CNBC, Power Lunch features "Eletronic Cigarette" and Big Tobacco

[vsummer1]

It basically says Big tobacco is not worried, it is investing in it to compete with a diverse group of start ups. Of course, they are only showing cig-a-likes. They compare them to "an asthma inhaler". They are predicting that ecigs will surpass cigarette consumption in the next decade.

They are predicting that Ecigs will become big business and could reach 1 billion by next year. RJ Reynolds has gone on record stating they plan to get in the field with "We have big plans."

But, the reporter does say she bought an njoy from 7-11 for $9 and states one will last the equivalent of 2 packs. That is disappointing. She also says that there is more profit margin since they are not taxed (except in Minnesota as the only state to do so) and so are garnering more shelf space in convenience stores.

Other than the misinformation on the 2 pack thing, it was very positive.

*I was trying to type this as I listened so if it reads funny, oh well!

ETA: link
http://video.cnbc.com/gallery/?play=1&video=3000139290

 

[Crazyinariz]

are they going to replay it later today?

 

[vsummer1]

I don't know. It was just a feature on the the show. I watch CNBC all day, and when I heard it was coming up I got ready to type

Okay, found a link:
Lighting Up ...With a Battery - CNBC

 

[dagnagan]

Here's a link:
Lighting Up ...With a Battery - CNBC

I've been wondering when CNBC, which I watch all the time, would catch up with this trend, because it has such huge implications for the tobacco industry and all the government entities that collect taxes and Master Settlement payments on cigarettes.

 

[dagnagan]

Okay, I guess that's enough links. Sorry I'm so sloooowww.

 

[Vocalek]

Anybody know how the Minnesota taxation works? Is it on the entire device? Only on refills? Liquid? By the ml or some other measure? What if the product contains no nicotine?

 

[vsummer1]

Anybody know how the Minnesota taxation works? Is it on the entire device? Only on refills? Liquid? By the ml or some other measure? What if the product contains no nicotine?

Sorry, no. I was only posting what I saw on the news. I thought it was generally a good report, except that little white lie from NJoy about the 2 pack thing...

 

[Vocalek]

I recalled hearing that a new NJOY model contains 4.5% nicotine (45 mg/ml).

Found this: Njoy King Electronic Cigarette - Directions for Me

The lower the nicotine level, the more likely you are to take more puffs. 4.5% is higher than most ECF members use.

I have seen 10 puffs per cigarette given as an average for analog, but I never took that many puffs. Probably closer to 5 given that I used to have to put on coat, go to elevator, get off at ground floor and go outside, puff, and then repeat in reverse order.

If 160 is the total number of puffs for the disposable described in the link, it might be worth somewhere between a pack and 2 packs, depending on how many puffs you consider to be equal to one cigarette and how much nicotine you are used to deriving from that many puffs.

 

[Stubby]

From what I can gather the tax is 70% of wholesale. I would assume that is just for the liquid and refills. All this does is make e-cig shops a much harder go of it in Minnesota.

 

[YKruss]

Anybody know how the Minnesota taxation works? Is it on the entire device? Only on refills? Liquid? By the ml or some other measure? What if the product contains no nicotine?

http://www.revenue.state.mn.us/law_policy/revenue_notices/RN_12-10.pdf

MN State passed a tobacco tax, where any product containing any derivative from the tobacco plant, including nicotine is taxed as in their Tobacco tax laws at a 70% tax rate.

 

[Vocalek]

http://www.revenue.state.mn.us/law_policy/revenue_notices/RN_12-10.pdf

MN State passed a tobacco tax, where any product containing any derivative from the tobacco plant, including nicotine is taxed as in their Tobacco tax laws at a 70% tax rate.

There goes their excuse that the purpose of the tax is to get smokers to quit.

Maybe its time for MN residents to be contacting their state legislators and sending them information on Tobacco Harm Reduction --as in switching to a non-combusted delivery system for nicotine carries at most 1% of the health risks of smoking.

 

[Placebo Effect]

Anybody know how the Minnesota taxation works? Is it on the entire device? Only on refills? Liquid? By the ml or some other measure? What if the product contains no nicotine?

As I recall from speaking to someone from the MN Department of Revenue, it's on the value of the nicotine liquid inside the e-cigarette. No data is available on actual revenue because they're just bulked into the OTP group, but he indicated that 70 cents to a bit over $1 was typical.

 

[kristin]

From my understanding, the markup on e-liquid is pretty high, so the tax could be absorbed by the companies selling it pretty easily. It would lower the profit margin for them a bit, but most companies also sell 0% nicotine liquid for the same price as 3.6% nicotine liquids. If you are getting the same price for liquid without any nicotine as for 36 mg nicotine, you can absorb the cost of the Minnesota tobacco tax, IMO!

But let's keep perspective. Even if they pass the cost on to consumers and blame the government, the cost would still be significantly less than smokers are currently paying for the nicotine in their traditional cigarettes! The tax on e-liquid is based on wholesale cost, whereas the Minnesota tax on cigarettes is currently a combination of fees and taxes: Cigarette Excise Tax (48¢ per pack) + Health Impact Fee (75¢ per pack) + Tax in lieu of sales tax (35.6¢ per pack) = $1.586 tax per pack.

If a bottle of e-liquid is sold RETAIL for 67¢ a milliliter (I pay $20 for a 30 ml bottle), a 70% tax even on retail would only amount to a final cost of $1.14/ml. Figuring an average 3ml per day use, that amounts to paying $3.42 per day to vape vs. an average of $6.30 for a pack-a-day cigarette habit in Minnesota. But it's actually based on WHOLESALE cost to the e-cig company. So, if the company marked up its wholesale cost by 50% (it's probably much, much higher than that) the 67¢ per ml they charge would have a wholesale cost of 44.6¢. The tax on that would be 31.2¢, so the cost per milliliter would be 98.2¢ per mil/$2.95 per day.

 

[chuckie]

A better idea would be to buy your juice from China @ 9 cents a ml. and just laugh at the tax.

 

[TennDave]

I don't like the idea of taxing nicotine at all- especially at those rates. I DIY and vape about 6ml of 1.8% a day. I figured my actual cost is about a quarter (25 cents) a day and this includes the flavors I add to my juice.

 

[kristin]

Well, no one likes ANY of the taxes we pay. Of course, CASAA argues that low-risk tobacco products do not "deserve" to be sin taxed anymore than pharmaceutical nicotine products should.

This is another reason why we should all submit comments to the FDA (see other threads) supporting long-term NRT use (ie. smokers should be encouraged to use NRT "as long as necessary to prevent returning to smoking" rather than given an arbitrary time they must stop.) This essentially makes NRT no different than e-cigarettes for "intended use" and that means the nicotine liquid shouldn't be taxed any differently than nicotine gums, patches and lozenges (ie. just sales tax.)

My point was really for people whose greatest fear seems to be that vaping will become just as expensive as smoking via tobacco taxes. When you run the numbers, it still doesn't work out to be anywhere near as expensive as cigarettes. Not that CASAA still wouldn't fight attempts to pass sin taxes on e-cigarettes, just that people should realize that its not the worst thing that can happen and those things are what we need to focus on.