BILL NUMBER: S3045

SPONSOR: RIVERA
 
TITLE OF BILL:

An act to amend the tax law and the public health law, in relation to
providing for the taxation of electronic cigarette cartridges

 
PURPOSE:

This legislation would include electronic cigarette cartridges as a
tobacco product in the tax law, and would subsequently subject them to
the appropriate taxes for such items.

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 amends subdivision 2 of section 470 of the tax law, as amended
by section 15 of part D of chapter 134 of the laws of 2010 by adding two
new subdivisions 20 and 21 that add the definition of an electronic
cigarette or c-cigarette, as well as electronic cigarette cartridge or
e-cigarette cartridge.
              

Section 2 amends section 1399-aa of the public health law by adding a
new subdivision 14, which adds the definition of an electronic cigarette
cartridge or e-cigarette cartridge.

Section 3 sets the effective date.

 
JUSTIFICATION:

In recent years we have begun to address the litany of issues that have
arrived with the rise in popularity of the electronic cigarette (e-ci-
garette). Beginning with the ban on sales to minors, electronic ciga-
rettes are now banned from being used indoors in the City of New York,
and legislation to do the same on a statewide level is being pursued.
However, the issue of taxation has yet to be addressed and this legis-
lation will do just that.  Currently the Federal Food and Drug Adminis-
tration (FDA) has yet to rule on how to regulate these products but many
states and localities are moving ahead. New York State will join Minne-
sota in classifying cartridges that contain the nicotine and/or other
chemicals that deliver the addic- tive drug that are found in cigarettes
and other forms of tobacco products in a vaporized form.

In December of 2010, the U.S. Court of Appeals for the D.C. Circuit
issued a decision stating that e-cigarettes and other products "made or
derived from tobacco" should be regulated as tobacco products and that
the FDA can regulate them under the Tobacco Control Act. On April 25,
2011 the FDA announced it would not appeal that ruling, and has since
been working toward forming a strategy to regulate e-cigarettes under
the Tobacco Control Act.

Those in the business of selling e-cigarettes market them as a safe
alternative to traditional forms of smoking, i.e. cigarettes, cigarillos
and many other smoking related ways of inhaling nicotine. The truth is
that to date, the FDA is unaware of what is in the majority of these'
devices; those they have tested have been found to contain not only
nicotine but also detectable levels of known carcinogens and toxic chem-
icals. The FDA also found that "quality control processes used to manu-
facture these products 'are inconsistent or non-existent." Additionally,
while electronic cigarettes are often marketed as a smoking cessation
tool or a safer alternative, there is growing concern amongst tobacco
control organiza- tions that there is little noticeable difference in
appearance when using these devices. This could lead to young teens
being potentially lured by the e-cigarettes and ultimately find them-
selves addicted to nicotine, which could very well lead to smoking ciga-
rettes.  Adding these products to Section 470 of the tax law will bring
these products in line with other tobacco products; they will be regu-
lated and taxed in the same fashion as other tobacco products. As the
State continues to fight to lessen the smoking population as a public
health measure, allowing an addictive drug like nicotine to be sold
without tax is simply counter intuitive.

 
PRIOR LEGISLATIVE HISTORY:

2013-2014: S6610/A8594 Dinowitz

2015-2016: S722/A296 Dinowitz

2017-2018: S1089/A1138 Dinowitz

2019-2020: S876/A3503 Dinowitz

 
FISCAL IMPLICATIONS:

The State will receive significant new revenue by classifying these
products as tobacco products; they will subsequently be taxed under
existing law and new regulations promulgated by the Department of Taxa-
tion and Finance as directed under this bill.

 
EFFECTIVE DATE:
This act shall take effect on the 180th day after it shall have become a
law; provided, however, that the Department of Taxation and Finance is
authorized and directed to promulgate rules and regulations necessary
for the implementation of this act on or before such date.