The Hawaii Senate has passed a bill that would tax e-liquids and “electronic smoking devices.” The bill now awaits further action in the Hawaii House of Representatives.

The legislation is based on a stated finding that the electronic smoking device industry is growing rapidly and that, as cigarette prices increase smokers may purchase less expensive electronic smoking devices. The legislative preamble concludes that there should not be lower-priced tobacco alternatives to cigarettes.

The law would impose an excise tax on disposable electronic smoking devices and e-liquids sold by a wholesaler or dealer on and after January 1, 2017, would require every retailer of cigarettes, tobacco products, electronic smoking devices or e-liquids to obtain a retail tobacco permit, and imposes a myriad of reporting requirements on licensees.  Electronic smoking devices that do not contain nicotine are exempt from the tax.  The amount of the tax has yet to be determined but would be a percent of the wholesale price of each disposable electronic smoking device, and cents per milliliter of e-liquid.  The stated intent is to have a similar tax rate to the rate on cigarettes.

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