WASHINGTON While waiting for the debate on electronic cigarettes to heat up on Capitol Hill, several state and local governments are pressing ahead with their own agendas for taxing and regulating the popular battery powered smoking alternatives.

Right now, there is no uniform national approach to regulating the vapor based e cigarettes. They are mostly free from federal rules and typically are subject only to state sales taxes.



But lawmakers in more than two dozen cash strapped states are racing to regulate them as a new source of revenue. For some, this means tacking on an excise tax which is a fee on a specific product, and often dubbed a “sin tax” when applied to socially shunned products like cigarettes.

Minnesota has led the charge and is currently the only state that s got a specific tax policy for e cigarettes on the books. The 2012 decision subjects vapor inhalers to a 95 percent tax that is stapled to the wholesale cost of the product.

According to the Minnesota Department of Revenue, e cigarettes are considered tobacco products and are subject to the state s tobacco tax. Distributors there are required to pay the tobacco tax or risk losing their license. Retailers must purchase e cigarettes from distributors licensed by the state and are expected to collect and remit sales tax on e cigarette sales.

In total, Minnesota estimates it will bring in $1.16 billion from all of its tobacco taxes in fiscal year 2014 2015.

Other states are taking notice.

In his 2015 budget proposal last month, New Jersey Gov. Chris Christie pitched a plan to hike taxes on electronic cigarettes to match the rate of regular cigarettes about $2.70 per pack.

Supporters say increasing taxes will keep them out of the hands of children and teens.

But critics argue treating traditional cigarettes the same as e cigs will hurt small businesses and strip smokers of the incentive to quit.

Small businesses like convenience stores and especially brick and mortar vape shops will be hardest hit by this $35 million tax increase, Americans for Tax Reform President Grover Norquist wrote in a March 11 dated letter sent to the New Jersey Legislature and shared with

Norquist also warns that raising taxes on consumers will significantly decrease in state sales, resulting in increased cross border tax leakage.

In recent years, as much as 40 percent of all cigarettes smoked in New Jersey were smuggled into the state illegally, resulting in a loss of more than $500 million in uncollected tax revenue each year, he says.

By making New Jersey uncompetitive in e cigarette pricing, the state would encourage smuggling, which will cost New Jersey small businesses tens of thousands of dollars in lost revenue, he said.

But to some, like New Jersey Democratic Assemblyman Dan Benson, taxing e cigarettes is not only a fiscal responsibility but also sends an important message to would be smokers.

If e cigarettes are taxed less than regular cigarettes, we re sending a message out there that they re somehow safer, and I think the jury is out on that, he recently told a New Jersey radio station.

Meanwhile, a similar proposal in Washington state recently died in the Legislature. That plan would have redefined vapor products the kind used in e cigarettes as tobacco substitutes and tobacco products. By changing their classification to a tobacco product, lawmakers were initially hoping to slap a 95 percent tax on them, projected to generate an additional $40 million for the state.

According to the Centers for Disease Control and Prevention, the vapor from e cigarettes has far fewer of the toxins found in smoke compared to traditional cigarettes.

However, the Atlanta based agency says it s too soon to say how much of a health benefit the alternative to traditional cigarettes offers. Both traditional cigarettes and e cigarettes contain nicotine.

Tim McAfee, CDC s director of Smoking and Health, says while it s reasonably certain that if someone who smokes a pack a day switched completely to e cigarettes it could represent a health benefit, there are still many caveats and buts around that.

Many argue that the reason state and local leaders are pushing so hard to tax e cigarettes is because they ve become addicted to the massive amounts of money brought in through the Master Settlement Agreement a 25 year settlement that forces the nation s top tobacco companies to pay out billions of dollars in profit to help pay for smoking related health care costs in some states.

The 1998 settlement, for example, makes Philip Morris USA, the nation s largest cigarette maker, pay $3.5 billion annually. The second largest tobacco company, Reynolds Tobacco Co., has handed out more than $2 billion a year.

In total, the landmark settlement requires tobacco product manufacturers to make $206 billion in payments to 46 states and U.S. territories.

If e cigarettes are regulated the same way, that might mean millions more for states still struggling to find financial footing following the recession.

Utah, North Dakota and the District of Columbia have included e cigarettes as part of their indoor smoking bans, setting up the argument that the vapor sticks should be regulated like other tobacco products in the state. Wyoming, Tennessee, New York and Colorado are among nine other states that have already dumped e cigarettes into the tobacco product category.


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Boom in e-cigarette sales divides smoking campaigners

European union approves tough rules on electronic cigarettes

In the window of a hairdresser’s in a west London side street, there is an array of brightly coloured little bottles, which the casual passer by who doesn’t look too closely might assume had something to do with hair conditioning. References to best “juice” don’t immediately give the game away. You probably need to have come across vaping already to realise that you are looking at the paraphernalia beloved by aficionados of e cigarettes.

Wetherspoons has banned them and Megabus routinely announces to passengers that they cannot use them on its coaches after a scare when police were called because somebody saw steam drifting out of a holdall. But a grassroots revolution is going on and e cigarettes are booming. More than 1.3 million people now use them in Britain.

The public health community is seriously divided about e cigarettes. Some believe they are a breakthrough and will save thousands of lives because it is the tar in tobacco that kills not the nicotine. But others say we should be trying to wean people off an addictive drug like nicotine they fear that e cigarettes are already being used as a stalking horse by the tobacco companies, who want to re normalise the pariah habit.

This month, British American Tobacco ran its first advert on television in years for a brand of e cigarette made by a subsidiary company. Philip Morris has also got in on the act. It is making e cigarettes that look and are marketed just like the tobacco products that were banned from our screens and magazines.

Steve, who runs the Vapeshack above the hairdresser’s in West Ealing, says it’s not cool young people who come through the doors in search of a healthier nicotine fix but older people who have tried and failed to kick the smoking habit. “It’s hardcore smokers who have tried everything. There was an Irish chap who use to smoke 70 a day. He bought a kit off me three months ago and he hasn’t had a cigarette since.

“He was in that theatre when the ceiling fell in at a performance of The Curious Incident of the Dog in the Night Time and he was just scrabbling on the floor looking for it his e cigarette .”

Steve himself had a 20 a day habit two years ago. “A friend of mine had a kit and I tried it and it was great. He got me one and that was it. I managed to well, you can’t call it quit because you still have the nicotine habit but I managed to change completely. I think it’s much more satisfying than patches and gum. It’s the action.”

He has never had a problem finding places to vape even on a flight to Spain with one of the bargain airlines. He surreptitiously blew vapour at the floor, only to realise that a couple of other passengers were vaping quite openly. He wouldn’t do it next to somebody who is eating though, he says. It has an odour a different one depending on what flavour you prefer.

The UK government wanted to clamp down on e cigarettes and have them all regulated as medical devices, which would require stringent testing. It has been wrong footed in Europe, where the European Parliament has decided they are consumer products unless the cartridges contain more than 20mg/ml of nicotine. Although the Department of Health said that it would ban them from sale to under 18s, it is still working out what else to do. “We have no further clarification on how the UK will regulate e cigarettes,” said a spokesman. “This issue is still being considered as part of the new European tobacco products directive that is in the final stages of negotiation. Once the directive is finalised, we will work through the best way of implementing it.” A request for an interview with the chief medical officer, Dame Sally Davies, who has voiced concerns about e cigarettes, was turned down.

A damning report commissioned by the World Health Organisation last December from three leading scientists Rachel Grana, Neal Benowitz and Stanton A Glantz of the Center for Tobacco Control Research and Education at the University of California said “Television and radio have been unavailable to the cigarette and other tobacco companies to market their products in the US (as well as much of the world) since the 1970s. E cigarette advertising on television and radio is mass marketing of an addictive nicotine product for use in a recreational manner to new generations who have never experienced such marketing. This pervasive marketing may have implications for existing smokers as well.”

Martin McKee, professor of European Public Health at the London School of Hygiene and Tropical Medicine, has spoken out more forcefully than most against e cigarettes and has been denounced in turn by the vaping community, many of whom are now evangelical about their new habit.

“My view at the moment is that these are things that have been around since the 1960s and people had not paid attention to them. Then suddenly the tobacco industry got interested,” he said. He is alarmed to see celebrities such as Lily Allen vaping and an advert for e cigarettes broadcast during Downton Abbey. More recently, the Netflix remake of House of Cards featured Kevin Spacey as US vice president Frank Underwood substituting an e cigarette for tobacco. “Addiction without the consequences,” remarks Underwood.

“The advertisements they are using are almost identical to the ones the tobacco industry used historically,” said McKee, who believes this is about the rehabilitation of cigarettes.

“The smoking ban in public places has been self enforcing,” he said. But steam rising from an e cigarette can look very like smoke rising from an old style fag. Other drinkers in pubs will be less and less likely to intervene once they’ve made that mistake a couple of times, he believes.

McKee acknowledges that a lot of people in public health say e cigarettes are much safer than tobacco. “Absolutely, but that is not the issue here,” he said. “They are missing the point.”

But while some suspect Big Tobacco’s involvement, the e cigarette lobby accuses Big Pharma of dirty tricks. Drug companies make the nicotine gum and pills that have been licensed for stopping smoking and are handed out by the NHS. The pro vaping lobby cites a letter sent to all MEPs from one of these companies, arguing that the permitted nicotine level in e cigarettes should be no higher than 12mg/ml and claiming that nicotine is as toxic as strychnine and arsenic.

Rubbish, say those who support e cigarettes, who liken the effect of nicotine to that of perfectly legal caffeine and alcohol. In fact, they say, it is a great deal safer than alcohol.

The leading voice in support of e cigarettes in Britain is Clive Bates, who a decade ago headed Ash Action on Smoking and Health which fought the tobacco companies full time. He has always been in favour of harm reduction, he says, a phrase in common parlance in drug addiction.

“Obviously the best thing is to quit nicotine completely, but we don’t consider stopping all alcohol or caffeine consumption as a public health goal,” he said. “There is no reason to think they are less harmful drugs than nicotine.

“There is a deep conflation in public health between the drug nicotine and the harm caused by smoking. If tobacco was not causing so much harm, we would not be so concerned,” he said. Before we understood the cancer and heart risks, smoking was considered a way to relax and alter mood, he said.

E cigarettes are a way to take the harm out of the drug use. As things stand, 1 billion people will die from smoking related diseases, the WHO says. ” There are not really many other good ideas,” said Bates, who points to the use of snus in Sweden a derivative of snuff. Sweden has a smoking prevalence of 13%, compared with 27% in Britain and 28% across Europe, according to the Eurobarometer figures (the UK government’s figure is 20%). “They have dramatically lower levels of cancer and heart disease,” he says.

There are fears that young people who would not have smoked may take up e cigarettes, but Bates says there is little evidence of that as yet. Most people using the devices appear to have been heavy smokers.

Bates is not the only anti smoking campaigner to support e cigarettes. Derek Yach, who led the successful tobacco control initiative of the WHO over a decade ago, agrees with him. “My view is that we failed to build a nicotine policy till now. E cigarettes and related non combustibles are growing super fast, and if they do displace tobacco, it could be the most positively disruptive technology ever, with the potential to bring down the death rate faster than the quit programmes we now have.”

But there is scant actual scientific evidence yet that e cigarettes help people quit smoking and some people do both. The official position of most public health bodies in the UK is that stopping the nicotine habit is the way to go.

Dr John Middleton, vice president for policy at the Faculty of Public Health, said his institution believes that “e cigarettes have some potential to help people to stop smoking and therefore reduce the harms that causes. This is particularly the case where people already smoke and have long term conditions.”

But the faculty is concerned about the e cigarette firms’ mass marketing. “We believe incitement to nicotine addiction of any kind should be discouraged. Mass marketing of e cigarettes is bringing the smoking habit to more young people, just at the time when young people are being discouraged from starting smoking tobacco.”

The faculty, like the British Medical Association, believes e cigarettes should be regulated as a medicine and it wants curbs on its advertising and promotion.

Around 1.3 million Britons now use e cigarettes Photograph Mike Segar/Reuters Getting up a head of steam

E cigarettes date back at least to 1963, when Herbert A Gilbert patented a non tobacco cigarette that heated a nicotine solution and produced steam, but it was never manufactured.

Many small companies have set up to manufacture a range of devices and nicotine liquids. But the big tobacco companies were late entrants to the field.

Flavours matter, say supporters. Nicotine has none. Many people progress from a tobacco flavour to fruits and mint but the companies deny these are designed to attract young people.

Look alike disposable e cigarettes, resembling the tobacco version, are also similar in cost, but many people graduate to other sorts of devices with a refillable tank and longer battery life, which are less expensive.

E cigarette supporters oppose the new EU rules enforcing medical regulation over 20mg/ml of nicotine, saying hardened smokers need more than that to switch. They also object to rules restricting the advertising of flavours.

Most people agree e cigarettes need some sort of regulation, at least to ensure standards, which are currently very variable. The WHO says while there are less toxins than cigarettes, there are some.

This article was amended on 24 February 2014 to correct the name of Wetherspoons, from Weatherspoons as the original said.