GRAND FORKS - Even as other states and the federal government take a closer look at regulating e-cigarettes, North Dakota still doesn't officially consider them taxable tobacco products. An anti-tobacco group in the state hopes to change that next year.
In 2015, the state Legislature passed a law prohibiting minors from having or purchasing e-cigarettes and all other electronic smoking devices. The same law also required that liquid nicotine come in child-resistant packaging.
State legislators then agreed residents under 18 shouldn't use e-cigarettes, yet lawmakers still haven't acted on a request from tobacco prevention groups to reclassifying e-cigarettes as tobacco products, making them eligible for the state tobacco tax.
Heather Austin is the executive director of Tobacco Free North Dakota, a nonprofit focused on restricting tobacco access in the state through policy change and community outreach. She said the group is drafting a bill, which in addition to raising the tobacco tax also asks legislators to consider e-cigarettes tobacco products. She hopes to have it ready when the next legislative session begins in January.
Austin has always focused on discouraging minors from picking up tobacco, she said.
"As these electric products have come out," she added, "it's become more and more challenging, as you can imagine."
This year, Austin said she remains optimistic.
"A lot of the legislators I've spoken to are curious about these electronic products and what our youth rates are and how we talk to our schools about them," Austin said. "I always think it's a good sign. When they're asking questions about an issue and looking to gain knowledge, that helps them make better decisions on how to put policy into place."
She adds recent national attention to e-cigarettes is also motivating. Wednesday, the federal Food and Drug Administration (FDA) announced it will begin escalating regulations on major smoking companies to "forcefully address youth use trends." The FDA sent letters to five major e-cigarette companies last week, it said, requesting they return in 60 days with a plan to address the "widespread use of their products by minors."
Dr. Eric Johnson, president of Tobacco Free North Dakota's board of directors, said the FDA already considers e-cigarettes tobacco products.
"They're nicotine delivery systems, and nicotine is derived from tobacco," Johnson said. "It's hard to synthetically create nicotine, so it's usually just derived from tobacco."
Johnson thinks it's "pretty well understood" e-cigarettes are tobacco products, he said.
"I'm not aware the state is deliberately ignoring e-cigarettes as tobacco products, it's just been so long since there's been a change in tobacco tax."
The state hasn't updated that tax since 1993. "And e-cigarettes weren't largely marketed back in 1993," Johnson said.
Understanding the tobacco tax
There are three ways North Dakota taxes tobacco products, according to the state Tax Administration Division.
"Cigarettes are 44 cents a pack," Director Myles Vosberg said. "The other tobacco products that are charged are snuff and chewing product. Snuff is taxed at 60 cents an ounce and the chewing tobacco and so on is at 16 cents an ounce."
The Tobacco Free North Dakota bill suggests the state tax e-cigarettes on a percentage of the wholesale price, Austin said. According to Johnson, his and Austin's group has repeatedly recommended the state Legislature raise its tobacco tax. In 2015, Tobacco Free North Dakota had a House bill suggesting the Legislature raise the cigarette tax to $1.54 a pack, and a Senate bill suggested increasing it to $2 a pack. In a 2016 ballot measure, statewide voters considered raising the cigarette tax to $2.20 a pack and increasing the tax on all other tobacco products from 28 percent of the wholesale purchase price to 56 percent. The measure failed, with 62 percent voting against it.
"I don't think it's a big secret the state has some money problems," Johnson said, "and I think upon further reflection there are some legislators who think this might be a good way to develop a revenue stream."
In 2018, the Tax Administration Division reported collecting approximately $26.5 million from tobacco and cigarette taxes, the lowest amount in the last six years. In 2017, the division reported collecting about $27.4 million, and in 2016 it reported collecting nearly $29.1 million.