In California, a total of six bills were proposed that were all related to regulation on cigarette and tobacco products. The Governor of California, Jerry Brown, signed off on five of the bills and vetoed one.
The most controversial bill was the one that the Governor vetoed, AB-10. Under this bill, counties would have had the authority to tax the distribution of cigarettes and other tobacco products, subject to voter approval. In his veto message, Brown wrote that endorsing new taxes on a blanket basis goes too far, especially as there are so many tobacco tax bills on the November ballot, which include placing a $2 per pack cigarette tax. He stated, “Although California has one of the lowest cigarette tax rates in the nation, I am reluctant to approve this measure in view of all the taxes being proposed for the 2016 ballot.”
One of the bills the California Governor signed off on, SB-5, lays out the manner in which e-cigarettes will now be regulated within the state. Under this bill, e-cigarettes will now be treated like any other cigarette or tobacco product. This means e-cigarettes will now be taxed the same as other cigarette and tobacco products. Currently, the Cigarette and Tobacco Products Tax Law, imposes a tax on the distribution of cigarettes and tobacco products at a specified rates. This bill also establishes an annual licensing fee on e-cigarette retailers of $265 per location.
The other four bills that were less controversial and passed were: AB-11, which will increase California’s tobacco licensing, distributor, and wholesaler fees; SB-7, which will raise California’s legal smoking age and the age to buy tobacco products from 18 to 21, except for active duty military 18 or older; AB-7, which extends California’s workplace smoking ban to owner-operated businesses; and lastly, AB-9, which will serve to make all California schools tobacco-free.
As legislatures currently have a strong focus on tobacco regulation, it will be interesting to watch the development and success of new regulations on these products. The flurry of activity in California is yet another example why it is so critical for tobacco and cigarette distributors to stay up to date on the ever changing legal landscape.
About the Author: In his law practice Mr. Donnini's primary practice is multi-state sales and use tax as well as state corporate income tax controversy. Mr. Donnini also practices in the areas of federal tax controversy, federal estate planning, Florida probate, and all other state taxes including communication service tax, cigarette & tobacco tax, motor fuel tax, and Native American taxation. Mr. Donnini obtained his LL.M. in Taxation at NYU. Mr. Donnini is licensed to practice law in Florida. If you have any questions please do not hesitate to contact him via email [email protected] or phone at 954-639-4496.