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Spike Babaian loved the way the first puff hit her lips. She never thought electronic cigarettes would be her gateway into the business world.

“I thought it was a miracle device,” she said. “I just wanted everybody to have one.”

Four years later, Ms. Babaian is New York City’s reigning maven of e-cigarettes—battery-powered devices used to heat up and inhale liquid nicotine. She’s president of the National Vapers Club, founder of a national summit for e-cig vendors, Vapefest, and co-owner of the city’s first e-cigarette store, VapeNY.

But Ms. Babaian and an industry that is expected to grow tenfold in the next several years, to $10 billion in U.S. retail sales, face a threat in New York. In late November, a month after banning the sale of the devices to people under 21, the City Council surprised the sector by introducing a bill that would treat electronic cigarettes like their tobacco counterparts, prohibiting use in restaurants, bars, workplaces and even parks. Ms. Babaian said the law would deter a million potential customers, the city’s population of cigarette smokers, from buying her product as a way to wean themselves off cigarettes.

“One of the biggest selling points is indoor use,” she said. “If people have to stand outside with smokers, there’s less incentive to switch over.”

Proponents of the product were blindsided by the council’s proposed prohibition, which is being fast-tracked by council leaders for approval at its last slated meeting this week. Mayor Michael Bloomberg would sign the bill into law before he leaves office Dec. 31.

Opponents of e-cigarettes say the industry is being taken over by Big Tobacco interests that soon will be powerful enough to insulate themselves from regulations. But e-cigarette manufacturers argue that the Bloomberg administration is simply trying to ram through a late-term ban even though there’s no academic research indicating that the product is harmful.

“I can’t for the life of me understand how you can pass regulations without any sort of research behind them,” said David Schwartz, a lobbyist at the firm Gotham Government Relations, who recently founded a coalition called New Yorkers for Smarter Smoking Alternatives to fight the Bloomberg regulations. “They are looking to pass it before the next administration can look at the issue.”

Mr. Schwartz’s firm represents electronic cigarette company LOGIC, which is not affiliated with Big Tobacco, even though other companies pushing against the restrictions do have ties to tobacco firms. The Bloomberg administration and City Council effort came too quickly for the e-cigarette industry, restaurant and bar owners and others to effectively mobilize against it, he said.

At a recent public hearing of the bill, Health Commissioner Dr. Thomas Farley challenged the notion that e-cigs are healthier than tobacco smokes, though he admitted that not enough research had been conducted to support either side’s claim on the healthfulness of the vaporizers. In attendance was a horde of users (who call themselves “vapers” to distinguish themselves from “smokers”) puffing their pipes in protest .

When Ms. Babaian, a Long Island native, first tried an e-cig, she was teaching a Mercy College course in human sexual behavior and smoking two packs a day. The device helped her kick the habit.

Vaper trails

Her business has been smoking: VapeNY recently relocated to a larger space in Forest Hills, Queens, on Austin Street, an increasingly popular commercial strip, from its original location in the borough’s Gertz Plaza Mall on Jamaica Avenue. A 400-square-foot location opened in June on the Lower East Side.

Competition has cropped up in the past two months. In NoLita, the Henley Vaporium is capitalizing on users’ taste for indoor puffing, billing itself a “part social hub.” The 2,700-square-foot café offers a menu of 80 liquid-nicotine flavors, like mint chocolate chip, which customers order at a bar top from employees in white lab coats. Talia Eisenberg, co-owner of the company, said Henley plans to add fresh juices, coffee and live acoustic music sets to the offering.

“We want to create a whole lifestyle around it,” she said. “It’s about saving people.”

The owners of Henley “vehemently” oppose the indoor-use ban, but the law may spawn more establishments like their own. It wouldn’t affect devoted e-cigarette sellers.

Lounging around

“The vaporium would be one of the few places vapers could go,” Ms. Eisenberg said. “It would probably be better for business.”

She said that Henley plans to open five more stores in the next eight months. The third, and most recent, company to enter the market, Beyond Vape, expanded from Los Angeles, where lounge-like e-cig venues are common.

Ms. Babaian and her business partner had planned to open three more stores by the end of 2014. But VapeNY would need bigger spaces if the ban takes effect, she said. That would require loans, licenses to sell additional products or slower expansion.

Her career in e-cigs began in an Applebee’s, when she organized meet-ups with fellow users and paid restaurants to host the get-togethers. She isn’t looking back.

“I have to work for myself,” said Ms. Babaian. “I don’t follow the rules very well.”

Read the article at Crain’s


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