Tuesday, July 23, 2024

Vape bans are creating a thriving illicit market


On a normal day, Nic Holden makes $150 selling liquid nicotine out of his car. For the past month, he has been meeting customers in parking lots on Long Island, where they get into the passenger seat with cash in-hand. He buys the nicotine from what he refers to as “a reputable wholesale nicotine distributor.” Then he measures it out and pre-fills the bottles for purchase, usually ranging from 5-10 milliliters. He spread this business solely through word of mouth and estimates that he already has up to 50 loyal visitors. Holden—a pseudonym that he uses with his clientele—even has a burner phone.

He has had to resort to such a practice because—smuggled into a budget in the early hours of April 3, while most of the state focused on the worsening coronavirus outbreak—New York banned the sale of all flavored vaping products other than tobacco-flavor.

Previously a run-of-the-mill employee in the vape industry, Holden now essentially conducts drug deals. Tobacco harm reduction advocates and drug policy experts have long pointed out that this is an inevitable consequence of bans: Prohibition does not simply erase a product, but instead drives it to an illicit and criminalized market with a bevy of unintended dangers.

Holden isn’t alone. Hundreds of miles north, Sally, a vape shop owner and e-liquid manufacturer in Upstate New York who also required a pseudonym, has been illegally offering flavored vapor products to about 50 of her longtime clients. She moved her e-liquid lab out of her storefront, where a health inspector could potentially find it, and into the arts-and-crafts room in her house, where she can mix in private. She keeps extra coils, mods and tanks in her trunk—like, she said, “something out of a Mafia movie.”

Every Monday, Wednesday and Friday, she makes deliveries of her goods in the surrounding area. She rakes in up to $2,000 each week—far more than she would when running a brick-and-mortar store with significant overhead. Like Holden, Sally also has a second cell phone.

Filter interviewed nearly a dozen people currently operating in the newly burgeoning illicit vape markets in New YorkNew Jersey and Massachusetts, where versions of flavor bans have recently gone into effect, high excise taxes have been instituted and billions of dollars—at least according to one report out of Massachusetts—are already being generated in illegal transactions. Most requested anonymity for fear of legal repercussions.

“This is the same kind of dumb failure that has led us into the War on Drugs.”

One e-liquid manufacturer in New York State, who told Filter he acquired 10 gallons of liquid nicotine before the state ban became a reality, just leased a new property to produce and sell his homemade flavors to his hundreds of established customers.

“I’m set for a few years,” he claimed.

Outside of Boston, a vape shop owner said that he keeps his flavored products in a locked room in the back of his store, which he compared—if somewhat jokingly—to a speakeasy.

“Black market behavior is unintended and unwelcome, but easily anticipated,” said Clive Bates, a former public health official in the United Kingdom and an expert in tobacco harm reduction. “The fact that no one imposing these bans has taken this into account is the same kind of dumb failure that has led us into the War on Drugs.”

This is especially predictable of an industry with DIY at its core—where, for better or worse, a kind of punk-rock, libertarian ethos prevails, and where old-school vapers, who spent the 2000s tinkering with devices, advancing the technology and mixing e-liquids on their kitchen tables, can basically return to those roots. The structure is in place.

Vapers are a passionate and savvy crowd, and many of those who own vape businesses are largely driven by their desire to see smokers transition to safer alternatives like vaping, just as they did. They often view themselves not only as salespeople, but as guides, liaisons and activists.

Accordingly, some vape shop owners are willing to take significant risks to continue this work. The fine for retailers selling flavored vapes in New York, for example, is $100 per single unit they have in stock. Owners estimated that could mean $20,000 to $30,000 across their typical past inventory.

“My desire has been to be successful in a legitimate way,” said the Massachusetts shop owner. “What the state is doing is taking the legitimacy of my success away.”


“Gray-Market” Workarounds

Nic Holden expressed a similar sentiment, but also insisted that he is participating within something of a “gray area” that lawmakers created. It’s quite a confusing loophole, and what he’s doing isn’t quite illegal: As of July 1, consumers in New York cannot go online and order flavored e-liquids to their doorsteps, even if the products don’t contain nicotine; however, retailers with valid permits—such as vape shops—can order online, and they can technically sell flavored, nicotine-less e-liquid out of their brick-and-mortar locations. That is, so long as they can claim it’s not intended to be used with nicotine.

The logic of this is akin to convenience stores with bowls available for “tobacco use only.” If somebody gets home and fills a pipe they bought with weed, that’s no fault of the cashier. (No similar loophole exists in places like New Jersey or Massachusetts, where all online sales are banned.)

These sort of varied “workarounds,” Holden and others said, have been considered since there was first talk of bans.

In New York, it’s rather difficult, though, to legally sell both flavored, nicotine-less e-liquid and liquid nicotine at a retail location and maintain they’re not supposed to be put together. That’s where innovators like Holden come in: Vapers can still pick up their favorite flavors from their favorite shops, and then Holden provides the appropriate amount of nicotine as well as instructions on how to mix the two, since a majority of newer vapers aren’t familiar with the process. It’s a minor convenience in a system that has been rendered entirely inconvenient, a simple method to make a product that the government doesn’t want made. The opposite can be true, too: Some vape shop owners are just selling liquid nicotine—perfectly legal—assuming that their customers have somehow found flavored liquid with zero nicotine elsewhere.

These sort of varied “workarounds,” Holden and others said, have been considered since there was first talk of bans.

“I sell a do-it-yourself tobacco-flavored kit,” said a New York vape shop owner, when asked how he was helping his customer base. “It’s all enclosed with directions. It’s unflavored e-liquid with zero nicotine, a flavoring concentrate of tobacco, and packs of nicotine. And there’s a small disclaimer, saying that it shouldn’t be used with any other products. But what anybody does with the nicotine at home—what they mix it with—is on them, you know?”

“I warned my senators and assemblymen that what I’m doing was going to happen,” Holden told Filter. “I told them that they would probably have the largest black market since alcohol prohibition. So now we’re here, and I’m selling nicotine to people from the ages of 21 to 75 who feel as if they’re criminals. This isn’t a surprise.”


Predictable Harms and Defiance

In many ways, it was a long time coming. President Trump had been flirting with a flavor ban until advisors reportedly walked him back in late 2019. But in states like New York, the ban was a move that Governor Andrew Cuomo had been trying to make since at least the fall of 2019, as politicians became more and more concerned about teenage nicotine dependency, and people across the country were dying from vape-related illnesses (labeled EVALI)—the fault, the Centers for Disease Control and Prevention later determined, almost definitely of tainted and illicit THC cartridgesnot legal nicotine vapes. In Massachusetts, the Senate actually had to slice a provision that would have allowed the government to seize the car of a person cruising around with untaxed vapes.

It isn’t far-fetched to imagine a new, totally avoidable form of EVALI emerging.

These kinds of knee-jerk reactions, as vape shop owners, industry insiders and illicit sellers repeatedly pointed out to Filter, built the illicit market we’re now watching grow. There are serious consequences. It’s much harder for smokers seeking to switch to find people like Holden than it was to simply show up at a vape shop. And without any sort of regulatory body able to oversee this industry, the very problems the government was hoping to prevent seem more likely to happen. Many will probably be more apt to make their own e-liquids, not knowing what to do. Or they might purchase from a bad source.

It isn’t far-fetched to imagine a new, totally avoidable form of EVALI emerging.

The ridiculous political posturing and the feeling of being criminalized have been the last straws for some vape shop owners, in a year that has seen so many of their businesses close: first, following the public-relations nightmare of the increasing youth vaping rate, and second, after COVID shut down a significant section of the economy, including many vape shops.

Currently, some bolder store owners are in open defiance of state laws because without flavored vapes, they would rapidly shutter anyway, so have little to lose. They are vocal about the illicit market they believe they are being forced into, particularly as the September deadline for manufacturers to submit Premarket Tobacco Product Applications to the Food and Drug Administration looms—requiring an expensive and arduous process that many believe will favor vape giants and shut out smaller, less connected players.

At the moment, one vape shop owner in New Jersey estimated that more than 90 percent of his revenue comes from flavored products. (Few people looking to quit cigarettes want to vape tobacco-flavor, which reminds them of, well, cigarettes.) Given this fact, he is continuing to leave flavored products on his shelves and is advertising them on social media. Another shop in Upstate New York is doing the same, and a former general manager there said that sheriffs and corrections officers remain frequent customers.

“I feel like a crook. But I should have been doing this so long ago.”

Other business owners are carrying on, they say, more on principle—like Lane Shannon, owner of the e-liquid line Phoenix Elixirs. The only retailer who agreed that his full name be published, he quoted Thomas Jefferson and promised to fight laws that he found unjust. He is shipping to all 50 states, regardless of their restrictions.

Nic Holden doesn’t ask anybody where they get their nicotine-less e-liquid from. It could be from Shannon; he doesn’t care. He wants plausible deniability. His primary motivation, he said, has always been to prevent vapers from returning to smoking cigarettes, though he did admit that he was making more money hawking nicotine than any other job he has ever had—“hand over fist,” is how he described his cash flow.

In Upstate New York, Sally described her motivation and newfound income in the exact same way. Most of her clients, she said, are aged between 50 and 80.

“Before this, I maybe had a single parking ticket,” she told Filter. “I feel like a crook. But I should have been doing this so long ago.”

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