On November 8 2016 voters in California voted to increase taxes on cigarettes. As a result, a pack of cigarettes in California will cost $2 more as of April 1. Unfortunately, e-liquids that contain nicotine have been caught in the net. Non nicotine juices are not subject to the tax. Nicotine delivery devices i.e. vaping hardware may also be subject to the tax. California vapers are rushing to stock up before the 28% tax goes into place as of April 1. Well, 27.3% to be exact but I’m rounding up. This tax applies to distributors. This new tax is the result of the approval of Prop 56.
There were no details in Prop 56 regarding how big the California e-cig tax would be. Now we know that on April 1 the tax rate will be 28%. The news gets worse, there is a lot off pressure to increase that tax rate. We could see the vapor tax in Cali increase even more later this July. We don’t know what the July tax rate increase will be yet but it will probably be bad. Vaping will still be cheaper than smoking but this excessive, onerous tax could discourage smokers from vaping as well as punishing current vapers and small business.
Of course the excuse for levying such an oppressive burden on vapers is the spurious claim that non-smoking young people are being drawn in to nicotine addiction. This despite study after study showing that non-smokers are not getting into vaping. Be that as it may, we know fear is an effective tactic and California vapers will be paying a lot more as of April 1, 2017. So if you are a California vaper, it would be wise to stock up now.
California Electronic Cigarette Tax Starts April 1
I have spoken to a number of e-cig companies and phoned around to a number of vape shops. There is a very low level of awareness regarding what is going on and how it will impact vapers and small business. Most business people are aware that a tax is coming but the don’t know the details. The details are bleak. Here is what the tax will apply to as per the notice from the California Board of Equalization.
Products subject to vaping excise tax
- Little cigars (a cigarette tax stamp will no longer be required to be affixed to the package);
- Any product made, derived, or containing any amount of tobacco that is intended for human consumption (previously products had to contain at least 50 percent tobacco, be a smoking or chewing tobacco, or snuff to be subject to tax);
- Nicotine that is intended for human consumption (sold with or without a nicotine delivery device); and
- Nicotine delivery devices (including, but not limited to, electronic cigarettes, e-cigars, e-pipes, vape pens and e-hookahs) sold in combination with substances containing nicotine.
Products not subject to excise tax
- Nicotine delivery devices sold independently and not in combination with any liquid orsubstance containing nicotine;
- Any battery, battery charger, carrying case, or any other accessory used in the operation of a nicotine delivery device if sold separately from a substance containing nicotine; and
- Any product approved by the U. S. Food and Drug Administration as a tobacco cessation product or other therapeutic purpose when that product is marketed and sold for such approved use (for instance, nicotine patches).
Not where it says “nicotine delivery devices sold in conjunction with substances containing nicotine. When I spoke to the board of equalization they were not able to fully elaborate on the meaning. By the letter of the text, if we use an originalist interpretation, if we buy hardware separately we could avoid the tax. We may have to wait for clarification on that.
They are calling this the “Floor tax” and the rate as of April 1 will be 27.3 % with another increase coming in July.
Excise Tax On Vaping
This is an excise tax meaning that you will not specifically pay this price when you check out. The retailer or vendor is going pay the tax and have to recover the money at the point of sale to the end consumer. The tax will be hidden in the inevitable price increases that will be coming.
How this will be executed is unknown. Will retailers show two different prices one for CA residents and another price for everyone else? Will California companies pull up stakes and head for a neighboring state? We just don’t have a lot of details right now and we expect a rocky, confusing roll-out. Please check back because we are working this situation every day trying to get more details. This is going to be a mess.
California Vapers Should Stock Up Now
A third of e-liquid businesses are located in California. How this tax will impact their business remains to be seen. It is California vapers who will have to pay the new tax. That includes buying from out of state companies. To buy e-liquid you have to verify your age and that verification will include your address. If you are a California resident, there is no escaping this e-liquid tax.
If you live in California right now is a good time to stock up on e-liquids. You are facing a 28% price increase by April 1. Here are a few of our top rated sources for premium quality e-liquids. VaporFi makes e-juice in a state of the art FDA registered lab and uses the best quality ingredients. VaporFi juices are outstanding and you can even create your own blend online and they will make it and ship it to you asap.
Halo Cigs is an award winning vape juice company that is also actively involved in fighting for vape rights in the courts. Direct Vapor carries 37 of the leading national brands of e-liquid including many made in California brands. You can find Charlies Chalk Dust, Beard Vapes, Cosmic Fog, Mad Hatter, Ripe Vapes and more. With Direct Vapor they will ship for free.
If you live in California and are concerned about your right to vape without punitive taxes, now would be a good time to get involved. California vapor businesses have a vape trade group called CSFO. You can join CASAA or connect with local vapers in your area. Look for Facebook groups. All of that can be empowering but California residents should consider contacting their state representatives directly.
Political representatives deal with a huge range of issues from constituents every day. Your reps probably do not know much about vaping other than possibly a briefing note from CDPH. This tax is infuriating on its face but there is no point in an angry communication to your rep. That will not work. At all. remember that your rep probably does not know much about the subject and that’s where you come in.
Be kind and respectful and just tell your story. You want to get your reps to listen and you do that by sincere, respectful communication. Assume your rep knows nothing about vaping. Let them know that vaping is not smoking and the California vape companies are not Big Tobacco. Tell them about Public Health England determining that vaping is at least 95% safer than smoking and the Royal College of Physicians agrees with them. Your personal experience with vaping is an appropriate message to convey. Let them know that a massive tax might just have the effect of keeping people smoking cigarettes.
Be kind, friendly and sincere. You want to sway with charm, honesty and sincerity. If lawmakers could recognize vaping as an ally in the fight against smoking perhaps the onerous tax can be repealed.