(Bloomberg) -- More than 300 operators of vaping shops across Massachusetts are reeling in the wake of a state order that they immediately cease operations for four months as U.S. health officials rush to determine the cause of a lung ailment that’s killed 12 people and sickened 805 others.

“It's a mix of shock and anger and sadness,” said John Nathan, president of the New England Vapor Technology Association. 

Governor Charlie Baker’s emergency decree last week was the most aggressive action yet taken by officials seeking to contain the illness and a nationwide surge in the use of nicotine and marijuana vaporizers by minors. The impact on the fledgling industry in Massachusetts may provide a window into how consumers and businesses might cope with similar moves planned by other states, as the prospect of tighter federal regulations looms.

So far, about a dozen U.S. states and cities have taken, or are considering steps, to limit access to e-cigarette products. On Friday, Washington Governor Jay Inslee became the latest to join the fray, asking the state’s health department to ban flavored vaping products – including flavored THC products. Recreational marijuana use is legal in Washington. 

The Massachusetts vaping industry employs 2,500 with an annual payroll of $131 million, according to Tony Abboud, executive director of the National Vapor Technology Association in Washington. Industry representatives said the governor's order failed to make the distinction between responsible shops that serve only adults over age 21, and convenience stores and gas stations. Those latter establishments apply less scrutiny and offer products such as pods manufactured by San Francisco-based Juul Labs Inc. that contain high concentrations of addictive nicotine in flavors that attract younger customers, they said.

The various bans and restrictions being implemented across the U.S. have put a sudden damper on new businesses that sprang up in recent years to sell vaping products and accessories. While vaping was once viewed as a potential tool to help adult smokers quit, perceptions have shifted amid the surge in teen use -- roughly one in four high-school seniors have vaped in the past 30 days, according to U.S. Health and Human Services Secretary Alex Azar -- and the outbreak of the mysterious, fast-spreading lung condition.

“We're not talking about big tobacco executives; we're talking about ex-smokers,” Nathan said of his members in Massachusetts. “These are men and women who quit smoking using this technology and went into business. They wake up every single day trying to help others do the same, and now they're closing their doors.”

In New York, Governor Andrew Cuomo has ordered an emergency ban on sales of flavored e-cigarettes that health officials will begin to enforce on Oct. 4. Retailers who flout the ban could face fines of as much as $2,000 per violation. Cuomo plans to push legislators to pass a permanent ban on the products next year; the emergency restrictions are in place for 90 days.

Cuomo’s order is “devastating” for the industry, said Spike Babaian, technical analysis director of the New York State Vapor Association. She said her group has told lawmakers that there’s a risk that vapers will now return to smoking cigarettes.

“But there's also a risk of people who don't want to go back to smoking mixing the product in their homes and creating an illicit market for the product that didn't exist before,” Babaian said. “There wasn't a black market for nicotine because you could just buy it in a store.”

THC Eyed

Meanwhile, federal health officials said Friday that nearly 77% of patients with vaping-related lung injuries had used products containing THC, the psychoactive ingredient in marijuana, adding to evidence that such vaping devices and cartridges are lead suspects in the widening epidemic.

“The outbreak is currently pointing to a greater concern around THC-containing products,” said Anne Schuchat, principal deputy director of the U.S. Centers for Disease Control and Prevention, on a call with reporters. 

However, she emphasized that the agency couldn’t rule out that nicotine-containing products were risky, and said that no one product or substance has been used by all patients with vaping-related lung damage.

When Michael Portelle’s grandfather died of lung cancer, his daughter urged him to quit smoking. He turned to vaping to wean himself off cigarettes, and then, a year ago, decided to buy New England Vapors, a shop in in Woburn, Massachusetts. He said he was floored by the abrupt and extreme nature of Baker's order.

“Within a minute, with one swipe of the pen, our lives just turned for the worse,” he told Bloomberg Radio. “I have literally lost everything. I won't be able to turn the lights on in my home. Is Governor Baker going to pay my electric bill? This is our lives.”

In Saugus, Massachusetts, Behram Agha, who co-owns four vape shops with his family, has asked a judge for a preliminary injunction. He said Baker's order denied him due process and forced him to lay off 11 employees.

Agha's attorney, Craig Rourke, said he filed for immediate relief in Suffolk Superior Court in Boston. Rourke also said he is preparing a federal lawsuit to include other shopkeepers who have called him for help.

Baker told reporters Thursday that, while business owners are free to go to court, he stands ready to defend his order. He told The Boston Globe in a story Friday that it wasn’t an easy decision and that he understood it would create economic hardship. But after listening to the experts, Baker said that ignoring the potentially fatal outcomes would have been more harmful and dangerous than his ban.

Even in states with no restrictions, vapers have seen their options for buying devices and refill pods dwindle. Walmart Inc. said this month that it would stop selling e-cigarettes in all its U.S. locations. At the same time, the vaping industry has been thrown into turmoil. Juul said last week week that its chief executive was stepping down and the company was halting all marketing and lobbying activities.

The rapid implosion of vaping has raised concerns in some quarters that nicotine-addicted consumers, including underage users, could be draw back to traditional cigarettes. Cigarette sales declined 1.8% last year, the first decline in five years, according to IRI data as interpreted by Bloomberg Intelligence, while sales of electronic smoking devices more than doubled.
 

--With assistance from Joe Shortsleeve.

To contact the editor responsible for this story: Timothy Annett at tannett@bloomberg.net, Mark Schoifet

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