Over the last year, the California Smoke Free Organization (CSFO) has been tirelessly working behind the scenes to build awareness of the economic and public health benefits of the California Vapor Industry. Formed as a non-profit organization under the national Vapor Technology Association umbrella, the CSFO is the go-to source for information on California’s immense and shifting legal and political landscape. The CSFO board is comprised of many industry pioneers and visionaries in both manufacturing and distribution. Tasked with building a truly representational statewide organization, the CSFO will be expanding its ranks to include shop owners and other industry professionals going forward. With stringent taxation already extant, and flavor bans starting to infiltrate legislation at the local level, the CSFO believes that a unified voice in California is the only vehicle to effectively combat these measures, and keep the industry thriving for years to come.
On August 22, 2017, The California Smoke Free Organization traveled up to Sacramento for a lobby day at the capitol. Before meeting with three (3) State Senators and five (5) State Assemblymembers, they began the day with a webinar, CSFO: Update from Sacramento, outlining the specifics of Prop 56, a measure passed by the citizens of California in 2016 that calls for increased taxation on tobacco products. Under current FDA guidelines, vapor products containing nicotine are considered an Other Tobacco Product (OTP) and are therefore subject to an equivalency tax in California of 65.08% of wholesale cost at the first point of distribution in the state.
The California State Board of Equalization (BOE) was responsible for overseeing the rollout and implementation of this tax. In order to do so, the BOE (now known as The CA Department of Tax and Fee Administration) conducts Interested Parties meetings where the language is finalized prior to enforcement. The CSFO attended each of these meetings and won the inclusion of several key measures. First, they successfully asked the Board to remove devices and hardware from being taxed. Secondly, they submitted changes to the standing definition of what an E-liquid manufacturer actually is.
In Regulation 4077, the BOE submitted the following language: “A tobacco product manufacturer is any person, including any repacker and/or relabeler, who manufactures, fabricates, assembles, processes, or labels a finished tobacco product.” The issue with this language is that according to the definition, any manufacturer who produces products at any outside facility would be considered a distributor. This is of vital importance because products in California are taxed from the first point of distribution. Under this definition, the BOE would call Coca-Cola a distributor of any products manufactured in a facility that their company did not own and operate. Compelled by the CSFO’s argument, the BOE added the following language: “An owner of a brand or formula for tobacco products, who contracts with another person to physically complete the fabrication and assembly to the brand or formula owner’s standard, is the manufacturer of the contracted finished tobacco products.” There is no understating the importance of this to California’s industry at large.
Another major victory in these proceedings was the CSFO’s rebuttal that products (hardware, etc) sold in combination with nicotine products (E-liquid), should not be taxed under Prop 56. The BOE adopted this position after the Second Interested Parties Meeting. Without this key legal protection, any device in the same transaction – ie, sold in combination – with E-liquid would have been taxed at 65.08%.
As mentioned, the CSFO also met with State Senators and Assemblymembers during their trip to Sacramento. Their messaging was simple: the California Vapor Industry generates billions of dollars in taxable revenue each year and represents tens of thousands of jobs in our state. Furthermore, the CSFO looks forward to working legislators to make sure that we continue to represent and support both the economic and public health of the state of California and its citizens. Join the CSFO today.
For more information on this topic, please visit their website at www.californiasmokefreeorganization.org, or email: [email protected] SVBS
Patrick Taylor is the President of California Smoke Free Organization and VP of Marketing & External Development for Charlie’s Chalk Dust. Concerned with the gravity of pending legislation and its negative impact on every aspect of the industry from producers on down to consumers, Patrick has been deeply involved with the VTA and helped spearhead the formation of the California Smoke Free Organization.
Currently serving as the Board President for the CSFO, he recently invited and hosted US Congressmen Dana Rohrabacher (R-CA) and Andy Harris (R-MD) to Charlie’s Chalk Dust Headquarters to educate the congressmen about the industry and to stress the importance of fair and representative legislation. He has also met with numerous Senators, Congressmen, and California Assembly members in Washington DC and Sacramento.
Having seen the success of Vaping Industry to change people’s lives for the better, Patrick is dedicated to protecting and advancing the Vape Industry at the local, federal, and international levels.