The electronic cigarette market — more commonly known today as “vaporizers” — has come a long way. In 2008, when vaporizers were just making their presence known, total sales in the industry were only $20 million. By the end of 2015, revenue jumped to nearly $2.9 billion, or an increase of approximately 14,300% over a seven-year period. With great revenue comes great attention.
Once considered fringe, vaporizer stocks were thrusted into legitimacy. Although the vast majority of e-cigarette investments are speculative, a few have found respectable followings. Naturally, not all of the attention has been helpful. Big Tobacco companies once viewed vaporizers as a niche movement, but now see it as a threat.
Playing both sides of the legislative table, major cigarette firms are using whatever means necessary to stop vaporizers. That also means siding with the Food and Drug Administration, so long as it will hurt vaporizer stocks. As a prime example, Reynolds American, Inc (NYSE:RAI) pressed for the ban of “open-system” vaporizers, which allow for modularity, while leaving “closed-system” vaporizers alone (PDF). Guess which of the two Big Tobacco companies sell.
The key for vaporizer stocks is that manufacturers have shifted production to accommodate the blossoming trend of marijuana legalization, which saw nine states vote on various degrees of legalization and Maine join the growing list of states (and districts) allowing for recreational use. Eventually, what attracted smokers to vaporizers — the consistent functionality of a digital platform — will likely do the same for “botanical clients.” Thus, Big Tobacco can take a hike … vaporizers are in it to win it.
Here are three vaporizer stocks that will benefit from favorable legislation.