Minnesota Cigarette Tax Hike Seen as Boon for E-Cigarette Sales

The state’s cigarette excise tax will increase to $1.60 per pack beginning July 1.

June 26, 2013

ST. PAUL – Minnesotans will be paying more for cigarettes come July 1 and retailers predict a sharp increase in electronic-cigarette sales as a result, Minnesota Public Radio reports. The state’s cigarette tax will jump $1.60 per pack.

Stores like the Uptown Vapor Shoppe and Smokeless Smoking have opened recently, specializing in e-cig sales. “We've experienced extreme growth just since opening this last store,” said Angie Griffith, co-owner of a Smokeless Smoking location. The state tax on liquid nicotine is significantly less than regular cigarettes, which has been driving business her way.

“A lot of customers have come in and noted that that has been their motivation because they can no longer afford cigarettes, and unfortunately a lot of times cost is a bigger motivator than health,” she said.

The U.S. Food and Drug Administration (FDA) hasn’t yet decided how to classify electronic cigarettes, although antismoking groups are pushing for them to be regulated like regular cigarettes. The American Lung Association is one calling for the agency to regular e-cigarettes immediately. “The questions about e-cigarettes go on and on and on, but in the meantime the tobacco industry has jumped in with both feet,” said Erika Sward, vice president for national advocacy. “There's absolutely no oversight or regulation of these products right now, and we're really seeing a resurgence of the glamorization of tobacco products.”

That interest has traditional tobacco companies adding e-cigarettes to their portfolios. “And the e-cigarette category is one of those groups that folks have shown some interest in,” said Bill Phelps, spokesman for Nu Mark, a subsidiary of Phillip Morris. “So given the fact that there's been increased trial and sale of e-cigarettes to adults who currently smoke, we decided that we wanted to enter that category in a lead market in limited form in Indiana this year.”

E-cigs are also attracting investors and the attention of state legislatures, such as Utah, which is considering classifying e-cigarettes with their regular cigarette counterparts.

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