Tobacco manufacturer Lorillard has purchased Blue Ecigs, a company that makes electronic cigarettes. This is the first foray by a major tobacco company into the small, but quickly expanding, market of e-cigarettes, according to The Wall Street Journal.

E-cigarettes are battery powered, and turn heated liquid laced with nicotine into a vapor mist. Lorillard’s acquisition comes at a time of falling cigarette sales. Prices for e-cigarettes are often much lower than traditional cigarettes, which are taxed heavily.

The company’s rivals Altria and Reynolds are pushing smokeless tobacco products, such as snuff and snus, the article notes. The companies are also eyeing a possible crackdown by the Food and Drug Administration on menthol cigarettes.

E-cigarettes account for between $250 and $500 million in annual sales in the United States, according to the newspaper. They still represent just a small percentage of the $100 billion U.S. tobacco market.

Legislators in some states, including New York and Arizona, have introduced measures that would ban the sale of e-cigarettes to minors. In Alabama, Kentucky, Mississippi and Utah, bills would extend smoking bans in public areas to include e-cigarettes. Other states are considering bills that would require special taxes on the devices, or halt Internet sales.

Public health groups say not enough is known about the health effects of e-cigarettes. They are also concerned e-cigarettes, which come in flavors such as cherry, chocolate and piña colada, are attractive to youth.

FDA announced last April that it would regulate smokeless electronic cigarettes as tobacco products, treating them the same as traditional cigarettes. The FDA said it would not try to regulate e-cigarettes under stricter rules for drug-delivery devices. In 2010, the FDA lost a court case after it tried to treat e-cigarettes as drug-delivery devices, which must satisfy stricter requirements than tobacco products, including clinical trials to prove they are safe and effective.