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Policymakers are limiting the use and development of electronic nicotine delivery systems (ENDS or e-cigarettes) by imposing additional regulations and excise taxes on the growing industry. Making ENDS more expense for or unavailable to consumers is misguided because switching to ENDS from combustible cigarettes leads to improved health outcomes for cigarette smokers. Over time, this will lower the substantial amount of state funds that are spent on public healthcare programs such as Medicaid.
Section 1 of this paper lays out the regulatory and tax landscape faced by ENDS on the state and federal levels. As a case study, Section 2 focuses on Indiana's unique ENDS regulations, and Section 3 explores the state's tobacco-related revenues and expenses. Indiana's experience shows why the conclusion is reached in Section 4 that placing additional taxes and regulations on ENDS is inadvisable and harmful to both cigarette smokers’ long-term health outcomes and states’ finances.