Vapescore 2016: Regulating vapor products in U.S. cities

The attached study was co-authored by R Street Research Associate Dan Semelsberger 

Americans’ use of tobacco cigarettes has declined over the past decade from 20.9 percent of adults in 2004 to 16.8 percent of adults in 2014. For perspective on the longer-term trend, the U.S. smoking rate is down from a high of 42.4 percent in 1965, when the Centers for Disease Control and Prevention first began collecting data.

Some of the credit for these falling rates should go to cigarette taxes, which have provided an effective price signal encouraging smokers to quit. But while that effect may have been the original goal, for cities and states that have gotten hooked on the revenue from these excise taxes, the falling smoking rates prove to be a mixed blessing. Many have responded by raising cigarette taxes further, sometimes exponentially so. As California state Sen. Mike McGuire, D-Healdsburg, put it in reference to this year’s Proposition 56 ballot measure to raise the state’s tobacco taxes dramatically:

California has one of the lowest tobacco taxes in the nation, currently ranking 35th with a tax of 87 cents – even Texas has higher tobacco taxes than California. … Nearly 40,000 Californians die every year from smoking and tobacco-related diseases. Tobacco use continues to be a public health crisis and we know that the most effective way to reduce smoking, especially among young people, is the price point for a pack of cigarettes.

Politicians commonly make arguments similar to McGuire’s as justification for tobacco tax hikes. But if improving public health is, in fact, the primary objective, we need to ask whether current public policies actually advance that goal. Specifically, when it comes to newer nicotine-delivery products like e-cigarettes, the question needs to be raised whether current efforts to subject them to the same tax and regulatory systems as cigarettes might potentially undermine less harmful alternatives for smokers.

Tobacco and nicotine products exist on a continuum of harm. On one end are traditional combustible cigarettes, which do by far the most damage, and on the other are smoking-cessation products, such as pharmaceutical patches, gums and lozenges, which do little damage and aid some smokers in quitting the habit.

Though many smokers have used them to cease or substantially cut down their smoking, by law, e-cigarettes and similar products may not be marketed as “cessation” products without express permission from the Food and Drug Administration. But much like the cessation devices, and unlike cigarettes, vapor products and e-cigarettes do not combust and consequently produce no tarry smoke. The absence of smoke makes these electronic nicotine-delivery systems substantially less hazardous, not only to the user, but also to third parties, and thus less of a threat to the general welfare of the nonsmoking public.

If the goal of tobacco policy is to reduce public harm, then alternative products that move smokers away from cigarettes should receive favorable treatment under the law. Most jurisdictions, for example, tax cigarettes at a much higher rate than nicotine gums and patches. Such policies recognize that the inhaled smoke from cigarettes does far more harm to consumers’ health than the nicotine.

This approach has been taken in the United Kingdom with respect to e-cigarettes, where public-health authorities recognize that vapor products are a less harmful alternative to traditional cigarettes. As Public Health England reported last year:

The comprehensive review of the evidence finds that almost all of the 2.6 million adults using e-cigarettes in Great Britain are current or ex-smokers, most of whom are using the devices to help them quit smoking or to prevent them going back to cigarettes. It also provides reassurance that very few adults and young people who have never smoked are becoming regular e-cigarette users (less than 1 percent in each group). U.S. studies and research mostly confirm similar findings about the value of e-cigarettes in smoking reduction and cessation, including a meta-analysis of six studies from last year.

But the temptation to treat vapor products as equivalent to cigarettes—especially with respect to revenue-generating taxes—may grow even stronger as more smokers make the switch. According to estimates by BIS Research, a marketing strategy firm, the global e-cigarette industry will grow more than 22.36 percent from 2015 to 2025, when it is expected to be a $50 billion global industry.

Over the past year, the R Street Institute has examined the tax and regulatory environments for e-cigarettes and nicotine-vapor products across 52 major American cities, evaluating the degree to which each promotes a harm-reduction approach to tobacco. We focus specifically on currently available vapor products that most nearly replicate the smoking experience, but without the harmful tar and other chemicals that cause cancer and a host of other smoking-related diseases.

We hope this analysis of the evolving policy landscape for vapor products at the local level helps to illuminate policy considerations that should guide cities and states toward regulatory frameworks that improve public health by reducing tobacco harm.

Image by hurricanehank


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