The battery-powered devices create vapor by heating nicotine-laden liquid and are, according to their fans, less harmful than conventional cigarettes because they spare users the toxins found in tobacco smoke. Sales of e-cigarettes are expected to hit $1 billion this year, according to The Wall Street Journal. That equals just 1% of the U.S. cigarette market, but it's twice what it was in 2012.
Altria Group (MO +0.14%), the largest tobacco company and the maker of Marlboro, on Tuesday announced details of its e-cigarette plans under the brand name MarkTen. Rival Reynolds American (RAI -0.48%), which makes Camels, plans to sell e-cigarettes in Colorado before starting national sales. And Lorilard (LO -0.18%) acquired blu eCigs for $135 million last year.
In addition, big-name investors such as Sean Parker, an early backer of Facebook (FB -0.86%), are pouring money into the sector. He's part of a group that's investing $75 million in e-cigarette maker Njoy. Parker, who has supported cancer research, told The Wall Street Journal, "There's a huge opportunity to transition the entire world away from dangerous, carcinogenic, combusting cigarettes."
Experts are skeptical. The American Lung Association argues that the high-tech alternatives may do more harm than good and recommends people avoid them until more is known about their safety.
"We want to see (the) FDA move forward with regulating them as tobacco products," Erika Sward, the association's assistant vice president for national advocacy, said in an interview with MSN Money, adding that the Food & Drug Administration hasn't approved any e-cigarettes as a means to help people quit smoking.
Sward pointed out that "not a lot" is known about what's in e-cigarettes. "We know the vast majority of them contain nicotine," she said. "Anytime you see Big Tobacco jumping into something with both feet, it should be cause for concern."
Other medical professionals have also raised some flags. "When the FDA analyzed samples of two popular brands, they found variable amounts of nicotine and traces of toxic chemicals, including known cancer-causing substances," according to Mayo Clinic physician Lowell Dale.
Unlike regular smokes, e-cigarettes aren't federally regulated. And they come in flavors that make them more palatable to young people, such as chocolate and pina colada, which raises even more alarm bells.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
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