Vermont's Electronic Cigarette Tax Impacts Cannabis Industry

Shoppers at Vermont pharmacies may have noticed that cannabis e-cigarettes are hard to come by, and even if in stock, they are among the most expensive items on the shelves.

In some areas, the cost of half a pod can be as high as $70, while the total price for a whole pod plus electronic cigarette accessories and equipment is over $100, making it quite expensive.

On July 1, 2019, the state of Vermont implemented a wholesale tax of 92% on all electronic cigarettes and products in an effort to deter youth from accessing these products. However, the legislation categorizes marijuana-based products alongside vaporized nicotine products.

Initially, it was created to combat the use of Juul in high schools, which we all agree is a bad thing that needs attention. However, they unintentionally harmed innocent parties and affected the cannabis industry," said Tito Bern, founder of Bern.

For some time now, Bernice has been advocating for this issue and closely collaborating with former state representative Debbie Ingram, who was one of the original sponsors of the e-cigarette bill.

Burns exclaimed feeling as though all the work he had done was wiped away in an instant.

After the imposition of an electronic cigarette tax on wholesale purchases, businesses were unable to achieve balanced revenue and expenditure, resulting in consumers ultimately paying nearly double the cost of the product.

Due to limited research, it is difficult to prove that smoking marijuana is a safer alternative to smoking cigarettes. However, some people believe this to be true because it can be vaporized without reaching combustion temperature when consuming flowers or oils. For many e-cigarette users, vaping is their preferred method of consumption.

This is unfortunate because from a public health standpoint, we would prefer if people in Vermont purchased e-cigarettes that have been tested - we would know what ingredients have been used and what kind of diluents have been used," said James Pepper of the Vermont Marijuana Control Board. "We don't want to push people towards the illegal market.

In recent years, opponents of marijuana have made concerns about the potency of marijuana products and youth usage the focus of their messaging. These efforts have also influenced the solid concentrate 60% THC limit that was sustained during the lengthy and often contentious debates of the 2022 spring legislative session.

The vape tax basically prices these products out of our market," said James Pepper, chairman of the Vermont Cannabis Control Board.

This is first and foremost the basic theory behind marijuana regulation. We are not saying that these products are safe or healthy for you," said Pepper. "We are saying that we can do better by testing, labeling, and providing education.

The same logic applies to high THC solid concentrates, as it does to eliminating this vape tax, which essentially prices these products out of our market," he added.

Although this tax has recently impacted regulated THC products and cartridges, it has been causing significant disruption to the sales of CBD vaping devices over the past three years. This includes products such as Pax, Volcano, and Puffco, which are dry herb and oil vaporizers.

This tax essentially eats up almost all of the profits... if we try to conduct business on this basis, it will not be feasible.

Chief Science Officer, Grayson Glosser, of X-tract VT.

X-Tract Vermont in St. Albans extracts cannabis oil. Source: Heady Vermont.

Since the adult use market for X-TRACT has been launched and is operating, businesses are finding it nearly impossible to achieve a financial balance on the product due to the application of an e-cigarette tax on wholesale purchases, resulting in consumers paying almost double the cost for the product.

We've been selling these products without any profit, but hey, at least they're coming into the store and maybe they'll buy something else. We feel like we have to keep these things available for our customers, our patients, and everyone else," said Bern.

Most manufacturers have delayed production until the tax is cancelled. However, X-tract VT continues to produce vape products. Although they mainly focus on pre-rolls and edibles, they hope their clients can get access to cannabis e-cigarettes.

The cannabis e-cigarette is expected to account for approximately 12% of the sales revenue in the adult usage market.

If, you know, we could really make things work with electronic cigarettes, that would be great. But this tax essentially eats up almost all of the profits. It wouldn't be feasible for us to try to build a business around it. Grayson Glosser, Chief Scientific Officer of X-tract VT, said it's really difficult, just like we can't hire employees.

The National Organization for the Reform of Marijuana Laws (NORML) in Vermont, led by Nick Schuermann and other partners, is working to provide the best solution for businesses and consumers in the state, while considering the industry and public health.

He stated that an important point to note is that this tax does not apply to medical marijuana patients who are registered in Vermont. However, according to a nationally-funded research project, electronic marijuana vaporizers are anticipated to account for approximately 12% of the adult consumer market sales.

This is a significant figure. Therefore, we believe it is worth studying to determine the best course of action... for this 92% tax," Schuermann stated.

Legislative action is needed before manufacturers and retailers can make urgently needed changes to increase accessibility of vape cartridges and devices for consumers.

These companies in Vermont are currently producing CBD and now we will be producing THC. It's simply adding a huge product for them to sell," stated Bern. "This will be a significant income source for them and very appealing to younger demographics.

Bernie added, "It can address many issues by means of taxation and keeping young people in the state.

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