While this blog has focused on federal regulations affecting electronic cigarettes (“e-cigs”), which were promised by April 2013, but thus far undelivered by the Food and Drug Administration (“FDA”), several states have taken the matter into their own hands. Until the FDA heeds the call of several prominent U.S. Senators and publishes its “deeming” regulations pertaining to e-cigs, we will keep you apprised of various state attempts to regulate e-cigarettes.
New York Proposed E-Cig Regulations
A new bill has been introduced in New York, which may be heard before the New York Assembly Health Committee as early as this afternoon in Albany. The stated purpose of the bill is to ensure that the tax definition of tobacco products includes every type of tobacco product on the market and amends the definition of “tobacco products” to include all new and novel products “containing tobacco or nicotine that [are] intended or expected to be consumed.” While electronic cigarettes are not specifically identified within the bill, a strict reading of the expansive definition of “tobacco products” should be construed to include e-cigs, which contain nicotine and are intended to be consumed. It should be noted that earlier this year, the Maine and New Mexico legislatures rejected bills containing similarly broad definitions of “tobacco products.”
Possible Outcome of New York’s E-Cig Bill
If the proposed amendments are enacted and e-cigarettes are found to qualify as “tobacco products” under the bill, they will be treated as every other tobacco product on the market and subject to a 95% wholesale “sin” tax on sales. At present, the average price of e-cigarettes is lower than regular cigarettes, but with the imposition of the foregoing tax, e-cigs will likely surpass the price of regular cigarettes and curtail consumers from buying e-cigs. Furthermore, e-cigarette vendors would be required to obtain a tobacco retail license to sell electronic cigarettes in accordance with N.Y. Tax Law § 480-A, resulting in e-cigs becoming less available on the market.
Given the gravity of the New York bill, we will be sure to follow its progress and provide detailed updates on this blog.
The development of federal and state electronic cigarette regulations should be of interest to anyone involved in the e-cigarette industry and those interested in product marketing in general. If you are interested in learning more about this topic or pursuing a venture in this area, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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