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June 11, 2019

New Jersey lawmakers introduced legislation that would apply a complicated and convoluted new tax structure on e-cigarettes and vaping devices. The bill would also require all vape shops in the Garden State to purchases costly licenses.

Assembly Bill 5385 defines “e-liquid containers” as “a container of liquid nicotine or other liquid where the liquid is intended for use in electronic smoking devices,” but does not include “prefilled containers where the container is intended for use in an electronic smoking device (e.g cartridges).” The proposed legislation would apply a 10 percent tax to container e-liquids while removing the existing wholesale 10-cents-per-milliliter tax on these products.

Although the legislation is laudable and addresses the problem of tax parity among tobacco harm reduction products, lawmakers should refrain from enacting “sin taxes” on e-cigarettes and vaping devices, which have helped at least three million American adults quit smoking combustible cigarettes since their introduction to the U.S. market in 2007.

In 2007, electronic cigarettes and vaping devices debuted on the U.S. market. Since then, manufacturers added second-generation tank systems, followed by larger third-generation personal vaporizers, which vape users commonly call “mods.” In recent years, closed systems, often referred to as “pod systems,” have emerged as effective and popular e-cigarette products. Pod systems contain a disposable cartridge that is discarded after consumption.

Closed and open systems utilize the same three primary parts—a liquid, an atomizer with a heating element, and a battery—as well as other electronic parts. Mods allow users to manage flavorings and the amount of vapor produced by controlling the temperature that heats the e-liquid. Mods also permit consumers to control nicotine levels. Current nicotine levels in e-liquids range from zero to greater than 50 milligrams per milliliter. Many users have reduced their nicotine concentration levels after using vaping devices for a prolonged period, indicating nicotine is not the only reason people choose to vape.

New Jersey’s current tax rate of 10 cents per milliliter applies to closed and open systems, regardless of nicotine content. Though this legislation removes this burden from container e-liquids, lawmakers should move to remove all taxation on tobacco harm reduction products such as e-cigarettes.

Numerous public health groups, including the Royal College of Physicians, American Cancer Society, and the National Academies of Sciences, Engineering, and Medicine have acknowledged the reduced harm of electronic cigarettes and vaping devices.

In 2015, Public Health England (PHE), a leading health agency in the United Kingdom similar to the U.S. Food and Drug Administration, found e-cigarettes are 95 percent safer than smoking. In 2018, PHE reiterated this claim, finding “vaping is at least 95% safer than smoking.”

Moreover, electronic cigarettes and vaping devices can actually reduce smoking-related health care costs. One analysis found that if all Medicaid recipients who smoke switched to e-cigarettes, state Medicaid programs would have saved $48 billion in 2012.

Although A.B. 5385 recognizes different types of electronic cigarette products, it ignores public health. E-cigarettes have emerged as one of the most effective tools to help smokers quit and lawmakers should promote their use instead of enacting unnecessary and counterproductive sin taxes on them.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute or Tobacco Harm Reduction 101.

Centers for Disease Control and Prevention Link Majority of Vaping-Related Hospitalizations to THC: Welcome
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