B.C.’s convoluted vape tax another blow to legal industry

A new proposed tax hike stands to make it even more difficult for consumers to get their hands on vape products come the new year.

Last week, the B.C. government announced that, in the face of rising vaping rates among youth, it would introduce legislation to hike the provincial sales tax (PST) on all vapour products from seven per cent to 20 per cent. The new rate, which will not be implemented until January 1, 2020, will apply to all vaping devices, cartridges, parts, accessories, and substances.

In an announcement on Thursday, Health Minister Adrian Dix justified what are set to be Canada’s most stringent rules on vaping by focusing on the trend’s negative impacts on young people, calling it, “an addictions trap for our youth.”

“Large vaping manufacturers have embraced this new technology and have used flavours and advertising to introduce a new generation of young people to very high levels of a very addictive drug, nicotine,” Dix said.

Finance Minister Carole James added that along with the increase in PST for vaping products, the rate of tax on cigarettes and loose tobacco would also go up to prevent young people from turning to the retro delivery system as an alternative.

While it wasn’t covered in the announcement or in mainstream coverage of the tax increase, the notice to sellers released the same day stated that the increase will also apply to vaping products containing cannabis. The increase means come January, vape pens and cannabis-containing cartridges purchased on the legal market will cost consumers in B.C. even more than they were already anticipating to pay. (PST on dried flower, dried flower vaporizers, extracts not intended for vaping, edibles, and topicals will remain at seven per cent.)

As stated, the aim of the provincial government is to reduce the rate of nicotine consumption among young people, with the spotlight on vaping. Juul, Vype, and other pod-based products have become popular within the last year and can be purchased at most gas stations and convenience stores, if you’re of legal age. Other e-cigarette products on the market—from the varyingly potent and wildly flavoured e-juices, to the smoking devices some of my girlfriends have dubbed “douche flutes”—aren’t as easy to regulate.

Age-gating online and in the vape shops that sell some of the products I’ve described above is virtually non-existent. It takes one lunchtime stroll past the local high school to know that young people are getting their hands on these devices in one way or another, so taxing these products as a way to deter use makes sense.

But why lump in cannabis vapes? Yes, there have been reports numbering in the thousands in the United States of people who have experienced adverse health effects after using THC-containing vaping products. But in a legal market, where products are strictly tested, regulated, and already quite heavily taxed, increasing the taxes further only serves to hurt an already struggling industry. It also stands to drive consumers even further away from the few legal retail outlets that do exist. It’s not yet clear how this will affect sales of vaping products, which some predicted could capture up to 20 to 30 per cent of the market once available.

Tom Ulanowski, president of NextLeaf Labs, a Vancouver company focusing on cannabis distillation and extraction, told Inside the Jar that he was shocked to learn of the tax increase, and called it “incredibly short-sighted”.

“At the surface, these two growing public health issues seem to be related. Vape-based delivery methods are the common denominator,” he said.

“However, it has recently become apparent that cannabis vapes are not themselves the reason for these lung injuries.”

Ulanowski pointed to data released earlier this month by the U.S. Centers for Disease Control and Prevention (CDC) in the wake of what some are calling a “vaping illness epidemic”. According to CDC, vitamin E acetate, used in vape products as a thickening agent, has been identified as “a chemical of concern” among those experiencing vaping-related lung injury. As a result, the center has recommended that people should not use THC-containing e-cigarettes or vape pens.

In B.C., he added, the unregulated cannabis vape market continues to thrive, offering a diverse assortment of unregulated cannabis vape products, often delivered right to your door. This type of product availability adds to issues like the slow rollout of retail stores—particularly in provinces like B.C. and Ontario—as well as issues associated with price, quality, and supply chain.

“These potentially harmful unregulated products are already at least two to three times cheaper than what I expect legal, regulated vape products to cost once they hit retail stores,” Ulanowski said.

“To me, this new tax will do nothing but continue to allow the unregulated market in B.C. to thrive. I don’t think this is in the best interest of public health and safety, nor does it do anything to curb the use of these products by young persons.”

ITJ reached out to the Ministry of Finance for background information on why cannabis vape products were included in the tax.

“This measure, along with the 10-point plan to address vaping introduced by the Ministry of Health, is an important first step in restricting access to a product that is addicting our children and youth to vaping at an alarming rate,” read an emailed statement from the Ministry.

“When it comes to legalization government’s priority is to protect young British Columbians. People who prefer not to smoke cannabis but still consume the plant, will still have a range of consumption methods available to them at the seven per cent rate.”

Note from the editor: This story was edited on Tuesday, December 17, after the B.C. government updated its notice to sellers clarifying that the increased tax would not apply to dry herb vaporizers.

This article is available under a Canadian Creative Commons licence.