IN THE TRENCHES
STATE OF THE STATES UPDATE
JUNE 24, 2019
As state legislatures around the country are adjourning, there has been a lot of activity in the last couple weeks on which we need to catch you up. There is still considerable work to be done in the Northeast which remains very active on the tax front. Thus far, solid performances by VTA’s lobbying teams in each of these state capitals and by the VTA’s affiliated state associations are delivering wins and negotiated bills that are in strong defense of our industry. Importantly, no state flavor ban bills have been passed as we continue our vigilant defense. Here are some of the highlights:
Connecticut Drops Flavor Ban, Moves Forward With Tax Bill
The big news out of Connecticut is that our team has successfully removed the flavor ban from consideration. The language of HB 7200 was recently amended to strip out the flavor ban. Thanks to the steady drumbeat by the New England Vapor Technology Association and VTA lobbyists this effort was successful.
Also, Finance Committee Chairman Jason Rojas has been working with the VTA to find an alternative to the wholesale tax proposed by Governor Lamont. SB 877 passed the legislature last week with a bifurcated model. The new tax is $.40 per ML for closed systems and 10% for open systems at wholesale. Unfortunately, the compromise language supported by all of the industry players was modified late the night before the vote to apply the tax to open system devices as well. The VTA is strongly opposed to this language and we are seeking avenues to fix it, including working with the Department of Revenue services to modify it administratively.
Finally, HB 7200 did pass both chambers, without the flavor ban as noted above, and will raise the age to 21 for all nicotine products and include a requirement for a signature of someone over the age of 21 for delivery of online sales.
Illinois Passes Wholesale Tax But Defeats Flavor Ban
The Illinois General Assembly went into overtime before finally passing several legislative matters including a full year budget, a capitol funding bill for road construction and public buildings, and other tax increases including a dollar a pack increase on combustible cigarettes.
The vapor industry held a lobby day in Springfield and worked tirelessly in the final days of session to defeat the tax. The tax was pulled from the original operating budget funding bill as a proposed bifurcated tax between open and closed systems.
A 15% wholesale was put into the road construction and public buildings funding bill as was a dollar a pack cigarette at the request of the Senate President. This tax is still 15% lower than any other product in the OTP category. VTA and the Smoke Free Alternatives Coalition of Illinois will continue to work with the Department of Revenue on implementation of this tax.
The VTA also worked in the final week of session to kill an 11th hour amendment that would ban all flavored tobacco products, including vapor products. VTA and the Smoke Free Alternatives Coalition of Illinois met with committee members as well as the bill sponsor and convinced them to hold the bill and look at alternatives related to labeling and marketing of vapor products.
Maine Flavor Ban Defeated While Wholesale Tax Revived As Session Ends
LD 1090, the original flavor ban bill, was amended in committee earlier in the session provide penalties for sales to minors. The flavor ban language was removed. In the final hours of the session, there was an attempt to add the flavor language back into the bill. We successfully defeated the attempt and the bill passed.
Two weeks ago the Committee on Taxation amended LD 1028. The 81% wholesale tax was reduced to 43%. Cigarette taxes were removed from the bill but tax increases of 50% are levied on “other tobacco products.” Governor Mills and the Senate leadership had expressed concerns about the taxes as the VTA and the New England Vapor Technology Association continued to lobby against the bill. However, a late-night, backroom deal, in the final hours of the session, ensured that a large portion of the money raised by the tax would go to a handful on hospitals in Governor Mill’s hometown and the Senate President’s district. The VTA attempted a procedural move to stop the bill, however, at the request of General Assembly leadership the bill passed. We are working to pressure the Governor to veto the bill based on campaign promises not to raise taxes.
Massachusetts Tax Bills Heard in Committee
Last week the VTA testified against a series of tax bills before the Joint Committee on Revenue. H 2436, H 2654, S 1606 & S 1633 would impose a 75% wholesale tax on e-liquids. H 2454 would impose a 20% wholesale tax. While the language in each of the bills is similar, some would impose the tax on devices as well as non-nicotine. The hearing was for information only and did not include a vote on any of the bills on the agenda. The VTA continues to work with the New England Vapor Technology Association to lobby against all of the tax proposals.
Nevada Republicans Break Ranks And Vote For A Wholesale Tax
After two months of holding off a 30% wholesale tax in the Senate, Nevada SB 263 was called to the floor and passed the Senate. Despite the hard work of the VTA and the Nevada Vaping Association, we expected the bill to pass the upper chamber. Our efforts turned to defeating the bill in the Assembly. Shortly before the final vote, 3 Democrats committed to vote against their party in opposition to the tax. And, we had also been assured by the Assembly Minority Leader that the Republican Caucus was unified in voting against the bill.
However, the bill was called and passed with the required two-thirds vote, 30-11.
As it turned out, four Republicans broke ranks and voted in favor of the bill. The VTA and NVA attempted to get Governor Sisolak to veto the tax measure, but the Governor ultimately signed the bill.
New Hampshire Compromise: Bifurcated Tax Moves To Conference Committee The VTA and the New England Vapor Technology Association have been working on a compromise to the proposed wholesale tax in HB 2. Last week the Senate passed a bifurcated model that imposes a .30 per ML tax on closed systems and an 8% tax on open systems. Both taxes would be applied at wholesale. The budget bill moves to conference committee last week.
New York Flavor Ban And Sales Restriction Defeated!
The final days of the New York session saw significant anti-vapor action. First, Assemblywoman Linda Rosenthal attempted to revive her flavor ban bill, A 47. Then, Senator John Brooks sought to move S 6076, a bill that would have banned the sale of e-liquid with a nicotine content greater than 2%, but only for e-liquids manufactured in the State of New York. This ill-conceived bill would have killed New York e-liquid manufacturers.
Quick work by the VTA lobbying team in Albany and by all those who answered our Call to Action – which generated more than 5,000 legislator contacts in less than 12 hours – the flavor ban bill was not moved forward and ultimately died. Also, VTA’s team immediately went to work on the 2% nicotine cap bill lobbying the Senate sponsor, Senate members, as well as key Senate staff to have the bill held on the floor.
On Friday, June 21, just before 7:30 a.m., the New York Assembly session ADJOURNED. We want to thank all those that responded to our calls to action and thank our Albany Team – the Parkside Group – for their steady and sophisticated leadership on the ground for ensuring that the flavor ban and the 2% nicotine limit bills did not move. There is more work to be done, but the New York Team and New York vapor companies that stepped up deserve a moment of congratulations. Congratulations New York!
Ohio Senate Passes A Budget With A Volume-Based Tax
Last week the Ohio Senate passed their version of the budget with a .10 per ML tax on vapor products. In addition, HB 166 defines vapor products as any liquid solution or other substance that contains nicotine and is depleted as it is used in an electronic smoking product. The bill moves to a conference committee with the House. Jake Butcher testified for VTA and James Jarvis testified for the Ohio Vapor Trade Association against the tax, and both groups will continue to lobby the conferees to remove the tax from the budget bill.
Oregon Faces Uncertainty After Senators Walk Out
House Bill 2270 would have established a ballot initiative to impose a 65% wholesale tax on vapor products along with additional tobacco tax increases. The VTA and the Oregon Vapor Trade Association lobbied and testified against the bill in committee. In the final hours of the session, Republican senators were being pressured to support the tax measure and other unpopular measures. To avoid that prospect, the GOP Senators walked out of the Capitol and many left the state to avoid being forced to come back.
VTA Working to Prevent Tax Proposals in Wisconsin
Governor Evers proposed a 71% wholesale tax on e-liquids in his budget request to the legislature. The proposal also applies the burdensome floor tax to existing inventory. The Governor’s tax has not gained traction with the legislature, but Assembly Speaker Vos is considering a .5 ML tax for both open and closed systems. The VTA met with key members of the Joint Committee on Finance recently to try to prevent the proposal from being added to the legislative budget. Key Senators were inclined to oppose the tax but had not seen final budget language for consideration. The VTA continues to actively engage in Madison to stop the tax. Share Tweet Forward
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