Continuing the Works of Fire

With fireworks sales reclining after the Fourth of July, Arbitrage Magazine takes a look at the resilient industry that is still booming despite the numerous restrictions.

By: Jaron Serven

In high school, I had a neighbor who loved fireworks, and on a particular July evening he set some up for us to light.

We oohed and ahhed — until one of us put a small mortar into a tube too large and lit the fuse.

I remember watching in a mix of horror and detached amusement as the small fireball just hung there ten feet above the ground.  It was a perfect moment, when all of us standing in the backyard realized at once we were in serious trouble.

The firework exploded in a shower of sparks and a concussion of sound, all of us diving for cover, but no one was hurt — although I can probably attribute some of my hearing loss to that incident directly.

In the United States, the Fourth of July means more than commemorating a bunch of slave-owners announcing their secession from the United Kingdom because they didn’t want to pay taxes.

It’s about picnics with our families and stringing up the national colors to prove our collective patriotism. For a lucky few, we get to sit and contemplate who we are as a country and how we can become better to each other and to the world.

Mostly, though, the Fourth of July is a build-up to the evening festivities, where we sit on our lawns or in the open hatchbacks of our cars and watch the night sky as it’s lit up with fireworks.

In 2002, the fireworks industry in the U.S. reported a record-high revenue of $725 billion, a number attributed mostly to “consumer class” fireworks.

Consumer class fireworks are classified in the States under the supervision of the Consumer Product Safety Commission (CPSC), which designates fireworks according to their composition, quantity of pyrotechnic material, and their stability under heat and pressure.

If the CPSC finds a firework too volatile, it will be classified as “professional grade”, which requires a federal license to purchase and operate.

A look at the numbers shows that this particular corner of the fireworks market has almost doubled in size over the past decade.

And yet the U.S., like most developed nations around the world, sets limits even on the types of consumer class fireworks which can be used, and those laws can differ from state to state.

For those of you unaware, the U.S. operates within different levels of government, the most primary being the federal level, or the complete and unifying law of the land. But there is also state law, which can be different from the federal level.

Even if the federal government declares consumer fireworks legal, the individual 50 states have a say in what’s allowed or not. As early as 2012, four states outright ban all consumer fireworks and another four allow only sparklers and other novelty products.

This makes all of the restrictions and laws regarding the use and distribution of fireworks in the U.S. almost too much to innumerate.

The ultimate testament to that point may come from Angus Loten at Inc.com: “In general, the legal amount of explosive material in retail fireworks is no more than 50 milligrams, about half the size of an aspirin, according to the APA.”

Which raises the question: How can people still make a business out of selling consumer fireworks in the U.S.? How can you make a profit at selling a product that is legal in some states but not in others?