(Recasts with judge's ruling, adds comments from vaping industry lawyers)
By Tim McLaughlin
BOSTON, Oct 4 (Reuters) - A federal judge on Friday denied an industry bid to put on hold Massachusetts' four-month ban on the sale of vaping products, keeping intact the toughest prohibition yet in a rapidly developing response to e-cigarettes and their potential link to a lung disease.
U.S. District Judge Indira Talwani declined to grant a temporary restraining order sought by the vaping industry, including by trade group Vapor Technology Association (VTA).
"The court finds that plaintiffs have not demonstrated a substantial likelihood of success on the merits or that the balance of hardships between the parties weighs in (their) favor," according to the decision.
"The court finds further that granting the request for a temporary restraining order would conflict with the public interest," the judge added.
But the industry may still get relief. Talwani scheduled an Oct. 15 hearing for arguments on whether she should issue a preliminary injunction against the ban.
On Friday, Joseph Terry, an attorney for the vaping industry, argued before Talwani that the Massachusetts ban is overly broad and suggested it should instead target "black market products sold by drug dealers."
Massachusetts Governor Charlie Baker's ban targets sales of e-cigarettes and vaping supplies, both those used for nicotine and THC, the psychoactive ingredient in marijuana, which is legal in the state, in response to the nationwide outbreak in the sometimes deadly lung disease linked to vaping.
Terry blamed health problems on THC-based products, not ones solely using nicotine. Talwani noted that no single product has been identified by U.S. health officials as the link to the lung illnesses.
Meanwhile, Terry said his clients, many of the them small, family-owned vaping shops, already are falling short on their financial obligations, such as paying rent to landlords. The Massachusetts ban went into effect on Sept. 24.
"The ban poses an existential threat to their businesses and the industry," Terry said.
The VTA says Baker's ban, if left standing, will irreparably destroy Massachusetts' $331 million nicotine vapor products industry and the livelihoods of the nearly 2,500 workers it employs.
The VTA prevailed in a hearing in a New York state appeals court on Thursday. The court temporarily prevented the state from enforcing a more limited ban, blocking the sale of flavored e-cigarettes, from taking effect.
Nevertheless, a regulatory crackdown on vaping products in the United States has forced investors to reassess their bets on e-cigarettes.
Last month, the chief executive of Juul Labs Inc stepped down as merger talks between its biggest investor Altria Group Inc and Philip Morris International Inc collapsed in the face of a regulatory backlash against vaping.
In Boston, Fidelity Investments' popular Blue Chip Growth Fund has a $738 million stake in Juul, making it one of the largest bets in its $27 billion portfolio. Juul has been a strong contributor to Blue Chip Growth's year-to-date return of 15.8%.
The U.S. Centers for Disease Control and Prevention on Thursday provided updated numbers linked to the severe lung condition, saying there are now 1,080 confirmed and probable cases in 48 states and one U.S. territory, along with 18 deaths. It has said most patients affected reported using products containing THC, but some had used just nicotine or both.
The lawsuit is one of a number filed nationwide by vape shops and the VTA challenging restrictions announced by various states in response to the outbreak of vaping-related illnesses.
Governors in Michigan and Rhode Island have also restricted sales of flavored e-cigarette products in recent weeks. Ohio Governor Mike DeWine on Tuesday called on state lawmakers to pass a ban on most flavored e-cigarettes.
(Reporting by Nate Raymond in Boston; Writing by Tim McLaughlin in Boston; Editing by Bernadette Baum and Bill Berkrot)
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