaping businesses in the state. All of its employees are paid more than minimum wage, and full-time workers get benefits including health insurance and 401(k) options.

Mount Baker Vapor’s marketing director Michael Sullivan talked about his business sitting on a couch in the company’s retail location on the Guide Meridian in Lynden. He said he started smoking when he was 15 years old. He kicked the habit at 25 by switching to e-cigarettes.

As he inhales from the rectangular black personal device, a heating coil heats nicotine-infused liquid to its boiling point, vaporizing the liquid drawn into Sullivan’s lungs.

He blows out a cloud of vapor, which smells faintly of his favorite flavor — Vanishing Oatmeal Treats — before it dissipates. For Sullivan, vaping mimics the feel of smoking. It delivers nicotine to the bloodstream without many of the harmful effects of tobacco smoke.

By vaporizing nicotine infused liquid, Sullivan said he doesn’t inhale arsenic, tar, benzene or other products of tobacco combustion.

One of Inslee’s health policy advisers, Jason McGill, agrees that e-cigarettes could be a safer alternative to traditional cigarettes for adults.

But McGill is alarmed by how many kids who have never smoked cigarettes are trying e-cigarettes.

Nicotine is both addictive and toxic. Inslee’s health policy team thinks the products, which come in flavors including zebra stripe gum and cotton candy, are too attractive to kids.

“We will have this whole new generation of people who will be addicted to nicotine,” McGill said “We’re doing this is to prevent youth access to this innovative, sexy product marketed to kids.”

Washington state’s 2014 Healthy Youth Survey found that 18 percent of 10th graders had tried e-cigarettes in the past 30 days.

That’s a huge jump from 2012 when only 4 percent of 10th graders had tried e-cigarettes.

This comes at a time when traditional cigarette use is dropping. Between 2012 and 2014, the percentage of 10th graders who smoked cigarettes in the past 30 days fell from 9.5 percent to 7.9 percent. McGill doesn’t think corresponds to the increase in 10th graders using e-cigarettes.

“For e-cigs, you have an immense jump,” McGill said. “It is not a one-to-one correlation.”

Research conclusions on the dangers of e-cigarettes vary. A University of Washington report titled “E-cigarettes: evidence and policy options for Washington State,” summarizes the research this way: “E-cigarettes, then, exist on a continuum of risk; relative to conventional cigarettes, they are almost undoubtedly safer because there is no combustion that occurs. However, it is too soon to declare them safe, and we do not yet know enough about whether their use will produce widespread population-health effects, either positive or negative.”

Davis, Mount Baker Vapor’s chief of government affairs, said politicians want to compare the use of e-cigarettes to breathing air, but he compares e-cigarettes to traditional cigarettes.

Davis thinks legislative changes could have the unintended consequence of driving adults away from vaping and back to traditional cigarettes.

As a child, Davis watched his grandfather die from emphysema. His mom also smoked, quit for 14 years and then started again.

Davis has a 5-year-old daughter, and he told his mom that he wouldn’t bring her over to her house and risk exposing her to secondhand smoke. So he helped his mom find an e-cigarette alternative that she liked, and now she no longer smokes cigarettes.

Mount Baker Vapor and other vape shops run promotions where smokers can get free or discounted products by throwing away a pack of cigarettes.

Davis believes e-cigarettes are a healthy alternative to cigarettes and have been more effective at getting smokers to quit cigarettes than nicotine patches or other stop-smoking aids. By taxing the product, it would make it more expensive for regular smokers to use it as an alternative to cigarettes.

“The problem is if you make us cost the same, what’s to deter people from cigarettes?” Davis said. “Your highest smoking population in the U.S. is the under $20,000 a year income bracket. They’re making a switch because its cheaper.”

Oliver Lazenby, associate editor of The Bellingham Business Journal, can be reached at 360-647-8805, Ext. 5052, or olazenby@bbjtoday.com.

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