SFATA Requests Veto on California SBX2-5

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The California chapters of the Smoke-Free Alternatives Trade Association (SFATA), the largest trade group representing the vapor industry, last week met with Governor Brown’s office urging his veto of SBX2-5, a measure the seeks to define vapor products as “tobacco” and make related changes to existing law.

The bill, which passed last week during the second special session of the California Assembly, is now headed to the State Senate where a “yes” vote is inevitable.

“While we are hopeful this measure will not pass in the California Senate, and are outreaching to these legislators announcing our opposition, we are calling on Governor Brown for a veto nevertheless,” Cynthia Cabrera, president of SFATA, said in a statement on SFATA’s website.

“Treating vapor products like tobacco opens the door to unfair and unwarranted tobacco tax-related implications that will discourage smokers from switching to what science says is an effective and significant alternative to combustible tobacco,” she wrote in a hand-delivered letter to Governor Brown.

Below is a copy of the full letter to Governor Brown that was delivered on March 9, 2016:

March 9, 2016
The Honorable Edmund G. Brown Jr.
Governor of California 
c/o State Capitol, Suite 1173
Sacramento, CA 95814
 

Re: VETO Request on SBX2-5 introduced during the Extraordinary Session on Health Care’s Public Health and Development Services

Dear Governor Brown:

On behalf of the California chapters of the Smoke-Free Alternatives Trade Association (SFATA), we respectfully request your veto on SBX2-5, a measure that seeks to classify vapor products as “tobacco” and make related changes to the law. The bill, which passed last week during the second extraordinary session of the California Assembly, is now headed to the State Senate where a “yes” vote is inevitable.

 Our industry always has supported sensible legislation, such as prohibitions on selling to minors, reasonable licensing requirements and child-resistant packaging. However, attempting to classify these products as “tobacco” has unintended consequences, several of which are outlined below. We also believe this legislation opens the door to unfair and unwarranted tobacco tax-related implications that will discourage smokers from switching to what science says is an effective and significant alternative to combustible tobacco.

Please consider the following:

•  Vapor products are not tobacco products because they clearly do not contain tobacco. Vapor products are significantly different than combustible cigarettes. They are technology products comprised of metal and electronic circuitry and use heat from a battery to vaporize e-liquids rather than combustion to burn tobacco. It is scientifically impossible to create an equivalent between the risk posed by combusted tobacco and that posed by vapor products because the chemical makeup of the products is entirely different. Even California’s own current definition of vapor products says they do not meet the definition of a cigarette or tobacco product, since they do not contain tobacco and are not subject to the state’s tobacco excise tax. 

• Other products such as therapeutic vaporizers may be subject to regulation. The language “electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device” is broad and could be construed to capture products that the legislature did not intend to regulate as “tobacco products,” such as therapeutic vaporizers that are not subject to FDA approval requirements and products such as air fresheners or “aromatherapy” devices.

• Hardware including batteries will be regulated as a “tobacco.” The new definition of “tobacco product,” and in particular the “component, part, or accessory of a tobacco product, whether or not sold separately” language is broad enough to capture hardware, including batteries, which are represented for use in or in conjunction with vaping products.

• SBX2-5 legislation leaves ambiguity as it relates to licensing. Although it appears that Chapter 2 of the Cigarette and Tobacco Product Licensing Act of 2003 (CTPLA) (which requires licensure of retailers) would incorporate the new definition of “tobacco product,” the other Chapters of CTPLA would continue to use the Revenue and Taxation Code (RTC) definition, as incorporated by the California Business and Professions Code at Sec. 22971(s).

•  The consequences for a vapor retailer are unclear. Under CTPLA Sec. 22974, retailers would need to “retain purchase invoices that meet the requirements set forth in Section 22978.4 for all cigarettes or tobacco products the retailer purchased for a period of four years.” Section 22978.4 applies to wholesalers and distributors and is in Chapter 3 of CTPLA, so it uses the RTC definition of “tobacco product,” which does not include vaping products.  Given that such wholesalers and distributors need not comply with 22978.4, it is not clear what would be the consequences for a retailer, if any.  

• Legislation may impact a vapor business’ ability to successfully operate. The stigma of being equated with tobacco has many negative consequences, including the potential to be denied workers’ compensation and product liability insurance, as well as being forced out of financial institutions and merchant service agreements. 

• Raising the minimum age does not take into consideration current adult smokers between the ages of 18-21. According to a 2012 California Health Interview Survey, 16 percent of male smokers, and 11 percent of women smokers, are between the ages of 18-24, respectively. Studies have revealed smoking cessation products such as patches and gums are not effective. Removing this group from access to vapor products, which science has proven to be 95+ percent less harmful than combustible tobacco, as well as an effective tool at replacing smoking, leaves these current adult smokers without viable options to  help them stop smoking. Similar legislation such as SB7X2 and AB8X2 also cuts-off these smokers from significant alternatives to smoking. 

• Linking vapor products to tobacco will lead to excessive taxation. It is very likely that measures SB9X2 and AB10X2 granting local jurisdictions the ability to apply tobacco taxes will pass and head to your desk for signature. Not only does this create a patchwork of inconsistent laws across the state, it leaves the vapor industry at risk of being taxed like tobacco products, which certainly will lead to an unregulated, underground market of these products, as well as become considerably more expensive than combustible tobacco. There also is no clear indication of how these products will be taxed, such as vapor products that do not contain nicotine and all other non-nicotine related hardware, which can are used for many applications other than vaping, leaving enormous ambiguity in the proposed law. 

Our industry was built by former smokers that morphed into small- and mid-sized businesses as a way to offer a significant alternative to combustible tobacco. In California alone, there are approximately 1,400 vaping retail locations, plus hundreds of manufacturers, distributors, and related businesses that contribute to the state’s economy, generating taxes and thousands of jobs. 

The majority of the scientific community believe vapor products can be effective in achieving the goal of harm reduction caused by smoking, especially in California, which costs the state $18 billion in annual healthcare costs, and is responsible for 37,000 deaths each year. Fewer smokers also will contribute to cost savings among Medicaid patients, where the prevalence for smoking is more than twice the national average. In California, 45 percent of adult smokers receive Medi-Cal, according to 2011 CDC data. Even the FDA has acknowledged that vapor products may be a viable option to help smokers who are otherwise unable or unwilling to quit.

SFATA represents a wide cross-section of the entire vapor product industry, including distributors, manufacturers, and retailers. Its membership is comprised of responsible business owners who are committed to ensuring a path for the continued innovation of products that researchers worldwide have agreed could eliminate the public health hazards caused by use of combustible tobacco cigarettes. 

While we share the same goal of eliminating smoking as many of the measure’s advocates, we believe SBX2-5 is actually counterproductive to that goal and we urge your consideration for a veto.

Please visit Sfata.org for more information including scientific research on vaping as well as our top 10 vapor facts that clarifies misconceptions about the vapor industry. 

Sincerely,

Cynthia Cabrera

President & Executive Director

 

SFATA Requests Veto on California SBX2-5