What will current technology trends mean for electronic cigarettes? Consider what might happen to vaping after the technological singularity.
The U.S. Senate last week confirmed President Trump’s nominee to lead the Food and Drug Administration (FDA), Scott Gottlieb, M.D., a physician and venture capitalist investor. As with all things Trump, the choice of Gottlieb was controversial. Democrats were not happy about Gottlieb’s financial ties to dozens of pharmaceutical and medical device companies that the FDA is charged with overseeing.
But within the vaping industry, Gottlieb’s confirmation has been perceived as something of a hopeful sign. The FDA is currently developing regulations for e-cigarettes and other such products. And many companies are deeply worried that the FDA will bend to the will of anti-smoking advocates who want vaping regulated out of existence.
It is true that overall Gottlieb is a pretty vape-friendly guy to be running the FDA. He’s was a high-profile investor in the vaping company Kure. He held a resident fellowship at a conservative think tank where he developed a close relationship with Dr. Sally Satel, a leading advocate for the idea that vaping could save lives by curbing the public’s appetite for traditional cigarette smoking.
Gottlieb has also posted a number of tweets over the years (a few of which credit Dr. Satel as the source) that would seem to indicate a pro-vaping mindset:
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Gottlieb is clearly against an outright ban on vaping, and he does not seem inclined to use the FDA rule-making process to crush vaping into oblivion. However, that does not mean he will necessarily be a friend to the average vaping consumer or small business that develops vaping products. Gottlieb is a close ally of big business and will likely act in the interest of large corporations rather than the little guy.
In 2013, Gottlieb wrote a column for Forbes that chastised anti-smoking advocates for trying to destroy the tobacco industry entirely. He argued that all parties should work together to find a regulatory compromise so that tobacco companies could transition to making less harmful products than traditional cigarettes, such as vaping devices. And that is indeed vape-friendly point of view. However, despite the fact that Gottlieb wants to see more vaping in the world, his column is almost entirely focused on a solution in which the e-cigarettes are manufactured by large corporations.
There doesn’t seem to be much room in Gottlieb’s venture capital worldview for small businesses. All indications point to the new FDA commissioner being on board with the tobacco industry’s plan to crush smaller vaping companies with regulations so that the big boys can take over their entire market share. And perhaps that shouldn’t be too surprising.
President Trump appointed Gottlieb and his boss, Health and Human Services Secretary Tom Price, to do one thing: dismantle Obamacare. Gottlieb’s views on vaping were probably not a factor in his appointment. What’s more, Gottlieb and Price have both had a big role in health policy over the years while actively investing in medical companies. Price has even gotten in hot water for buying stock in a company, then introducing a deregulation bill the following day to benefit his new investment. Gottlieb has never been accused of anything quite that shady, but his clear love of making money suggests that he may also be for sale to the highest bidder. And if there’s one thing Big Tobacco has a lot of, it’s money.
Nevertheless, Gottlieb does have one core belief that could benefit smaller vaping manufacturers, and that’s that the FDA should speed up its drug approval process. He’s a free marketer. In his many columns and blog posts, Gottlieb has made it very clear that he feels like the drug prices are being artificially inflated by a burdensome bureaucracy that does little to safeguard public health. Apply that same logic to vaping, and maybe Gottlieb would be open to reducing the hoops that a vaping company would have to jump through to get approval for a new product.
The current fear among small vaping companies is that the FDA will really go through with its million-dollar approval process for each new vaping product, meaning only the Phillip Morrises of the world could afford to legally manufacture e-cigarettes and e-juices. If Gottlieb is a true believer in the free market, then it’s possible he would want to make it as easy as possible to safely produce new vaping products. But then again, some guys who claim to believe in the power of the free market are really just profiteering assholes. Gottlieb has a chance to prove or disprove if he is one of them.
New York Gov. Andrew Cuomo last week issued his annual budget plan, which includes a proposal to tax vaping in the state for the first time. Specifically, the budget (were it to become law) would impose a tax of 10 cents per millimeter on the liquid or gel used inside any kind of device. That means vape and e-cigs purchased in Brooklyn are about to get more expensive.
Not that much more expensive though. A Bedford Slim cartridge, which has 1.2 mL in e-liquid, would each go up by barely 10 cents. It's not exactly going to break anybody's bank. Even the someone who uses pretty heavily will only go through about 2mL per day. That means you're paying an another $1.40 every week. That adds up to an extra $73 annually. Money is money, but most people who can afford to vape can afford that.
The problem is more the precedent. Once a fee exists in a government budget, it will always be increased every year the budget is renewed.That's just a fact of life.
If the new fee is enacted, which seems likely, it won't actually start impacting prices until the fall. It's scheduled to take effect 180 days after the start of the fiscal year, which happens to be April 1. That means the vaping would get a little more expensive in Brooklyn and throughout New York State beginning September 28, 2017.
So why is this happening? The official reason is that it's for public safety. New York State is taking the same stance as pretty much every other level of government, that vaping is as bad for you as cigarettes and should be subject to the exact same level of regulatory restriction.
But perhaps the real reason is that cigarettes sales are on the decline and, as a result, tax revenue from cigarette taxes is going down as well. The state was relying on the money from cigarette taxes. And while I'm sure officials are somewhat glad that fewer people are smoking, they also must find somewhere else to make up that tax revenue. A tax on vaping was most likely just an easy way to fill the hole. The proposed fee is mindless, but not particularly surprising.
The question is how far this will go. Will the taxes on vaping eventually increase enough to the point that it makes e-cigs significantly more expensive? It certainly seems probable. Lawmakers always find it easier to ratchet up fees than to do meaningful tax reform. Vapers don't have much in the way of political clout. If someone needs to get taxed, it's just as likely to be them as anyone else.
It's the latest in a string of bad news when it comes to vaping in Brooklyn. Earlier in January, a state appeals court struck down a challenge to New York City’s indoor vaping ban. Vaping advocates had attempted to make the argument that vaping should not be regulated the same way as smoking because it's entirely different kind of combustible. But to no avail. For all the talk recently about how the government is starting to come around to the benefits of vaping lately, there's still a long way to go.
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