Green sign law puts 70% tax on electronic cigarettes, liquids

Gov. Josh Green signed anti-vaping legislation into law on Tuesday in an effort to address the growing use of nicotine products, especially among youth in Hawaiʻi.

The measure bans the shipment of tobacco products to non-licensed retailers and official groups electronic cigarettes and vape juices under the definition of “tobacco products.”

It also introduces a 70% exclusive tax on the wholesale price of each electronic smoking product, which could likely increase consumer costs.

The tax will take effect on Jan. 1, 2024. Lawmakers say it is the first step in protecting Hawaiʻi’s youth from the dangers of “Big Tobacco.”

“Regulation and taxation are tools that we have… And we know it works and we know it will continue to work because this is the model that we use on traditional cigarettes. By raising the taxes over the years…we were able to decrease tobacco use and increase resources for public health,” Green said at the bill signing.

Nearly 1 in 3 Hawaiʻi high school students regularly vape, according to the state Department of Health. While notably less harmful than traditional tobacco products, electronic cigarettes still carry risks of their own.

According to the US Surgeon General, nicotine is as addictive as heroin and cocaine, and the aerosol produced by the e-products may contain heavy metals and flavors linked to lung disease.

Critics of the law say the increase in prices on vape products will only encourage people to start using traditional tobacco products and dissuade those thinking of quitting.

Studies suggest that taxing and regulating e-cigarettes may have the unintended consequence of increasing traditional cigarette use.

One study from the National Bureau of Economic Research on the effect of a vape tax on youth tobacco use found that “23% of teens who responded to higher [e-cigarette] taxes with reduced use are substituting towards regular cigarette use.”

Another from the same research organization found the same phenomenon in young adults. For 18 to 25-year-olds, a $1 increase in e-cigarette taxes increased cigarette sales by more than 4,800 packs.

Green, however, isn’t too worried that Hawaiʻi will see an increase in traditional cigarette use.

“We laid the foundation before this bill passed with years of legislation to make it very difficult for children to get traditional cigarettes. Also, we’ve made them very expensive in the state of Hawaiʻi already,” Green said.