The convenience store trade body called for the plans to be scrapped, describing them as "bad news" for the bid to make Scotland smoke-free by 2034.
The Scottish Government is consulting on proposals to restrict the promotion and advertisement of vaping products.
It argues while current evidence indicates the devices are less harmful than smoking tobacco, "we cannot say with total certainty that they do not have any long-term harms to health".
The consultation document adds: "Restricting the advertising and promotion of these products, and reducing their visibility, is one way to ensure young people and adult non-smokers are protected from the uptake of these products whilst the long-term health implications remain uncertain.”
Advertising electronic cigarettes in newspapers and magazines and through product placement on TV is already banned.
But SNP ministers believe these restrictions “do not go far enough to protect young people and non-smokers from influential messaging”.
The consultation suggests a number of further measures, including restricting advertising on billboards, posters and bus stops, and banning in-store promotional displays.
Such moves already apply to cigarettes and other tobacco products.
Dr John Lee, head of public affairs at the SGF, said: “The evidence base presented in the consultation document simply does not justify the measures proposed.
“It clearly sets out the benefits of using vaping products to stop smoking.
"That it then makes the contradictory suggestion that displays of them should be banned is somewhat bewildering.
“The trouble is that banning the in-store promotion of vaping products will inevitably stall the drive to make Scotland smoke-free by 2034.
“This is clearly bad news for Scotland’s public health.”
He added: “Scotland has led the way in encouraging people to stop smoking.
"Making vaping easier could be at least as beneficial in 15 years’ time as the smoking ban was 15 years ago."
Doug Mutter, director of vaping retailer VPZ, said there "absolutely should be advertising on the educational side of this product".
He said: "We should be allowed to promote and advertise the public health opportunity."
Public health minister Maree Todd said: “Although smoking rates are falling in all our communities, we are aware that the emergence of vaping products, including electronic cigarettes, as an alternative to tobacco are a concern. The full impact of their long-term use is not yet known and could have a negative impact on public health in years to come.
“The Scottish Government recognises that these products can be used as a smoking cessation tool. We have stated very clearly that we wish current smokers to be able to gain information and access to vapes as an alternative to tobacco.
"However, they should be used to help people stop smoking tobacco. They are not a lifestyle accessory.
“Reducing exposure to the promotion of vape products is the best way to protect non-smokers, young people and children from experimenting with these products.
“We appreciate that the SGF may not support these actions as their membership includes tobacco and e-cigarette industries. Once the consultation has ended, we will analyse the responses before proposing any changes to the current regulations.”