Tight margins, FDA challenge vaping companies in Nevada, US

Shelf after shelf of liquid nicotine containers in Billy Wilson’s warehouse would make his job a dream for any of the people who buy the products he ships from the Las Vegas Valley.

But despite an inventory of thousands of brands, Wilson has stayed loyal to the same strawberry-flavored, out-of-production liquid nicotine he’s inhaled for over a year.

“I just love this stuff,” he said. “People think it’s weird. I could have whatever I want.”

Wilson’s company, eCig Distributors, has called Southern Nevada home for about a year.

Lured from Southern California by public assistance and fewer taxes, the electronic cigarette distributor and online retailer has grown along with its industry.

But tight margins and an uncertain regulatory environment challenge those who sell and distribute vaping products.

Growing industry

A February report by Wells Fargo predicted the U.S. e-cigarette market will hit $5.5 billion this year, a 25 percent growth rate from last year.

About 70 percent of sales have come from rechargeable liquid nicotine refills.

The researchers credited industry growth to advances in the technology customers use to vape.

Wells Fargo predicts consumers will eventually shift to other products that the industry markets as less harmful than tobacco cigarettes, including cigarettes that heat tobacco instead of burning it. These so-called heat-not-burn products may expose smokers to fewer harmful chemicals, according to the Wells Fargo report.

A crowded industry has meant increased competition and interest from the industry e-cigarettes aim to replace.

Blu, an e-cigarette company owned by tobacco company Imperial Brands, was once a category leader with a U.S. market share of almost 50 percent, according to financial services firm Cowen. Now its share is just 7.2 percent, and Juul is considered the market leader.

Companies like Imperial have responded to increased e-cigarette competition with products that have different strengths of nicotine and more flavors.

Imperial has also invested in selling e-cigarettes in more markets, and it is expected to introduce products with nicotine salt, yet another smoking alternative, with two different nicotine strengths.

Tight margins

As the industry has grown, margins have tightened. The standard bottle size for liquid nicotine has grown from 15 milliliters to 120 milliliters, while decreased production costs have driven e-cigarette prices down. A 2017 U.S. surgeon general report found the average price of a single disposable e-cigarette went from $17 in 2010 to under $9 in 2014.

What’s more, manufacturers are working to meet emerging regulations from the U.S. Food and Drug Administration, including an Aug. 8, 2022, deadline for applications for new e-cigarettes.

The process could cost companies millions of dollars, said Norm Bour, founder of the VapeMentors consultancy in Newport Beach, California.

But the FDA has postponed multiple compliance deadlines, said Barnaby Page, editorial director for British research firm ECigIntelligence. In response, e-cigarette companies have become less worried about regulations than they were a year ago.

European regulators, especially those in the United Kingdom, have been friendly to e-cigarettes, Page said, while Latin American and Asian countries have been less welcome.

Out of California

To avoid tight margins and any negative effects of consolidation among manufacturers, eCig has added more business segments, Wilson said. The company maintains a variety of websites for retail and wholesale electronic cigarettes under the names eJuices and eLiquid.

The company has added advertising services for emerging markets worldwide. With about 5,000 U.S. brands in the industry, and a goal to increase business in places like Europe and Asia, the company still has plenty of work ahead, Wilson said.

“We still have a lot of room to grow our supplier list,” he said.

Bour said eCig Distributors ranks among the 10 largest distributors of electronic cigarettes.

It relocated all operations to Southern Nevada in March 2017, receiving about $72,000 in tax abatements from the Governor’s Office of Economic Development to do so.

The abatements helped the company to grow from 40 employees to about 60. It started as a vape shop and grew into a distributor that sells and ships vapor products throughout the U.S. and to over 80 countries.

California voters passed a proposition in November 2016 that raised the tax on tobacco-related products, including e-cigarettes, to 27.3 percent of the wholesale cost.

Shortly after moving to Nevada, eCig helped kill a proposal for a 5-cents-a-milliliter tax on liquid nicotine, Wilson said.

Contact Wade Tyler Millward at 702-383-4602 or wmillward@reviewjournal.com. Follow @wademillward on Twitter.

Business Videos
Boulder City housing construction
Boulder City, population 15,970, limits its growth by putting a cap on residential construction. But Las Vegas builder Wayne Laska sees little competition and has launched a 127-home project there. His development, Boulder Hills Estates, will span about 30 acres and is the biggest new housing tract in the city in decades. Home prices start around $410,000. By comparison, the median sales price of newly built homes in the Las Vegas Valley last year was about $383,700.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
LVCVA/Boring Company Press Conference
The Las Vegas Convention and Visitors Authority announced a collaboration with Elon Musk's The Boring Company to develop and operate an autonomous people mover system for the Las Vegas Convention Center District.
International Pizza Expo includes green and gluten free
The International Pizza Expo at Las Vegas Convention Center included companies focused on vegan and gluten free, and plant-based pizza boxes. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
International Pizza Expo kicks off in Las Vegas
The first day of the International Pizza Expo at Las Vegas Convention Center is everything Pizza. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
T-Mobile program aids guests with sensory needs
A program at T-Mobile Arena is designed to provide a more sensory friendly experience for guests.
Photo Booth Expo
Danielle May talks about how Simple Booth transformed her Volkswagen bus into a business.
Nevada Gaming Commission's highest fines
The highest fines assessed by the Nevada Gaming Commission, according to commission Chairman Tony Alamo: 1) Wynn Resorts Ltd., $20 million, 2019 2) CG Technology (then known as Cantor G&W Holdings), $5.5 million, 2014 3) The Mirage, $5 million ($3 million fine, $2 million compensatory payment), 2003 4) Stardust, $3 million, 1985 5) Santa Fe Station, $2.2 million ($1.5 million fine, $700,000 compensatory payment), 2005 6) Las Vegas Sands, $2 million, 2016 7) CG Technology, $1.75 million, 2018 8) CG Technology, $1.5 million (also $25,000 in escrow for underpaid patrons), 2016 9) Caesars Entertainment, $1.5 million, 2015 10) Imperial Palace, $1.5 million, 1989 11) Peppermill Casinos, $1 million, 2014
Tiny Pipe Home vs Shipping Crate
A Tiny pipe home was displayed at the International Builders Show this week in Las Vegas.
Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
Africa Love owner talks about his store in Las Vegas
Mara Diakhate, owner of Africa Love, gift and decor store, talks about his store in Las Vegas. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Developer gets approval to build homes at Bonnie Springs
The Clark County Planning Commission has approved a plan to build 20 homes on the site of Bonnie Springs Ranch. (Michael Quine/Las Vegas Review-Journal)
Dig This opens new location In Las Vegas
Remember when you were a kid and played with construction toys in the sand box? Dig This Las Vegas has the same idea, except instead of toy bulldozers, you get to play with the real thing. (Mat Luschek/Review-Journal)
Town Square developer Jim Stuart building again in Las Vegas
Las Vegas’ real estate bubble took developers on a wild ride, something Jim Stuart knows all too well. (Las Vegas Review-Journal)
Salon opens at Veterans Village
T.H.E. Salon, owned by Nicole Christie, celebrated their opening at the Veterans Village with a ribbon cutting ceremony.
Southwest Airlines considering Las Vegas-Hawaii flights
Southwest Airlines CEO Gary Kelly says the airline is "very focused" on Hawaii. Hawaiians have a strong presence in Las Vegas.The city’s unofficial status is “Hawaii’s ninth island.” In 2018, at least 2,958 people from Hawaii moved to Nevada. Of those, 88.7 percent moved into Clark County, according to driver license surrender data. According to the Las Vegas Convention and Visitors Authority, 310,249 people came to Las Vegas from Hawaii in 2018.
Fewer Nevadans are celebrating Valentine's Day
Fewer Nevadans are celebrating Valentine's Day. About 1.2 million Nevadans are expected to celebrate this year, a 5 percent drop from 2018. A growing number of people consider Valentine’s Day over-commercialized. Others weren’t interested in the holiday or had nobody to celebrate with. But spending is expected to rise. Those who do celebrate are buying for more people. The average American is expected to spend about $162 this year for Valentine’s Day, a 57 percent jump from a decade prior. Katherine Cullen, director of industry and consumer insights at NRF
Foreclosures of mansions in Las Vegas
Las Vegas was ground zero for America's foreclosure crisis after the housing bubble burst. (Eli Segall/Las Vegas Review-Journal)
Rick Helfenbein talks about the impact of tariffs on the clothing industry
MAGIC fashion convention showcases men's clothing trends
The MAGIC fashion convention has come to Las Vegas at the Mandalay Bay Convention Center to showcase some of the hottest clothing trends for men. (Nathan Asselin/Las Vegas Review-Journal)
Allegiant Air flight attendants learn how to handle a water landing
Field instructor Ashleigh Markel talks about training prospective flight attendants for Allegiant Air getting live training with a raft for a water landing at the Heritage Park Aquatic Complex in Henderson on Monday. (John Hornberg/Las Vegas Review-Journal)
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery talks about Las Vegas return
Michael Feighery, CEO of Smith & Wollensky Restaurant Group, discusses the restaurant's upcoming return to the Las Vegas Strip.
Apartments to Come to Hughes Center
Developer Eric Cohen discusses his current building project at the Hughes Center office park in Las Vegas, Thursday, Jan. 31, 2019. Caroline Brehman/Las Vegas Review-Journal
Stratosphere to rebrand to The STRAT
The Stratosphere, a 1,150-foot-tall property in Las Vegas will be renamed The STRAT Hotel, Casino and Skypod.
Home Front Page Footer Listing