Nicotine Tax Rewards Big Tobacco

Nicotine Tax and Build Back Better Act

Federal lawmakers are considering a tax on e-cigarettes and vape juices to help fund the Build Back Better Act (BBB). The nicotine tax is currently being debated and was not part of the initial bill. The danger of it passing in the coming weeks is an eminent threat to the vaping. Its threatens to further damage the independent vaping industry and deny adult vapers access to the products and e-liquid flavors they prefer.

No Tax Increase on Cigarettes 

With no corresponding tax on cigarettes, this law will regressively tax marginalized groups, drive vapers back into the waiting arms of Big Tobacco, put thousands out of work by killing off the additional vaping businesses and will still fail to generate consistent revenue.

The proposal is expected to generate $96 billion in revenue but is a flawed concept. A tax on nicotine is a perfect example of a “Sin Tax” but this style of revenue generation is regressive by its very nature. Sin taxes rarely deliver the revenue promised. 

Marginalized Americans who vape will likely suffer worse health outcomes because of the nicotine tax unless total nicotine abstinence is embraced by a wide swathe of the vaping public. Considering how well the war on drugs, soda taxes, prohibition and similar initiatives have fared, this is an unlikely outcome. The more likely outcome is that Big Tobacco welcomes back past smokers or is able to sell more of their own vape products. With lower volumes of e-liquid contained within, there is less sticker shock when the tax hike is spread over multiple transactions.

Please visit CASAA to help fight the Vape Tax.


Nicotine Tax

In its current form, the nicotine tax will be imposed at a rate of $50.33 per 1,810 milligrams of nicotine. It will not apply to cigarettes, the most popular form of nicotine consumption. This will more than double the price of a 25mg salt nic juice, and hammer 6mg max-VG juices with a 40 percent spike. DIY vapers will be hit by far the hardest.

This tax will be applied on top of the already onerous series of local and state taxes that many vapers encounter on a regular basis and compounds the PACT ACT induced shipping price increases.  

US versus UK

The US is taking the exact opposite of the approach adopted in the United Kingdom, where vape companies can now submit their products to the National Health Service for approval as a prescription product. The UK paves the way for prescription vapes in order to get them into the hands of disadvantaged and marginalized smokers. The US prepares to pass a regressive tax on e-liquids that drives vapers back to cigarettes. 

The NHS also hosts the “Using E-Cigarettes to Stop Smoking” website. The NHS is not a for profit institution. This makes it harder for lobbyists to manipulate their policies without outside pressure and money. The NHS has skin in the game and their goal is to identify the most effective and affordable treatment options for citizens of the United Kingdom. They would jettison e-cigarettes in a minute if they thought that they were not effective.

They had no qualms about ditching homeopathy, herbal medicine, chiropractic care and other alternative forms of treatment. And they did this despite loud cries from the wealthiest and most influential residents in the land, including Prince Charles. 


Vape Taxes Punish Marginalized

Despite stated claims that the President’s Build Back Better Act (BBB) will not raise taxes on anyone making less than $400,000 per year, the vaping tax will be shouldered almost entirely by individuals making far below this threshold. The Biden administration does not seem all that progressive when compared with the United Kingdom on the issue of harm reduction. A regressive tax should be an anathema to anyone with a liberal bone in their body. 

As reported in a Washington Post feature, wealthy Americans stopped smoking decades ago. Marginalized groups, rural Americans and lower socioeconomic groups are most likely to vape.


Vaping in LGBT Community

Vaping is most prevalent in the LGBT community. The CDC found that 20.3 percent of adults that identify as lesbian, gay or bisexual smoke cigarettes, versus an overall rate of 14 percent. Bisexual women are over twice as likely to smoke as heterosexual women. As a whole, the LGBT population in the US is three times more likely to use electronic cigarettes: 7.5 percent versus 2.6 percent. This is the highest rate for any group surveyed. Smoking rates among the transgendered have been estimated at over 80 percent and studies have tied this to structural discrimination. The smoking rate in the LGBT community kills over 30,000 annually and leads significant health disparities.


Vaping in African American Community

The International Journal of Environmental Research and Public Health conducted a study into racial and ethnic differences among e-cigarette users. They found that African Americans were more likely to embrace e-cigarettes as a cessation aid than Whites and Hispanics. They were also statistically more inclined to avoid dual use of cigarettes and e-cigarettes.

With less access to independent vape shops in the rural south and the heavier tax rates on vape products present in the urban north, for many Black Americans their access to cigarette alternatives will be dictated by PACT Act restrictions and the whims of local convenience store owners.


Rural Americans

Rural and poor areas also suffer from the scourge of cigarettes. Lung cancer rates are far higher and a lack of access to health care is blamed. Smoking health disparities have been compounded with the PACT Act. It is no longer viable to ship smoke and ash free combustible cigarette alternatives to much of rural America. Without a population base to support a local vape shop, if you do not agree to enforced nicotine abstinence the remaining options are gas station e-cigs manufacturers by Big Tobacco and of course tobacco cigarettes.


Vaping Beats Nicotine Replacement Therapy

In light of the New England Journal of Medicine (NEJM) study that found e-cigarettes were nearly twice as effective as nicotine replacement. Critics of the study expressed concerns about former smokers continuing to vape were presented as proof that e-cigarettes have no value.

This critique marks a major shift of the goalposts and demonstrates that the old myth was that e-cigarettes merely supplemented cigarettes and were a gateway drug to smoking should be buried for good. The real gateway from vaping to cigarettes may end up being a heavy tax burden on e-liquid purchases and not raising tobacco taxes a single cent.


Funneling Vapers Back to Cigarettes

It really should come as no surprise that there is no combustible cigarette tax that runs parallel to the proposed vape nicotine tax. Every broadside unleashed at the vaping industry over the last year has seemingly targeted smaller and independent businesses while leaving Big Tobacco owned operations unscathed.

The PACT Act punishes smaller vape shops and online retailers, driving customers to the convenience store and gas station locations dominated by products made by Big Tobacco. A tax on nicotine e-liquids products will simply shift these sales one shelf over to cigarettes.


Vaping’s Potential Suppressed

Former FDA chief Scott Gottlieb, no ally of the vaping industry, long argued that it would be a net positive if every cigarette smoker switched to vaping. Even in FDA press releases lamenting the increase in teen vaping, he argued that the potential benefits of vaping should be explored:

We saw a chance to leverage the potential benefits of new and non-combustible technology to allow more adults to get nicotine from sources that could pose a lot less harm than smoking cigarettes. We continue to believe in this central concept.



This view is clearly not shared by lawmakers. The goal of universal nicotine abstinence, or the use of the pharmaceutical nicotine replacement therapy products that were soundly beaten by vaping as a cessation tool in the NEJM study, is admirable on paper. Yet in the social circles frequented by Michael Bloomberg, whose $160 million in funding has put the vaping industry’s future in the hands of a single man with an agenda, are there any other risky adult behaviors where total abstinence is suggested as the only solution?

Or would such benighted views get you laughed out of the room? This mindset is how you end up with scenarios such as San Francisco. A city once noted for harm reduction and compassion outright banned flavored vape products three years ago. At the same time, safe injection sights staffed by nurses for IV narcotics users are currently approved. Interestingly, the mysterious lung ailment of 2019 that was traced entirely to cannabis cartridges with vitamin E acetate did not result in a ban on those vaping products.

Between the PACT Act, flavor bans, and new taxes, there are three options being presented to vapers. One is a puritanical gold standard of total nicotine abstinence. The second option is the use of less effective gums and patches. An option made more likely with the nicotine tax is to once again take up smoking.  


Sin Taxes

Prohibition, the war on drugs, soda taxes and previous efforts at exerting comprehensive control over the habits of the masses have failed. Sin Taxes rarely generate the revenue that is promised. This is true for alcohol, gambling and tobacco.

These taxes are not only regressive but the parties most impacted are not the wealthiest Americans because the wealthiest Americans would never stand for their vices to targeted by the government.

Consumption taxes have been around for centuries. They rarely succeed as planned. Adults find ways to circumvent the tax. Be it the black market, reduced consumption or shifting to a similar product, there is no guarantee that the nicotine tax will create a consistent revenue stream and considerable evidence that it will underperform. 

This is because driving down sales also reduces the amount of money generated by the tax. Rather than funding the BBB, the vape tax could have the perverse effect of destroying thousands of jobs in the vaping industry, driving hundreds of thousands of vapers back to smoking, generating revenue for Big Tobacco companies and not bringing in anywhere near the promised revenue.


Regulatory Capture

It has become increasingly impossible to note that a textbook case of regulatory capture is unfolding before our eyes and smaller vaping companies are the primary victims. Regulatory capture is a theory that often plays out in practice in the United States. It occurs when government agencies are dominated by the largest stakeholders in the industries they are meant to regulate. Public interest takes a backseat.


State Flavor Bans

It started with illogical flavor bans on the state level. Former FDA head Scott Gottlieb blames Juul for the teen vaping epidemic and there is no question that Juul Mint made up the majority of sales to minors. Yet every anti-vaping press conference seemed to include a colorfully labelled max-VG juices as a prop. Consumed in vape mods, these lower nicotine juices generate tons of vapor, odor, have lower nicotine levels and frankly even the devices are quite loud. They are the opposite of discrete.

Flavor bans assist Big Tobacco companies on two levels. The first is that adult vapers overwhelmingly prefer sweet dessert, fruit and beverage vapes. Taking away the preferred flavors makes it more likely that adults will switch back to smoking. Then there is the matter that the Big Tobacco e-cig offerings focus overwhelmingly on fake tobacco flavors.


Misinformation and Debunked Studies

State and city flavor bans were in many cases enacted as emergency responses to an outbreak of lung disease in the fall of 2019. It turns out these unfortunate cases were due to vitamin E acetate found in black market THC cartridges. Not one commercially available nicotine vape was ever tied to this outbreak, as vitamin E acetate would serve no role in a propylene glycol and vegetable glycerin formula.

This did not stop Governor Whitmer in Michigan from failing to protect her state from cannabis cartridges, possibly to the benefit of the industrial hemp industry which supported her candidacy. This was a potential explanation for her misleading approach and failure to take executive action against the responsible products according to the Detroit Metro Times

CDC Finds No Vitamin E Acetate in Any Nicotine Vape Sample

The final conclusion of the CDC did not come until December 2019, even though such disparate groups as the Leafly Magazine, Utah, ex-FDA Chief Scott Gottlieb and New York City identified vitamin E acetate as the culprit by Labor Day. 

“Pure THC oil has a viscosity like that of vitamin E acetate. Cutting THC oil with vitamin E acetate has been reported to be common in the illicit market.9-11 The FDA reports that most case-associated THC product fluids contain vitamin E acetate, at an average concentration of 50% by weight, ranging from 23 to 88%.8 By contrast, the FDA detected no vitamin E acetate in 197 case-associated nicotine products analyzed to date. The viscosity of vitamin E acetate makes it undesirable as an additive to nicotine solutions; the propylene glycol and vegetable glycerin in nicotine solutions create a fluid with a much lower viscosity than that of vitamin E acetate.

Centers for Disease Control, " Vitamin E Acetate in Bronchoalveolar-Lavage Fluid Associated with EVALI", 12/20/2019


Coupled with the bunk science and shadowy machinations behind the retracted Heart Attack Study of Dr Stanton Glantz, discussed here in the USA Today, it is clear that the enemies of vaping are willing to obfuscate and distort news items to frighten the public and further their agenda.


Federal Flavor Ban 2020

The 2019 lung disease scare and uptick in teen vaping upped the political pressure on the Trump Administration to suppress vaping. The initial rumor was that a total flavor ban was in the works. This would be similar to what was enacted in Massachusetts, New Jersey, New York, Michigan and other states.

The flavor ban was thought not to include Juul Mint. Basically, all the flavors and juices popular with adult vapers would be scrapped. The product viewed as most responsible for the teen vaping epidemic could remain on store shelves and Big Tobacco’s collection of vape products and cigarettes would enjoy a boost in sales as all their competitors were driven out of business.

To the credit of an administration viewed as controversial by half the country, this did not end up occurring. Instead, bans on flavored vape pods and cartridges were enacted. The primary target was Juul and their prefilled vape pods. Similar products from Juno, MyBlu and Vuse were also hit. Legacy cigalikes with prefilled carts were also swept up in the ban.

While it is the opinion of the author that Tobacco 21 laws should have been given an opportunity to prove their worth before cancelling an entire class of vape juice flavors and devices, at least the federal flavor ban specifically targeted the products most popular with underage vapers.

Since the time of federal flavor ban, teen vaping rates have decreased. The final research is not in but Tobacco 21, general teen trends and Covid-19 probably all had a hand in the decrease. Most underage vapers obtained their products from peers and friends. Illegal sales at convenience stores only made up a small percent of sales. The CDC National Youth Tobacco Survey had already confirmed that flavors were not the catalyst for the uptick in teenage vaping.



The PMTA application process involves multiple steps. The FDA reviews vaping product applications to assess their public health impact. Vapes, which they refer to as Electronic Nicotine Delivery Systems (ENDs), are the exclusive target as cigarettes are grandfathered in.

It is obviously much easier for a huge tobacco company to fund the studies necessary to defend their application. Vuse, Logic, Juul and MyBlu all have Big Tobacco backers. 

Moreover, Big Tobacco vaping products generally have far fewer flavors and nicotine strength options. It should come as no surprise that the first product approved was from RJ Reynolds. The Vuse Solo, an antiquated 2013 cigalike, was the first e-cigarette to receive FDA approval.

Despite being a federal agency that should be immune from craven lobbying and a current presidential administration that proclaims that science and not agendas will dictate executive policies, members of the President’s party continue to pressure the FDA to make PMTA decisions they consider favorable. 

Their goal is a nearly total ban on vaping devices. This lobbying crosses a line set by the Supreme Court case Pillsbury v. The Federal Trade Commission.



What is there to say about the PACT Act?  Combined with flavor bans, the comprehensive restrictions on USPS shipment and excise tax enforcement drove many small vape companies out of business.

Added to PMTA woes, it is not hard to envision a world where the only vape products left are Big Tobacco manufactured tobacco vape pod systems. The acceptance of the Vuse Solo’s PMTA application is a reminder of what the state of the art in vaping technology used to look like. It was unsatisfactory and many would be vapers stuck with smoking until the creation of more effective devices and more palatable e-juice flavors.

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