Governor, Legislature Clash Over E-Cigarette Regulations

Despite a trend in other states, Michigan lawmakers appear to have little interest in taxing e-cigarettes in the same way as traditional tobacco products. In the current Legislature, just one bill has been introduced to do so, Senate Bill 807 sponsored by Sen. Coleman Young II (D-Detroit).

But the bill has been met by strong criticism from other legislators who oppose treating e-cigarettes as a tobacco product for tax reasons.

“Coleman Young’s bill is laughable and dead on arrival,” said Sen. Rick Jones, R-Grand Ledge. The bill appears stuck in committee with no indication it will be brought to the floor anytime soon.

Young was not available for comment on his bill, which would authorize a tax but does not prescribe the rate at which e-cigarette products would be taxed.

Michigan currently has the 10th-highest tobacco tax in the country at $2 per pack; the state also has the 10th-highest cigarette smuggling rate nationally.

E-cigarettes use a battery-powered mouthpiece to produce a vapor containing nicotine, which is inhaled. Some studies have shown vapor products are less harmful than traditional tobacco products, and some people argue that e-cigarettes are potentially useful in helping smokers quit.

An e-cigarette should not be taxed as a cigarette, Jones said, noting that he has friends who have used the devices to quit smoking tobacco. He also said e-cigarettes benefit bars and private clubs that suffered following Michigan’s 2010 prohibition of smoking in public places.

Young’s bill highlights a point of contention between the Michigan Legislature and Gov. Rick Snyder that surfaced in 2015 over the effort to ban e-cigarettes to minors, led in part by Jones.

In January 2015, Snyder vetoed two bills that would have banned minors under age 18 from buying or possessing e-cigarettes. In his veto message Snyder said the legislation “does not go far enough,” and that “electronic cigarettes are nicotine-delivery devices that resemble traditional tobacco cigarettes and share a common ingredient, which is the highly addictive chemical nicotine that is derived from tobacco.”

The Senate tried again in May 2015, unanimously passing Senate Bill 231, another Jones-sponsored bill that would ban the sale of e-cigarettes to minors.

Jones said the bill is held up because Snyder’s office wants e-cigarettes to be regulated like tobacco cigarettes, which is something that will never get the Legislature’s support.

“My bill is to make sure e-cigarettes — which are not cigarettes, they are nicotine delivery devices — are not sold to minors,” he said.

Tom Briant, the executive director of National Association of Tobacco Outlets, which opposes all taxes on e-cigarettes, said that part of the appeal of the battery-powered water vaporizers is that they’re not taxed like tobacco.

“Taxing an e-cig like a tobacco product could discourage adults from switching over from tobacco,” he said. “They should not really be considered tobacco products for tax reasons because there’s generally less harm than tobacco products.”

The Washington, D.C.-based Tax Foundation said in a March report that the two products should be treated differently: "Vapor products and traditional cigarettes work and are measured in fundamentally different ways, and as a result should not be taxed in the same way."

In 2015, 25 states and the District of Columbia considered legislation to tax e-cigarette products, the Tax Foundation noted. Louisiana, Kansas, and D.C. enacted vapor excise taxes, bringing the total number of states with e-cigarette-related laws to five since Minnesota and North Carolina initiated taxes in 2012 and 2014, respectively.

Cook County, Illinois, the city of Chicago, and Montgomery County, Maryland, also enacted laws taxing e-cigarettes and vapor products in 2015.