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Massachusetts Senator Dick Durbin (Dem.) – who most recently was a mouthpiece for Bill Ackman’s claim that HLF is a pyramid scheme – was joined by Senators Waxman, Harkin, Rockefeller and members of Congress in releasing a report this morning titled “Gateway to Addiction? A Survey of Popular Electronic Cigarette Manufacturers and Targeted Marketing To Youth”.

Lorillard (LO) remains our preferred name in tobacco and we believe the contents of this report have already been priced into the tobacco stocks . Why?

The report says nothing new about the industry’s own stance on the likely “deeming” regulation that the FDA will hand down on e-cigs.

In the conference calls we’ve held with the CEOs of e-cig companies, including with NJOY, LOGIC, Ballantyne Brands, and Victory – they’ve all suggested to us that they’re bracing for FDA regulation, including:

  • A ban of online commerce
  • Age verification standards at retail
  • Flavor limitations (beyond tobacco and menthol)
  • Health/safety certifications
  • Labeling and marketing requirements

Directly below are the key recommendations from the Durbin & Co. report, which show great overlap between its call for regulation and those that are being braced for/expected and encouraged from the industry. 

Senator Durbin Back at It With FDA E-Cig Recommendations – The Industry Is Already Prepared - a. durbin ecig recs

Note that the group solicited information via surveys sent to 9 e-cig manufacturers last September, including to MO (Mark-Ten), RAI (Vuse), LO (blu), NJOY, Eonsmoke, LOGIC, VMR, Green Smoke, and Lead by Sales. It reported that all the companies responded to the survey except for Lead by Sales.

The report’s loudest call, to keep e-cigs out of the hands of children (no marketing of them, no attractive properties like flavors, no ease to purchase via strict age restriction), again echoes the industry’s leaders’ expectations and desires for the category, and we believe that the FDA, when it chooses to act, is likely to carve out similar standards so as to treat e-cigs similar to traditional cigarettes in terms of sales and marketing.

Call with questions,


Howard Penney

Managing Director

Matt Hedrick


Fred Masotta