What happens when a vape shop closes?

[englishmick]

Well said. I think I like you

I'm assuming these laws only apply to juice and not the other devices/merch?

It's going to hurt the B&M places but to be honest it kind of drives me nuts that they survive on juice sales to begin with. Selling juice for ~1$/ml that costs at most $1/30ml to manufacture. That's one hell of a markup.

All the more reason to DIY...they might charge you a sales tax for the nicotine but that's going to be negligible...can't tax PG/VG/flavorings I assume.

Shops and juice makers would be wise to sell nicotine-free juice and let users add nicotine on their own. You could charge me 100% tax on $5 of nicotine if it lasts me a couple months. Beat that, suits!

As to whether the tax applies to hardware, the Senate Bill as it appears on the State website is very fuzzy. Part of the language appears to limit the tax to cartridges that contain nicotine. But other parts define a vapor product in more general terms. Can't cut and paste from there but here's sample:

"such as an electronic cigarette, that employs a mechanical heating element, battery, or electronic circuit, regardless of shape or size, that can be used to produce vapor from a liquid nicotine solution"

I imagine the language will be refined as the bill progresses.

I wouldn't be too confident about the tax on bulk nicotine being negligible. The math I've seen seems to produce a tenfold increase in the price.

On sales from out of State the seller is responsible for collecting the taxes.

The Senate Bill as it appears right now on the State website only refers to taxes. I'm a bit puzzled at this point because I'm sure I read some material from the State, and heard politicians discussing it, that appeared to have a whole bunch more stuff going on. I thought I read that on the State website just yesterday. Particularly some licensing conditions that would have been almost impossible for small vendors to meet, which included any vendor from out of State that wanted to sell in Indiana. And stuff about the danger to minors. I don't see that language anywhere in the Bill on the State website now. Maybe it's somewhere else and what I'm seeing now is just the tax part of a larger thing. Or maybe I got confused about something. I'll try to figure this out when I get a chance. Maybe someone else knows. It had its first reading yesterday so maybe they trimmed it down.

If it's just the tax then it's not a huge deal. Annoying but not the end of the world. People pay 3X for premium juice today, or pay way over the internet price for hardware and juice from local shops, etc,

 

[sparkky1]

Well said. I think I like you

I'm assuming these laws only apply to juice and not the other devices/merch?

It's going to hurt the B&M places but to be honest it kind of drives me nuts that they survive on juice sales to begin with. Selling juice for ~1$/ml that costs at most $1/30ml to manufacture. That's one hell of a markup.

All the more reason to DIY...they might charge you a sales tax for the nicotine but that's going to be negligible...can't tax PG/VG/flavorings I assume.

Shops and juice makers would be wise to sell nicotine-free juice and let users add nicotine on their own. You could charge me 100% tax on $5 of nicotine if it lasts me a couple months. Beat that, suits!

Most vendors have been making 0 nic juice for a while now ....
Derailed - Suicide Bunny

 

[pennysmalls]

Racehorse, you are reading the proposal correctly. The main focus of the chair members was child safety caps, a clean final product and keeping things of an illicit nature from making their way into our juice. But there are other things tucked into the bill that would close our shops. Armed security, some sort of special grade store locks, both on site and off site video surveillance as well as provision aimed at shops who produce their own liquid. Those shops producing their own liquid would not only have to use a clean kitchen (I'm sorry I can't remember the actual term for that facility) that passes inspection regularly but they would have to own it as well. Apparently this is not possible for most shops, it was even the reason Njoy products would not be allowed to be sold in Indiana, they don't own the facility where their products are made.


Then there is the $5000 non-refundable permit fee which is ten times more than tobacco permits cost. All out of state liquid manufacturers would also have to pay this permit fee if they want to sell their liquids in Indiana and being a holder of said permit would then allow the Indiana Alcohol and Tobacco Commission and Indiana State Health Department to inspect their facilities. So Indiana shops wouldn't be carrying out of state made liquids anymore and wouldn't be able to make and sell their own.

I agree that things are pretty much up in the air right now and it's all due to Hoosiers showing up and voicing their opposition to this bill. If they hadn't been there things would probably be heading seriously south for Indiana vapers and there would definitely be a need for panic. I got the impression from the video of the hearing that the chair members didn't really grasp the actual affect these proposals would have on our stores until they heard what our store owners had to say. The presence of our vapers at that hearing was vital.

The paranoia over this bill was valid. The bill was just proposed on the 13th, I think it was, and less than two weeks later a hearing was scheduled. Rumor has it that the state house heard about vapers uniting in a letter writing campaign and two days later the hearing was scheduled for just two days later again. It sure seemed like they were going to try to pass this quickly while hoping vapers didn't catch wind of it.

 

[pennysmalls]

Racehorse- I forgot to answer the 24% tax question. They way it was explained at a meeting this past Sunday was that the 24% sin tax would apply to store owners when they order new inventory. When you look at all of it all put together it was on obvious attempt to make it financially impossible for Indiana store owners to stay in business.

 

[BluzKing]

Cigar shops have undergone the same bs...I have a friend that owns a high end cigar shop in Atlanta. He told me that an average of 60 cents out of every dollar he collects goes to the government in the form of taxes. As a result, a cigar than cost the consumer $3 a few years ago now costs double that amount, or more. The high prices have led to many customers quitting altogether or exclusively using online vendors for their cigars. It's a shame, but that will probably happen to the vaping industry as well.

 

[zoiDman]

The FDA is not doing this, Indiana is.

 

[englishmick]

FYI - about my earlier post in this thread.

I got mixed up. There are 2 Senate Bills. One for taxes and one for everything else. I was just looking at the tax Bill. Sorry.

The other one relating to permits is as horrible as it could be. If it passes there is very little chance that any out of State juice vendors would be selling their wares in Indiana. And Vape shops would probably be out of business. The language in this one is almost unreadable. And probably written by big tobacco advisors, since it specifically excludes the type of cig-alikes they sell.

 

[Rickajho]

Wow - you got some real smart ones in Indiana.

This won't pass for the same reasons similar State legislation never passes. Indiana as no legal authority to impose taxes of fees on business that have no physical presence in the State. How are they going to impose this fee on the "State" of China, let alone enforce it? Indiana also has no authority to inspect or control shipments of goods into their State. They cannot hijack USPS, Fedex, UPS, DHL etc. and/or customs and make them do a specialty subset of operations solely for the State of Indiana..

Then you have the "intent" issues - taxing by intent. "That battery shall be declared taxable because we know people intend to use it in an e-cig, but shall not be taxable when intended to be used in a flashlight." "That cotton shall be taxable..." Is there a lie detector clause in this bill as well? Gonna need it.

Do raise bloody hell about it though - especially the stupid parts.

 

[twgbonehead]

As far as I know, there are only 2 other products which are taxed as inventory: Liquor and cigarettes. And I'm not 100% positive about liquor. (For cigarettes, the tax is paid when the stamp is applied).

Everything else is taxed at point-of-sale to the consumer.

Am I wrong on this?

 

[twgbonehead]

Wow - you got some real smart ones in Indiana.

This won't pass for the same reasons similar State legislation never passes. Indiana as no legal authority to impose taxes of fees on business that have no physical presence in the State. How are they going to impose this fee on the "State" of China, let alone enforce it? Indiana also has no authority to inspect or control shipments of goods into their State. They cannot hijack USPS, Fedex, UPS, DHL etc. and/or customs and make them do a specialty subset of operations solely for the State of Indiana..

Then you have the "intent" issues - taxing by intent. "That battery shall be declared taxable because we know people intend to use it in an e-cig, but shall not be taxable when intended to be used in a flashlight." "That cotton shall be taxable..." Is there a lie detector clause in this bill as well? Gonna need it.

Do raise bloody hell about it though - especially the stupid parts.

Not exactly that simple, though. Although trying to tax individual purchases from out-of-state might be impossible, the B&M's would likely order their stuff from out-of-state as well, and THEY could be required to show proof, and penalized. (Hence the focus on taxing at the "inventory" level, which mandates accurate record-keeping on what a store bought, and from whom, rather than on what they sold).

Nasty, nasty bill. Hope it dies the painful death it deserves.

 

[Lessifer]

Retail is all about profit margins. If I buy a bottle of juice for $10 and intend to resell it for $15, that's $5 profit, not counting overhead. Now, apply an extra 24% tax on that bottle that I intend to resell and either my profit gets cut in half, or my sale price has to go up.

 

[zoiDman]

Wow - you got some real smart ones in Indiana.

This won't pass for the same reasons similar State legislation never passes. Indiana as no legal authority to impose taxes of fees on business that have no physical presence in the State. How are they going to impose this fee on the "State" of China, let alone enforce it? Indiana also has no authority to inspect or control shipments of goods into their State. They cannot hijack USPS, Fedex, UPS, DHL etc. and/or customs and make them do a specialty subset of operations solely for the State of Indiana..

Then you have the "intent" issues - taxing by intent. "That battery shall be declared taxable because we know people intend to use it in an e-cig, but shall not be taxable when intended to be used in a flashlight." "That cotton shall be taxable..." Is there a lie detector clause in this bill as well? Gonna need it.

Do raise bloody hell about it though - especially the stupid parts.

Forget about Intent for a Second.

What would happen if there was a Specific Tax on Nicotine. Say... $0.0083 per Milligram of Nicotine

http://www.e-cigarette-forum.com/fo...s-would-threaten-access-use-e-cigarettes.html

Nobody is going to Try and Impose/Enforce a Tax on an 18650 Battery or a Bag of Cotton. But Nicotine. Well, that is a Different Story.

http://www.e-cigarette-forum.com/forum/diy-e-liquid/642648-1l-100mg-nic-base-went-up-830-00-a.html

 

[twgbonehead]

Retail is all about profit margins. If I buy a bottle of juice for $10 and intend to resell it for $15, that's $5 profit, not counting overhead. Now, apply an extra 24% tax on that bottle that I intend to resell and either my profit gets cut in half, or my sale price has to go up.

You're missing the point, I fear.

You need to pay a 25% tax on that bottle, when you buy it. Not when you sell it. Great News! If your markup is 50%, then your customer only has to pay a 12.5% tax.

HOWEVER:
a) you need to pay the tax immediately when you buy it; unlike the inventory which you could purchase on account
b) You need to document all the inventory purchases you make, who you bought it from, how much you paid, etc.
c) You need to document that whoever you bought it from owns their own lab, and makes their own juice, and is registered to do so under Indiana law (and has paid the $5000, meets the state-specific requirements, has been granted a permit, etc). Otherwise, the Vendor won't be fined, the B&M will!
d) While Indiana has no authority to interfere with USPS, UPS, FedEx, customs, or the like, they are granting themselves the right to interfere with any B&M who buys e-cigarette-related stuff from a supplier. And, if passed they WILL have this authority, not to mention a very strong ability to collect.

While it reads like a sales-tax bill on the surface, the impact is much deeper. It will kill all the B&M's in the state.

This 25% "inventory tax" is more harmful than a 100% sales tax would be. Except for the fact that 25% of nothing is still nothing.

 

[Lessifer]

You're missing the point, I fear.

You need to pay a 25% tax on that bottle, when you buy it. Not when you sell it. Great News! If your markup is 50%, then your customer only has to pay a 12.5% tax.

HOWEVER:
a) you need to pay the tax immediately when you buy it; unlike the inventory which you could purchase on account
b) You need to document all the inventory purchases you make, who you bought it from, how much you paid, etc.
c) You need to document that whoever you bought it from owns their own lab, and makes their own juice, and is registered to do so under Indiana law (and has paid the $5000, meets the state-specific requirements, has been granted a permit, etc). Otherwise, the Vendor won't be fined, the B&M will!
d) While Indiana has no authority to interfere with USPS, UPS, FedEx, customs, or the like, they are granting themselves the right to interfere with any B&M who buys e-cigarette-related stuff from a supplier. And, if passed they WILL have this authority, not to mention a very strong ability to collect.

While it reads like a sales-tax bill on the surface, the impact is much deeper. It will kill all the B&M's in the state.

This 25% "inventory tax" is more harmful than a 100% sales tax would be. Except for the fact that 25% of nothing is still nothing.

oh no, I didn't miss all that, I agree that this bill seems to be designed to kill vaping in indiana, or at least the vaping industry. I was just pointing out that "it's just a 24% tax, I'm willing to pay a little more for my e-liquid" was the wrong way to see it.

 

[zoiDman]

One thing that People should Not Forget is that Indiana is not try to Pass 1 Piece of e-Cigarette related Legislation. They are Trying to Pass 5.

HB1235

HB1432

HB1169

SB384

SB539

 

[sofarsogood]

Lots of bills are introduced. Many or most don't go anywhere. Any legislator can introduce anything thing he wants. Lots of times they do that just to appease important constituents or they propose ridiculous rules for a bargaining position. Vaping is not a public health or science issue it is a politial issue and that's because the government gets most of the revenue from tobacco. Government is, simply, a drug dealer. In Michigan my annual smoking cost was $3,000. $1,000 of that went to the State. Suddenly the state is getting none of that. My local vape shop owner says he starts 5-10 newbies every day and 75% become non smokers. If the shop gets 2,000 smokers quit that costs the state treasury upwards of $2 million dollars. OF COURSE state governments are upset. The vape shops are hurting their drug business.

Consider it from the customer point of view. I give a vape shop $80-100 for an N mini, iStick 30, replacement coils and a few bottles of liquid and a few months later I'm saving $3,000 a year. That's a hell of a deal and I think in a lot of places the move to vaping has already, or soon will be, a stampede.

Nobody worries about the gas station cigalikes because all they are good for is avoiding indoor smoking issues. Speciality vape shop products are designed to replace cigarettes and the success rate is high. State governments are in a panic. Follow the money.