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A protest organized by Vapor Advocates of Ontario on April 9th, 2016 at Queens Park in Toronto

When Xavier Riberet and his two partners opened a vape shop in the Montreal area in 2014, e-cigarettes and vaping accessories were a booming business in Quebec.

E-cigarettes, or vape pens, are battery-powered hand-held devices that simulate smoking by converting liquids known as "e-juice" into a vapour that the user inhales. Some of the liquids contain nicotine, while others do not. Advocates and some studies contend that vaping is less harmful than smoking tobacco, and may help some people to kick the habit, making them a popular alternative to traditional cigarettes.

Mr. Riberet's company, Boulevard Vapes, was an instant success. "It was constant growth for almost a year and a half. Just consistent increases in numbers, in volume, in repeat customers," he says.

But sales stalled in late 2015, when Quebec's new tobacco-control law took effect. Among other things, the law bans online sales, any form of advertising and vaping inside public spaces – including vape shops that previously let customers test merchandise before buying. He says dismantling his online store caused the business to lose 10 per cent of yearly sales. Other restrictions include having to use plain, unbranded menus and putting all products behind glass, including the e-juice customers typically like to smell before purchasing.

More than 500 vape shops and manufacturers have popped up across Canada in the past five or so years, according to data collected for the Canadian Vaping Association, which represents the industry. This, despite the fact that elements used in vaping – namely liquids containing nicotine and devices that make health claims – are not authorized by Health Canada.

There is conflicting information on the short and long-term effects of vaping. Health Canada says it is actively reviewing scientific studies on the issue. However, Federal Health Minister Jane Philpott said at last week's news conference on plain cigarette packaging that updated rules around e-cigarettes may be in the pipeline. "We need more evidence, but in the meantime it's not too early to introduce regulations around that," she said.

The provinces have stepped in to regulate e-cigarettes in the absence of comprehensive federal rules, and those shifting regulations are challenging the industry.

Ontario is looking to make amendments to its Smoke-Free Ontario Act, though there's no date attached to the change so far. According to David Jensen, media relations co-ordinator for the province's Ministry of Health and Long-Term Care, the province is looking to place restrictions on the use, sale, display and promotion of vaping products, as well as prohibit vaping indoors.

Nova Scotia, New Brunswick and Quebec already have similar rules, and vape vendors in Ontario are concerned the province will follow their lead.

Debbie Walker, the owner of Oshawa-based store and vaping liquid manufacturer Canada E-Juice, says an indoor-vaping ban would force customers onto the street to test products, exposing non-users to the very thing the government is hoping to limit. "It's called parking-lot vaping," she says.

Ms. Walker began making homemade e-cigarette juice after buying a bad-tasting product from China. With no advertising, her home-based operation blossomed; the former waitress now hand blends 132 juice flavours and is opening a second store in Kingston. She says she's helped thousands of people to quit smoking.

Ms. Walker didn't want to speculate on how her business might be affected by changing rules, but other vendors expressed deep concerns. Maria Papaioannoy, owner of Toronto's Ecig Flavourium, fears she may have to lay off most of her employees if incoming rules restrict her ability to advertise and increase sales.

Vaping business owners such as Ms. Walker and Ms. Papaioannoy say that Health Canada's 2009 stance on e-cigarettes, which advises Canadians not to use them and warns that they may pose health risks, is woefully outdated. Lobbyists would like to see vaping given its own classification, rather than grouping it with tobacco or medicine, and would like to see Health Canada implement manufacturing standards.

They've also set their sights abroad, to global studies that support their views. Recently, the United Kingdom's Royal College of Physicians said in a report that e-cigarettes should be promoted as a smoking-cessation tool.

Meanwhile, the U.S. Food and Drug Administration last month announced new, strict rules on e-cigarettes; among them, the requirement to request approval for every single vaping product sold.

Graham Simmonds is CEO of Gilla Inc., a Toronto-based business that manufactures and distributes e-liquids globally.

Mr. Simmonds says Gilla has not been deeply affected by the FDA's rules because the company is compliant and aggressive at diversifying in new markets (Gilla is in 30 countries so far). If anything, he anticipates the FDA's rules will be favourable for Gilla because it will thin out non-compliant rivals. As such, the company projects earning $29-million (U.S.) next year.

Beju Lakhani, president of the Canadian Vaping Association and CEO of Vape Brands International, who also works as Gilla's Canadian distributor, adds that despite increased regulation, vaping companies will likely continue to proliferate to meet consumer demand.

"The reality is, as long as there are smokers, there will be smokers looking to stop smoking," he says.