I’ve said this before, and I’ll say it again: I love small businesses.

My Dad is a small business owner. He is a workhorse bordering on workaholic, and he built his company from scratch. You can still find him in the warehouse every day from open to close working his printing presses. His employees and clients are all local residents.

His business is important to his community, and vice versa. Thankfully, he lives in a community — a quaint town on the Chesapeake Bay — where small businesses tend to thrive.

Now, I might have some bias here, but even if my own family members weren’t intrinsically tied to the small business economy, I would still vehemently support local companies.

“Shopping Small” isn’t just about supporting your community or keeping millions of businesses afloat, or helping a shop owner pay for his daughter’s dance lessons.

Small businesses inherently foster innovation.

They produce 13 times more patents per employee than large firms.

They account for 52% of all American jobs.

Of the almost 6 million companies in the United States, 90% employ less than 20 people.

Although it’s usually monster firms like Apple and Google that are flooding economic headlines, it’s small businesses that are truly the heartbeat of our economy.

Small business tax dollars stay within the local economy.

Sales at small businesses directly contribute to increased local prosperity, which means your community and your neighbors.

For every $100 you spend at a large, non-locally owned business, $57 goes elsewhere.

For every $100 you spend at a small, locally owned business, only $27 leaves your community.

Why are we talking about this?

In honor of this past weekend’s Small Business Saturday, I’d like to bring everyone’s attention to a relatively unknown piece of legislation that has the potential to save 16,000 small businesses across the country.

Investors who are keen to get involved in a growing industry should pay attention here:

Recent reports from the Centers for Disease Control show that one in 10 American adults have used e-cigarettes, while eight in 10 are aware of their existence.

The global e-cigarette market is expected to reach more than $40 billion by 2024.

Personal vaporizers account for $2 billion of the $3.5 billion in sales the vaping industry is expected to generate in 2015, according to Wells Fargo Securities. E-cigarettes account for the rest.

Vapor devices have also proven to be a threat to traditional tobacco products, as many smokers use vaping as a strategy for quitting cigarettes.

There are some Big Tobacco companies that have embraced e-cig technology, but all of them have failed to push the boundaries. At this point, most of their products, like the micro-cig, are considered outdated. Those e-cigs use a closed cartridge system, meaning that once the liquid nicotine runs out, it cannot be refilled.

Closed-cartridge e-cigs have been rapidly losing ground to personal vaporizers, which are more expensive but can be refilled with a variety of flavors.

Just a side note: This really doesn’t surprise me at all. Innovation isn’t really a factor for the tobacco industry. Cigarettes have essentially been the same for hundreds of years. (The last major change to the product was the widespread addition of the filter in the 1960s.)

The e-cigarette and “vape” industry is poised for something big. Unfortunately, we have yet to see a public firm that is a viable, revolutionary, and a pure play.

The vapor space has yet to produce a first-mover because the fate of the entire industry is currently at risk.

Big Tobacco Buys Another Victory

An FDA crackdown, which is a blatant and inappropriate over-regulation of the market, has the potential to shut down 99% of small businesses in the vaping industry.

The FDA is currently working to finalize new rules for the vapor tobacco industry, which would grandfather all smokeless tobacco products that hit the market before February 15, 2007.

All products on the shelves after February 15, 2007 would essentially be banned.

Companies responsible for those products will be required to apply for retroactive approval.

Doesn’t sound too bad, right?

Wrong.

The FDA estimates that an approval application will cost approximately $300,000 and more than 5,000 man-hours… per product. In total, this process could cost small business owners between $2 and $10 million.

Greg Conley, President of the American Vaping Association, says that small companies “don’t have a chance in hell of being able to raise the venture capital to be able to do that.”

An estimated 16,000 vape shops across the country would be out of business.

This FDA regulation is killing innovation and enforcing a dangerously powerful oligarchy. As it currently stands, only Big Tobacco firms have the capital required to apply for retroactive approval — and the FDA knows it.

Even further, the FDA claims to “lack the legal authority” to adjust the grandfather date.

Don’t Tread On Me

HR 2058, a bill proposed by Oklahoma Representative Tom Cole (R-OK04), intends to change the grandfather period, pushing the date up to June 2015.

The bill has a long road ahead, and most supporters expect that HR 2058 probably won’t survive the Senate Appropriations Committee.

Even if the bill does fail, it has opened doors and provided the foundation for the inevitable lawsuits to follow the FDA regulations.

For now, small business owners can only wait for the outcome.

Joe Steed, the owner of a small vape device and liquid nicotine company in Los Angeles, states, “If it comes, it comes. We’ll test the waters and probably be out of business, and our 17 employees would have no jobs. Every one of us has a share in this thing.”

I can actually feel my blood pressure rising when I think about the FDA blatantly pandering to Big Tobacco, killing thousands of small businesses and livelihoods, and stunting innovation in an industry with such phenomenal market potential.

I am not a smokeless tobacco user. I don’t vape, and I don’t use e-cigs. I am not personally invested in the vapor space in any way, shape, or form.

However, I am personally invested in the principles of liberty, free markets, and basic fairness. 

For the sake of these essential values, I hope you are, too.

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