Drawing a Profit from E-Cigs

Drawing a Profit from E-Cigs

1:14pm May 27, 2014
N.C. House members have tentatively passed a measure to tax the nicotine liquid used in all e-cigarettes. The tax would be 5 cents-per-milliliter of nicotine. It’s part of the state’s Omnibus Tax Law Change Bill.
Kathryn Mobley

The look and sound of a person getting their nicotine fix is changing. Now North Carolina legislators want to profit from the buzz.

A growing number of smokers are trading traditional cigarettes for e-cig devices. Nationally, this is a $2-3 billion industry.

Vaporizers are a popular type of e-cig.  Eric Cooper, 25, is floor manager at Southern Vapes on Peters Creek Parkway in Winston-Salem. “Vaping is the only thing that has fixed that need for a cigarette and helped me quit for so long,” says Cooper. He began smoking cigarettes when he was 13. Two years ago, he was forced to put down a two-pack-a-day habit. “I had to have back surgery, I’ve had three. My doctor wouldn’t touch me until I quit smoking. I’ve tried everything, the patch and tea tree tooth picks. Vaping is the only thing that give me the hand to mouth fixation,” explains Cooper.

His device is a black rectangular box. Inside are duel 6-volt batteries that power the unit. Under his mouth piece are coils surrounded by a cotton-like wick. On top of them he drips a liquid mixture of propylene glycol, vegetable glycerin, nicotine and flavoring. The batteries heat the liquid and create a vapor. “For me personally it’s not a nicotine addiction, I vape about 6 mg. It’s the hand to mouth fixation. As all smokers know either driving or after eating, I needed to have a cigarette in hand.”

Sitting at a small round table, Cooper leans back in his chair and inhales on his device. As he exhales, a relaxed smile spreads across his face. “In the morning, I’ll have a nice bold tobacco vape. After that it’s strawberries, mango or peach. Right now I’m on a custard kick,” says Cooper. North Carolina lawmakers also like the liquid, as a potential revenue generator. Last Wednesday, house members tentatively passed a measure to tax the nicotine liquid used in all e-cigarettes at 5 cents-per-milliliter. It’s part of the state’s Omnibus Tax Law Change Bill.

But Southern Vapes owner Leigh Anne Blackburn says the tax will hurt her business. “For the consumer it’s not a good thing. For the business owner it’s not a good thing because it's going to come straight out of the consumer's pocket and into the government's pocket.” Vaping helped Blackburn kick the habit after 37 years. She says she opened Southern Vapes on Peters Creek about a year ago after having difficulty finding supplies in the Triad. She also wanted to create easy access to an alternative form of smoking for others who want to stop lighting up traditional cigarettes.

Blackburn has a shop in Greensboro and Yadkinville, as well as two Winston-Salem franchises. She sells the mixed liquid in bottles of 10 ml. or 15 ml.“People come in here to save money. They can get the nicotine delivered through a safer alternative," says Blackburn. "One bottle equals a carton of cigarettes for a week. $8 to $10 versus $40 to $50 a week they're saving and now their proposing we apply a tax. On a 10 ml bottle that's going to be 50 cents and on a 15 ml it'll be 75 cents more than what they were paying last week." Tobacco cigarettes are taxed 45 cents-per-pack.According to Blackburn, a bottle of vape liquid can contain from zero to 24 milligrams of nicotine per milliliter. Custom liquids can be made with a higher nicotine content. But Cooper has mixed feelings about the proposed tax. “The 5 cents isn’t bad right now. But we need to fight it because they’ll increase it over time", he believes. "So I think we need a fixed rate.” In Raleigh, House members also amended the bill to make it label e-cigarettes as a "tobacco product." If signed into state law, this tax is projected to generate about $7 million over the next two years.

But a state representative for Forsyth County doesn’t agree with the proposed tax. Democrat Evelyn Terry believes it’s premature and too little. “A 5 cents excise tax when we’re taxing cigarettes at 45 cents per pack is probably too low," says Terry. "Also, I believe we probably need to wait until the FDA, which has issued some proposed rules about regulating the e-cigarette, comes back. Right now we just don’t know.”

Blackburn agrees. She and other vape shop owners are emailing letters to legislators asking them to hold off applying a tax on e-cigarettes until after federal regulations are in place. “I’m all about the consumer, and if they like it, they find it’s a better option for them and when they realize they can have different flavors," says Blackburn. "It makes me happy that people are getting off of cigarettes.”

Overall, Cooper, who is the father of a 2-year-old son, calls any tax on e-cig devise hypocritical.  “Now I can play with him without getting winded, I don't stink, I feel better and my skin has cleared up a lot," argues Cooper. "The government always talks about we need to be healthier and we’re quitting smoking but you're going to make us pay for it.” This measure will go through another House vote. If it passes, it’ll move to the state senate.

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