Shopify Inc. is preparing to ban all vape products from its e-commerce platform as early as this week, marking a significant victory for a bipartisan group of U.S. state attorneys general who have been pressing the company to curb the online sale of unlicensed e-cigarettes.
The Ottawa-based company, whose infrastructure powers millions of online merchants worldwide, has been in discussions with the coalition of 25 state attorneys general since last year. The officials have targeted not just retailers but the underlying digital and financial infrastructure enabling the sale of illegal vapes, which they argue pose serious public health risks, particularly to young people.
A Shopify spokesperson confirmed the company’s stance on illegal activity but stopped short of explicitly confirming the timing of the ban.
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“We’ve always prohibited illegal activity and take action when we become aware of merchants violating our policies,” the spokesperson said in a statement. “We adjust our enforcement approach when legal changes call for it.”
The expected ban, first reported by Reuters, would represent the most substantial action yet by major digital platforms against the illicit vape trade. It applies to all vapes sold on Shopify, regardless of whether they hold FDA marketing authorization, according to two sources familiar with the plans.
The illegal U.S. market for vapes is currently valued at around $9 billion, according to British American Tobacco, whose legal U.S. business has been significantly undermined by the proliferation of unauthorized products. These vapes, often manufactured in China, are widely sold online and in physical stores despite being illegal to import or distribute without proper FDA approval.
To date, the FDA has granted marketing authorization to just 45 e-cigarette products, mostly tobacco-flavored. Big tobacco companies and some public health advocates argue that this restrictive approach has inadvertently fueled the black market.
Limited Impact on Licensed Players, Bigger Hit for Illicit Sellers
E-commerce represents a relatively small portion of authorized vape sales in the U.S., meaning the ban is expected to have minimal effect on licensed operators such as BAT or Juul. However, online channels are far more critical for illegal vape sellers, who rely on platforms like Shopify for reach and scale. The move could therefore have a “chilling effect” on those merchants and disrupt a key distribution channel.
Separately, Mastercard issued a global notice in May warning its partners, the financial institutions known as acquirers that onboard merchants to its network, that facilitating sales of unlicensed vapes violates its standards. The notice, obtained by Reuters, emphasizes that acquirers must implement stronger controls, including reviewing product inventories and monitoring transactions.
“We have zero tolerance for unlawful activity on our network,” Mastercard said.
The state attorneys general had urged Mastercard and other payment networks in an April letter to do more to prevent their systems from being used for illegal vape sales. Mastercard’s guidance recommends robust due diligence, with the threat of investigations, fines, or termination for non-compliant partners.
For Shopify, the decision was prompted by the growing pressure on technology platforms to act as gatekeepers for regulated or illegal products. While the company has long maintained policies against illegal activity, the scale of the illicit vape trade and the direct engagement from state law enforcement appear to have prompted stronger enforcement.
The ban’s geographic scope was not immediately clear. While the primary focus is the U.S. market, where regulatory scrutiny is highest, Shopify operates globally. Some countries, such as India, have outright banned vape sales, while Australia restricts them to pharmacies. The company did not respond to questions about whether the policy would extend beyond the United States.
The Illicit Vape Market
The explosion of illegal vapes has become a major public health and enforcement concern in the United States. Unregulated products, often containing high levels of nicotine or synthetic substances, have been linked to youth vaping epidemics and serious health incidents. State attorneys general have increasingly shifted focus from individual retailers to the infrastructure, payment processors, e-commerce platforms, and shipping companies that enable the trade.
However, the FDA’s limited authorization of products has created a stark divide: a small legal market dominated by tobacco-flavored options and a vast gray-to-black market offering thousands of flavored products that appeal particularly to younger users.
The ban is unlikely to have a material financial impact given the relatively small share of Shopify’s overall business tied to vape sales. However, it sets a precedent that could influence how the company handles other controversial or regulated categories in the future.
But as the crackdown on illegal vapes intensifies, the focus is expected to shift further downstream to logistics providers and payment networks. Mastercard’s warning to acquirers suggests financial infrastructure is the next frontier in enforcement efforts.
For platforms like Shopify, the message is that the era of relatively hands-off facilitation of all types of commerce is giving way to more active policing of what flows across their systems.
The ban, expected as soon as this week, represents a meaningful win for state attorneys general who have argued that tech companies must do more to prevent their platforms from becoming conduits for products that evade federal and state laws.