Senate President Pro Tempore Jim Hendren, R-Gravette, is introducing a bill that would tax vaping products, prohibit their use in places where cigarettes are already prohibited, and restrict advertising to minors. He hopes to pass the bill in a special session, potentially this year.
The School Safety Act would levy a privilege tax on e-cigarettes that is equal to the 67% tax currently levied on other tobacco products. Revenues would be credited to the Public School Fund for school facility safety and security improvements along with mental health counselors for students with an addiction or other mental health issues.
The bill would add e-cigarettes to the Arkansas Clean Indoor Air Act of 2006, which prohibits smoking indoors in public places. It would amend the Clean Air on Campus Act of 2009 prohibiting smoking at public college campuses by adding e-cigarettes. E-cigarettes would be added to the prohibition against using tobacco products in a motor vehicle and the State Capitol, the latter of which is punishable by a $25 fine.
Children would not be able to remain in foster homes where members of the family use e-cigarette products, unless the Department of Human Services determines staying there is in the best interest of the child. Such a prohibition already exists for tobacco products.
The bill also would make wholesalers, manufacturers or retailers guilty of a Class A misdemeanor if they distribute e-cigarettes to minors or advertise to them. The Arkansas Tobacco Control director could revoke or suspend the license of those who violate that section.
The bill also would ban e-cigarette advertising on outdoor billboards located within 1,000 feet of a public or private school or playground.
If enacted, the bill would require final rules to be adopted by Jan. 1, 2020 by the Department of Finance and Administration, the Department of Education, and Arkansas Tobacco Control.
That would mean a special session would have to be called this year. Hendren said he has spoken to Gov. Asa Hutchinson and Speaker of the House Matthew Shepherd, R-El Dorado, about that possibility.
“Whether or not there is a special session and the timing of a special session depends completely on how long it takes us to build a consensus,” he said in an interview with Talk Business & Politics on Monday. “I believe support is building for us to take action prior to our next regular session in 2021.”
Hendren earlier this year proposed Senate Bill 571, which would have levied what amounted to a 67% tax rate on e-cigarette products while also increasing taxes on cigarettes. The proceeds would have been used to provide an earned income tax credit, a tax refund for lower-income Arkansans. It also would have levied a 20% special excise tax at the retail level on cigarettes, or 80 cents a pack.
The bill narrowly passed the Senate with bipartisan support, but died in the House. It then was placed in interim study.
As part of another bill, legislators did raise the legal age requirement for vaping to 21.
On Sept. 9, legislators heard testimony from Dr. Joe Thompson, director of the Arkansas Center for Health Improvement, that 44% of Arkansas high school seniors say they have used vape products at some point, and 20% do it on a regular basis.
Dr. Debbie Jones, superintendent of the Bentonville School District, said her district had seen a 420% increase in the use of the products since 2016. She said students easily can hide the products.
Nationwide, six people have died and 450 became sick after using vaping products, though it’s not clear what caused them to become sick. Six of those cases resulting in sickness occurred in Arkansas. Last week, President Trump and the Food and Drug Administration asserted that the FDA would ban the use of all e-cigarette flavors.
Hendren said that since the bill’s failure, public attitudes toward vaping has shifted as the consequences have become clear.
“The school administrators continue to tell me that this is an epidemic, that it’s growing faster than anything they’ve seen in years, and so it’s time for the policy to catch up with the technology,” he said.
Hendren said vaping products result in health care costs borne by society.
“Right now, the tobacco companies have discovered a way to basically evade paying taxes on their nicotine products by changing the form from cigarettes to these vaping devices and pods, so it’s a fairness issue with regard to taxation,” he said.
He said the bill is less controversial than the one that passed the Senate earlier this year. He called it a “starting point.”
“I think there is significant support in the Senate and there’s growing support in the House. Whether or not that translates into the votes that are necessary … time will tell,” he said.
The Arkansas Vape Advocacy Alliance announced in late August that it would support a 2% sales tax on e-liquids.
Bradley Phillips, who represents the Arkansas Vape Advocacy Alliance (AVAA) of 160 small businesses that are registered vape shops and regulated by Arkansas Tobacco Control, said his group stands behind the 2% sales tax it proposed earlier, but not Hendren’s 67% wholesale tax.
“The AVAA supports any realistic measure to help curb underage vaping but there are no known incidents of people getting sick from traditional vaping. Our 160 small businesses could not survive if they have to pay a 67% wholesale tax. There isn’t a small business in the state that could afford to pay the government 67% for their products and then hope they can sell a retail product with that kind of markup. We stand by our offer of 2% sales tax. That would tax Juul twice as much as Louisiana and it’s something our small businesses can live with.”
“We have been working with legislators since day one to frame good, responsible legislation. We don’t allow minors in our store unless they’re with a parent. Under state law, we can’t legally sell minors any of our products except the liquid, and we have decided amongst ourselves not to even do that,” said Troy Meuret, owner of Rogue Vapors in Little Rock.