Vape Stores Face Closure After Washington Passes New Sin Tax on Vapor Products

The dreams of vape store owners are going up in arguably non-carcinogenic vapor. HAZEMMKAMAL / GETTY IMAGES

In a final flurry of late-night votes before session's end, the Legislature passed a new sales tax on vapor products. The bill, sponsored by Rep. Gerry Pollet, taxes "closed" vape products such as Juul and other corporate e-cigarettes at $0.27 per milliliter. "Open" systems, like those battery-powered devices with refillable cartridges of e-liquid that make people look like they're exhaling giant ghosts, will be taxed at $0.09 per milliliter.

The tax will raise $19.1 million in revenue over the course of two years, with half of the money going into the state's public health services account and the rest going to fund cancer research, programs designed to prevent tobacco/vape use among teens, and enforcement.

Washington's brick-and-mortar vape shop owners are in a state of shock. They say the tax will force them to shut down. "It's definitely going to be devastating," said Zach McLain, who runs Future Vapor in Seattle. "I’m going to try to figure something out so we don’t have to pass the tax onto the consumer, but other stores like mine will have to close."

Though people tend to be rightly pissed about passing regressive sin taxes that further impoverish poor, vulnerable people, the vape community is ultra-super-mega pissed about this one. They say the tax looks like it's structured to hit Big Tobacco harder than small business, but, in reality, the vape tax is a huge win for Big Tobacco.

"We are calling this what it truly is. This is the bill that Juul built," said Kim Thompson, owner of The Vaporium and president of the Pink Lung Brigade.

Two separate business models drive the vape industry. The larger one, funded by Big Tobacco, sells closed systems such as Juul and other e-cigs. These products are sold at convenience stores and drug stores in large, teen-epidemic-level quantities. Juul pods contain 0.7 milliliters of nicotine-laced e-liquid and come in packs of four, so Washington's new tax would raise the cost of a pack by about a buck. Major distributors and retailers will have the fiscal flexibility to swallow the tax hike.

That's not the case with the smaller model of vape sellers, which is composed of independent businesses owners who operate between 300 and 400 adult-only vape shops all around Washington. Though some vape shops carry products such as Juul, they primarily offer customizable vape pens along with 60 or 100-milliliter bottles of e-liquid. The bottles contain anywhere between zero and 18 milligrams of nicotine. No matter the amount of nicotine in the containers, stores are looking down the barrel at a $5.40 or $9 wholesale tax on every bottle of e-liquid, which owners say is unsustainable. "It at least doubles everyone's cost," Thompson said.

Thompson fears the tax will push out independent vape shops, ceding all ground to Juul purveyors and other retailers who, unlike her, aren't dedicated to helping their customers quit smoking cigarettes. "70 percent of the market isn't being nicked while 30 percent is being blown out, and our product is meant for stepping down," she said.

Just before the bill passed over a week ago, Rep. Pollet told me he thought the concerns of vape store owners were overblown. He says vaping is "dirt cheap" compared to cigarettes, and argues that the stores can raise prices. "We could triple the cost, and adults who wanted to switch [from smoking to vaping] would still save $1,000 or more a year," he said. "Those stores are still going to have that customer base."

Pollet's main goal with this legislation, he said, is cutting down on kids getting hooked on nicotine, which is a growing problem. The 2018 Washington State Healthy Youth Survey found that e-cigarette use "increased dramatically" among high school students between 2016 and 2018. Last year 30% of 12th graders reported using e-cigarettes. That represents a 10% rise in two years.

Other studies, including a 2018 report from the National Academies of Sciences, Engineering and Medicine (NASEM), which is considered the most comprehensive review of the science on vaping to date, have found "substantial evidence" that e-cigs can be a gateway to real cigs for teens.

The best way of going about decreasing underage usage, Pollet argues, is "having a reasonable tax." He points to testimony from Dr. Kathy Lofy, Washington's state health officer, who says other states that have implemented vape taxes have seen a decline in use. For every 10% increase in price, researchers see a 10% decrease in the hours teenagers vape.

"You decrease consumption by raising the price, and you put those dollars into prevention and cessation," Pollet said. "That's how we beat this."

Moreover, the vape store owners he's talked to said they "wouldn't even let their own teenagers use the products they're selling," Pollet added.

To which Thompson and every other vape store owner say, "Duh, they're teenagers. We don't want teenagers to vape. We want adults to stop smoking."

Unlike drug stores and convenience stores, which have been subject to recent crackdowns from the FDA for selling e-cigs to minors, you can't walk into most vape shops unless you're 18 years old.

Both Thompson and McLain say they set age restrictions on their stores before the state said they had to. Thompson says vape shop advocates also pushed for legislation on labeling requirements and statewide age restrictions on vape products. They welcome "positive regulation," Thompson says, as it helps to legitimize their businesses.

Since they don't sell to underage kids, they say they're not contributing to the epidemic of teen e-cig consumption that freaks out Pollet so much. Rather, their main customers are smokers who struggle to kick the habit.

Both Thompson and McLain say they're in the "harm reduction" business. The idea isn't to get new people hooked on nicotine—least of all teens—but to get people away from "combustion," i.e., traditional cigarettes, which kills nearly 500,000 Americans a year, according to the Centers for Disease Control. But quitting combustion can be emotionally difficult. And the vape systems they use to help people quit can be intimidating. The vape shop addresses both of those issues by offering technical advice and a sense of community.

"We're like the Apple store meets an AA meeting," Thompson said. "We have to talk about technology and voltage and milliliters—sometimes these older peoples' eyes start to cross. They're used to just lighting it and smoking it, and now you're telling them to charge a device and make sure their wattage isn't above a certain number."

McLain says he sometimes spends an hour or two per customer talking about different kinds of vapor products and ways to trick the body into kicking the many addictions caused by cigarette smoking. "It's a very DIY thing, putting one tank from this system on this system—we’re kinda geeking out over here," he said. "It's a community, too. You’re not going to get that from a convenience store."

Both owners say they meet their customers where they are in their addiction and work to decrease their nicotine levels.

"My best customers quit me all together," Thompson said.

But do they? Kinda, yeah. One recent study from the New England Journal of Medicine found that e-cigs had an 18% success rate, which was "more effective for smoking cessation than nicotine-replacement therapy [patches or gum], when both products were accompanied by behavioral support."

A spokesperson for the state Department of Health says "there is not enough evidence" to determine if vapes are good for quitting, nor has there been enough time to "assess long-term health effects" of vaping. But, bottom line, "vapor products are probably safer for adults who smoke."

And though Pollet and the DOH say the tax will limit teen access to vape products, Thompson isn't so sure. "You can go to the baking section of any grocery store and buy the ingredients you need to make the e-liquid," she said. "You can buy the nicotine online and mix it at the kitchen table. People have been doing it for a while, and it's a huge subculture that has not gone away."

Pollet seems to recognize that both he and vape shop advocates share the goal of trying to help people quit smoking. In a Facebook comment last week, he blames Republicans and the Senate—which, like the House, enjoys a healthy democratic majority—for wanting the per-milliliter tax. He also said he and other lawmakers tried to hang a last-minute amendment exempting brick and mortar vape stores from the nine cent tax, but he accused vapor advocates of not helping whip votes for that amendment. "Did your organizations or individual vape store owners help us get votes for that?" he wrote.

Thompson thinks the suggestion that she or another vape advocate could have helped whip votes for a late-night amendment she knew nothing about is absurd.

She's hoping Gov. Inslee will veto the bill. "Vaping is to smoking what solar power is to coal mining," she said in an appeal to Inslee. "We're up against what the environmentalists are up against with Big Coal. This is Big Tobacco holding back true harm reductions."

In lieu of a veto, Thompson wants lawmakers to agree to a meeting at the beginning of the next session to talk about an exemption. And she promises to continue fighting. "They're taking away something that saves peoples' lives. Now they're going to deal with people whose lives we've saved," she said.