For a few hours Wednesday, North Carolina legislators in Raleigh appeared to have taken a bipartisan step toward significant tobacco taxing and funding regulations.
However, the N.C. House Republican leadership determined that the timing wasn’t right for an increase in the excise tax on electronic cigarettes, even though it had potential to help deal with elements of the state and national vaping-illness crisis.
An amendment to Senate Bill 557 submitted by state Rep. Gail Adcock, D-Wake, in the House Finance Committee would have taxed vaping products at the same rate as traditional cigarettes.
The current excise tax on vapor products is 5 cents per fluid milliliter of consumable product — a much lower rate supported by tobacco manufacturers when the law was passed during the 2014 legislative session and took effect in February 2015.
By comparison, the excise tax on a pack of traditional cigarettes is 45 cents, one of the lowest rates in the country.
The amendment created an intriguing dynamic: raising the vaping tax to discourage young people from using the products, while also potentially being a disincentive for adult smokers trying to switch to what some health experts considered as a reduced-risk option to combustible cigarettes.
The lower excise tax was meant to make e-cigarettes and vaping products a less-costly alternative to traditional cigarettes.
“It is a good time for this amendment because it creates a level (tax) playing field for electronic cigarettes and vaping,” Adcock said in recommending the legislation.
Just as pivotal, the net proceeds from the tax would have helped create the Tobacco Use Prevention Fund to evaluate, track usage and make recommendations concerning “emerging tobacco products ... especially among youth and people of childbearing age.”
Although it is unclear how much the tax could have raised annually, it would have represented a major, sustainable improvement from the $2.8 million in state funding currently dedicated to tobacco-prevention efforts.
The amendment had bipartisan support in the finance committee, which ended up recommending it, even though some Republicans preferred dealing with the issue in a stand-alone bill.
However, before SB557 could reach the House floor Wednesday night, the vaping-tax language was removed in what was called an effort to get the core of finance-law changes approved.
On the House floor, Adcock expressed her disappointment and frustration at having a potential political and socio-economic breakthrough dashed.
“This would have established a permanent funding stream for tobacco-use prevention with an emphasis on youth and on vaping,” Adcock said. “This (removal) keeps this from being a better bill. It harms it, and it is not as good as it could have been.”
Yet Adcock took solace in the pledge made by a co-chairman of the finance committee, state Rep. John Szoka, R-Cumberland, on the House floor to work with her “to advance the larger issue of what they want to accomplish.”
State Rep. Verla Insko, D-Orange, a leading legislative health-care expert, said that “with the recent deaths and illnesses associated with vaping by youth right here in North Carolina, this is a perfect time to take action to educate our young people about the very real and dangerous risks.”
“I’m sure we will all follow up on this.”
Sixty-one cases of lung injury in N.C.
The amendment was inspired in part by the sobering news of North Carolina’s share of the vaping-illness crisis.
On Tuesday, the N.C. Department of Health and Human Services issued a news release that said North Carolina has experienced at least 61 cases of severe lung injury associated with vaping.
All patients reported a history of using e-cigarette or vaping products, with most saying they had used THC-containing products in open-pod systems that allow for liquid refills. THC is the primary psychoactive component in cannabis. Eighty percent of North Carolina cases interviewed reported vaping THC.
The U.S. Centers for Disease Control and Prevention has not confirmed whether the problem stems from THC or from thickeners added to the vaping liquid.
There have been few cases directly connected with closed-pod e-cigarettes, such as those made by Juul Labs Inc., R.J. Reynolds Vapor Co. (Vuse), Fontem Ventures (blu eCigs) and NJoy,
“Those who use e-cigarettes or vaping products should not obtain them through informal sources and should not modify or add any substances,” said Dr. Zack Moore, North Carolina’s state epidemiologist.
The DHHS expanded its warning to include recommending individuals get a flu shot to protect against a combination of the flu and lung injury from vaping.
Tobacco-use prevention programs
North Carolina’s heritage as a tobacco-growing state has made it challenging to ramp up funding for prevention initiatives.
In December, North Carolina went from 43rd to 42nd nationally in terms of how much it allocates annually for tobacco-prevention programs, such as quit lines and public-health marketing initiatives.
The 2017-18 and 2018-19 state budgets added $500,000 to be used “to develop strategies to prevent the use of new and emerging tobacco products, including electronic cigarettes, by youth and people of childbearing age.”
Several anti-tobacco and public-health advocates support raising the excise tax on vaping products, smokeless tobacco and snus because they view them as potential gateways to the use of traditional cigarettes. Anti-smoking advocates dispute those findings.
Legislators opposed to the Adcock amendment said they agree with anti-smoking advocates who say e-cigarettes have the potential to wean smokers off traditional cigarettes, thus playing a positive public-health role.
Momentum continues to grow across the nation for raising the minimum age to buy tobacco products from 18 to 21.
However, North Carolina’s Republican legislative leaders appeared content to remain on the sideline as the current legislative session neared its end.
Despite speculation in January that 2019 might be the year the drive for age restrictions on tobacco purchases moved forward, no bill has been introduced toward that goal.
To date, 18 mostly Democratic-leaning states have enacted age-21 restrictions, along with Republican-leaning Arkansas, Ohio, Texas and Utah. Of the traditional tobacco states, only Virginia has age-21 restrictions. Some states’ 21 or older laws won’t take effect until 2020 or 2021.
House Bill 725, co-sponsored by state Rep. Donny Lambeth, R-Forsyth, would have enhanced state initiatives to prevent young people from using tobacco products with a $17 million funding boost for both budget years. It has not been heard in committee.
In the 2017 session, bipartisan House Bill 435 would have raised the smoking and vaping age to 21. Lambeth was a co-sponsor of that bill as well. It was sent to House Rules and Operations Committee, where it collected dust for the entire 2017-18 and 2018-19 legislative sessions.
“As much as health committee chairs talk about the benefits to raise the age, there is still only limited support across rural North Carolina,” Lambeth said.
“North Carolina has a rich history with both our tobacco farmers and strong corporate partners who have been the backbone of our economy.” he said. “Tobacco remains an important part of that history.”
Lambeth said, however, the health issues related to smoking “are serious and costly issues for our state.”
“It is important that we continue to inform our citizens of the risk and that we particularly make sure our youth are aware of those risks,” he said.
As recently as 2014, the top Big 3 tobacco manufacturers — which included Lorillard Inc. at that time along with Philip Morris USA and R.J. Reynolds Tobacco Co.— were adamant about preserving 18 as the minimum age for using their products.
However, in November 2018, Philip Morris USA, Reynolds and ITG Brands LLC signaled support for a U.S. Food and Drug Administration recommendation to Congress to support the initiative to raise the minimum age to 21.
The strategic policy changes likely come in large part from an FDA request in September that Juul, Reynolds Vapor, Fontem and Logic submit details on how they plan to curtail use of their products by youth, in particular flavored electronic cigarettes.
Reynolds said on Nov. 3, 2018, that it supports age-21 restrictions at the federal and state level, as well as implementing safeguards to prevent online purchases by youngsters and “straw” purchases, which Reynolds defines as “any person who purchases on behalf of an underaged person.
“Tobacco 21 is an important step forward,” said John Schachter, the director of state communications for the Campaign for Tobacco-Free Kids, “but it must be part of a comprehensive strategy that also includes, for example, ending the sale of the many flavored tobacco products that lure kids, raising tobacco taxes, and funding tobacco prevention and cessation programs.”
It’s not surprising that North Carolina legislators are lagging behind other states with age-21 restrictions, said John Dinan, a political science professor at Wake Forest University and a leading national expert on state legislatures.
“This is an issue that only recently emerged on the agenda of many state legislatures in a serious way,” Dinan said. “Sometimes, movements of this kind just take a few years before they spread more broadly and fully to various regions. So, if anything the speed with which the movement enjoyed success in 2019 is striking.
“It wouldn’t be a surprise to see the ranks of states with such laws increase further in coming years and to include more Southern states,” he said.
Dinan said it’s possible that the Republican leaders of the N.C. legislature may favor allowing Congress to set age-21 restrictions.
“The announced support of the most powerful member of the U.S. Congress for a national law,” Dinan said, “likely drew increased attention to efforts to pass state laws, and in a way that helped state efforts.”
“On the other hand, to the extent that this signaled the real possibility of a national law passing, this might have taken some of the urgency out of state officials’ moves to pass state laws,” he added.
Effects of taxation?
David Sweanor, an adjunct law professor at the University of Ottawa and the author of several e-cigarette and health studies, argues that “here is a huge difference in risk between different nicotine products, and tax and regulatory policies should encourage consumers to move away from lethal combustible cigarettes.”
“Anything that narrows the price difference between cigarettes and vaping discourages substitution (and) is helpful to the cigarette business, but perpetuates a public health catastrophe,” Conley said.
Brad Rodu, a professor of medicine at the University of Louisville and an anti-smoking advocate, is a proponent of no excise taxes on e-cigarettes.
“My plan was endorsed by 16 tobacco research and policy experts, and it was enacted by the Kentucky General Assembly last year,” Rodu said.
“The economics are simple: raising the tax on (currently) less expensive and vastly safer e-cigarettes will not deter youth experimentation, but it will protect cigarettes at the expense of adult smokers.”
Zagros Madjd-Sadjadi, an economics professor at Winston-Salem State University, said that while increasing the e-cigarette excise tax would reduce some consumption, “it is more likely that this will end up increasing cigarette consumption as opposed to getting individuals to quit entirely since cigarette prices are not being increased in tandem.”
“This is especially true for older teenagers and men who will tend to switch from e-cigarettes to traditional cigarettes rather than quit entirely,” Madjd-Sadjadi said.
Mitch Kokai, senior policy analyst with the libertarian-leaning John Locke Foundation said lawmakers should approach increasing the vaping excise tax “with skepticism and caution.”
“A good rule of thumb is that if you want less of something, you tax it,” which is why anti-tobacco advocates overwhelmingly support higher state and federal excise taxes, Kokai said.
“Advocates of this approach want to treat e-cigarettes in much the same way as state government treats traditional cigarettes. That shouldn’t surprise us,” he said. “If you’re accustomed to using a regulatory hammer, then every new challenge starts to look like a nail.
“They also want to create a new fund — overseen by government bureaucrats — to deal with the tax revenue,” Kokai said.
“Growing bureaucracy always should raise a red flag.”