E-Cigarettes have become more popular than sliced bread. Celebrities have hopped on the bandwagon and e-cigarette companies are now sponsoring sports stadiums.

E-cigarettes vaporize liquid nicotine with heat, providing a healthier alternative to burning tobacco leaves. The trend is growing so rapidly that the market is expected to exceed $1 billion this year. Having been caught rather by surprise, the US government is looking at how they can regulate this market.

The FDA is contemplating a ban on the online sale of e-cigarettes, and implementing regulations regarding advertising to cut down on sales to minors. They are expected to outline their proposed rules in October.

In the mean time, tobacco giants are all rolling out their versions of electronic cigarettes, which are expected to surpass sales of regular cigarettes by 2047.

At the moment e-cigarettes are only subject to sales taxes, like the tax you pay when you buy clothes. But if the market keeps growing the US government may indeed institute heavy “sin taxes” on the product.

Scott Drenkard, an economist at the Tax Foundation said:

Once a tax gets too high, it acts in the same way that Prohibition did: You get substantial black-market activity

How long do you think it will be before illegal e-cigarettes hit the black market?

[Source: Business Week]