The citizens of Montana will decide Nov. 6 whether to tax vapor products for the first time. The vape tax is part of an increase on tobacco taxes that is being presented as a solution to the state’s Medicaid funding problems.
The “Healthy Montana Initiative” (I-185) will define vapes as “other tobacco products,” which are already taxed at a rate of 50 percent of wholesale cost. Then it will add 33 percent to the existing tax. That would make vapor products so expensive that vape shops and other Montana vaping businesses would probably have to close.
In 2016, Pennsylvania imposed a 40 percent wholesale tax that eventually caused half of the state’s vape shops to close their doors. Vapers can simply switch their business to online vendors to avoid the high in-state costs. And some, of course, will go back to smoking cigarettes.
Despite the American Cancer Society’s supposed change of heart on vaping as an acceptable alternative for smokers, the massive charity’s lobbying arm, the Cancer Action Network, is supportive of the vape tax. Other tobacco control groups, like the Campaign for Tobacco-Free Kids and the American Heart Association, also support the tax, according to the Great Falls Tribune.
Because ballot Initiative 185 also includes a $2 a pack cigarette tax increase (the current tax is $1.70 a pack), cigarette manufacturers are spending a lot of money to persuade voters to oppose the initiative. A group called Montanans Against Tax Hikes has already spent more than $1.6 million on TV commercials, according to the Billings Gazette. The group is primarily funded by Altria and Reynolds American/British American Tobacco, the largest American tobacco companies.
This won’t be the first time the interests of small vapor businesses and Big Tobacco have aligned. Reynolds spent millions this year and last on the effort to prevent a tobacco (and vapor) products flavor ban in San Francisco. However, the San Francisco flavor ban was approved by voters.
The Initiative allocates a portion of the tax revenue to pay for the state’s Medicaid expansion. Much of the advocacy on both sides of the ballot initiative revolves around a fairly complex argument over whether the new tax dollars will cover the cost of the expansion.
But for vapers and business owners and employees, the issue on Nov. 6 will be fairly simple: if I-185 passes, their local vape shops will probably not survive.