Last month, San Francisco’s supervisors approved a total e-cig ban in a unanimous preliminary vote. “We spent the 90s battling big tobacco, and now we see its new form in e-cigarettes,” said supervisor Shamann Walton. “This is about thinking about the next generation of users and thinking about protecting the overall health and sending a message to the rest of the state and the country: follow our lead,” added supervisor Ahsha Safaí.

Under the new legislation, it will be illegal for retailers in San Francisco to sell vaping products, and for online vendors to ship them to addresses across the city, until the time the FDA officially reviews the products and grants them a Pre Market Tobacco Authorisation (PMTA).

Many public health experts are concerned that this ban will push many former smokers who had switched to the safer alternatives back to smoking, and stock experts seem to concur.

A loss for public health and win for big tobacco?

“Despite this threat, tobacco companies are still a great, recession-proof investment. And there’s one tobacco stock that will benefit from the crackdown on e-cigs big time. This might sound counterintuitive, but vaping bans could actually boost a company like Universal Corp. UVV, -0.05% In fact, it’s one of my favorite dividend stocks in 2019.”

In an article on MarketWatch, senior income analyst at Mauldin Economics Robert Ross points out that the San Francisco ban is likely to be the first of many.  “But other cities are already considering similar laws. So this looks like the start of a bigger trend that could weigh heavily on certain tobacco companies.”

“Despite this threat, tobacco companies are still a great, recession-proof investment. And there’s one tobacco stock that will benefit from the crackdown on e-cigs big time. This might sound counterintuitive, but vaping bans could actually boost a company like Universal Corp. UVV, -0.05% In fact, it’s one of my favorite dividend stocks in 2019,” said Ross.

“… e-cigarette regulations can’t hurt the company. (Perversely enough, they might even help, as smokers return to traditional cigarettes if and when e-cigarettes become harder to buy),” he added.

Big Tobacco benefits from e-cig bans

The article pointed out that investors have taken notice of Universal’s advantageous position, so shared have jumped 4.1% after the San Francisco ban was announced.  Similarly, when last September the FDA had issued over a 1,000 warning letters to U.S. retailers and manufacturers of e-cigarettes, Altria Group and British American Tobacco had gained the most intraday since 2008, rising as much as 7.7 percent and 6.9 percent, respectively.

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