Jim Palasota took a drag of his cigarette, exhaling a wisp of watery vapor.

He closed his eyes.

"Just like the real thing," he said.

Two Scottsdale businesses, including one where Palasota works, are profiting from a trend of "smokeless" cigarettes that circumvent Arizona's anti-smoking laws.

Like real cigarettes, "e-cigarettes" offer smokers a shot of nicotine. But instead of producing smoke, they emit a watery mist. Businesses market them as a way to legally inhale in restaurants and bars.

Based in the Scottsdale Airpark, Sottera Inc. sells the smoke-free devices through the trade name NJOY. The company, which opened in 2007, bills itself as the largest wholesale manufacturer of the electronic gadgets.

"It's a great opportunity because it's a new product," said Palasota, vice president of sales and marketing for NJOY.

Target and Costco sell NJOY cigarettes on their Web sites. By April, Walgreens will be selling them in stores.

In July, the company introduced the "NPRO," a shorter version of the cigarette that looks more real like the real thing.

Like other models, the battery-powered device contains liquid made of nicotine, water, flavoring and propylene glycol, an odorless substance found in toothpaste and cosmetics.

When smokers inhale, the mixture is converted into a nicotine "mist" that is absorbed into the lungs.

Because it is not a tobacco product, the device falls outside the purview of the state's anti-smoking law, according to Don Herrington, bureau chief for epidemiology and disease control for the Arizona Department of Health Services.

Another e-cigarette purveyor, Crown7, has been featured in US News and World Report, USA Today and the New York Post.

The Scottsdale company is growing by leaps and bounds, said founder Ron MacDonald.

MacDonald said he put up initial funding for NJOY but left two years ago to pursue Crown7. His new product, dubbed "the Hydro," rivals a regular cigarette in size. The most potent version carries 18 milligrams of nicotine compared with 22 milligrams in regular cigarettes.

The cost is $75, plus $10 for replacement cartridges equivalent to about two packs.

The company also sells car and USB chargers.

"We've got new products coming out shortly," MacDonald said.

Palasota noted that electronic cigarettes are not a form of anti-smoking therapy. The World Health Organization has warned that, unlike traditional nicotine replacements, e-cigarettes lack scientific evidence that confirms their effectiveness.

What they do lack are the harmful chemicals found in most tobacco products.

Some consumers and professionals maintain the e-cigarettes are a healthier alternative to traditional tobacco. In a statement last month, Dr. Jonathan Winickoff of Harvard Medical School called the Crown7 "a thousand times safer than cigarettes."

Ex-smoker Patty Rosebery loves the cigarettes so much that she decided to sell them.

"I want to put this out there for people to quit," said Rosebery, an independent sales rep for NJOY.

Megan Smith, 28, of Scottsdale, has smoked cigarettes for 10 years. She began using an electronic one this month.

"I feel like I can run a marathon," Smith said. "At first, you don't know if you really believe it. Now, I love it."