Extras on Excise: E-Cigarettes Play Roadrunner to State Tax Bills’ Wile E. Coyote as Some Legislatures Adjourn, But That’s Not All, Folks!


Though 2015 started with a bang with several state legislators filing e-cigarette tax bills, the sound being made so far is “Meep! Meep!” as e-cigarettes evade the Acme anvil of legislation.

Out of the 18 states with electronic cigarette tax bills filed, five bills have already met their demise in four of the states. Virginia’s Legislature, which adjourned in February, killed both H.B. 1310 and S.B. 1004 in committee. These bills would have imposed $0.40 (H.B. 1310) and $0.18 (S.B. 1004) excise taxes per milliliter of e-liquid.

Montana’s H.B. 579, proposing a 0.0173 cent tax per milligram of nicotine in the vapor product for each milliliter of consumable material, was officially withdrawn on March 5. The state Legislature’s website lists the bill as “probably dead.”

The bills in both Arizona and New Mexico died in committee before their legislatures adjourned on April 3 and March 21, respectively. Neither one had made much progress. The House had only read H.B. 2596 for the first time on March 31 in Arizona; in New Mexico, S.B. 65 had been introduced and referred to a committee.

In Utah, Gov. Gary Herbert (R) signed H.B. 415 into law on March 24. The law requires licenses to sell electronic cigarettes and authorizes the state health department to create regulatory standards for packaging, labeling, content and product quality. While the governor’s budget proposal had included taxes for e-cigarettes, there are no provisions for them in the new law. Meep! Meep!

Time is ticking for other tax bills. The Legislature in Arkansas will adjourn in early May and it is currently on recess. The status of H.B. 1156, which proposes taxing e-cigarettes at $0.075 per milliliter, is still pending. On March 27, the bill was withdrawn, but the Legislature’s website says that within a minute, it was recommended to be studied by the Joint Interim Committee on House Rules.

The Indiana General Assembly is also slated to end soon; H.B. 1235 (24 percent tax imposed on the wholesale price, including the e-cigarette cartridge) and S.B. 384 ($0.0083 per milligram of nicotine in the e-liquid) are still making their way through the legislative process.

E-cigarette industry officials continue to be vigilant, however. Bloomberg BNA attended the ECig East Coast Industry Conference taxation focus event on March 30 in Washington, where participants voiced concerns over the structure of current e-cigarette excise taxes in Minnesota and North Carolina, as well as future legislation.

And they have reason to do so. Even though five bills have been stopped, legislation is still pending in several states, and governors in Washington, Pennsylvania, Utah, Louisiana and New Hampshire have called for taxing e-cigarettes in their budget proposals. Additionally, on April 2, D.C. Mayor Muriel Bowser (D) submitted her budget plan, which includes taxing e-cigarettes, to the D.C. Council. Her plan would subject electronic cigarettes to the same tax treatment as other tobacco products.

Not to be forgotten is the Food and Drug Administration’s proposal to regulate e-cigarettes, which was released last April. When asked about this at the ECig conference, NJOY Premium Electronic Cigarettes’ Director of External Relations Brian Fojtik said that nobody can predict the upcoming decision, as he believes the FDA itself is genuinely struggling over how treat the products.

Until the FDA makes a decision, viewers must stay tuned to see what legislative Acme tools Wile E. Coyote still has in store for the E-Cigarettes Road Runner.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: What are your predictions for state and federal e-cigarette tax regulations?

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by Laura Lieberman