I have to say that both you and Bill are correct. It's somewhat to do with money and mostly to do with tobacco/nicotine prohibitionists. I don't think the tax consequences have even occurred to most of these people.
Consider these facts:
1. The FDA first started it's campaign against e-cigs when alerted by health organizations who hate anything that looks like smoking or contains nicotine not intended to treat addiction. (Prohibitionist)
2. Those groups are funded by Big Pharma. (Money)
3. When the FDA started the campaign, it was headed by a known anti-tobacco person. (Prohibitionist)
4. Some of these groups and legislators are so against tobacco, they can't accept that e-cigs look like cigarettes and keep people "addicted" to nicotine (Prohibitionist)
5. Most legislators who have opposed e-cigs did so because they were also approached by the health groups who pushed their lies on them (prohibitionist, but not their fault, they were lied to)
6. The health groups lobbied the legislators to ban e-cigs because they believe that anything that looks like smoking and contains nicotine is evil and the groups are funded by Big Pharma (prohibitionist AND money)
It's really a mix of the two. There really are groups out there that cannot STAND anything tobacco or smoking related. Witness the fact that it is no longer the fight against smoking, they now call it the fight against tobacco. And when it's pointed out that some tobacco has very little health risks, they are suddenly against any addiction at all. These people truly don't care if smokers die - they just want all tobacco GONE. The former head of the FDA was one such person. They only support Big Pharma nicotine because it's meant to treat nicotine addiction and people are assumed to be free from addiction.
On the other hand, many of these groups are funded by Big Pharma. It's hard not to imagine that they aren't influenced by the fact that they receive huge amounts of money they receive from the industry.
Finally, just about every legislator who is not a rabid anti/prohibitionist (like Rosenthal) who proposed legislation was found to have been heavily influenced by the lies that the health groups were telling. They really don't seem to have even considered the tax ramifications at this point. Most proposed legislation has been indoor use bans, not outright sales bans. This was made evident in Illinois when we went and testified and the panel was pretty shocked to hear the difference in our testimony and that of the lobbyist for the health groups. If it was really about the money for legislators, they would have passed it regardless, but they didn't. And California and Minnesota also passed on banning them.
So, it's both about prohibitionism and money, but the evidence suggests that the tax ramification haven't yet come into play for the most part or more legislators would be attempting to ban sales outright rather than just include them in indoor use bans.
Bill, with all due respect, it's always about the $$--especially with gov't. The states are dependent on these revenues from tobacco taxation. New York expected to bring in $440 million in 2010 alone (New York Times June 18, 2010).
New York Times June 21,2010 article speaks about the newly enacted legislation on raising the cigarette taxes as a way of bridging the budget gap. "The new law, part of an emergency budget measure to keep the government running..."
I don't care what the FDA is doing or what ruse it is using...the states and fed's are dependent on this $$ and will do and use whatever gov't agency (including the FDA) they have at their disposal in order to protect this revenue from tobacco.
It's all about the $$. The FDA receives its funding from the gov't and it will do what the politicians tell them to do