Puffing On Profits: The Economic Ramifications of the Vaping Industry

By  //  August 2, 2023

During the past 20 years, vaping has become a normalized alternative to cigarette smoking. With the rise of physical and online vape options such as the leading Vape Shop Dampfi, up to 9 million people in the United States and 82 million people worldwide vape regularly.

This influx in the vaping industry has seen a significant impact on both American and global economies.  According to economic experts, the vaping industry has affected the economy in three significant ways. These include demand, spending and wages, and health care expenses. 

Discover the top 3 ways that the vaping industry impacts the economy. 

Increased Employment and Production 

The vaping industry plays a dynamic role in the U.S. and European Union (EU) economies. In practical terms, vaping industries, and places such as a local vape shop create $22.09 billion in total output, or 10% of the American GDP. The vaping industry also significantly impacts the U.S. economy by employing at least 133,573 Americans with wages and benefits that add up to $7 billion annually. In the United States, vapes and vaping accessories purchases, sold in a physical or online vape shop, bring in local or excise taxes totaling up to $1.88 billion per year. In the Western EU, vaping brought in revenue of around $6.5 billion in 2021. Meanwhile, the global market is valued at $22.45 billion USD in 2022 and continues to expand rapidly.  

Higher Healthcare Costs 

According to a 2022 report by the University of California San Francisco School of Nursing, vaping results in healthcare costs of up to $15 billion in the U.S. every year. Put in another way, this averages out to over $2,000 per person each year. This means that a person who frequents a vape shop typically spends $2,042 more each year on healthcare expenses than people who don’t smoke or vape, according to the UCSF Institute for Health and Aging. This demographic largely affected adults aged 18 through 29 who vape (20% of the U.S. population), but also impacted those aged 30-64 (16%), and less than 1% for adults aged 65 and over. These results come from healthcare cost calculations and data from the National Health Interview Survey. Vaping directly affects the medical industry which in turn impacts the wider economy. Vaping increases the likelihood and frequency of emergency room visits, overnight hospital stays, visits to the doctor, home healthcare support, and incidents of COVID-19. Increased healthcare costs disproportionately impact low-income adults, uninsured individuals, and people of color. 

A rise in healthcare costs directly impacts the economy due to raised taxes, increased debt, or fewer investments in important sectors that include infrastructure and education. Research links the vaping industry to higher health costs which can suppress economic growth, and result in fewer business developments, and lower living conditions for millions of households.  A 2017 UK study showed that lower-income youths and young people are taking up vaping at increasing rates which can impact the economy through lost work opportunities, benefit reliance, and increase medical costs. 

Environmental Impact and Sustainability

The vaping industry’s influence extends beyond economics and healthcare, contributing significantly to environmental concerns. The manufacturing, distribution, and disposal of vape pens and associated products have environmental implications. Millions of disposable vape pens, cartridges, and batteries end up in landfills each year, contributing to the global waste problem. Similarly, the energy and resources needed to manufacture these products add to the industry’s environmental footprint. The focus on sustainable practices in the vaping industry has been gaining attention as awareness of these issues grows. Companies are introducing eco-friendly initiatives such as recyclable packaging and rechargeable devices, along with advocating for responsible disposal of vaping products. These actions can mitigate the industry’s environmental impact and pave the way for sustainable growth. However, the environmental costs associated with vaping also contribute to indirect economic implications, such as waste management expenses and potential regulatory costs. These could further impact the economic landscape surrounding the vaping industry and must be factored into comprehensive economic evaluations of the sector. 

Profits Follow Demand

The more popular vaping becomes, the more the demand for vaping increases. This results in a cycle of demand and profits that benefit the overall economy. Many vape shop sellers and the American Vaping Association trade group are also boosting their success by offering college scholarships that even make their way onto the sites of elite universities such as Harvard. Marketing tools help increase vaping frequency, which in turn drives demand and economic revenue. While vaping is a social practice, it is also an effective economy that creates a sense of community and promotes vaping trends. There’s no doubt that vaping is an exploding industry. As vape options, demand, and accessibility expand, the industry will continue to have an impact on the U.S., European, and global economies from employment, wages, and taxes, to increased production and healthcare costs.