California Prop 56 - Hidden Vape Tax

[zoiDman]

Not quite the 80% I was expecting, but pretty darn close...

I see No Reason that the 2018-19 Tax Rate shouldn't meet your Expectation.

If not Exceed It.

 

[zoiDman]

Have you guys seen this in action? None of my local shops seem to have raised their prices, at least the last time I was in them, a month or so ago...I'm sure I would have noticed if juice prices had gone up that much. I bought a new mod from a shop on my last visit and they matched the online price, but if I read it right, this tax is on ejuice only...I buy most of my juice online, have shops raised their prices by 35-40%? (65% of wholesale *should* be around 35% of retail, the way I figure it, maybe less because the margins are really huge on ejuice.)

I know a few CA B&M owners. And they all took most of the Hit on their end for the 1st round of Tax Increases. One told me it was better to Maintain Pricing then to Risk pushing customers toward Net Sales.

Not sure what percentage they might eat this go around?

 

[Rossum]

I know a few CA B&M owners. And they all took most of the Hit on their end for the 1st round of Tax Increases. One told me it was better to Maintain Pricing then to Risk pushing customers toward Net Sales.

Same thing happened in PA, at least at with the two I know who mix their own juice. 40% or even 65% of the wholesale cost of ingredients for house juice really doesn't have much of an effect on the margins. Let's say making a 30 ml bottle of juice used to cost them $2.00. With tax, it now costs something on the order of $3.00 or $3.50. Selling that bottle for $10 or even $15 is still a decent business.

Now if a B&M is buying pre-bottled juice at wholesale, this picture changes dramatically.

 

[zoiDman]

...

Now if a B&M is buying pre-bottled juice at wholesale, this picture changes dramatically.

Exactly. And this is something, in CA's Party Leadership, that leaves me Shaking My Head.

Because all it does for a CA Business is make Leaving CA more Attractive. And for those who choose to Stay, less competitive against OOS sales.

And OOS sales doesn't Fatten Up tax coffers. Or Offset the Cigarette Tax Monies you aren't getting anymore. So they Think the Solution is to Keep Raising Taxes. And that Forces More to Leave and More OOS Sales.

Wash - Rinse - Repeat

 

[oplholik]

Well, doesn't it help the coffers somewhat if we are good little people and voluntarily cough up the tax at the end of the year?

 

[zoiDman]

Well, doesn't it help the coffers somewhat if we are good little people and voluntarily cough up the tax at the end of the year?

In the words of another member here...

"Not One Thin Dime."

That's what they are going to get out of Me.

 

[stormjib]

I looked into wholesale juice pricing recently and what I found kind of shocked me...a 60 ml bottle that sells in my local place for around 25$ costs the business less than 6$...I don't know if that's typical or not.

 

[zoiDman]

I looked into wholesale juice pricing recently and what I found kind of shocked me...a 60 ml bottle that sells in my local place for around 25$ costs the business less than 6$...I don't know if that's typical or not.

That Doesn't sound all that out of the Ordinary.

 

[stormjib]

if it's typical, then even with a 70% wholesale tax, that'd only add about 18% to the retail price...compared to what it could be, I'd say that's not too bad...especially because it doesn't apply to hardware...at least so far

 

[Alexander Mundy]

Now if a B&M is buying pre-bottled juice at wholesale, this picture changes dramatically.

Before you know it....wham....the Deeming will make this happen.
That is assuming there will be any juice approved.

 

[Lessifer]

Retailers could eat the tax increase, however, I imagine that liquid sales are where they make the majority of their income and most are probably struggling as is. Add to that the giant domino falling in the form of the SF flavor ban, and I don't know what to think.

 

[zoiDman]

if it's typical, then even with a 70% wholesale tax, that'd only add about 18% to the retail price...compared to what it could be, I'd say that's not too bad...especially because it doesn't apply to hardware...at least so far

Just Curious.

But what Other products have a 65% Wholesale Tax on them in CA?

 

[zoiDman]

BTW - I just got an e-Mail from TastyVapor regarding Prop 56.

​

Hello Friends!

We appreciate your continuous support and business. Thanks to you, Tasty Vapor has remained one of the most experienced and long living companies in the industry We take pride in being transparent with you regarding any activity that may impact your access to these lifesaving products.


ATTENTION to our California customers!


As you might recall, back in March 2017, we first shared with you that Proposition 56 was passed by the California voters on November 8th, 2016. As of April 1st, 2017, Prop 56 now allows imposing an excise tax on liquids containing nicotine. According to the California Board of Equalization (BOE), any products containing nicotine are now considered tobacco products.


The California BOE approved the new tax rate of whopping 65.08% effective July 1st, 2017 through June 30th, 2018 on all tobacco products. The BOE is required to determine a tax rate annually on other tobacco products (products other than cigarettes) that are equivalent to the combined rate of tax imposed on cigarettes.


These taxes continue to have a negative impact on our industry, as approximately 1/3 of the eliquid companies in the United States operate in California. As always, we invite you, our California customers, to become active with our industry's advocacy efforts.


Don't allow the California government to systematically kill our California-based vapor businesses! Become involved — protect your rights!


Here are a few sources to stay informed, support all our efforts financially, and fight for our right to vape:

​

Not Blowing Smoke

LEARN MORE ▸

​

American Vaping Association

LEARN MORE ▸

​

Consumer Advocates for Smoke Free Alternatives

LEARN MORE ▸




Feel free to contact us with any questions, concerns, and issues related to this new law via email mixteam@tastyvapor.us or phone 888-389-3229.

Thank you for your continued support, patronage, and your friendship.

Sincerely,

Geoffrey Braithwaite
Co-Owner/Operator/Founder
Tasty Vapor

 

[stormjib]

I don't know of any other product that is taxed that way, but a tax on wholesale is pretty much hidden from the consumer, generally...I'm not defending the tax at all, just saying it could be much worse...at least it's only ejuice, not hardware, as I said, and there was no floor tax...so as odious as it sounds, it could have been much worse...of course it's always possible that in future, it will be much worse.

 

[Rossum]

at least it's only ejuice, not hardware

I wonder how much a normal vaper spends on juice vs. hardware. A vaper has to keep buying juice, or at least DIY ingredients, whereas carefully chosen hardware should last a lifetime.

 

[zoiDman]

I don't know of any other product that is taxed that way, but a tax on wholesale is pretty much hidden from the consumer, generally...I'm not defending the tax at all, just saying it could be much worse...at least it's only ejuice, not hardware, as I said, and there was no floor tax...so as odious as it sounds, it could have been much worse...of course it's always possible that in future, it will be much worse.

I just have a Problem with this Form of Taxation.

Can a Tax be Enacted by the Voters when the Tax Basis was Never Stated? Seems like that falls under the Taxation without Representation thing.

Can one Market Sector be singled out and a Tax be placed on it that is Orders of Magnitude Higher than other Market Sectors? And if so, what is Financial/Moral justification for doing so?

If Public Health is important, does Raising the Cost thru Taxation of something that is Significantly Less Harmful than Smoking, and has been Shown to be a Viable means for a Smoker to Quit, improve Public Health?

If CA can Not Restrict the purchase of e-Liquids from OOS Retailers, is making CA e-Liquids less competitive really a Intelligent way to manage a Taxation revenue stream? Or do it just Drive Out CA Business and leave CA with a Smaller Tax Base to draw from?

 

[Beamslider]

They do this all the time here in CA. They put a tax proposition on the ballot that is a so called sin tax and say the fund will go to healthcare and children's healthcare. The money never goes for either but it is easy to get people to go along with taxing the sinners.

 

[zoiDman]

They do this all the time here in CA. They put a tax proposition on the ballot that is a so called sin tax and say the fund will go to healthcare and children's healthcare. The money never goes for either but it is easy to get people to go along with taxing the sinners.

So when does a Line Get Drawn? Or should people just keep walk around with their Heads Down and Door Mats on their backs?

Because this Isn't just happening in CA.

 

[Beamslider]

Most people don't pay attention to what is going on with government, some just don't care, some are too busy trying to make a living.

Only about half of those eligible to vote actually even bother voting.

 

[zoiDman]

Most people don't pay attention to what is going on with government, some just don't care, some are too busy trying to make a living.

Only about half of those eligible to vote actually even bother voting.

No Arguments here.

I guess then we Get Exactly what we Deserve.