How to start a vape company: A legal guide for new entrepreneurs

Everyone wants “a piece of the vape pie,” but only a few businesses get to taste it. Indeed, the US vape and e-cig market currently stands at $9.4 billion and is on track to climb to $69.5 billion by 2030. But most of it stays in the gray zone, plagued by unauthorized disposables, shady suppliers, and FDA red tape. You need to get out of the gray zone to grab a sizable piece of that metaphorical pie and set your business up for long-term presence.

So, how hard is it to start a vape company? What are the start-up costs? Should you stick to the brick-and-mortar or online route? If these questions are giving you a headache, let MYLARMEN take that pain off your plate.

Choosing a business format: Which suits you best?

This is easier to visualize than put in words. Let’s suppose you’re interested in how to start a disposable vape company. This being the case, you can take one of three paths: opening a physical store, selling disposables online, or launching your brand with delegated production (white-label). Each option has its logic, costs, and rules that must be taken into account:

• Physical store (vape shop). This is a classic format featuring a physical location, storefront, and staff. It requires the highest start-up costs but works best for direct customer interactions and relationship-building endeavors.
• Online store (e-commerce). This is a less capital-intensive option that’s worth it if you don’t have enough funds for a physical location. However, vape products in the US are subject to age verification and logistics restrictions in many states. That’s why you’ll need to set up online ID checks and brace yourself for USPS shipping limitations.
• White-label. This business model implies that you’ll be working directly with a PMTA holder as your manufacturer to produce e-liquids or devices that you can then sell under your logo.

There’s no such thing as the best business model for all entrepreneurs. You should get started in a way that makes sense to you and fits your sales strategy and budget.

Business registration: The formalities you can’t do without

To start a vape company the right way, register your business and stay compliant. The LLC form is the gold standard for most small or medium-sized businesses. It is a breeze to register, inexpensive to maintain, and good for basic protection of the owner’s assets. In states such as Delaware, Wyoming, or Florida, this can be done online for as low as $100.

After that, you must obtain an EIN (Employer Identification Number) from the IRS. This is your company’s tax number used to keep track of business activities and file taxes. You can get an EIN at no cost on the official IRS website. The process takes around 10 minutes.

Next, open a business account at a bank you trust to separate your company’s funds from your personal funds. Unfortunately, not all financial institutions are willing to open accounts for high-risk niches like vaping or CBD. It is often easier to work with banking services that specialize in these industries.

Licenses and permits: What you can’t skip in the vape industry

Since 2016, the vaping industry has been highly regulated, with the FDA taking control of most regulatory activities. That’s why starting a vape company and selling e-cigarettes or vape liquids requires permits at the intersection of federal and local levels.

Your business will fall under the definition of either a tobacco retailer or an ENDS (Electronic Nicotine Delivery System) retailer. This means that:

• You need a license to sell tobacco products (even if your assortment will be made up of nicotine liquids without tobacco).
• In certain states (like CA, NY, and MA), you must obtain an additional license if you plan to sell vape devices at retail.

Without proper permits, your business may find itself in legal hot water. It will be impossible to expand your sales strategies or commercial activities.

Legal vape inventory: What to look for

Disposable vapes and liquids generate the highest returns in the gray market, but in the legal segment, the average profit range is not as eye-opening. Reusable devices (pod systems and mods) usually have lower margins, but they are more stable and subject to fewer bans.

If you’re serious about starting a vape company, ensure that your suppliers provide products legally. Legality is more important than profitability here, as quick wins won’t get your business far enough to generate stable returns. The most reliable way is to build direct relationships with manufacturers and PMTA holders.

And what about distributors? The best approach is to think about scalability from the very beginning. You can’t go wrong by teaming up with well-known US distributors that have the required licenses – let alone official partnerships with major brands – and consistently receive solid reviews from retailers.

Find a branding agency that “reads” the industry

Setting up a vape company is one thing, but staying there and continuously attracting customers is another. Most of the new business entities formed in the US vaping and e-cig industry trip up at some point and disappear for good. If you’re serious about building something that lasts, good branding can be your secret weapon.

MYLARMEN knows how to turn branding into your company’s superpower without violating FDA and other regulations, as well as how to design packaging that works to sell, not just looks cool. This is especially relevant for those researching how to start a marijuana vape company and launch their own brand, as cannabis-related products are subject to even stricter regulatory oversight and legal risks.

If you pour tens of thousands of dollars into your business but neglect branding, you risk being overlooked. We can help with your strategy, tone of voice, and slogans that won’t get banned while developing a visual style that distinguishes you from hundreds of similar vape stores.

Start a vape company on a solid footing by taking all the legal steps outlined above and turn to MYLARMEN for effective branding from day one!