Skip to main content

Senate Wants Tobacco Licensing While House Goes for E-Cig Tax

Some tobacco vendors, including the Northwest Grocery Association, have pledged support for statewide licensing to avoid a patchwork of local ordinances, but licensing advocates are insisting on local control. Meanwhile, the House is debating a 50 percent retail tax on e-cigarettes and supplies.
February 5, 2016

Sen. Laurie Monnes Anderson, D-Gresham, and Sen. Elizabeth Steiner Hayward, D-Portland, appear determined to push through a state law requiring a license to sell tobacco and e-cigarettes to the public, but they face opposition from unlikely quarters.

Meanwhile, the House Health Committee renewed the debate on a bigger political lift -- taxing e-cigarettes, as the increasingly popular nicotine-delivery devices are displacing traditional tobacco cigarettes.

The tobacco companies and the Northwest Grocery Association -- whose members sell cigarettes at supermarkets -- are not resisting the proposed state licensing regulations, which are designed to cut off youth access to tobacco by creating real consequences to vendors who sell to minors.

Instead, the biggest objections to Senate Bill 1559 come from local public health officials and anti-smoking advocates, who don’t want the state telling counties they can’t go further, for example by restricting the types of businesses that can sell tobacco and e-cigarettes or restricting their location.

Monnes Anderson told Carrie Nyssen of the American Lung Association at the hearing Tuesday that Nyssen was being a purist for staking out opposition to a uniform statewide law that pre-empts local laws, and while Monnes Anderson agreed with her in principle, it could prevent the Legislature from passing any law if the licensing bill did not include this compromise.

Grocery lobbyist Shawn Miller said his organization supported new regulations because they want to avoid a patchwork of laws across Oregon, after Multnomah County created a licensing law last year. The ordinance from the state’s largest county is generally serving as the template for SB 1559, although the statewide proposal goes further by regulating vape shops alongside regular tobacco vendors.

The proposed statewide pre-emptions are limited and would not stop a county or municipality from banning flavored tobacco products. Steiner Hayward told The Lund Report that local governments would also be free to set their own age restrictions, including raising the age to 21 -- a key wish of advocates at Tuesday’s hearing. The new statute would also allow Multnomah County and the city of Corvallis to keep their existing ordinances.

“We are long overdue to pass tobacco legislation in this state,” Steiner Hayward said. “It embarasses me beyond words that Oregon is one of the few states that does not.

“I don’t see why certain kids should be protected and others shouldn’t,” she added, noting the unlikelihood that Clackamas or Marion county commissioners would ever pass their own licensing programs.

Last session, Sen. Mark Hass, D-Beaverton, expressed similar frustration with the uncompromising stance of licensing advocates, and pulled the plug on a similar version of the legislation after publicly declaring to reporters that he thought a deal was reached.

The Democrats have a supermajority in the Senate, but if they overruled the grocers’ objections, a partisan bill might peel off support from centrist Democrats like Sen. Betsy Johnson, D-Scappoose, or even Hass.

E-Cigarette Tax

House Bill 4062 sets a retail tax of 50 percent on e-cigarettes and the liquid used in these devices. The bill appeared to be a starting point on the tax discussion, which will have to be debated in the House Revenue Committee, if House Health passes the bill. Rep. Mitch Greenlick, D-Portland, delayed the vote until Monday.

Anti-tobacco advocates, including Jenn Baker of the Oregon Nurses Association, noted the exponential increase in recent years of the use of e-cigarettes by adolescents, driven in part by their low price compared to heavily taxed regular cigarettes.  “The goal would be to pass the cost increase onto the consumer -- especially teens who are price-sensitive,” Baker said.

Even as traditional cigarette use is in decline, a new generation is at risk of being addicted to nicotine in a new form, which presents its own health risks.

A key challenge the Revenue Committee will have is to how to set a tax on e-cigarettes, and how high it should be set.

Justin Rainey, a lobbyist for Reynolds American, argued e-cigarettes should be taxed at the wholesale level, like regular cigarettes. Some vape shop owners were opposed to any tax, since they market their devices as a way of weaning smokers off more harmful regular cigarettes. Others, including Northwest Vaping Association lobbyist Matt Minnehan, argued simply that a 50 percent retail tax was too high.

“It will price vaping products above the price of tobacco,” warned Spencer Knowles, a Bend vape (e-cigarette) shop owner. Minnehan said he was open to negotiation about a smaller tax, and it’s possible the bill’s sponsor, Rep. Phil Barnhart, D-Eugene, set the initial offering at 50 percent as an opening point in the negotiation rather than a firm figure.

But Morgan Cowling of the Coalition of Local Health Officials told The Lund Report that if the current tobacco tax was expressed per nicotine levels as in this retail tax, it would come out to as high as 180 percent.

Unlike the tobacco licensing bill, the e-cigarette tax -- particularly at the current rate and in its current form -- drew vocal skepticism from Republicans, including Rep. Jim Weidner, R-McMinnville and Rep. Cedric Hayden, R-Cottage Grove, who in particular questioned why the tax should be twice the rate of marijuana.

And unlike the tobacco licensing bill, the majority Democrats will need at least one House Republican to support House Bill 4062, since all taxes require a three-fifths majority.


Submitted by Thomas S Duncan on Sat, 02/06/2016 - 08:51 Permalink

Seems to me that if the purpose of the tax is just to create revenue, then everything should be taxed the same.

If the purpose is to use a political process to mitigate social harm, then things should be taxed according to the harm they cause.

Very controversial, of course, but it appears to me at this time that tobacco causes far more harm than marijuana.  Time will tell about that, I guess.

Dr. Thomas Duncan