By Lauren A. Williams
The Orange County Register.
Randy Freer is all in on the vaping business, even if he worries that pending laws and regulations could make him go bust.
Freer’s construction career dried up during the housing crisis, and he became an entrepreneur. In spring 2013 he launched P.O.E.T., a boutique Seal Beach-based manufacturer of e-liquid, or “juice” as it’s called — the stuff loaded into vaping devices to create an inhalable vapor that simulates cigarette smoke.
Freer sees himself as an artisan. Creating new flavors of vaping liquid, “electronic nectar” as he calls it, is akin to crafting a high-end alcoholic beverage layered with differ-ent tastes. “It’s almost like a fine whiskey or a fine wine,” he said. “You can start to pick the layers apart in the flavor profile.”
Freer is far from alone in his enthusiasm. As vaping has caught on, it has attracted legions of aficionados here — not only the ones who inhale the stuff but also entrepreneurs staking their claim to a burgeoning industry. Orange County has become a vaping hub — home to 15 percent to 20 percent of e-liquid manufacturers in the U.S., by one estimate.
Health concerns
Not everyone, however, is as enamored of vaping as are Freer and his peers in the business. The growing distribution of an essentially unregulated product has drawn the attention of lawmakers, regulatory agencies, city officials and the medical establishment.
And their scrutiny has intensified with the appearance of studies showing that the chemicals contained in the liquid inhaled by vapers may have serious health consequences.
One study by the U.S. Food and Drug Administration showed that “the tobacco solution used in e-cigarettes contains a toxic chemical found in antifreeze and several cancer-causing chemicals,” according to cancer.net, the website of the American Society of Clinical Oncology.
In response to these concerns, some cities in Orange County have begun to impose restrictions on vaping.
The state Legislature is pushing to classify — and perhaps tax — vaping products as tobacco. And the U.S. Food and Drug Administration has drafted regulations that would require testing every strength of each flavor a manufacturer offers.
Under this rule, 80 variations of Freer’s products would need costly laboratory analysis that he says his small business can’t afford. Freer, along with many other vaping juice manufacturers, worries he might be forced out of the state — or out of business entirely — because of such regulations.
“If the FDA regs roll the way they’re proposed, I will find a new industry,” Freer said.
Austin Hopper, who has worked at three big e-liquid companies in Orange County, says proposed state legislation is too stringent. Lumping vaping liquids in with traditional tobacco products will only damage an industry that could help people quit smoking cigarettes, he warned.
“Being classified as tobacco is a stigma we don’t need,” Hopper said. “It is killing an industry that is saving people.”
Some researchers believe the opposite: that vaping may lead people to cigarettes.
“The FDA’s mandate is to protect Americans from tobacco-related disease and death in today’s rapidly evolving marketplace,” Michael Felberbaum, a press officer with the agency, wrote in response to an emailed question about its pending new e-cigarette regulations.
“Under the proposed rule, all newly deemed tobacco products would require market authorization” from the agency, Felberbaum noted. He added that the FDA is sympathetic to the concerns of small businesses and is proposing to stagger the compliance dates.
O.C.’s emerging “vapreneurs”
Many of the biggest names in the vaping industry are headquartered in Orange County, most of them led by young entrepreneurs.
“This is our Silicon Valley of vaping — of e-liquids certainly,” said Norm Bour, the founder of VapeMentors, a Newport Beach-based consultancy for what he calls “vapreneurs.”
Some e-liquid manufacturers point to the intersection of a hip emerging industry and the area’s status as a hub for drug and alcohol recovery services as the driving force behind vaping’s big foothold in Orange County.
Stores selling starter kits, e-liquid and the devices that turn it into vapor also have proliferated in Orange County with the popularity of vaping.
Data provided by Yelp show 238 Vape shops across Orange County opened and registered with the site over the past decade, most of them concentrated in the northern part of the county. Anaheim spawned the most, with 35 opening and listing on Yelp.
In 1963, the first patent for an e-cigarette was filed, but it would be four decades before a pharmacist in China developed a more sophisticated version of the e-cigarette. In the mid-2000s, e-cigarettes came to the U.S., and by 2009 their popularity had boomed.
By 2014, vaping had mushroomed into a $2.5 billion industry. This year the e-cigarette market is on track to grow to $3.5 billion, said Greg Conley, president of the New Jersey-based American Vaping Association. Most of the people benefiting from this exploding industry are the owners of small operations — shops employing a handful of workers.
“This is really a small business revolution,” Conley said.
‘Wild West’ of vaping
When e-cigarettes first caught on, there was no body of research measuring their health effects, and government officials were caught off guard by the need to classify, tax and regulate them. Business owners abounded, and the quality of the e-liquid they produced varied widely.
“It was a little bit of the Wild West when this industry started,” said Doug Hughes, a manufacturer and retailer of vaping products who is the co-president of the Southern California chapter of the Smoke-Free Alternatives Trade Association.
But the industry is no longer a free-for-all.
Several cities across Orange County are changing their laws to ban e-cigarette consumption in parks and public places. Under the regulations being prepared, the FDA is poised to crack down on free giveaways, require health warning labels, and generally treat e-cigarettes and vaping products much like traditional cigarettes.
Since the early days of vaping, academic studies monitoring its effects have appeared almost weekly. Some show more dire findings; others more benign.
One study released late last month by Public Health England, a UK government agency, found that most of the chemicals that cause smoking-related diseases are absent in vaping and that those that are in the vapor pose less of a risk.
Earlier this year, however, the California Department of Public Health determined that heated e-liquid delivers ultrafine particles that can become trapped in the lungs.
More ominously, a study by the New England Journal of Medicine published in January found the lifetime cancer risk from formaldehyde inhalation was significantly higher for long-term vapers than for cigarette smokers.
And yet another study published last month by JAMA Pediatrics found that young people who Vape are more likely to start smoking cigarettes.
“As an organization we are very concerned in having another generation addicted to nicotine,” said Cynthia Hallett, executive director of Americans for Nonsmokers’ Rights.
Vape business owners say they are concerned, too.
Freer launched the Vape Free Youth campaign and a set of standards for those in the industry to follow. The Smoke-Free Alternatives group is pushing Age to Vape, an effort asking businesses to hang signs in their stores showing their commitment to keep vaping products out of the hands of children.
“These products are for adults, sold by adults, and we want to keep these out of the hands of minors,” said Cynthia Cabrera, the executive director of the national Smoke-Free Alternatives Trade Association.
High-tech production
In preparation for stiff regulations, many manufacturers started about a year ago to move away from amateur methods and establish high-tech labs. Hughes estimated 10 percent of manufacturers don’t have high-quality labs.
Jeffrey Nelson left a job at a pharmaceutical company to join Cosmic Fog Vapors, a Costa Mesa-based maker of e-liquid, to prepare its facilities for a state-of-the-art lab. And he brought his expertise on FDA regulations with him.
“I realized this is not just a trend among a generation,” Nelson said of his decision. “This is a cultural shift.”
For Hopper, who has worked at three big-name e-liquid makers and recently launched his own line, Revol, in Orange County, some regulation is welcome.
“We need to be made in a lab,” Hopper said of the products. “We need regulations. We need a nomenclature that’s not geared toward children.”
Stuart Christensen of Laguna Beach said if regulations sent the cost of e-liquid skyrocketing he would stop buying it.
“I would probably try to start making my own,” he said.
Freer worries others will return to smoking cigarettes. And he said the extra regulations would push out the small businesses that have propelled the industry.
At that point, “the only kind of money that can do it is big tobacco and pharm,” Freer said. “This is small business, middle America latching onto brand new technology that really is a viable technology. We’re kind of the new electric car.”
