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E-Cigarettes Avoid EU Regulation, Anti-Tobacco Advocates Are Fuming

Tickers in this article: BTI LO MO RAI

James Dennin, Kapitall: E-cigarettes may be on the rise, as the European Parliament just voted not to regulate them like medicine.

Last month we wrote about the growing push-back domestically against the spread of electronic cigarettes, e-cigarettes for short. Cities like New York are considering ways to ban them outright, or at least raise the purchasing age up to 21.

[Read more from Kapitall on E-Cigarettes: E-Cigarettes: Big Tobacco and FDA Start Paying Attention]

And a number of anti-tobacco advocates argue that the devices, which vaporize liquid nicotine for inhalation, are less a smoking cessation device than they are a tactic to lure in younger customers. 

But now, in a move likely to rile up anti-smoking advocates, the European Parliament rejected a proposed ban on the sale of e-cigarettes alongside most other tobacco products. Advocates of the ban favored classifying e-cigarettes as medicines, subjecting them to much harsher regulation. Had the ban succeeded, many countries would have only permitted their sale in pharmacies or even required a prescription.

On one side, advocates of e-cigarettes decried and even protested the ban. Long-time nicotine addicts say that making them more difficult to find will lead to more tobacco related deaths, by restricting access to what they say is a more healthy alternative.

In a move that almost calls to mind the now hilariously misleading advertisements from the 1950s, a coalition of French doctors denounced the possible ban, calling e-cigarettes "infinitely safer," and an important part of the country's tobacco cessation efforts. 

But on the other hand, a lot of people, including the World Health Organization, are skeptical. (Let me reiterate that – much more skeptical.) They say the health effects of the devices have yet to be determined, and need to be meticulously studied before their availability is allowed to spread.

Investing ideas

In light of the EU's decision, momentum seems to be pushing solidly against the anti-smoking side. One of the biggest cigarette companies, Lorillard (LO) is buying up e-cigarette brands like hot cakes.

Lorillard already owns Blu, one of the largest e-cigarette companies in the US, and recently announced the purchase of another brand in the UK. Two companies that exclusively make e-cigarettes are already trading on pink sheets.

The other big names in tobacco, Altria (MO), Reynolds (RAI), and British American Tobacco (BTIhave all bought patents for technology related to e-cigarettes, and started working on brands themselves. And analysts are projecting that the market for e-cigarettes will be twice the size in 2013 as it was in 2012.

That being said, e-cigarettes are still relatively unstudied. Attorneys General from 40 states have started pressuring the FDA for details on how to move forward (although the government shutdown isn't making this very easy).

Given their status as a smoke-less alternative to help you quit the normal ones – a single study with negative findings on e-cigarettes could send the whole thing up in smoke.