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In this blog post, you will find all about the legislation in the state of California and how it impacts the future of our company since Freeman Vape Juice is California based. We are doing our best to fight against this ban and keep making the vape juices you all love!
We think that information is power, so learning as much as you can regarding the PMTA and the vape ban is key in fighting back. Be sure to share it with your friends and to tweet it.
The legislation to ban the retail sales of all flavored tobacco and vaping products passed the California Senate Health Committee on May 13, 2020. Senate Bill 793, which was introduced by Senator Jerry Hill, was also against all “flavor enhancers,” which include any flavoring agents sold to modify unflavored nicotine.
And the Senate Health Committee voted 8-1 in support of the bill, putting it up for further review by the Senate Appropriations Committee, after which it will have to pass through one additional committee before the full Senate votes on it.
Senator Hill noted that the bill is aimed at halting the widespread youth consumptions of flavored vapor and tobacco products, including e-cigarettes, e-pipes, e-hookahs, and other vaping devices, as well as cigars, pipe tobacco, cigarillos, snuff, chewing tobacco, and tobacco edibles. He stressed that the use of tobacco is the leading cause of preventable death and disease.
“We need to be mindful of the long-term effect of a new generation hooked on nicotine. There is no need for the most deadly product to come in candy flavor,” Senator Hill said.
He had introduced a similar flavor ban bill in 2019, but it was beaten back. However, many vaping advocates expected that California would be the first state to place a ban on vape products. But due to the lung injury outbreak, CDC called “EVALI,” several eastern states have passed flavor bans out of fear and uncertainty about vaping.
States like New Jersey, Rhode Island, Massachusetts, and New York have gone ahead of California. Even Florida has a ban in place awaiting the Governor’s signature or veto.
However, many counties and cities around the state have banned the use of vape products. Notably, among them, San Francisco has banned the sale of all vaping products, whether flavored or non-flavored.
The Oakland City Council has also voted 8-0 to get rid of the elimination that allowed adult-only vape shops and other retailers to sell flavored products.
How is the state of California taxing the vape industry?
California currently taxes all vapor products at 59.27 percent of the wholesale value. (yeah that much) But on May 14, 2019, Governor Gavin Newsom submitted his revised budget, which includes a vapor tax increase. This proposal imposes an additional tax at the rate of $2 for each 40milligrams of nicotine in the product.
If this tax passes the legislature, the effect will begin on January 1, 2021, and it is forecasted to raise $32 million in FY 2021. According to the budget summary, the money would force enforcement, administration, health care workforce programs, and youth prevention.
The implication is that for every 60ml bottle of 6mg/ml e-liquid, there would be an additional $9 to the price. So for a 30ml bottle of 25mg/ml vape juice, the price would be up by $18.75. And four-pack of JUUL pods would cost an additional $8.25. More so, there would be $2,500 extra for every 1-liter bottle of 100mg/DIY nicotine.
The statistics above show that smokers considering to switch to vape products will have to think hard about the chance of saving money if they continue with vaping.
But the Governor’s tax, aimed at restricting kids from patronizing vaping products. This is informed by a national survey of high schoolers, which was published in the fall of 2019. The result shows that in the previous 30 days, 27.5 percent of students had vaped at least once. Out of this number of students, 10 percent were considered regular users (vaping 20 days out of 30).
Hence, the impetus of this tax increase proposal is the increased use of vaping products by youths in the state. And the tax proposal sets aside $7 million to establish a task force in cooperation with the Department of Justice to combat the underground market for vaping products.
But unfortunately, this concern for youth uptake will drive many adults back to smoking. Outright ban and punitive level taxes will sure impede the high smoking cessation rates already recorded.
Newsom’s proposed tax increases the price of high-nicotine vape products. And this will encourage vapers to patronize low-nicotine e-liquid but in larger quantities. But the harm does not lie using more nicotine, but in vaping more of the carrier liquids (VG and PG) and flavorings in e-liquids. So, instead of the tax-reducing the potential harms of vaping, it puts vapers at higher risk.
Besides, the excessive nicotine tax that Gov. Newson is proposing, coupled with his support to ban all flavored nicotine products, will encourage the rise of the vaping black market.
“This tax should not exceed taxes on other restricted products based on age, including alcohol, cannabis, and tobacco,” said Tony Abboud, executive director of the Vapor Technology Association. “The enormous cost of the health care system due to smoking is enough to encourage vaping instead of smoking. We are ready to work with the Governor on regulations that discourage the use of vaping products by youths only if it does not give an unfair advantage to combustible cigarettes,” he continued.
Besides, the health economist from UCFS, Wendy Max, stressed that “vaping is complicated, and kids are going to respond to tax increase. They may not have a lot of money, but the nature of the product encourages sharing with other kids. So there are ways kids can get away from the tax burden.”
Last year, Virginia, Kentucky, Utah, and Wyoming already passed increases to vapor tax. So for now, 25 states and the District of Columbia tax vapor product. California is the latest to try this increase in vapor tax.
What is going to happen with vape shops based in California after the September PMTA?
The PMTA deadline for manufacturers of vaping products remains September 9, 2020. It was initially set for May 12, but it was shifted for an additional four months due to the challenges created by the coronavirus pandemic.
All products, including prefilled pods and cartridges containing flavors other than menthol and tobacco, must receive FDA market approval before they can be sold. However, the process for completing a successful PMTA is quite complicated and expensive, and it requires several studies, testing, and evidence.
So the question remains, “what is the fate of vape shops based in California?” “Can they afford the price of PMTA ($117,000 to $466,000 for every product) to stay in business?” You need to understand that the PMTA process was never intended to be easy. The primary goal to restrict the vapor industry from thriving in the market. And considering all the required documents and evidence for PMTA, including the cost and expenses, it becomes a problem for small vape shops, especially those based in California.
Undoubtedly, the cost of PMTA is an insurmountable hurdle, and many vape shops will have to stop operation.
So what happens to your favorite e-liquid company based in California?
Looking at the low chances of most vape shops to get approval from the FDA on September 9, 2020, it is clear that your favorite e-liquid company in California might close down. The implication is that you have a higher tendency to fall back to smoking harmful tobacco again.
You need to speak against this proposal that goes against the concept of harm reduction.