A bill filed in the Arkansas Legislature would place a tax on electronic cigarettes in an effort to help pay for enforcement of a 2013 bill that banned merchants from selling the devices to minors.
Rep. Charles Blake, D-Little Rock, said Monday that he is working on a few amendments to House Bill 1156, which he hopes to finish before running the bill through the House Rules Committee. He said he wants Arkansas to be ahead of the curve in regulating the devices, called e-cigarettes.
"My main reason for filing the bill is to maybe give some teeth to the great legislation that was passed in 2013 that banned the sale to minors," Blake said. "I was just looking at the process and there seemed to be a lot of questions not answered."
The bill would put a 7.5-cent tax on every fluid milliliter of liquid nicotine solution sold for use in electronic cigarettes or vaporizers. The distributor, wholesaler or manufacturer of the solution, or a retailer selling the solution if the producer is unlicensed, would remit the taxes on a monthly basis to the Department of Finance and Administration.
If the tax is not paid, the department could assess penalties. The bill would split the tax revenue evenly between the Child Care and Early Childhood Education Fund account and the Aging and Adult Services Fund at the Department of Human Services, the Department of Veterans Affairs' cash fund, and the State Apportionment Fund.
The bill also requires that anyone selling or making e-cigarettes or the solution obtain a license from the state.
Finance department officials estimated that the new tax could raise an additional $1.5 million in state revenue next year and more if sales of e-cigarettes continue to grow.
An electronic cigarette simulates a normal cigarette, with a battery-powered heating element that creates a nicotine vapor. The user can choose how much nicotine is vaporized. Non-nicotine options are also available.
Also known as personal vaporizers, the devices and accessories can be bought online and can be found in tobacco shops, convenience stores and mall kiosks.
The bill that passed in 2013, Arkansas Act 1451, prohibits selling electronic cigarettes to anyone under 18. Act 1099, which also passed in 2013, banned the use of nicotine products, including e-cigarettes, on public school property.
Steve Goode, the recently appointed director of Arkansas Tobacco Control, said his department is hoping to be given power to help enforce Act 1451.
"Currently, there is no enforcement power by our agency. It's against the law for minors to purchase them, but we don't have enforcement power," Goode said.
"Basically the governor's office is looking at e-cigarettes to make sure they are kept out of the hands of minors. We want the enforcement power to be able to do that. Kids under 18 do not need to be going into vapor only shops."
Goode said access by minors to the vapor shops is particularly worrisome to his agency.
He said most gas stations and kiosks sell "closed e-cigarette systems," meaning they have a set amount of nicotine in a nonrefillable cartridge. But vapor shops often make their own combinations of vapor liquid in varying concentration levels and with different flavorings.
The Arkansas Department of Health issued a health warning about e-cigarettes in June, telling consumers that the products emit pollutants that could be harmful to users and those exposed to the vapors secondhand. It also warned of poisoning risks for children who swallow the liquids used in the devices.
But Blake said the bill he is proposing does not seek to end e-cigarette use in Arkansas or to over-regulate small businesses. The legislator said he looked at legislation that passed in North Carolina and in Minnesota when drafting his legislation, and decided against the Minnesota model, which taxed the devices out of use in a lot of cases.
"Minnesota killed small business and killed the product, and that's not what I'm trying to do," he said. "We just need to give the existing law some teeth and raise money to be able to enforce that law. With 1 percent budget cuts across the board, we can't just do nothing and expect the state to be able to come up with a way to enforce the law. We're going to have to be proactive and start this conversation."
Blake also said he realizes that getting a new tax passed, regardless of how small, might be difficult. He said one of the amendments he's considering would change the proposed tax to an annual fee paid by businesses that want to sell e-cigarettes.
Several calls to Little Rock vapor shops that sell electronic cigarettes and to witnesses who have testified at previous legislative hearings about e-cigarettes were not returned Monday afternoon.
Metro on 02/17/2015