Shopify to ban vape sales as US intensifies crackdown on illegal $9 billion e-cigarette industry

LONDON: Shopify Inc will ban all vape products from its platform as soon as this week following engagement with U.S. state attorneys general seeking to curb illegal e-cigarette sales online, according to two sources familiar with the matter.

The Ottawa-based company, which provides infrastructure enabling millions of merchants to operate and scale e-commerce businesses globally, has been in discussions since last year with a bipartisan coalition of 25 U.S. state attorneys general. The group has called for stronger enforcement against merchants selling vape products that lack required U.S. licences or violate applicable regulations.

Unlicensed vape products—often manufactured in China—remain widely available across the United States through both online platforms and physical retail channels, including vape shops, convenience stores, and gas stations, despite restrictions on their import and sale.

The expected policy change, first reported by Reuters, comes amid broader enforcement efforts targeting illegal e-cigarette distribution and concerns about public health risks linked to unregulated products.

A key point in the report is that the geographic scope of the expected ban remains unclear. While the move is driven by U.S. regulatory engagement, it is not yet known whether Shopify’s restriction will apply solely within the United States or extend to other markets. Shopify did not respond to questions regarding international applicability.

A Shopify spokesperson said:

“We've always prohibited illegal activity and take action when we become aware of merchants violating our policies,”

and added:

“We adjust our enforcement approach when legal changes call for it.”

The spokesperson further noted that enforcement decisions are made within global legal frameworks and are not driven by any single external stakeholder group.

In the U.S. market, the ban is expected to apply to all vape products, including those that have received U.S. Food and Drug Administration (FDA) marketing authorisation. The FDA has authorised only 45 e-cigarette products to date, most of them tobacco-flavoured.

The illegal U.S. vape market is estimated to be worth around $9 billion, according to British American Tobacco (British American Tobacco), which has highlighted the scale of unregulated competition in the sector.

Licensed operators such as Juul (Juul) are expected to face limited impact due to already constrained online distribution channels, though e-commerce platforms remain an important channel for unlicensed vape sales alongside physical retail outlets.

Payment networks are also tightening compliance oversight. Mastercard (Mastercard) has issued guidance to merchant-acquiring partners stating that unlicensed vape sales violate its network standards.

“We have zero tolerance for unlawful activity on our network,” Mastercard said.

In a global notice issued in May, Mastercard said acquiring institutions are “attesting that all appropriate controls are in place” when onboarding merchants and recommended enhanced monitoring of product inventories, transactions, and invoices.

The broader enforcement effort follows an April communication from U.S. state attorneys general urging payment networks and processors to strengthen controls preventing their systems from being used to facilitate illegal vape sales.

Other jurisdictions continue to take different regulatory approaches. India has implemented a complete ban on vape sales, while Australia restricts vape distribution to pharmacies only.

As regulatory enforcement expands across e-commerce platforms and financial systems, Shopify’s decision reflects a broader tightening of compliance standards governing online e-cigarette distribution, with the geographic scope of the policy still not clearly defined, according to the Reuters report.

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