Capitol Report: Makers of flavored e-cigarettes face ‘a make-or-break year’ in Washington, analyst says

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Money & Politics reporter

It’s crunch time for manufacturers of flavored e-cigarettes, according to one analyst.

“2019 will be a make-or-break year for alternative tobacco product manufacturers to regain control of the flavors debate,” said Stefanie Miller of Height Capital Markets in a note Friday.

If they don’t succeed on this front, these companies could face government regulations as soon as 2020 that aim to “ban virtually all flavors of every tobacco product — cigarettes and e-cigarettes alike,” she said.

One of the biggest developments in federal tobacco policy in the past year was the “seemingly meteoric rise in youth e-cigarette use,” Miller wrote. She warned e-cig makers that “the youth vaping ‘epidemic’ has captured the public’s interest in a way that creates a high degree of panic” among U.S. officials, and “policy born of panic is bound to have a series of unintended consequences, despite regulators’ best intentions.”

But on the plus side for major manufacturers of cigarettes such as Altria Group MO, +2.32%  , British American Tobacco BATS, +0.06% BTI, -1.86%  and Imperial Brands IMB, -0.17% IMBBY, -0.37% , the Food and Drug Administration is more interested in addressing youth vaping than cutting nicotine levels in conventional cigarettes, according to the Height analyst.

Read more: The FDA has a plan to stop teen vaping

And see: FDA to sharply curtail sales of flavored e-cigarettes in convenience stores

Even so, it’s a big challenge for those companies — along with others that want to or currently sell alternative products, such as Philip Morris International PM, +0.29%  and Juul Labs — that flavored e-cigs have captured the FDA’s attention in an unprecedented way, Miller said. She notes the agency’s Center for Tobacco Products, which aims to carry out the Tobacco Control Act, has only been in existence since 2009.

“The idea that these companies could be creating and even profiting from nicotine addiction in youth who may eventually transition to combustible cigarette use is devastating to regulators and certain factions of the public health community,” Miller wrote.

Development of alternative products could be hampered if “most or all flavors are banned other than tobacco flavors,” and then other countries could follow the U.S. with their policies, she added. “It’s possible the e-cigarette category all but disappears,” Miller said, after being an area of major investment for tobacco giants.

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