Californians will be voting on new proposition this year that will change the course of the vaping industry, and the experience of vape consumers, for many years to come. If passed, Prop 56 will change the state’s definition of “other tobacco products” to include e-cigarettes that do not contain tobacco. The negative impact of Prop 56 on vaping will reverberate from the production lines of manufacturers down to the pocketbook of consumers.
UNINTENDED RAMIFICATIONS OF PROP 56
In addition to adding more tax on e-cigarettes, Prop 56 will make e-cigarettes taxable by Prop 99 (2015), and Prop 10 (1998). Prop 99 from 2015 puts a tax on tobacco products in order to fund activities that reduce tobacco-related deaths and illnesses in adults. This year’s Prop 56 will include e-liquids in “other tobacco products” so that they can be taxed to prevent tobacco-related health issues. This means that Prop 56 taxes people who buy e-liquids that DO NOT contain tobacco and forces them to pay for activities that prevent illness resulting from products that DO contain tobacco. Is this fair? Why do vapers need to be responsible for the activities of tobacco smokers?
HIGHER PRICES FOR CONSUMERS DUE TO IN-STATE CONSEQUENCES
Prop 56 will add a 67% increase in the price of e-cigarette products. A $20 bottle of e-liquid will now cost at least $35. Vapor products that are subject to this tax include cigalikes, pod refills, and close-system devices that contain liquids.
HIGHER PRICES DUE TO OUT-OF-STATE CONSEQUENCES
The higher tax on e-liquid products is paid by the manufacturers, distributors, or retailers. This means that an estimated 1000 small businesses will likely close due to a change in prices. Furthermore, large manufacturers of e-liquids will be forced to move to Arizona or Nevada. In addition to losing the convenience of local small businesses, consumers will also have to pay out of state taxes when they purchase e-liquids shipped from outside of California.
CONCLUSION: PROP 56 WILL COST VAPERS BEYOND WHAT IT CLAIMS
If Prop 56 passes, the vaping industry in California and the vapers who enjoy their e-liquids will take a heavy hit. Prop 56 seeks to add a higher “sin tax” on e-cigarettes, even though we know that sin taxes don’t work because they end up burdening low-income communities that purchase the product more than it helps them. The revenue from sin taxes have also had a history of being misused by the government, instead of helping those it claimed to help.
Fortunately, California has many vapers, in addition to gas stations and convenience stores, who know that a price hike is coming. Together, our vote will make a difference. Vote No on Prop 56.