The District of Columbia Mayor recently approved a proposal to increase the tobacco products tax, although the new law exempts e-cigarettes from the tax.

The law increases the tobacco products tax, defined generally to include all products that contain tobacco, or that are made or derived from tobacco, except cigarettes and premium cigars.  Premium cigars are defined as cigars that cost at least $2.00 at retail.  Importantly, the new tax also exempts e-cigarettes and any other products that have been approved by the FDA for smoking cessation.  An e-cigarette is defined as an electronic vaporizer producing an aerosol that simulates tobacco smoking.

The new tax is intended to be equivalent to the cigarette tax, levied as a percentage of products’ wholesale price.  The Mayor is responsible for issuing regulations to determine the precise percentage to equate to the cigarette tax, which is $2.86 per pack.  This will be significantly higher than the old tax, which was 12% of the price.

For questions and/or comments, please contact Bryan Haynes, at 804.697.1420 or by email.