Many believe that the smoke shop industry and the vape space have a lot in common. They both involve vices that are hard to quit. Ironically, vape was developed as a way to stop smoking by weaning off nicotine addiction. Many still vape for that reason, but vape has taken on a life of its own and includes the social and sharing aspects of “tearing shit apart,” blowing huge clouds, and comparing notes on devices, liquids and events.
The tobacco industry is a giant that generated $35B in 2010 according to the World Lung Foundation, while vaping is estimated at about $4B in 2015, per Wells Fargo Financial Analysts.
Smoke shops have been around for a long time and many still do business the way it was done decades ago. Most have added other products, including vape supplies, pipes, glassware, and a host of alternative products.
In the 18th century tobacco was a huge profit center for our government as early records show that up to 30 percent of our gross annual revenue originated from taxation on tobacco.
Two hundred years later we saw the true start of the “cigarette industry” as tobacco shops were represented by the iconic “Cigar Store Indian,” which became their symbol worldwide.
Tobacco stores radically changed in the 1960’s as some of them transitioned into “smoke shops” or “head shops” by adding cannabis products and paraphernalia.
Over the last 50 years the lines between tobacco shops, smoke shops and head shops blurred as they all tried to capitalize on a changing market and aging demographics.
Vape Shops Emerge
Vape shops are still the new kids on the block. In less than 10 years they have grown from a handful to an estimated 7,000 to 9,000 shops which are purely and exclusively vape shops. The bad news is that the numbers are down and will drop as many close.
Today there are few parts of the United States without a vape shop. When we include convenience stores and other retailers that sell vaping product, it makes the definition of “vape shop” harder to define. Add in the confusion of large box stores that sell primarily closed tank e-cigarettes, and you now have to ask “What IS a vape shop?”
Vape shops are usually “one-trick ponies” and rarely differ, which is part of the problem. In the eyes of the public, vape and smoke retailers look the same and cannot be distinguished from another.
Some smoke and head shops have added vape products, usually liquids with some hardware, but rarely does the door swing the other direction. Most vape shops do not carry tobacco products. (We’re ignoring the FDA’s definition for now and sticking with leaf tobacco vs. digital products).
Whereas smoke shops (we’ll stick with that name) typically had no issues with vape shops, many vape owners and patrons want nothing to do with tobacco. There are more vape shops that carry CBD products than tobacco and that market will continue to grow.
Since the FDA’s deeming regulations were released on August 8, 2016, vaping is now officially a “tobacco product.” Whether we agree or not, the definition of “tobacco” is the gold standard and vaping and tobacco are brothers in arms.
The Cannabis Market
The November election proved that the publics’ acceptance of marijuana, for medical or recreational reasons, is growing. Over 60% of the states have some approved cannabis laws, including giant bellwether states like Florida and California.
The “New Pot Economy” is on everyone’s radar and the state of Colorado has generated billions of dollars in profit and created new pot millionaires. I have been told that if you walk down the streets of Denver, two out of three people are getting high!
Senior citizen compounds, ie, planned living enclaves, are magnets for pot growth and in California, home of the original “Leisure World,” the smell of pot is an everyday event, as is the sight of six-foot-tall plants creeping over backyard fences.
The “Missing Link?”
The new deeming regulations and definitions provide the “crossover” between vape shops and tobacco/smoke shops. They are now (legally) one and the same. But is there a crossover event or product that could integrate cannabis into that coupling?
The answer could be “Yes,” and that product could be CBD.
Tetrahydrocannabinol, known as THC, is the principal psychoactive component of the female marijuana plant, whereas cannabidiol, or CBD, from the male plant, does not get you high, but does bring about relaxation. The marijuana plant is a complicated one with at least 113 active cannabinoids.
Hemp is produced by the male marijuana plant and has a history even longer than tobacco! Sailing ships crossing the Atlantic in the 1700s used hemp for ropes, sails and clothing. It was not usually smoked since it lacked the psychotropic qualities of the female plant.
Recently the Drug Enforcement Agency (DEA), announced that CBD would now be considered a “Schedule 1” drug. That would make it federally illegal.
Wayne Smeal with Miracle CBD Products from Golden, Colorado cleared up confusion about the recent event.
“Everyone freaked out about this announcement, but our attorneys looked at all the language and the law and determined that the DEA does not have the ability to determine the legality of CBD. Two characteristics required for CBD to be “legal” is that it cannot be grown in the US, but must be imported, and that it cannot exceed .03% THC.
“The DEA can suggest, but cannot pass law,” Smeal said. “Right now, they have no teeth or enforceability.”
I have been researching the CBD industry since 2014, when I interviewed Holy Grail Vapes, a CBD liquid company. Since that time, many vape shops have started to carry CBD, and they had no concerns or issues. They can still relax.
Steve Grantz with Kentucky-based Cox Smoker’s Outlets, runs 22 retail shops and most of them carry alcohol, tobacco, vape and CBD. Their main product continues to be cigarettes but Grantz confirmed that “There is no money in that anymore.”
He is a 22-year veteran of the industry and said that he does not predict that the state of Kentucky will get on the cannabis band wagon. Big Tobacco has a very heavy hold on Kentucky laws, but he does predict more growth of the CBD market.
What the Future May Hold
No one knows for sure, but here is my vision.
In a few years, you will to walk into a “super store,” probably the size of today’s drug store. Inside you can buy the vice of your choice: alcohol, tobacco in any and every form, vape, CBD, and cannabis. By that time cannabis may be legal nationwide, which will allow the revenues to be banked and taxed.
These stores will be heavily regulated, monitored, and run by pros.
Part of this metamorphosis will be driven by the growing CBD market.
What do you think? Do you agree? Send me a note and we’ll discuss! SVBS
Norm Bour is the founder of VapeMentors and creator of the VAPE U online programs. They offer services & resources for anyone in the vape space, including vape shops, online stores and e-liquid brands. He’s also the host of Vape Radio, the largest vaping radio show in the world with more than 1.3 M downloads. Norm interviews the masters of vape and thought leaders in the vape space. He is also co-founder of Vape Industry Business Exchange (VIBE), which supports the vaping industry. Contact him at [email protected]