Regulation Proposal for E-Cigarettes with Synthetic Nicotine Causes Controversy

According to news from the South Korean National Assembly on the 22nd, a proposal that synthetic nicotine, used as a raw material for e-cigarettes, should be regulated under the Tobacco Business Act as regular tobacco, despite opposition from the Ministry of Strategy and Finance, might be abandoned. The National Assembly's Finance Committee held an economic and financial subcommittee meeting on the 21st and expanded the range of tobacco raw materials, including natural nicotine such as stems and roots, which were previously excluded. Additionally, synthetic nicotine made from chemicals was excluded. They plan to meet again on the 23rd to confirm these details.

The South Korean Ministry of Finance has stated that while they agree to address the gaps in tobacco regulation, they cannot give their consent to a proposed bill recognizing synthetic nicotine, which has not yet been verified for toxicity, safety, and other factors, as tobacco.

The majority of e-cigarettes available on the market are made using synthetic nicotine. According to the Health Promotion Development Research Institute of South Korea, 92.2% of e-cigarettes sold online use synthetic nicotine. The import volume of synthetic nicotine oil has been increasing every year. According to data from the Korean Customs, it went from 56 tons in 2020 to 119 tons last year. In just the first half of this year, 91 tons have already been imported, and it is estimated to reach almost 200 tons by the end of the year.

However, unlike natural nicotine, synthetic nicotine is not subject to tax. This is because current tobacco industry laws define tobacco as being derived from tobacco leaves. The total import value of synthetic nicotine oil last year was $7.299 million, but there were no domestic taxes levied on it. According to information submitted to Congress by the e-cigarette association, as of 2019, over 4,300 e-cigarette shops nationwide achieved sales of 1.4746 trillion Korean won (approximately $1.13 billion). However, unlike traditional cigarettes, it is not subject to taxation.

In the past, the government imposed taxes on products made from tobacco leaves. However, starting from 2021, taxes have also been extended to naturally extracted nicotine from stems and roots through amendments to the Personal Consumption Tax Law and Local Tax Law. The taxes levied include tobacco consumption tax, local education tax, personal consumption tax, and national health promotion burden, amounting to 1,799 Korean won (approximately $1.4) per liter. This is driven by the rapid growth of the e-cigarette market using synthetic nicotine as a raw material.

Due to the lack of legal regulation, e-cigarettes can simply be purchased online by verifying that the buyer is of legal age. Unlike the restrictions in place for online sales of cigarettes or alcohol to limit adolescent exposure, e-cigarettes currently exist in a legal gray area.

Due to this situation, it has been pointed out that e-cigarettes are increasing the smoking rates among teenagers. In fact, the smoking rate among adults has decreased from 66.3% in 1998 to 34.0% in 2020, but e-cigarette use has risen from 1.1% in 2013 to 2.3% last year. Particularly alarming is the increase in e-cigarette use among adolescents, with rates for boys rising from 3.7% in 2021 to 4.5% last year, and for girls increasing from 1.9% to 2.2%. These figures highlight a growing trend.

The reasons why teenagers opt to purchase these products include their light scent, convenience in purchasing, and diverse designs. Due to the various appealing flavors available, they can be easily consumed indoors, allowing teenagers to avoid adult scrutiny, as the smell is minimal.

However, as pointed out by the Ministry of Finance, the controversy over the harmfulness of synthetic nicotine has yet to be resolved. Last month, with the passage of the Tobacco Harmful Management Act in Congress, tobacco companies will be required to disclose their ingredients every two years starting from November 2025. However, even synthetic nicotine has been excluded from this requirement. Therefore, there have been suggestions that a taxation system based on nicotine content should be established alongside the public disclosure of synthetic nicotine ingredients.

Tobacco industry insiders have expressed concerns over the legal loopholes that small-scale importers of synthetic nicotine are currently navigating. While traditional tobacco businesses are considering or reviewing the use of natural nicotine in liquid e-cigarettes, these importers are facing challenges. The need to disclose the composition of synthetic nicotine and streamline the taxation system has been highlighted as necessary.