Very stiff taxes: cigarettes in europe? yes. marijuana in colorado? no.

March 19, 2014 Leave a comment

Colorado Governor John Hickenlooper says, The marijuana industry was a great supporter of our very stiff tax rates generally they ve been supportive of our pretty stiff regulation, Colorado marijuana tax rates relatively aren t very stiff at all Whatever assumptions you use, those taxes add up to less than 20 percent of the after tax retail price. That’s less than Colorado taxes cigarettes. European cigarette taxes almost always account for over 75 percent of the retail price often, over 85 percent.

How can a 15 percent wholesale tax, a 10 percent retail tax, and a 2.9 percent sales raise less than 20 percent of the final price? Because the base of the wholesale tax is so small the wholesale price is very small compared to the retail price. The Governor s estimates (more ambitious than the Legislature’s when it comes to taxes) call for the first full fiscal year of recreational marijuana sales to bring in $125,008,337 in total from the three taxes, and $612,785,960 in pre tax price. The wholesale tax is estimated at $45,958,948. The estimated retail tax of $61,278,598 and the 2.9 percent sales tax of $17,770,793 add to that pre tax price of $612,785,960 for a total after tax price of $691,835,351. Total taxes, $125,008,337, are just over 20 percent of the $612,785,960 pre tax price, and just over 18 percent of the $691,835,351 after tax price. In percentage terms, that’s less than the combined federal ($1.01) and Colorado ($0.84) excise taxes per pack of cigarettes, which sell there, after tax, for about $6 a pack.

To see what very stiff tax rates look like, look at Europe s rates on cigarettes. Official chart linked here and copied at European tobacco taxes 2014 Table column 8 on page 6 shows total taxes as a percentage of WAP weighted average price. In the United Kingdom, taxes are 87.5 percent of that retail price. The government gets 87.5 percent the entire private sector supply chain, from farm to retail store, gets 12.5 percent. And the U.K. is not an outlier Greece gets 87.45 percent Poland gets 85.01 percent. Of the 28 countries in the Union, only little Luxembourg has a rate below 75 percent. Those countries don’t burden the marijuana trade with anything like our Federal Tax Code section 280E, but the Governor’s point was about rates.

Looking at it another way, in the U.K., the state gets 87.5/12.5 of what the private sector gets, or 700 percent. That s stiff.

Europe has stiff cigarette tax rates. Make taxes too stiff and you allow bootlegging problems. That’s a good reason not to have stiff taxes at first, especially at first. And stiff tax rates would simply not allow recreational marijuana to compete with Colorado’s tax free medical marijuana. But for recreational marijuana, Colorado is not yet dealing with “very stiff tax rates.”

The european commission has misinterpreted my scientific research on nicotine in e-cigarettes

Marlboro cigarettes types – an overview!

The European Commission has misinterpreted my scientific research on nicotine in e cigarettes

By Dr Farsalinos

As everyone knows, the latest TPD proposal dictates a 20mg/ml upper limit for nicotine content in e cigarette liquids. In their justification document, the European Commission cites 2 of my published studies to support that the scientific basis of their decision is that nicotine delivery from a 20mg/ml nicotine containing liquid is equivalent to one tobacco cigarette and that this level is sufficient for smokers to completely substitute smoking.

Since it is more than evident that my research has been misinterpreted, leading to bad decisions, I decided to send a letter to the Health Commissioner and MEPs and release this letter here.

Here is the letter

SANCO recently decided that 20mg/ml nicotine levels should be the highest level present in the liquids of e cigarettes. To justify this decision, they have released a document (reference 1) where they have cited two medical studies performed by me as principle researcher (references 2 and 3). The Commission suggests that my research shows that 20mg/mlnicotine limit is equivalent to the nicotine delivered through the use of tobacco cigarettes and is sufficient for most smokers to completely substitute smoking.

Since my studies are the only scientific evidence quoted by SANCO, it is my duty to inform you that the interpretation of my research is completely wrong.

My research (cited by SANCO) specifically examined nicotine consumption and made absolutely clear that the determination of the upper limits needs to be determined based on nicotine absorption and delivery to the bloodstream (reference 2). My studies on nicotine absorption pharmacokinetics have shown that liquids with nicotine content similar to the upper limit decided by SANCO provides typically less than one third of the nicotine delivered by one tobacco cigarette (references 4 and 5). We have calculated that a 50mg/ml nicotine containing liquid is marginally equivalent to smoking one tobacco cigarette in terms of nicotine delivery to the bloodstream. In my second study cited by SANCO, I have clearly shown that 23% of smokers had to use higher than 20mg/ml nicotine containing liquids in order to completely substitute smoking (reference 3, Figure 1). None can support that 23% of users is a small proportion however, this has been ignored by SANCO. In fact, this study provides further support that 20mg/ml nicotine content in liquids is insufficient for smokers.

I have always been willing to provide consultation to the regulatory authorities. Regulatory organizations such as the US Food and Drug Administration (FDA) were more than willing to meet and consult with me on the science behind e cigarettes and are open for any future meeting to present more research. It is highly important that regulators within the EU also realize the value of proper consultation for an issue which is of outmost importance for public health.

Regulatory decisions based on misinterpreting science are inevitably wrong. The Commission has no scientific justification for its proposed 20mg/ml nicotine limit.

References

1. European Commission. Revision of the Tobacco Products Directive. Factsheets for information on specific policy areas E cigarettes. Available at

2. Farsalinos K. et al. Evaluation of electronic cigarette use (vaping) topography and estimation of liquid consumption implications for research protocol standards definition and for public health authorities’ regulation. International Journal of Environmental Research and Public Health, 2013.

3. Farsalinos K. et al. Evaluating nicotine levels selection and patterns of electronic cigarette use in a group of “vapers” who had achieved complete substitution of smoking. Substance Abuse, 2013.

4. Farsalinos K. et al. Nicotine absorption from electronic cigarette use comparison between first and new generation devices. (Submitted for publication Presented to the FDA, December 19, 2013).

5. Farsalinos K. et al. Nicotine absorption from electronic cigarette use comparison between na ve and experienced users. (Presented to the FDA, December 19, 2013).