The Truth About Trump’s $100 Million User Fee on E-Cigarettes

[Robert T. Tan]

President Trump's Budget for a Better America would assess a substantial tobacco user fee on e-cigarettes. Is the $100 million dollar number being thrown around accurate or fake news?

The Truth About Trump's $100 Million User Fee on E-Cigarettes

 

[K9Luvr]

I would take a small user fee over a total ban on flavors, which is being discussed.

 

[Robert T. Tan]

I would take a small user fee over a total ban on flavors, which is being discussed.

I agree. If an e-cig user fee is used to fight teen vaping with education and age verification- the methods used to cut teen smoking- then it certainly beats a flavor ban.

If e-cigarettes continue to be treated like tobacco, it is probably inevitable that some form of user fee and even a federal excise tax will come to pass. And although the budget document is vague, it seems likely that the proposed $100 million increase would spread across all the classes of tobacco. Its hard to estimate exactly what the vaping industry would be on the hook for in this case because the fee is based on excise taxes. But $20-25 million is my educated guess. Juul would be on the hook for 70+ percent of this based on their market share.

The schedule of tobacco user fees was drawn up in 2009, pre-ecig revolution, and only outlines the annual increases through 2019. I don't think it is partisan to suggest that the odds of e-cigarettes being left out off going forward and the user fee remaining at the current $712 million are slim to none. The fact that Trump's budget will be largely ignored by the House does not mean that the Dems will not make a similar proposal.

 

[bombastinator]

I personally would worry more about alternate suggestions than anything Trump puts up. Even the GOP is getting sick of him. I’m too young to compare the environment around him to that of Carter, but there seem to be some parallels.

 

[r77r7r]

Can he just grab that cash straight from juul, they seem to have it and probably started most of the fuss lately.

 

[zoiDman]

I agree. If an e-cig user fee is used to fight teen vaping with education and age verification- the methods used to cut teen smoking- then it certainly beats a flavor ban.

If e-cigarettes continue to be treated like tobacco, it is probably inevitable that some form of user fee and even a federal excise tax will come to pass. And although the budget document is vague, it seems likely that the proposed $100 million increase would spread across all the classes of tobacco. Its hard to estimate exactly what the vaping industry would be on the hook for in this case because the fee is based on excise taxes. But $20-25 million is my educated guess. Juul would be on the hook for 70+ percent of this based on their market share.

The schedule of tobacco user fees was drawn up in 2009, pre-ecig revolution, and only outlines the annual increases through 2019. I don't think it is partisan to suggest that the odds of e-cigarettes being left out off going forward and the user fee remaining at the current $712 million are slim to none. The fact that Trump's budget will be largely ignored by the House does not mean that the Dems will not make a similar proposal. View attachment 803211 View attachment 803213

I posted this a few days ago in the "Deeming" Thread. It explains where Tobacco User Fees come from.

Kinda been Waiting for this Showdown to happen.

Here's the thing, since e-Liquids falls outside of a Statutory Classification of a Tobacco Product type, it can be argued that the FDA does Not have the authority to collect User Fees under the FD&C Act. That it was Only thru Deeming that e-Liquids were Fubarized into a Tobacco Product in the first place.


2. Allocations of Assessment by Class of Tobacco Products

1. In General. The total user fees assessed and collected under subsection (a) each fiscal year with respect to each class of tobacco products shall be an amount that is equal to the applicable percentage of each class for the fiscal year multiplied by the amount specified in paragraph (1) for the fiscal year. Section 919 of the Federal Food, Drug, and Cosmetic Act - User Fees

2. Allocations of Assessment by Class of Tobacco Products

1. In General. The total user fees assessed and collected under subsection (a) each fiscal year with respect to each class of tobacco products shall be an amount that is equal to the applicable percentage of each class for the fiscal year multiplied by the amount specified in paragraph (1) for the fiscal year.
2. Applicable Percentage
   1. In General. For purposes of subparagraph (A), the applicable percentage for a fiscal year for each of the following classes of tobacco products shall be determined in accordance with clause (ii):
      1. Cigarettes.
      2. Cigars, including small cigars and cigars other than small cigars.
      3. Snuff.
      4. Chewing tobacco.
      5. Pipe tobacco.
      6. Roll-your-own tobacco.
   2. Allocations. The applicable percentage of each class of tobacco product described in clause (i) for a fiscal year shall be the percentage determined under section 625(c) of Public Law 108-357 for each such class of product for such fiscal year.
   3. Requirement of Regulations. Notwithstanding clause (ii), no user fees shall be assessed on a class of tobacco products unless such class of tobacco products is listed in section 901(b) or is deemed by the Secretary in a regulation under section 901(b) to be subject to this chapter.
   4. Reallocations. In the case of a class of tobacco products that is not listed in section 901(b) or deemed by the Secretary in a regulation under section 901(b) to be subject to this chapter, the amount of user fees that would otherwise be assessed to such class of tobacco products shall be reallocated to the classes of tobacco products that are subject to this chapter in the same manner and based on the same relative percentages otherwise determined under clause (ii).

Section 919 of the Federal Food, Drug, and Cosmetic Act - User Fees

Of course, that has Never Stopped a Government Agency from extending their reach when it comes to a revenue stream. Especially when the Government is 20T in the hole.

So many believe this will decided in Federal Court.

Here some related FDA Published Information...

Tobacco User Fees

Small Entity Compliance Guide: Requirements for the Submission of Data Needed to Calculate User Fees for Domestic Manufacturers and Importers of Tobacco Products

 

[bombastinator]

Can he just grab that cash straight from juul, they seem to have it and probably started most of the fuss lately.

Except atria May very well now have a working controlling interest in JUUL. That one is currently a dark mystery.

 

[zoiDman]

Except atria May very well now have a working controlling interest in JUUL. That one is currently a dark mystery.

Atria Doesn't have a Controlling Interest in JUUL.

There is No Mystery about it.

 

[bombastinator]

Atria Doesn't have a Controlling Interest in JUUL.

True. That’s why I said “working control”. And afaik whether it’s there or not is unknown, at least to me.
Working Control

The only reason we know they even bought a stake is working control becomes a serious issue with ownership levels above 20%. That’s why it needs to be reported. Atria bought 35%

 

[zoiDman]

True. That’s why I said “working control”. And afaik whether it’s there or not is unknown, at least to me.
Working Control

OK...

Atria Doesn't have a Working Controlling Interest in JUUL.

There is No Mystery about it.

You do Understand the Difference between Publically Traded Stock and Privately Held Stock, Right?

 

[bombastinator]

OK...

Atria Doesn't have a Working Controlling Interest in JUUL.

There is No Mystery about it.

You do Understand the Difference between Publically Traded Stock and Privately Held Stock, Right?

Yup. I also know how board membership and voting works.. how it really works. Whether Atria has or can gain quickly if needed effective working control relies entirely on who exactly is on the board and their particular personal circumstances at a given moment.

 

[zoiDman]

Yup. I also know how board membership and voting works.. how it really works. Whether Atria has or can gain quickly if needed effective working control relies entirely on who exactly is on the board and their particular personal circumstances at a given moment.

I own a little over 2% of a Privately Held Corporation. Even If I could buy up another 33% of the Stock, and sit on the Board, I could never achieve a "Working Control". It just Isn't possible.

Because a Single Individual owns more than 51% of the Stock.

Now my Views may be inline with His. Or I might be about to get Other Share Holders to Band Together and to push for something I want. But Mathematically, I, nor another Individual Share Holder, nor any Group of Share Holders can have a Working Control.

Why on God's Green Earth would a Privately Held Company like JUUL want to engage in a Ownership Sale with Altria if the conditions of the Sale gave a Path to Ownership and or Control?

 

[bombastinator]

I own a little over 2% of a Privately Held Corporation. Even If I could buy up another 33% of the Stock, and sit on the Board, I could never achieve a "Working Control". It just Isn't possible.

Because a Single Individual owns more than 51% of the Stock.

and if that is the case with JUUL there is no issue. I have no knowledge of whether it is or isn’t though. All I know is the company split from PAX, and walked away with their most valuable patents which they spent years researching and creating.

Now my Views may be inline with His. Or I might be about to get Other Share Holders to Band Together and to push for something I want. But Mathematically, I, nor other Individual Share Holder, nor any Group of Share Holders can have a Working Control.

Why on God's Green Earth would a Privately Held Company like JUUL want to engage in a Ownership Sale with Altria if the conditions of the Sale gave a Path to Ownership and or Control?

Why indeed? It’s an interesting question.

 

[zoiDman]

Why indeed? It’s an interesting question.

It is Really Pretty Simple.

JUUL received a MASSIVE Cash Infusion as well as an Direct Retail Path/Shelf Space that Altria held. They Also Gained established Lobbyists as well as Legal Regulatory Expertise.

And JUUL could do it via a "Stand Still" Share Sale. So they Didn't give up Control of their Company.