Vape tax opponents rally around repeal effort, election challenge

New Taxes Threaten Pennsylvania Vape Stores
Wallace McKelvey | WMckelvey@pennlive.com By Wallace McKelvey | [email protected] The Patriot-News
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on September 19, 2016 at 2:10 PM, updated September 19, 2016 at 3:09 PM

Opponents of Pennsylvania’s 40 percent tax on e-cigarettes are rallying around new legislation that would repeal what vape store owners describe as the death knell of the industry.

Lawmakers and Gov. Tom Wolf avoided another protracted budget impasse this year by relying on new revenues from an expansion of gambling, reforms to the liquor system and higher taxes on smokers and the businesses that cater to their nicotine habits. That includes a 40 percent tax on the wholesale price on vaping supplies as well as a 40 percent “floor tax” on the inventory currently sitting on vape shop shelves.

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Nicotine without smoke: Tobacco harm reduction

Nicotine without smoke: Tobacco harm reduction

This report aims to provide a fresh update on the use of harm reduction in tobacco smoking, in relation to all non-tobacco nicotine products but particularly e-cigarettes. It concludes that, for all the potential risks involved, harm reduction has huge potential to prevent death and disability from tobacco use, and to hasten our progress to a tobacco-free society.

It’s Too Early to Prove Absolute Safety, But Smokers Shouldn’t Wait to Vape

It’s Too Early to Prove Absolute Safety, But Smokers Shouldn’t Wait to Vape

Electronic cigarette

Tobacco opponents say that we’ve had too little experience with e-cigarettes to know whether they are safe.  While it is true that we don’t yet know the health consequences of long-term use, that should not discourage smokers from switching.

We know that smoke contains high levels of thousands of agents, many of which are toxic or carcinogenic.  In contrast, e-cigarette vapor contains water, propylene glycol and/or vegetable glycerin, nicotine, flavors and perhaps a few contaminants at minuscule levels.  None of these – with the exception of buttery flavors (here) – are linked to any specific disease.  This difference alone justifies encouraging smokers to switch to e-cigarettes.

In the case of cigarettes, the effects of long-term use were not apparent for 20 years.

As I discuss in my book, For Smokers Only, smoking prevalence increased substantially around World War I (1914-1918).  The first clinical report of an increase in lung cancer and the suggestion of a link to smoking was published in 1939 by Alton Oschner and Michael Debakey in the journal Surgery, Gynecology & Obstetrics (68: 435-451, 1939). “Until recently,” they wrote, “[cancer] of the lung has been considered a relatively infrequent condition.  However, recent studies demonstrate that [lung cancer] is one of the most frequent [cancers] of the body.”  But they acknowledged, “…it is controversial whether the increase in [lung cancer] is apparent or real.”  Oschner and DeBakey described 79 previous cases and presented seven cases that they had seen.

German pathologist Dietrich Eberhard Schairer and colleague Erich Schöniger published perhaps the first epidemiologic case-control study of smoking and lung cancer in their native language in 1943. Now considered a groundbreaking study, it was republished in English by the International Journal of Epidemiology in 2001 (reference here).  They confirmed “the [earlier] report of Müller [1940] that non-smokers rarely get lung cancer whereas heavy smokers get it more frequently than average.”

The smoking-lung cancer link did not appear in mainstream medical literature until 1950, when studies by Ernst Wynder and Evarts Graham (Journal of the American Medical Association,here), and by Richard Doll and Austin Hill in the (British Medical Journal, here) were published.

While the strong link between smoking and lung cancer was not discovered for decades, today’s advanced surveillance techniques may detect a vapor-linked problem sooner.  It should be noted, however, that evaluating the effects of vaping will likely be complicated by the fact that most vapers already have smoking histories.

Smokers shouldn’t wait to vape.

Feds Asked To Investigate E-Cig Companies For Kid-Focused Advertising

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Feds Asked To Investigate E-Cig Companies For Kid-Focused Advertising

The Federal Trade Commission is taking public comments on a proposed study of the e-cigarette industry, and Comptroller Scott Stringer wants the agency to look into e-cig makers marketing their noxious wares to kids. In his testimony to the commission, the Daily News reports, Stringer said the new crop of nicotine delivery devices is using the old, now-banned tricks of the tobacco industry to get the populace hooked young.

“The same companies that peddled ‘Joe Camel’ and similar, kid-friendly images to an earlier generation are back with new ad strategies that appear to target e-cigarettes just as explicitly toward children and teens, with little or no regard for any potential health impacts,” he wrote.

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If it’s good enough for Santa… (Comptroller’s Office)

E-cigarette use is on the rise among kids as cigarette smoking continues to decline. A Center for Disease Control study last year found that 13.4 percent of youngsters surveyed had vaped in the past month, versus less than 10 percent who had puffed a square.

The ban on marketing cigarettes to kids came out of a landmark 1998 settlement agreement between the attorneys general of 46 states and big tobacco companies. In addition to mandating $200 billion in payments, the terms prohibited using cartoons, outdoor advertising, free samples at all-ages events, distributing cigarette-branded clothes, and more.

Now, the largely unregulated e-cigarette industry is advertising on subways, buses, and billboards, and as Stringer notes, in magazines and on TV, at summer concerts, with celebrity endorsers, and with cartoons, including one of Santa. Fruity flavors, also banned for tobacco, are back, too.

Stringer writes that while the jury is out on the long-term health effects of vaping, “the research about the damaging health effects of nicotine on adolescent brain development are clear,” and the FTC should scrutinize the industry for truth in marketing.

The comptroller’s comments echo a letter to the FTC by Senate Democrats from around the country.

I can report that looking at old cigarette ads while researching this story activated the animal/fiend part of my brain that is forever altered by smoking, and that smoking is a bad idea. Vaping is less stinky, and it may or may not be healthier, but it’s still addictive, and it looks silly. Mmkay?

How to Add Space for E-Cigarettes

 

After years of stellar growth, the vapor products category responds to changing marketplace dynamics. With one eye on the market, convenience retailers constantly weigh how much shelf space to allot e-cigarettes.

By Anne Baye Ericksen, Contributing Editor

When industry analysts announce in July that a product category is on track for a growth rate of approximately 31% for the entire year, most retailers would welcome the news as an indication that category is performing better than ever. But when that same category finished 2014 with an annual growth percentage of 77%, 31% suddenly looks less impressive.

That’s the figures stakeholders have been contemplating in terms of what’s happening with electronic tobacco products this year.

Sean Bumgarner, vice president of Scrivener Oil Co., headquartered in Springfield, Mo., is one of those stakeholders. The company’s 11 Signal Food Stores carry brands of both e-cigarettes and vapor-tank-mods (VTMs).

“They are selling fairly well, [but there are] lots of places besides convenience stores to buy the products,” Bumgarner said.

To promote the category, Bumgarner has chosen to highlight the top-sellers.

“The brands we want to really focus on are on the front counter. The remainder we work in next to the cigarette display,” he said.

SLIPPERY SALES
E-cigarettes, VTMs and e-liquids have all experienced softer sales in 2015, compared to last year. In a year-to-year comparison ending the week of Aug. 8, 2015, e-cigarette dollar sales in all retail channels dropped 3.5%.

Meanwhile combustible cigarette dollar sales rose 3.1% for the same period. What’s more, category growth has been decelerating quarter to quarter since early 2014. In fact, according to Wells Fargo Securities LLC, nearly as many retailers reported a decrease in e-cigarette sales as those that recorded increases.

“The apparent slowdown in the U.S. market is mainly attributed to the natural course correction in the industry. The industry has come a long way in a short span where market push forces (new product launches) are being outweighed by pull forces (consumer preference),” said Apoorva Awasthi, lead research analyst for Bloomington, Minn.-based BIS Research.

Meanwhile, a Reuters poll concluded that approximately 10% of adults currently vape, which includes both e-cigarettes with built-in

cartridges, as well as vaporizers that have replaceable cartridges, and users choosing e-liquid flavors. This rate is nearly four-times higher than government estimates.

BEHIND THE FIGURES
Why the discrepancy between sales and apparent widespread use? Bonnie Herzog, senior analyst for Wells Fargo Securities, suggested heavy discounting has driven down dollars. But even in that case, the category remains an important revenue source for c-stores.

At the Vapor Expo International earlier this year, Herzog told attendees that c-stores continue to offer non-combustible tobacco products to not only meet customer demand, but because products offer a sizable profit margin for makers and retailers. Indeed, Herzog anticipates margins from vapor products will approach 39% by 2018—substantially closing the gap with combustible cigarettes, which Wells Fargo estimates will generate margins of 54.5% by 2018.

“Although c-stores offer lesser variety of [e-tobacco] products [than vape shops], the number of [c-stores] and their reach to end-users are clearly contributing to their growth in the market,” said Awasthi. “Moreover, setting up new vape shops requires capital investments that are otherwise eliminated when offering products in already established c-stores.”

VTM MAKES GAINS
Over the past few years, Mike Gancedo, category manager for The Parker Cos., based in Savannah, Ga., noticed a steady uptick in VTM and e-liquid sales in 38 Parker’s stores located in Georgia and South Carolina. In fact, there has been enough sustained customer interest that the company decided to develop a private label line of VTMs and e-liquids and focus less on e-cigarettes.

“We have reduced [e-cigarette] space in most locations because we have discontinued non-performing products,” he said.

Instead, Gancedo showcases VTMs in customized displays placed in prominent positions.

“We found that in stores where we placed a counter display, they sold more than twice the product than in stores without counter displays,” Gancedo said. “We have also made space in all stores on the backbar displays. Larger stores have one-inch to three-inch backbar fixtures; smaller stores have a shelf on our other-tobacco-product fixtures. This gives visibility to our new vape mods from any register in our stores.”

CONSISTENCY FOCUSED
Deciding what brands to sell has become just as important a business strategy for c-stores as how to merchandise the products. While Parker’s has invested in creating its signature line, that is generally the exception. Rather, the majority of c-stores go through distributors or deal directly with manufacturers.

“We go with what our distributor recommends and adjust accordingly,” said Bumgarner. “Also, we bring in customer requests.”

The perception of the e-tobacco industry is still that it’s saturated with startup manufacturers with little official oversight. This quality assurance void has caused some concern for product safety among retailers and consumers.

Manufacturing leaders and industry advocates have been calling for industry-wide standards so retailers can promote the quality of products in their stores.

“Associations such as the American E-Liquid Manufacturing Standards Association, which started functioning in 2012, have been trying relentlessly to create responsible and sustainable practices and processes for the safe manufacturing of e-liquids,” said Awasthi. “Moreover, the packaging should have certain labeling, such as those from ISO (International Organization for Standardization) or if the product is CE (Conformité Européene) compliant, further enhancing the trust of end-users.”

This distinction could become more important as consumers become more brand aware and brand loyal. Evidence of this trend is already noticeable, such as Big Tobacco becoming more prominent this year. Until fall 2014, blu, recently sold to Imperial Tobacco, was the market leader. By the second quarter 2015, Vuse, an R.J. Reynolds Vapor property, assumed the top position. According to Wells Fargo, for the four-week period ending Aug. 8, Reynolds held nearly 40% of the e-cig dollar share, followed by blu (20.6%), Logic (16.3%), Altria, maker of MarkTen (6.3%) and NJOY (4.7%).

“For any growing industry, brand holds paramount importance since the products from established industry players are more trusted among users,” said Awasthi.

POSITIVE PROMOTION
One of the interesting phenomena affecting the electronic tobacco marketplace this year is a litany of conflicting factors. For example, the Reuters poll indicated that nearly three-fourths of vapor users started within the past year; however, there’s also been new tax and legislative activity, including age restrictions that have convenience store owners and operators concerned about the future growth of the category’s customer base.

And as of this printing, manufacturers and retailers alike still await the U.S. Food and Drug Administration’s (FDA) official ruling on e-tobacco and any potential aftermath it may have on both manufacturing and sales.

This conglomeration of factors, along with the occasional negative news story, has resulted in mixed messages reaching consumers. Analysts suggest convenience store owners and operators keep these issues in mind when formulating marketing plans.

“Because e-cigarettes have been attracting a large population of youth and adolescents, the advertisements must not be too flashy or something which appears to be a fad rather than an alternative to conventional smoking,” Awasthi said.

At Parker’s, nearly all the e-tobacco promotional materials highlight its private label.

“We customize and print our point-of-sale materials in house for our backbar displays, counter displays, window signage, pump toppers and pump wraps,” Gancedo said.

Not only does he want customers to be aware of the brand, but also the quality.

“We are working hard to let the vaping community know that Parker’s is a destination for high quality VTMs and premium liquids. Everything we print includes ‘vape store quality at your convenience.’ We are able to offer great quality at a price that vape shops cannot compete with,” said Gancedo.

Vaping versus smoking – the case for e-cigarettes

  • The study found significant health benefits associated with switchingfrom tobacco to e-cigarette use, which were characteristicallymore prominent in those who had completely quit smoking comparedto those who only reduced their smoking consumption. Participantsreported that any side effects associated with e-cigarette use weremild and temporary

A recent worldwide study in favour of vaping indicates it can help smokers kick the habit

Many countries, including the UAE, have banned electronic cigarettes or e-cigarettes but a worldwide survey of 19,441 users in 2014 found it had minimal adverse effects (about 1/100th to 1/20th) compared with smoking. Those who switched to vaping from smoking reported a reduction in harmful effects, with very mild and temporary side effects.

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How to Argue FOR Vaping

One of the most difficult things about this disruptive technology is how to defend it against the naysayers who are, like the Luddites of old, trying to destroy what they do not understand. It is frustrating beyond tolerance at times, to hear our lifesaving technology reduced to being perceptually more harmful than smoking itself.

Those of us who have been on the front lines face endless repetition of the same pseudo-scientific lies and misrepresentations at every turn. We are besieged by the very people we thought would be our biggest supporters. After all, don’t the various health groups share the same message: “If you smoke, stop”? And that is exactly what we’ve done! Having failed at every other method available, we found a way out of the trap of smoking for the nicotine and dying from the tar. Shouldn’t we be welcomed as a light in the darkness? (more…)

E-cigarettes: Helping smokers quit, or fueling a new addiction?

E-cigarettes: Helping smokers quit, or fueling a new addiction?

(CNN)It’s a portable piece of technology providing seemingly bottomless access to a drug craved by more than 1 billion people worldwide — nicotine. That craving is caused by smoking tobacco but is now being increasingly satisfied by e-cigarettes and the trend to “vape” instead of smoke.

The selling point is the clean image e-cigarettes purvey by removing the simultaneous exposure to the tar and thousands of chemicals found in the tobacco smoke of regular cigarettes — removing the cause of lung diseases as well as other tobacco-related conditions.

Tobacco kills almost 6 million people each year, according to the World Health Organization (WHO), and a growing number of people are now “vaping” instead of smoking, resulting in industry worth $2.7 billion worldwide. (more…)