Interim Committee Talks Tax Structure for E-Cigs

The Interim Taxation Committee recently met and briefly discussed the taxation of electronic smoking devices. The study must consider the current method of taxation applied to these products, the methods of taxation applied in other states, and the fiscal impact of applying an alternative or additional method of taxation. Current tax rate is the simple 5% sales tax; there is currently no licensing requirements for vaping/electronic smoking devices.

In his presentation Max Behlke, JUUL Labs, noted that points of consideration should include structure and administration of proposed taxes as well as clear definitions of what is to be taxed. 

The ND Tax Department provided the committee with an overview of possible taxing options stating the Department’s recommendation would be to tax at the wholesale level on final salable product. 

Offering support for a tax on all tobacco products as well as licensure of vape shops was Heather Austin of Tobacco Free North Dakota (TFND). Austin stated electronic smoking devices should be classified for what they are, which is a tobacco product, and therefore be taxed at the same rate of 28%. 

Committee members debated the subject with some believing there was not enough info to look into taxation and therefore was more of a regulation issue. It was argued that the only way these devices may get regulated is through taxation. The committee took no action on the issue.

The NDACo Legislative Team also monitored the Interim Judiciary committee which started exploring one of their interim studies, the implications of legalizing recreational marijuana. They are assigned to explore the impact to the state's economy, public health, legal system, existing medical marijuana program and other factors.