By Melissa Patrick
Kentucky Heath News
FRANKFORT, Ky. -- Two House bills aimed at reducing teen use of electronic cigarettes have cleared committee and are before the full House. One would place a 25 percent tax on the products, which is projected to bring in nearly $50 million in the next two-year state budget; the other adds regulations aimed at making it harder for teens to obtain e-cigarettes.
The sponsor of both bills, Rep. Jerry Miller, R-Louisville, says both bills are needed, to protect independent "vape" shops. House Bill 32 has the tax and HB 69 the regulations.
"These are two pieces of a whole," he said. "While 32 may hurt independent vape shops, HB 69 will help independent vape shops."
HB 69 would require makers and retailers of "enhanced vapor products" with flavorings, other than tobacco or menthol, to register with the stae Department of Alcoholic Beverage Control and pay a registration fee of $210 per location annually.
The bill refers to e-cigarettes as "enhanced vapor products," but they actually produce an aerosol that contains volatile organic compounds, ultrafine particles, heavy metals and potential cancer-causing agents, not a vapor.
HB 69 would also prohibit registered retailers or manufacturers of e-cigarettes from selling them online, through catalog sales or by phone; prohibit home delivery by outside vendors; require real-time age verification for purchase through an electronic third-party source no later than Jan. 1, 2021; require flavored products other than tobacco and menthol, and those with more than 4% nicotine content to only be sold in "vape" shops; and authorize fines on any person under 21 who tries to purchase e-,cigarettes or related products.
Miller added that the bill also allows the state to track purchases back to the store that sold them as a way to thwart those who might buy them in bulk and then sell them to minors.
"This bill simply seeks to regulate a product which adults should be able to use, but is such that it is very prone to abuse by underage people," Miller said. "We have a crisis of youth using these nicotine products, and that's what this bill is about.
The Kentucky Incentives Prevention Survey found that between 2016 and 2018, Kentucky teens nearly doubled their e-cig use, with more than one in four high-school seniors and one in seven eight-graders reporting use in 2018.
The House Committee on Licencing, Occupations and Administrative Regulations Committee approved HB 69 Feb. 12 with no dissent.
Kentucky Smoke Free Association Board Chair Tony LeBlanc defended the industry, which he said is considered "evil" in the U.S., but promoted in the United Kingdom as 95% safer than cigarettes, citing a 2013 study that he recognized some disagree with. He also said they were sold in the UK as a cessation device.
"We're doing everything we can to keep these out of teen hands, but I'm telling you right now, this is a device that is saving lives. It's saving lives and people are trying to tax it and ban it and smear it through the mud. I don't understand," he said.
The aforementioned study was was recently de-bunked in the American Journal of Public Health. The article, which includes an appendix of research to back up its conclusions, says, "the evidence-lacking estimate derived in 2013 cannot be valid today and should not be relied upon further."
After the meeting, Bonnie Hackbarth, vice-president of external affairs at the Foundation for a Healthy Kentucky, pointed out that it is currently illegal in the U.S. to advertise e-cigarettes as a cessation device, citing the recently released 700 page U.S. Department of Health and Human Services report that says more research is needed before we can conclude that e-cigs help people stop smoking.
"The evidence is inadequate to infer that e-cigarettes, in general, increase smoking cessation; factors contributing to the uncertainty include the changing characteristics of e-cigarettes, the many different contexts in which they are used, and the limited number of studies conducted to date," says the report, titled, "Smoking Cessation, A Report of the Surgeon General."
E-cig tax
The day before HB 69 passed, HB 32 passed out of the House Appropriations and Revenue Committee with a committee substitute that would impose a 25% wholesale tax on e-cigarettes.
The new version of the bill is expected to generate nearly $50 million over the next two years, raising about $22.6 million in Fiscal Year '21 and about $27.3 million in Fiscal Year '22. It also increases the wholesale tax for "other tobacco products," like cigars, from their current 15% to 25%, The bill adds e-cigarettes to the list of "other tobacco products. It would also double the per-unit tax on non-smokable and chewable products -- as was proposed in the governor's budget.
The original version of the bill, which called for a 27.5% tax hike, would have raised $94.1 million over the next two years.
Miller said the essence of this bill is to decrease youth e-cigarette use. "The most effective way to attack use by those under 21 is through raising the price," Miller said.
Representatives from the Kentucky Smoke Free Association, which represents about 400 independent vape shops statewide, told the panel that while they support the added regulations found in HB 69 because they address teen access issues, they do not support this tax increase because it will hurt their businesses, while doing little to hurt Juul Labs or the grocery and gas station chains -- which will still be allowed to sell some tobacco and menthol flavored e-cigarettes.
"We ask that you will reconsider this tax, because it's going to do nothing but hurt them and increase the [money in the] pockets of companies like Juul, who can absorb a 25% tax easily," LeBlanc, who spoke at both meetings, said.
They added that their goal is to help people quit smoking cigarettes and said this tax would discourage adults who want to use them as a cessation device. Further, they said it will push teens into purchasing their products online.
Jason Underwood, a lobbyist for the Kentucky Smoke Free Association, cited a study by the National Bureau of Economic Research that found higher e-cigarette taxes could lead to increased cigarette smoking. The study looked at Minnesota data, which imposed a 95% tax on e-cigs.
Ben Chandler, president and CEO of the Foundation for a Healthy Kentucky, voiced support for 25% tax on e-cigarettes, recognizing that a higher tax would reduce tobacco use even more.
"We know that raising the price of tobacco products is one of the most effective measures for reducing tobacco use," he said. Later adding, "The Foundation for a Healthy Kentucky believes than an excise tax of 25% of the wholesale price is close enough to the current tax on cigarettes and would lead to a substantial enough price increase to create a considerable reduction in youth vaping," he said.
Rep. Lynn Bechler, R-Marion, who cast the only no vote for the tax bill, said he didn't think this "sin tax" was warranted because people are already taxed enough. He added that he had taken the testimony of the vape shop representatives to heart
"I don't want to put those people out of work," he said. "So if we're putting people out of work and the epidemic isn't going to lessen, I don't understand the reason to do it."
Democratic Gov. Andy Beshear's budget recommends a 10 cent tax increase on cigarettes and other tobacco products and a 10 cent per milliliter tax on vaping liquids. These hikes are projected to raise $57 million over the next two years.
E-cigarettes incur a 6 percent sales tax, but is currently the only tobacco product in Kentucky that does not have an excise tax.
Juul fights back
Juul Labs the largest e-cigarette company, is not happy with these bills, recently sending a message to its customers that ask them to reach out to their legislators in opposition of the bills. The website includes a link to a form-letter type message that states opposition to the bills. The call for action says this legislation is "unbalanced and misguided," stating that it "will restrict your access to JUUL, while leaving cigarettes freely available on store shelves" and that they "may no longer be able to ship you JUUL devices or JUUL pods, nor will they be available at your local convenience store."
Kentucky Heath News
FRANKFORT, Ky. -- Two House bills aimed at reducing teen use of electronic cigarettes have cleared committee and are before the full House. One would place a 25 percent tax on the products, which is projected to bring in nearly $50 million in the next two-year state budget; the other adds regulations aimed at making it harder for teens to obtain e-cigarettes.
 |
| Abby Piper, with Jefferson County Public Schools, Rep. Jerry Miller, and Bonnie Hackbarth, with the Foundation for a Healthy Kentucky present HB 69 |
"These are two pieces of a whole," he said. "While 32 may hurt independent vape shops, HB 69 will help independent vape shops."
HB 69 would require makers and retailers of "enhanced vapor products" with flavorings, other than tobacco or menthol, to register with the stae Department of Alcoholic Beverage Control and pay a registration fee of $210 per location annually.
The bill refers to e-cigarettes as "enhanced vapor products," but they actually produce an aerosol that contains volatile organic compounds, ultrafine particles, heavy metals and potential cancer-causing agents, not a vapor.
HB 69 would also prohibit registered retailers or manufacturers of e-cigarettes from selling them online, through catalog sales or by phone; prohibit home delivery by outside vendors; require real-time age verification for purchase through an electronic third-party source no later than Jan. 1, 2021; require flavored products other than tobacco and menthol, and those with more than 4% nicotine content to only be sold in "vape" shops; and authorize fines on any person under 21 who tries to purchase e-,cigarettes or related products.
Miller added that the bill also allows the state to track purchases back to the store that sold them as a way to thwart those who might buy them in bulk and then sell them to minors.
"This bill simply seeks to regulate a product which adults should be able to use, but is such that it is very prone to abuse by underage people," Miller said. "We have a crisis of youth using these nicotine products, and that's what this bill is about.
 |
| Data from Kentucky Incentives for Prevention survey, graphic from from Sept. 18 Department for Public Health PowerPoint presentation. |
The House Committee on Licencing, Occupations and Administrative Regulations Committee approved HB 69 Feb. 12 with no dissent.
Kentucky Smoke Free Association Board Chair Tony LeBlanc defended the industry, which he said is considered "evil" in the U.S., but promoted in the United Kingdom as 95% safer than cigarettes, citing a 2013 study that he recognized some disagree with. He also said they were sold in the UK as a cessation device.
"We're doing everything we can to keep these out of teen hands, but I'm telling you right now, this is a device that is saving lives. It's saving lives and people are trying to tax it and ban it and smear it through the mud. I don't understand," he said.
The aforementioned study was was recently de-bunked in the American Journal of Public Health. The article, which includes an appendix of research to back up its conclusions, says, "the evidence-lacking estimate derived in 2013 cannot be valid today and should not be relied upon further."
After the meeting, Bonnie Hackbarth, vice-president of external affairs at the Foundation for a Healthy Kentucky, pointed out that it is currently illegal in the U.S. to advertise e-cigarettes as a cessation device, citing the recently released 700 page U.S. Department of Health and Human Services report that says more research is needed before we can conclude that e-cigs help people stop smoking.
"The evidence is inadequate to infer that e-cigarettes, in general, increase smoking cessation; factors contributing to the uncertainty include the changing characteristics of e-cigarettes, the many different contexts in which they are used, and the limited number of studies conducted to date," says the report, titled, "Smoking Cessation, A Report of the Surgeon General."
E-cig tax
The day before HB 69 passed, HB 32 passed out of the House Appropriations and Revenue Committee with a committee substitute that would impose a 25% wholesale tax on e-cigarettes.
The new version of the bill is expected to generate nearly $50 million over the next two years, raising about $22.6 million in Fiscal Year '21 and about $27.3 million in Fiscal Year '22. It also increases the wholesale tax for "other tobacco products," like cigars, from their current 15% to 25%, The bill adds e-cigarettes to the list of "other tobacco products. It would also double the per-unit tax on non-smokable and chewable products -- as was proposed in the governor's budget.
The original version of the bill, which called for a 27.5% tax hike, would have raised $94.1 million over the next two years.
Miller said the essence of this bill is to decrease youth e-cigarette use. "The most effective way to attack use by those under 21 is through raising the price," Miller said.
Representatives from the Kentucky Smoke Free Association, which represents about 400 independent vape shops statewide, told the panel that while they support the added regulations found in HB 69 because they address teen access issues, they do not support this tax increase because it will hurt their businesses, while doing little to hurt Juul Labs or the grocery and gas station chains -- which will still be allowed to sell some tobacco and menthol flavored e-cigarettes.
"We ask that you will reconsider this tax, because it's going to do nothing but hurt them and increase the [money in the] pockets of companies like Juul, who can absorb a 25% tax easily," LeBlanc, who spoke at both meetings, said.
They added that their goal is to help people quit smoking cigarettes and said this tax would discourage adults who want to use them as a cessation device. Further, they said it will push teens into purchasing their products online.
Jason Underwood, a lobbyist for the Kentucky Smoke Free Association, cited a study by the National Bureau of Economic Research that found higher e-cigarette taxes could lead to increased cigarette smoking. The study looked at Minnesota data, which imposed a 95% tax on e-cigs.
Ben Chandler, president and CEO of the Foundation for a Healthy Kentucky, voiced support for 25% tax on e-cigarettes, recognizing that a higher tax would reduce tobacco use even more.
"We know that raising the price of tobacco products is one of the most effective measures for reducing tobacco use," he said. Later adding, "The Foundation for a Healthy Kentucky believes than an excise tax of 25% of the wholesale price is close enough to the current tax on cigarettes and would lead to a substantial enough price increase to create a considerable reduction in youth vaping," he said.
Rep. Lynn Bechler, R-Marion, who cast the only no vote for the tax bill, said he didn't think this "sin tax" was warranted because people are already taxed enough. He added that he had taken the testimony of the vape shop representatives to heart
"I don't want to put those people out of work," he said. "So if we're putting people out of work and the epidemic isn't going to lessen, I don't understand the reason to do it."
Democratic Gov. Andy Beshear's budget recommends a 10 cent tax increase on cigarettes and other tobacco products and a 10 cent per milliliter tax on vaping liquids. These hikes are projected to raise $57 million over the next two years.
E-cigarettes incur a 6 percent sales tax, but is currently the only tobacco product in Kentucky that does not have an excise tax.
Juul fights back
Juul Labs the largest e-cigarette company, is not happy with these bills, recently sending a message to its customers that ask them to reach out to their legislators in opposition of the bills. The website includes a link to a form-letter type message that states opposition to the bills. The call for action says this legislation is "unbalanced and misguided," stating that it "will restrict your access to JUUL, while leaving cigarettes freely available on store shelves" and that they "may no longer be able to ship you JUUL devices or JUUL pods, nor will they be available at your local convenience store."
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