FINANCIAL ANALYSIS — RECREATIONAL N₂O MARKET AND THE COST OF COMPLIANCE
Prepared for SC Senate Judiciary Committee — S.751 Policy Briefing
Follow the Money: Factory to Consumer
February 2026
VERIFIED = court filings, government data, or direct documentation
ESTIMATE = calculated from verified inputs
3RD PARTY = business intelligence aggregators (unaudited)
Every number below traces the lifecycle of a single 3.3L (2,000g) flavored N₂O canister — the dominant product in the recreational market — from Chinese factory floor to South Carolina smoke shop counter.
Supply Chain Pricing — 3.3L / 2,000g Canister
STAGE
PRICE
MARKUP
CONFIDENCE
China factory (FOB)
$14 – $16
—
VERIFIED
Landed in US (duty + freight + handling)
$20 – $25
+$4–9 over FOB
ESTIMATE
Wholesale distributor → smoke shop
$30 – $50
50–150% over landed
ESTIMATE
Smoke shop → consumer
$90 – $160
100–300% over wholesale
VERIFIED
$15
CHINA FACTORY COST
$160
GALAXY GAS MSRP (3.3L)
967%
FACTORY-TO-MSRP MARKUP
[1] Tonghui Gas (Chongqing): $14.00–$15.50/unit FOB; tiered pricing at 3,200+ units per 20ft container
[2] Fujian Unite (BMAX/GreatWhip parent): $15.00–$16.00/unit FOB; 150,000 m² facility
[3] Alizee Gas (Shandong): $11.50–$14.50/unit distributor pricing at 1,900+ MOQ
[4] Galaxy Gas 3.3L MSRP: $159.99 per FS Wholesale distributor listing
[6] US tariff: 3.7% ad valorem + 25% Section 301 = 28.7% combined effective rate on Chinese N₂O
A canister that costs $15 to manufacture in China sells for $110–$160 at a South Carolina smoke shop. Someone in this supply chain is splitting $95–$145 in gross margin per unit. Nobody reports it. Nobody tracks it. Nobody taxes the recreational portion.
Margin analysis for a single 3.3L canister sold at $130 (midpoint of verified retail range). Based on documented FOB pricing, tariff rates, and retail observations. Distributor-to-retailer margin estimated from standard smoke shop wholesale patterns.
PARTICIPANT
BUYS AT
SELLS AT
GROSS MARGIN
% OF RETAIL PRICE
Chinese manufacturer
Production cost
$15 FOB
Unknown
11.5%
US importer / brand
$15 FOB
$40 to distributor
~$17 (after duty/freight)
13.1%
Wholesale distributor
$40
$55 to smoke shop
~$15
11.5%
Smoke shop (retailer)
$55
$130 to consumer
~$75
57.7%
The retailer captures the largest share — roughly 58% of the final price. This is why smoke shops stock it. This is why 75% of Whip-It! product went to smoke shops, not kitchens. The margins are better than almost anything else behind the counter.
[1] Whip-It! trial: former warehouse employee testified 75% of product went to smoke shops, not culinary customers
[1] Whip-It! trial: 60% of Missouri sales to smoke, liquor, or adult stores
[2] Galaxy Gas MSRP $159.99 (3.3L); wholesale pricing gated behind distributor login; estimated 40–50% of MSRP
[3] 8g charger margin: China FOB $0.15–$0.20 → US wholesale $0.37–$0.49 → retail $0.58–$1.03
Galaxy Gas was founded in 2021 by the Amor brothers, who also own Cloud 9 Smoke & Vape (70+ locations) and SBK International (wholesale distribution). Rolling Stone reported the operation was generating “millions of dollars a month.” Here is what can be verified and estimated.
$46.2M
CLOUD 9 EST. ANNUAL REVENUE
$7.9M
SBK INT'L EST. ANNUAL REVENUE
$1
GALAXY GAS TRADEMARK SALE PRICE
[1] Galaxy Gas generating “millions of dollars a month” per former employee with knowledge of shipping operations VERIFIED
[2] Cloud 9 Smoke & Vape: estimated $46.2 million annual revenue across 70+ locations 3RD PARTY
[3] SBK International: estimated $7.9 million annual revenue, 26–58 employees 3RD PARTY
[1] Galaxy Gas trademark transferred for $1 to OIIO FD TEK (Chinese manufacturer link), Oct 2024 VERIFIED
[4] SBK International importing 12,096+ cylinders per shipment to Atlanta warehouses VERIFIED
The $46.2M (Cloud 9) and $7.9M (SBK) are third-party algorithmic estimates, not audited financials. If the Rolling Stone figure of “millions per month” for Galaxy Gas alone is accurate, the combined Amor family operation likely exceeded $50–80M annually across all three entities.
South Carolina has approximately 904 tobacco/smoke shops. No N₂O-specific sales data exists at the state level. The following estimates are derived from verified unit economics applied to known retail outlet counts.
904
SC TOBACCO/SMOKE SHOPS
$7.1M
CONSERVATIVE ANNUAL EST.
$35.3M
AGGRESSIVE ANNUAL EST.
SCENARIO
SHOPS SELLING N₂O
UNITS/WEEK
AVG RETAIL PRICE
ANNUAL RETAIL REVENUE
Conservative
50% (452 shops)
5
$60
$7.1 million
Moderate
65% (588 shops)
10
$80
$24.5 million
Aggressive
75% (678 shops)
15
$100
$52.9 million
[1] SC tobacco/smoke shop count: 904 as of April 2024 3RD PARTY
[2] Personal data: 122 transactions, $8,300 at one Smokers Town location over ~9 months = ~$68/transactionVERIFIED
[2] That single location received ~$920/month from one customer alone VERIFIED
[3] Fox 8 investigation: users self-report spending $300–$1,000 per day on N₂O VERIFIED
Even the conservative estimate — $7.1 million — assumes only half of SC smoke shops sell N₂O and only 5 canisters per week. One verified customer spent $8,300 at a single shop. Multiply by the number of regular users and the moderate estimate of $24.5 million is likely closer to reality.
Georgia serves as the national distribution hub for Galaxy Gas via SBK International (Kennesaw). Cloud 9 operates 70+ locations statewide. Atlanta alone has 256 of the state’s 464 smoke shops — 55% concentrated in one metro area.
464
GA SMOKE SHOPS
70+
CLOUD 9 LOCATIONS
$46.2M
CLOUD 9 EST. ANNUAL REV (ALL PRODUCTS)
SCENARIO
SHOPS SELLING N₂O
UNITS/WEEK
AVG RETAIL PRICE
ANNUAL RETAIL REVENUE
Conservative
60% (278 shops)
8
$80
$9.3 million
Moderate
75% (348 shops)
15
$90
$24.4 million
Aggressive (incl. Cloud 9 hub effect)
85% (394 shops)
25
$100
$51.2 million
[1] GA smoke shop count: 464; Atlanta has 256 (55.2% of state total) 3RD PARTY
[2] Cloud 9 Smoke & Vape: 70+ locations across GA, FL, TN, WV; founded 2011 by Ben Amor
[3] SBK International: 12,096+ cylinders per shipment arriving at Atlanta-area warehouses VERIFIED
[4] Cloud 9 locations positioned adjacent to every major GA university campus
Georgia is not just a retail market — it is the wholesale distribution hub. SBK International’s Atlanta warehouses supply smoke shops across the Southeast. The aggressive estimate likely understates the total flow because it excludes wholesale-to-other-states revenue.
Scaling verified unit economics to the national retail footprint. Dedicated smoke/vape shops total approximately 20,000–25,000. Including convenience stores and gas stations that carry N₂O products brings the total to 100,000+.
790
N₂O SHIPMENTS (12 MONTHS)
78%
YEAR-OVER-YEAR GROWTH
13M
LIFETIME US USERS (NSDUH)
[1]790 N₂O shipments entered the US (Nov 2023–Oct 2024); 95% from China; 78% YoY growthVERIFIED
[2] US overall N₂O market (all applications): $406.4 million (2023); medical dominates at 88% share VERIFIED
[3] Global cream charger market: $340 million–$1.2 billion depending on source and methodology 3RD PARTY
[4]~13 million Americans (1 in 20) have used N₂O recreationally in their lifetime (NSDUH 2021–2023) VERIFIED
[5] Dedicated US smoke/vape shops: ~20,000–25,000; total tobacco retailers (incl. convenience): ~380,000VERIFIED
National Revenue Estimate
SCENARIO
OUTLETS SELLING N₂O
UNITS/WEEK/SHOP
AVG PRICE
ANNUAL US RETAIL
Conservative (smoke shops only)
12,000
8
$80
$399 million
Moderate (+ convenience/online)
30,000
10
$70
$1.09 billion
Aggressive (full retail + online)
50,000
12
$80
$2.50 billion
Even the conservative national estimate — $399 million — exceeds the total US kratom market. The moderate estimate puts recreational N₂O at roughly $1 billion, comparable to CBD. Yet N₂O has zero federal regulation, zero retail licensing, and zero transaction tracking. Kratom and CBD both face more oversight.
MARKET COMPARISON: N₂O VS. OTHER REGULATED PRODUCTS
PRODUCT
US MARKET SIZE
FEDERAL REGULATION
RETAIL LICENSE?
AGE CHECK?
E-cigarettes / Vapes
$8.1–$14.0 billion [1]
FDA PMTA required; $200M enforcement budget [4]
Yes
21+
CBD
$2.8–$3.4 billion [2]
FDA oversight; state licensing varies
Most states
18–21 (varies)
Kratom
$1.6–$2.2 billion [3]
DEA considered scheduling; 6 state bans
Some states
18+ (varies)
Recreational N₂O
$400M–$1B+ (estimated)
None
No
None (federal)
E-cigarettes generate $200M in federal enforcement funding. CBD requires state licensing in most jurisdictions. Kratom has been considered for DEA scheduling and is banned in 6 states. Recreational N₂O — a product responsible for 1,240 deaths [5] — has zero federal regulation, zero retail licensing, and zero enforcement funding.
S.751 proposes a $100 fine or 30 days for selling N₂O to a minor. Florida uses a third-degree felony with up to 5 years and $5,000. Here is what $100 means to a smoke shop selling N₂O.
$100
S.751 MAXIMUM FINE
$75
GROSS MARGIN PER CANISTER
1.3
CANISTERS TO PAY THE FINE
What $100 Means to a Smoke Shop
METRIC
CONSERVATIVE
MODERATE
AGGRESSIVE
Canisters sold per day
2
5
10
Gross margin per canister
$50
$75
$75
Daily N₂O gross profit
$100
$375
$750
Weekly N₂O gross profit
$700
$2,625
$5,250
Annual N₂O gross profit
$36,400
$136,500
$273,000
S.751 fine as % of annual profit
0.27%
0.07%
0.04%
Transactions to pay the fine
2
1.3
1.3
At moderate volume, a smoke shop earns $375/day in N₂O gross profit. The S.751 fine of $100 is paid off by 1.3 canister sales. The fine represents 0.07% of annual N₂O profit. This is not a deterrent. This is a rounding error.
Comparison: What Other States Do
JURISDICTION
PENALTY
TRANSACTIONS TO PAY
S.751 (SC, proposed) [5]
$100 fine or 30 days
1–2
Florida (current law)
3rd degree felony; up to $5,000 + 5 years
67–100
New York (current law) [6]
$250 first offense; $500 subsequent
3–7
Western Australia
$30,000 AUD; on-the-spot $6,000
80–400
United Kingdom
Up to 14 years (supply)
N/A (prison)
[1] Florida’s felony statute enabled 70 felony arrests in a single Sept 2025 statewide sting VERIFIED
[2] Western Australia: N₂O only sold to registered food businesses; individuals cannot purchase VERIFIED
[3] Netherlands: poison center exposures fell 84% after Opium Act listing; police incidents fell 77.5%VERIFIED
[4] UK: youth use fell from 3.3% to 1.3% after Class C reclassification VERIFIED
Every number in this document points to the same conclusion: the penalties don’t match the profits.
A smoke shop making $375/day in N₂O margin pays a $100 fine and is back in profit by lunchtime. A Florida shop faces five years. A UK supplier faces fourteen. An Australian retailer faces $30,000.
S.751 is a necessary first step. But at $100, the fine is not a penalty — it’s a line item. Raise it to $5,000. Add retailer licensing. Add escalating penalties. Make the cost of non-compliance exceed the cost of compliance.
That’s how Oklahoma eliminated 95% of meth labs in seven months [7]. Not by banning the product. By making the supply chain unprofitable.