E-cigarettes to face FDA sales rules

The agency has called youth use of the vaping devices ‘an epidemic.’

E-cigarettes will face strict new limits imposed by the Food and Drug Administration, according to a senior FDA official, restricting sales of many popular fruit flavors amid what the agency has called an epidemic of youth use.

Sales of popular e-cigarette fruit flavors will be limited to adult-only establishments, such as vaping stores. The restrictions will apply only to cartridge-style devices, such as a popular product from startup Juul Labs Inc., according to the official.

Online sales will be allowed but only by retailers who take steps to verify the buyer’s age, just as alcohol can be sold on the web as long as there’s someone 21 or older to sign for the package, said the official. The regulations, set to be announced next week, will take effect in the coming months.

Analysts said the FDA’s plans are positive for big tobacco companies because it will be more difficult for consumers to buy Juul’s pods.

“Any action that slows down the growth trajectory of Juul will be a positive for tobacco sentiment,” Jefferies International Ltd. analyst Owen Bennett wrote in a note.

He added that it will have a limited impact on the major tobacco companies, as the vape market is a “tiny part” of their sales.

The FDA has talked for months about ways to reduce youth use, citing rising concern that e-cigarettes are creating a new class of nicotine users, rather than primarily helping people transition off regular cigarettes. The FDA has called youth use of the devices “an epidemic” and said it would consider significant action to stop it. Vaping surged 77 percent among high school-age children and about 50 percent among middle-schoolers in 2018, according to preliminary government data.

As alternatives surge, the U.S. adult smoking rate plunged to 14 percent in 2017, the lowest measure on record and down 67 percent from 1965, according to the Centers for Disease Control and Prevention. About 10 percent of adults 18 to 24 years old lit up in 2017, down from 13 percent the year earlier.

Juul’s device has become wildly popular, accounting for almost one in three e-cigarette sales as of the end of 2017, according to the U.S. Centers for Disease Control and Prevention. The San Francisco-based company is backed by high-profile investors, including Tiger Global Management and Tao Capital Partners. Fundraising negotiations this year pegged a $15 billion valuation on the business, making its founders worth more than $800 million each.