Tax Measures Proposed in Tennessee to Regulate E-Cigarette Market

Apr.22.2025
Tax Measures Proposed in Tennessee to Regulate E-Cigarette Market
Tennessee proposes taxes on e-cigarette products, creates FDA-approved product registry to prevent unauthorized sales, concerns over market monopoly.

Key Points:

Tax measures introduced: Tennessee proposes to tax disposable e-cigarettes at 0.07 USD per milliliter, and to impose a 10% tax on refillable e-cigarette products, expected to generate over 16 million USD in revenue annually.

Establishing a registration directory: A directory for e-cigarettes will be established, limited to only FDA-authorized products. It will be open to the public starting in 2026, and products not listed in the directory will be prohibited from being sold.

Control of Unauthorized Products: Products that have not been approved by the FDA or are not under review cannot be sold. Manufacturers must submit a certification annually.

Store owners are concerned about market monopolies: e-cigarette merchants worry that the legislation may indirectly protect the interests of large tobacco companies, potentially leading to the closure of small and medium-sized businesses.


According to a report by Localmemphis on April 16, the Tennessee House of Representatives debated a bill on Wednesday (16th) that plans to tax e-cigarette products and create a registry of e-cigarette products approved by the FDA.

 

House Bill 0968 proposes a tax of $0.07 per milliliter on disposable e-cigarettes and a 10% tax on refillable e-cigarette products. Additionally, the bill calls for the creation of a state-wide directory of e-cigarette products for sale to the public, which will be open to the public starting January 1, 2026, and prohibits the sale of products not listed in the directory.

 

The bill also stipulates that any product not authorized by the FDA or in the process of applying for authorization will be prohibited from being sold. Starting on August 1, 2025, and each year thereafter, e-cigarette manufacturers will be required to present proof of FDA approval or pending review to the revenue department.

 

Tennessee state lawmakers Ken Yager (R-Kingston) and David Hawk (R-Greeneville) have introduced companion bills aimed at preventing youth access to e-cigarettes and keeping unapproved e-cigarette devices out of the market, in order to make a contribution towards preventing young people from accessing e-cigarettes and to prevent unapproved e-cigarette devices from entering the market.

 

E-cigarette store owner Phil Harrell stated that the majority of e-cigarette shops in the area have taken measures to ensure they do not stock unauthorized brands.

 

These products are only available at gas stations and are all tobacco company products. The FDA's approval has effectively created a monopoly in the e-cigarette market, with lawmakers now protecting this monopoly.

 

Harrell is worried that the new law will cause both of his e-cigarette stores to go out of business.

 

The bill also requires employees to check the license of individuals purchasing e-cigarette products and impose a 10% tax on open system products. According to the fiscal note of the bill, the new tax is expected to generate over $16 million in revenue. The Senate has passed the bill version with a vote of 24-4.

 

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