Earlier this year, both houses of the Alaska state legislature passed a bill to impose a statewide tax on electronic cigarette products, and to prohibit the delivery of such products within the state through US mail. Currently, Governor Mike Dunleavy is considering whether to sign SB 45 into law or to veto the bill.
The governor must make a decision before September 16. If he takes no action, the bill will automatically pass and become effective on January 1, 2023. If Governor Dunleavy signs or allows the bill to become law, he would be breaking his 2018 campaign promise not to impose new taxes exceeding 25%.
Residents of Alaska can contact the Governor's office at 907-465-3500 to register their opposition or use CASAA's action alert to send an email directly to the Governor. CASAA has created a pre-written message requesting the Governor to veto the bill, which would allow for amendments to explain the reason for resignation or provide full replacement with personal information.
Adding an additional 35% tax on top of the already high local taxes may make electronic cigarettes unaffordable for many Alaska residents.
Despite the fact that the final version of SB 45 passed by the legislature did not include a flavor ban, the bill still contains a significant amount of content that will create obstacles for electronic cigarette manufacturing in Alaska. It will impose a 35% wholesale tax on all electronic cigarette products (including devices) and will end Alaska's exemption from the US ban on mailing vapor products within the state. The bill also includes onerous licensing and reporting requirements for small electronic cigarette businesses, including those based outside the state.
The governor is currently contemplating the bill. If passed, Dunleavy's proposal would make it more difficult for residents of rural areas (which make up the majority of the state) to access e-cigarette products and significantly increase the cost of all e-cigarettes in Alaska.
Five out of the 19 administrative areas (counties) in the state have imposed high taxes on electronic cigarettes, including a 55% tax in Anchorage where about 40% of the state's population resides. Adding an additional 35% tax on top of the already high local taxes could result in electronic cigarettes being priced out of reach for many Alaskan residents.
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