Vape Stores Face Closure After Washington Passes New Sin Tax on Vapor Products

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Vape Stores Face Closure After Washington Passes New Sin Tax on Vapor Products

In a final flurry of late-night votes before session's end, the Legislature passed a new sales tax on vapor products. The bill, sponsored by Rep. Gerry Pollet, taxes "closed" vape products such as Juul and other corporate e-cigarettes at $0.27 per milliliter. "Open" systems, like those battery-powered devices with refillable cartridges of Vape Wholesale that make people look like they're exhaling giant ghosts, will be taxed at $0.09 per milliliter.
The tax will raise $19.1 million in revenue over the course of two years, with half of the money going into the state's public health services account and the rest going to fund cancer research, programs designed to prevent tobacco/vape use among teens, and enforcement.

Washington's brick-and-mortar vape shop owners are in a state of shock. They say the tax will force them to shut down. "It's definitely going to be devastating," said Zach McLain, who runs Future Vapor in Seattle. "I’m going to try to figure something out so we don’t have to pass the tax onto the consumer, but other stores like mine will have to close."

Though people tend to be rightly pissed about passing regressive sin taxes that further impoverish poor, vulnerable people, the vape community is ultra-super-mega pissed about this one. They say the tax looks like it's structured to hit Big Tobacco harder than small business, but, in reality, the vape tax is a huge win for Big Tobacco.

"We are calling this what it truly is. This is the bill that Juul built," said Kim Thompson, owner of The Vaporium and president of the Pink Lung Brigade.

Two separate business models drive the vape industry. The larger one, funded by Big Tobacco, sells closed systems such as Juul and other e-cigs. These products are sold at convenience stores and drug stores in large, teen-epidemic-level quantities. Juul pods contain 0.7 milliliters of nicotine-laced e-liquid and come in packs of four, so Washington's new tax would raise the cost of a pack by about a buck. Major distributors and retailers will have the fiscal flexibility to swallow the tax hike.

That's not the case with the smaller model of vape sellers, which is composed of independent businesses owners who operate between 300 and 400 adult-only vape shops all around Washington. Though some vape shops carry products such as Juul, they primarily offer customizable vape pens along with 60 or 100-milliliter bottles of e-liquid. The bottles contain anywhere between zero and 18 milligrams of nicotine. No matter the amount of nicotine in the containers, stores are looking down the barrel at a $5.40 or $9 wholesale tax on every bottle of e-liquid, which owners say is unsustainable. "It at least doubles everyone's cost," Thompson said.

Thompson fears the tax will push out independent vape shops, ceding all ground to Juul purveyors and other retailers who, unlike her, aren't dedicated to helping their customers quit smoking cigarettes. "70 percent of the market isn't being nicked while 30 percent is being blown out, and our product is meant for stepping down," she said.

Just before the bill passed over a week ago, Rep. Pollet told me he thought the concerns of vape store owners were overblown. He says vaping is "dirt cheap" compared to cigarettes, and argues that the stores can raise prices. "We could triple the cost, and adults who wanted to switch [from smoking to vaping] would still save $1,000 or more a year," he said. "Those stores are still going to have that customer base."

Pollet's main goal with this legislation, he said, is cutting down on kids getting hooked on nicotine, which is a growing problem. The 2018 Washington State Healthy Youth Survey found that e-cigarette use "increased dramatically" among high school students between 2016 and 2018. Last year 30% of 12th graders reported using e-cigarettes. That represents a 10% rise in two years.
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