Prop 56 – What it means for California vapers
California’s relationship with vaping is a strange one. On one hand the state has the greatest concentration of premium liquid makers in the world, and a large community of dedicated and passionate advocates. On the other, it’s ingested by academics and legislators who loathe e-cigarettes with a stunning level of bitterness and will go to any lengths to attack both the industry and vapers themselves. California has led the way in banning vapor products from public spaces. Now, while other states got there first on taxation, Prop 56 shows that Sacramento is determined to go down that road too.
Voters in California are going to have a busy time next month when they go to the polls. As well as the unusually heated presidential election, plus the usual state and national offices, there’s a whole list of propositions to be voted on – and Proposition 56 is a nightmare for the state’s vapers.
Prop 56 is being marketed as a move to improve the health of Californians by increasing the state tax on a pack of cigarettes from 87 cents to $2.87. Right now California has one of the lowest rates of cigarette taxes in the USA – the national average is $1.60 – and Prop 56 advocates say it needs to be increased to push the smoking rate down. The problem with that is that California also has one of the lowest rates of smoking in the USA. As low as the tax is, it certainly doesn’t seem to be encouraging Californians to smoke.
Prop 56 tax also hits e-liquids
The problem for vapers is that the tax increase won’t just affect smokers. Sacramento plans to levy it at the same rate on all other tobacco products, too – and, thanks to the FDA’s insistence that vapor products are actually tobacco products, that includes e-cigarettes. The vaping market doesn’t easily fit a flat-rate $2 per pack, like cigarettes do, so instead California plans to impose a 68% tax on all vapor products – hardware, liquids, spare coils, accessories and anything else they can classify as tobacco. There’s also a floor tax to be paid on all stock a vendor holds on the day the law comes into effect. For cigarettes that’s set at 10 cents per cigarette, and it’s likely to be just as steep for vapor products.
If Prop 56 passes, vapers in California are going to be paying a good bit more for their gear and liquid. It’s also likely to be contagious; if California can get away with it, other states are likely to try the same sort of thing. After all there’s quite a lot of money at stake; Sacramento estimates the new tax will raise between $1 billion and $1.6 billion in its first year.
It goes without saying that Prop 56 will be bad for vapers, but it’s the state’s plans for the money that are most likely to get it shot down by voters. California’s state constitution says 43% of the revenue from any new tax increase has to go to the school system. Prop 56 was carefully written to get round that requirement, so the state’s cash-strapped schools won’t see a penny of it. Instead, most of it will go to insurance companies and special interest groups.
Where will the money go?
Once admin costs have been deducted – and the law allows up to ten percent of the Prop 56 revenue to be spent on paperwork – the rest of the money raised will go into a special fund that’s exempt from the school funding requirement. From there it gets handed out to the lucky winners. The biggest of those winners is Medi-Cal, the state’s Medicaid provider; the law says they’ll get 82% of the remaining cash.
Most of what’s left – 13% of the total fund – will be allocated to tobacco control, with the bulk of it going to the California Department of Public Health. This troubled agency is fanatically anti-vaping, as we saw from their Curbit and StillBlowingSmoke campaigns. Their last chief executive actually told smokers to keep smoking rather than switch to vaping.
Finally, the remaining five percent of the money goes to the University of California’s tobacco control research. This may explain why one of the loudest advocates of Prop 56 has been Stanton Glantz of UCSF, who’s made a career out of spending taxpayers’ money on dubious research into smoking.
Supporters of Prop 56 have been making a lot of noise about how the tobacco companies and vaping industry are opposed to it, but they’ve been a lot quieter about the fact that they stand to make quite a bit of money themselves if it passes.
This law is basically a tax grab by special interests, who’ve cynically written the school funding requirement out of it so they don’t have to share the cash with California’s children. Vapers have a personal reason to vote against it – who wants to see the price of liquid close to doubled, just to put money in the pockets of rich insurers and quack academics? If California voters know what’s going to happen to the money, however, they’re likely to reject it for reasons of their own – just like they did in 2006 and 2012. The state government isn’t advertising their plan for the Prop 56 revenue, though, so it’s up to vapers to spread the news.