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JULY 18, 2014

E-Cigarettes and Federal Regulation (Updated)

EDITOR'S NOTE: An earlier brief was published July 10, 2014.

Policy makers have begun developing rules for how popular alternatives to traditional cigarettes can be marketed and sold.

What's the issue?
What's the background?

Overall, the e-cigarette market today comprises a mixture of small mom-and-pop retail outlets, which tend to sell a variety of e-liquids and more sophisticated e-cigarettes, as well as large companies. Two years ago Lorillard paid $135 million for blu eCigs.

In July 2014 tobacco company Reynolds American agreed to buy competitor Lorillard in a $27 billion deal that would make it the second largest tobacco company in the nation. Lorillard is currently the market leader in e-cigarettes, but in order to finance the deal and in an attempt to avoid antitrust scrutiny, Reynolds will sell the blu eCig brand to the Imperial Tobacco Group. The brand was introduced in Britain earlier this year, and Imperial plans to continue to expand the market for blu eCigs internationally.

In 2013 Reynolds American started marketing its Vuse brand in select markets, and in June 2014 it announced that the company would begin selling nationwide. Last year Altria, parent company of tobacco giant Philip Morris USA, began test-marketing its own e-cigarette, MarkTen, with a national rollout set for this year. And in February 2014 Altria also purchased e-cigarette maker Green Smoke for $110 million.

What's the policy?
What's the debate?
What's next?
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