S10 Blog

Everything You Need to Know To Start a Vape Company

Published Date:
January 27, 2022

The vape industry has grown exponentially in the last decade, and all projections suggest it’s only going to keep getting bigger, making it an excellent time for newcomers to enter the marketplace.

Starting your own business isn’t easy, but owning your own vape company could be extremely lucrative and personally satisfying. Whether you want to build a brand from scratch or introduce a new line of vape products to your existing business, this article is full of tips and insider secrets that will make starting your vape company easier. 

How To Start A Business

The first step to starting a business of any kind is developing a well-thought-out business plan. For those who don’t know, a business plan is a 15-20 page document that outlines the goals of your business and the potential costs and pitfalls you as a business owner may encounter while trying to achieve these goals.

No two business plans are identical, but they do typically contain the same general elements. A good business plan will include a list of the products you’re offering, a market analysis examining your competition, your branding strategy, and how you will cover the costs associated with starting out. 

After finishing the business plan, it’s time to start securing all the necessary permits and licenses required. This is especially important for a vape and cannabis-related business. 

Finally, a would-be CEO will need to open a business bank account, consider business insurance, and start looking for investors or other ways to raise the necessary capital to launch their business. 

Tips For Starting A Vape Company In North America

Vape companies come with a specific set of challenges that not all industries face. 

Firstly, where you start your business is incredibly important. What’s the best state for vape companies? It will depend on what kind of vape business you want to start. Many Southeastern states, like the home of R.J. Reynolds, North Carolina, has less taxes and regulations around nicotine and tobacco than states in the North and West.

This can be beneficial if you’re planning on starting a nicotine-exclusive vape company; however, these states often have stricter cannabis laws. If you’re planning on making CBD, THC, or any cannabis-related products, it’s a good idea to set up your headquarters in a state like Colorado or California where cannabis is recreationally legal.

The vape industry is highly competitive. In order to stand out, you’ll need to elevate your brand above the rest of the competition. Don’t skimp out on marketing. Designing your brand’s visuals and managing its social media all by yourself can help save money, but hiring a professional team will likely get you more business in the long run. 

Speaking of saving money, starting a vape company is going to require a tremendous amount of capital. However, there are ways to significantly reduce overhead. Storing inventory in a warehouse or brick-and-mortar retail location can create a lot of costs. By partnering with a white label service and dropshipping, you can remove this cost entirely. 

What Are White Label Products?

It’s expensive to manufacture products—especially in North America. Not to mention, the day-to-day management of manufacturing operations eats up valuable time that could be better spent developing your brand. 

White label products remove the hassle and costs of manufacturing. They are mass-produced generic products sold to a variety of different retailers at wholesale costs. White label products also often offer a degree of customization regarding labels and packaging.

The Zirco Disposable System is a perfect vape-industry-specific example. This high-quality vaporizer is fully functional, requires no manufacturing on the retailer’s part, and can be fitted with any brand’s trade dress. 

Navigating Vape Licenses And Regulations

Regardless of where you choose to set up shop, new federal policies passed in 2020 require vape companies to register with the Bureau of Alcohol, Tobacco, Firearms, and Explosives, as well as the state tobacco administrators of any state you ship to. Additionally, this recent piece of legislation prevents vape companies from shipping their products via the United States Postal Service, so you’ll need to secure a relationship with a private shipping company if you’re planning on engaging in interstate commerce. 

If you’re manufacturing a new product, as of 2016, you’ll need to apply for a PreMarket Tobacco Application PMTA. This applies even if your product doesn’t contain nicotine. Acquiring a PMTA is extremely arduous and can cost hundreds of thousands of dollars, making it nearly impossible for small businesses and startups to get. However, it’s unclear how the FDA will carry out PMTA enforcement on a practical level. At this point, the safest option may be to source an existing white label product. 

While the extensive regulations surrounding the industry can certainly seem daunting, the best vape companies still find a way to thrive.

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