Delaware’s Incremental Grapple with E-Cigs

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Earlier this month the FDA announced that use of electronic cigarettes (or “e-cigs”) reached epidemic proportions among teenagers and it is cracking down. It placed the burden on five manufacturers to prove their devices are not being sold to minors and sent out notices to retailers reminding them of the prohibition against selling to minors under federal law. Delaware has had this same debate in slow motion starting in 2014, attempting to leverage its three main regulatory strategies: sales to minors, Clean Indoor Air Act, and taxes.

Delaware’s three major mechanisms are as follows:

  • 11 Del.Code §§ 1115-27 - Prohibition of Tobacco Sale to Minors
  • 16 Del.Code §2901 et al. - Clear Indoor Air Act
  • 30 Del.Code § 5301 et al. - Tobacco Excise Tax

Prohibition of Tobacco Sale to Minors

In 2014 the first, and easiest, step was taken to ban the sale of “tobacco substitutes” (e-cigs) to minors. House Bill 241 sailed through the chambers without amendment and with near-unanimous votes. Easiest because, as e-cig companies claim, vaping is a smoking cessation tool, not aimed at youth use.

Clean Indoor Air Act

Not as easy, in 2015 Delaware’s House Bill 5 – after fiery debate – added e-cigs to the Clean Indoor Air Act. The Act itself had a long debate in the early-to-mid 1990’s under Governor Minner. The original law did not reach bars, indoor arena boxes, and tobacco businesses. These exemptions were eventually removed in 2002 – with new, narrower carve outs for “fraternal benefit societ[ies]” and, strangely, fire companies and volunteer ambulance fundraisers (although legislation such as HB404 of 2014 sought to close those carve outs). The effort to include e-cigs in the Clean Indoor Air Act started in 2014 with House Bill 309, which, although it passed the House, failed to see action in the Senate. House Bill 5 the next year adopted a compromise that allowed e-cigs to be used inside of “vapor establishments.” With this compromise, in 2015 HB 5 cleanly and efficiently put e-cigs on regulatory parity with cigarettes when it comes to indoor smoking bans.

Tobacco Excise Tax

What is not so clean is the last area, taxation. While there is not a direct tax on “electronic smoking devices” (e-cigs) there is one on “vapor products” (the nicotine solution used therein) at the rate of $0.05 per milliliter. This, however, is a distinct tax and a far cry from parity with cigarette taxes which are at 105 mills per cigarette (i.e., $2.10 per pack of 20 cigarettes or $2.63 per pack of 25 cigarettes).

A “Tobacco Product” broadly does not include an “electronic smoking device” but it does include “vapor products.” In fact, the only place the definition “electronic smoking device” appears is within the subsequent definition of “vaping products.” Interestingly, this means that any retailer can freely sell without license or fee the e-cig device itself so long as it does not sell the nicotine fluid. With the proliferation of vaping marijuana, this might be an oversight.

The role of tobacco taxation itself creates behind-the-scenes tension in Dover. In 2017 during Governor Carney’s first “Shared Sacrifice” Budget, Delaware took a half step on increasing the tobacco tax. The American Heart Association cited cessation experts’ claim that a $1increase (from $1.60 per pack to $2.60) was necessary to see a decrease in use. In Delaware Way fashion, the negotiation landed at a $0.50 increase with hopes (that did not materialize) that next year’s budget would include the other $0.50. We’re awaiting data on if the increase did prove a deterrent.

Regardless, it remains to be seen whether the FDA crackdown on teen use inspires Dover to cleanly adopt the pricing deterrent that has proven effective to dropping teen use of cigarettes. The legislature may consider adopting the model of 2013’s House Bill 138, which sought, but failed, to “eliminate the taxing disparity between moist snuff and ‘other tobacco products”. We’ll find out in the 150th General Assembly.