Smoke Signals

In a short time, the electronic cigarette industry has put down strong roots in the Queen City.

At least 15 storefronts in Springfield hold the merchant retail business license necessary to sell the aerosol alternatives to traditional cigarettes, aka vapors. According to the city’s business license directory, half opened their doors last year, and two-thirds are by companies with multiple locations. Those are just the shops with “vapor” in the name.

“Every single day we’ve got new customers coming in,” said Tyler Wood, who manages Paradise Vapors in the Fremont Center, the first store in Springfield to open an e-cigarette with “vapor” in the name, according to city records.

“It hasn’t reached the point where everybody has (a vaporizer). The industry just keeps growing.”

Wood said Paradise Vapors’ sales doubled last year, but he declined to disclose revenues of his two stores.

According to the Tobacco Vapor Electronic Cigarette Association, over 3.5 million people use e-cigarettes globally, and a World Health Organization report last year said consumers spent $3 billion on e-cigs in 2013.

Following the trends, Chip Paul this year expects to more than double his 13-store Palm Beach Vapors franchise.

He said the original store, which opened in Oklahoma in March 2013, nets over $175,000 a year.

“Our revenue sales month-over-month are up every month,” said Paul, founder and CEO of the Tulsa, Okla.-based Palm Beach Vapors, declining to disclose companywide revenue.

“That’s by virtue of our growth, but our unit level sales are up. Everything is up for us.”

Rob Sands, the first Palm Beach Vapors franchisee, said his downtown Springfield store has increased 15-20 percent a month since the store opened in December 2013.

“It was a lot higher than what my predictions were,” Sands said. “We’re probably looking at generating for our first year somewhere between $200,000 and $250,000.”

A rise and fall
The e-cig market is experiencing a rise in popularity at a time when the number of cigarette smokers is declining across the nation and in the Show-Me State.

The Center for Disease Control and Prevention estimated 17.8 percent of the U.S. population age 18 and older were cigarette smokers in 2013, a decrease of just over 3 percent since 2005. The number of adult cigarette smokers in Missouri decreased to 22 percent in 2013 from 25 percent in 2011.

“I always thought when I first started that money would be the driving factor that would make people want to quit, because it is cheaper than smoking cigarettes,” Wood said, adding cessation is the store’s No. 1 goal. “People are doing it for their health, and the money is just a cherry on the sundae.”

Christian Hutson, owner of Just For Him, began carrying a small selection of e-cigarettes in his store to meet the demand of customers trying to quit. However, because his store sells a variety of items, they are only a small percentage of sales.

“Tomorrow, if I couldn’t sell wallets anymore, it would probably not really hurt me. The same thing goes for vapor products,” Hutson said.

Health agencies remain unconvinced the products are safe. According to the Food and Drug Administration’s website, because e-cigarette studies are inconclusive, their potential health risks and use as a gateway to traditional cigarettes are unknown. An April report by the CDC claims e-cigarette use among middle and high school students tripled between 2013 and 2014. In Missouri, purchases are prohibited to those under 18 years old.

“It’s not a gateway or anything like that,” Sands said. “Is it 100 percent safe for people to do? No, but the thing is it’s there to combat cigarettes.”

Paul said most negative studies of vapor products trace back to propylene glycol, used to bond water-based flavorings to the vapor-producing ingredient, vegetable glycerin.

His company’s recent invention, GnuVape, is engineered to deliver the same experience without using the chemical. Beyond a smoking alternative, he sees the new tech being applied as a medical delivery system for vitamins and, where legal, medicinal cannabis oil.

“We rolled out as an e-cig franchise company, but really with this announcement we’re changing,” he said. “We’re going to become a health and wellness company.”

Regulation on the horizon
With the apparent tradeoff from traditional cigarettes, the tobacco industry is taking notice.

The Missouri Department of Revenue collects 17 cents from the sale of each 20-pack of cigarettes. In fiscal 2013, the DOR collected $109.2 million through the state’s cigarette taxes, down 1 percent from the previous year. The tax typically accounts for 2 percent of collections, and the volume has decreased every year since 2009.

“Cigarettes are down, less people are smoking, we’ve got a healthier country, but you’re also losing money off of the tobacco industry,” Sands said. “Obviously, there are going to be big businesses not too happy about this, as well as states making less money off of the tobacco tax.”

E-cigarette retailers feel government regulation of the product is inevitable.

“The FDA is going to regulate the heck out of the vapor industry at some point, probably quickly,” Hutson said. “You’ll see a pretty big change in the overall vapor market, because right now it’s kind of like the Wild West.”

Wood isn’t concerned about regulations affecting business at his store.

“We’re all for the regulations because we can confidently sell our e-liquid telling people this is 100 percent safe,” he said, adding Paradise purchases products from labs already in compliance with government standards.

According to the Agency for Toxic Studies and Disease Registry, propylene glycol is recognized by the FDA as a safe food additive under prescribed conditions.

Last year, the FDA proposed regulating e-cigarettes to the same degree as traditional cigarettes and smokeless tobacco. The agency is accepting public comment on e-cigarettes and health through July 2 to determine if products are subject to the U.S. Federal Food, Drug and Cosmetic Act.

Sands, who said he and his employees were trained by the franchisee to make vapor liquids on-site, predicts potential regulations won’t hurt his sales either.

“If they ban it from stores directly making their own juice, we have it set up with Palm Beach to have them make it in the lab and buy it directly from them,” he said. “It won’t affect us like it might other stores if it comes down to that.”[[In-content Ad]]