Unwrapping New Regulations On Vaping: What You Need To Know

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Unwrapping New Regulations On Vaping: What You Need To Know

Tue Apr 4, 2017


Since its 2007 debut in the American Market, the burgeoning vaping industry has gone from subculture to mainstream. Newly enacted federal regulations are in place and additional state regulations continue to make headlines. What are the new regulations? Who do they affect? Where are vaping products being taxed and how are those taxes being applied? Sorting out the “what applies where” can get a bit hazy; which is why we have unwrapped the basics and repackaged what matters. Below is an overview of what you need to know.


Federal regulations on vaping products became effective in the United States in August 2016 under the Tobacco Control Act. Originally passed by Congress in 2009, the provisions give the Food and Drug Administration (FDA) regulatory power over tobacco products and similar products that look and act like them. August 2016 also marked the start of a two-year review period, during which the FDA will decide which vaping products will remain in the market and which will be banned.

Who do the regulations apply to?

  • Retail dealers selling to end-users
  • Wholesale dealers selling to retailers and/or other wholesalers
  • Producers and manufacturers

Who is considered a manufacturer? If you mix or prepare liquid nicotine or nicotine-containing e-liquids, or if you create and/or modify any type of ENDS, you may be considered a manufacturer.

What do the regulations entail?

  1. All vape product producers and manufacturers must register with the FDA, providing a detailed account of product ingredients and manufacturing processes.
  2. Companies must file a Premarket Tobacco Application (PMTA) for every vape product flavor, sku, device etc.  This includes vape shops that mix their own e-liquids. For the companies offering multiple flavors and devices, application costs will run into the millions.
  3. Companies will be subject to FDA inspections.
  4. Companies may not market their products as “light” or “mild” without FDA approval.
  5. Companies may no longer distribute free samples.


Tis’ the season for taxing, and vaping products are no longer an exception. Aside from the new federal regulations, many states are proposing their own regulations on vaping, with excise tax (non-sales tax) at the center of it all. The proposed tax varies from state-to-state; however, four key approaches have emerged:

  1. Tax on wholesale price: The most common approach is to apply a fixed tax percentage rate on the wholesale price. This is a cost to the vendor, but will undoubtedly pass onto ordinary vapers to keep stores profitable. Minnesota and Pennsylvania have already imposed a wholesale tax on vaping products.
  2. Tax on retail price: Like tax on the wholesale price, except the tax percentage is applied to retail cost. An example is Washington State, currently proposing a 60% retail price tax on vaping products. If passed, a formerly $100 mod will cost $160, with over one-third of the money going to the government.
  3. Tax per ml of e-liquid: An increasingly popular approach is to tax per ml of e-liquid, since that is where the nicotine resides. Both North Carolina and Chicago have already imposed tax per ml of e-liquid, with Chicago having the highest rate of $0.55/ml, adding an additional $6 to the cost of every 30ml bottle of e-liquid.
  4. Tax per mg of nicotine: The final approach is to tax per mg of nicotine. For example, New Mexico has proposed an excise tax of $0.04/mg nicotine. If passed, a 30ml bottle of e-liquid containing 24mg of nicotine per ml would be subject to an excise tax of approximately $29.00.

 The landscape will continue to change as things progress. At the end of the day, who benefits? With the primary market for e-cigarettes being smokers, large tobacco companies stand to gain the most by regulations and taxing putting vaper product shops out of business.

 How do you pack for success amidst the ever-changing regulations? Many companies have responded by filling liquid nicotine concentrate in a unit dose package, and selling the carrier/filler separately to reduce the tax burden. Sonic offers a variety of unit dose packaging options to meet this need. Contact us and request a quote today!