Device manufacturers are worried about the potential impact of government regulations.
FORTUNE — Electronic cigarette makers just can’t catch a break these days.
This week, the cities of New York and Chicago banned the use of electronic smoking devices in bars, restaurants, and other public places, effectively treating them the same way as traditional tobacco products.
And in April, the Food and Drug Administration, which has yet to review the safety of e-cigarettes, unveiled a plan that would have the government agency review e-cigarettes and their ingredients for the first time, and ban the sale to minors of tobacco products that are currently unregulated, including e-cigarettes.
All this has e-cigarette companies crying foul.
“They [state and local health departments] don’t have the scientific expertise,” said Craig Weiss, a U.S. patent attorney and CEO of NJOY, whose NJOY King device remains one of the top-selling e-cigarette devices on the market. Given the lack of scientific study at the FDA, Weiss argues, why limit a market that may offer significant health benefits and prevent 480,000 deaths a year stemming from traditional tobacco use?
“If the FDA lacks the scientific research to form data and science-based conclusions, how does it make sense for any other government body to regulate ahead of that?” explained Weiss, who says he’s all for market regulation so long as due diligence is performed.
Proponents of New York regulations say the goal is to prevent the public from perceiving smoking as more acceptable again, particularly impressionable teens who might view e-cigarettes as a stepping stone toward old-school tobacco products. Dr. Thomas Farley, the New York City health commissioner under former Mayor Michael Bloomberg, recently argued that permitting electronic cigarettes in bars and restaurants would also undermine existing bans on tobacco products.
Stricter regulations would affect smokers like Lori Abiuso, an animal trainer based in Cherry Hill, N.J.
“I prefer an actual cigarette, but e-cigs negate the need for me to bring cigarettes with me when I am going out with non-smoking friends, or places like Disney World where there are few smoking sections, or smoking is completely banned,” Abiuso explained.
Powered by a battery, e-cigarettes don’t contain as many harmful chemicals as regular cigarettes, but they do contain nicotine, which is heated into a vapor that’s inhaled. Critics say the devices may encourage children to use them, while proponents argue they can help regular cigarette smokers kick the habit.
There’s also a huge market opportunity at stake. E-cigarette companies have gathered considerable steam in recent years, largely marketing their products as the healthier alternative for smokers, especially those trying to quit. Indeed, of the 44 million American smokers, nearly 70% of them want to stop, according to the Center for Disease Control. Bonnie Herzog, an analyst at Wells Fargo Bank, estimates e-cigs were a $2 billion global market last year. That number could swell to $10 billion by 2017, according to Herzog, outpacing traditional cigarettes sales for the first time ever.
The eye-popping figure does not factor in the potential impact of government regulations would have. But garnering widespread support for e-cigarettes may also prove a challenge.
“They’re a PR nightmare,” said one tech public relations executive, who argues it’s an uphill battle for the products to shake the stigma held around their more traditional tobacco counterpart, not to mention the likelihood companies will have to spend significant financial resources on lobbying and legal funding.
Industry insiders like Weiss argue they just want their products to undergo fair process. Adds Weiss: “All we’ve ever asked is that FDA do the research.”