Talk about a mixed bag. Just as Philip Morris International (NYSE:PM) has its application to sell its iQOS heat-not-burn electronic cigarette as a reduced-risk product under review by the FDA, the National Academies of Sciences, Engineering, and Medicine (NASEM) releases its study that e-cigs are a safer alternative than a traditional combustible cigarette and can be quite useful in helping people quit smoking.

Sounds good, except it also said e-cigs can't be considered "safe," they can be addicting, and they can lead teens to start smoking. That's hardly the kind of finding Philip Morris wants to hear at this point.

Woman using a electronic cigarette

Image source: Getty Images.

Where there's smoke

The headline data points from the NASEM report really aren't all that earth-shattering. Considering most of the toxic chemicals and harm they cause originate in cigarette smoke, an electronic cigarette generating a vapor was already considered a safer option for smokers, and most people were using them to try to quit smoking anyway.

And the manufacturers of e-cigs already acknowledge that e-cigs aren't safe, per se, but rather are a "less risky" alternative, as British American Tobacco (NYSE:BTI) points out on its website.

And in Philip Morris International's dramatic New Year's Day full-page ads, where it declared it wanted to quit smoking for good, it also said it would be best if people just stopped smoking, too, and that its electronic cigarettes and heat-not-burn alternatives were geared toward those who wouldn't otherwise give up combustible cigarettes.

Of course, much of this is marketing language necessary to perform the dance with regulators and hold off on injurious rules and regulations that could snuff out the nascent industry, which is still in a large growth phase.

This is why the study's findings that e-cigs can be addicting and can lure teens into smoking is problematic.

Regulatory cues

The NASEM study was commissioned by the FDA in 2016 after Congress gave the agency the authority to regulate e-cigs like regular cigarettes. While most e-cigs at the time used a nicotine-infused e-liquid to deliver the flavor and satisfaction smokers get from combustibles, advances have developed alternatives that draw the e-liquid vapor through a tobacco-filled cartridge, such as British American's iFuse e-cig, or the latest heat-not-burn technology that heats tobacco leaf just enough to create a vapor.

Philip Morris International's iQOS heat-not-burn electronic cigarette

Image souyrce: Philip Morris International.

Philip Morris is pushing its iQOS that it wants to market under Altria's (NYSE:MO) Marlboro brand, while British American says it wants to market its similar iFuse glo brand in the U.S. and will submit its own application this year.

The study is important because the FDA will likely be guided by its findings as it decides just how to regulate the industry. While it originally proposed draconian rules that promised to virtually wipe out the industry by making it possible for only the largest, most financially secure manufacturers to comply, last year, it gave the industry a four-year reprieve.

But the clock is ticking down, and the Philip Morris application could be the first real look into how the FDA will ultimately come down on the players. It's important because it will decide just what options in nicotine delivery and sources will be available to consumers. It's beneficial for the industry as a whole that NASEM recognized that the devices can save lives.

Teen usage a concern

The biggest problem, then, may be the finding of "substantial evidence that e-cigarette use by youth and young adults increases their risk of ever using conventional cigarettes." It said youths are the biggest users of e-cigs, and there's a heavy probability of them transitioning to using combustible cigarettes as a result.

The FDA's head of its tobacco division told The New York Times, "For kids who initiate on e-cigarettes, there's a great chance of intensive use of cigarettes. As the regulator, we've got to factor all that in."

Philip Morris International is the first to go under the microscope, and the FDA's ruling may ultimately determine whether British American Tobacco moves forward with its own plan. There seems to be something for everyone in this report, advocates and critics alike. One the whole, it looks favorable to the iQOS's chance for approval, but it may come at a cost of heavy regulation to keep them out of the hands of teens.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.