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Vape shops close under 40 percent Pa. tax
About it All Vapors closed in Hanover, the latest in over 100 vape shop closures in the state.
Michael Curry is usually busy managing five LifeSmoke Vapors locations across the state, including one at the York Galleria mall, but Tuesday he was preparing to do something he said was unfortunate.
“I’m actually helping my buddy pack up some things at his vape shop,” he said.
Curry’s friend, Tony Myers, just closed his e-cigarette business, About it All Vapors in Hanover. It is the latest vaping business to close in the state, in part due to a 40 percent tax on all e-cigarette inventory that has rocked the industry.
‘Mafia practices’: Myers was quite upset at the end result of his business venture.
“I’m closing what would be a lucrative business due to mafia practices by the state,” he said. “This is stuff John Gotti himself used to do.”
Myers said he opened the vape shop to help fund a special-needs program he conducts with his businesses. He said he wanted to teach his employees personal responsibility.
“I never asked for any help from the state” to subsidize the employment, Myers said. “I wanted to get them off the umbrella of the state, who deems them worthless.”
Myers said as soon as the tax took effect, “all the funding just stopped.”
The tax, which was included in last year’s state budget, has been met with virulent opposition by the industry.
“This 40 percent tax is a cancer, it needs a second opinion, and it needed it yesterday,” wrote John Dietz, vice president of the Pennsylvania Vape Association, on the organization’s website.
He warns the industry might not be around by this time next year if vape-shop owners and customers “just sit back, roll the dice and continue the same strategy.”
Pennsylvania Vape Association President Charles Huff said more than 110 businesses have closed since the vape tax went into effect late last year.
Tax reform: Legislators have introduced new bills aimed at reforming the inventory tax placed on e-cigarette merchants.
Rep. Jeff Wheeland, R-Lycoming County, and Sen. Camera Bartolotta, R-Greene and Washington counties, introduced similar vape-tax reform measures in their respective houses, both calling for an elimination of the 40 percent tax on inventory.
Instead, they call for a 5 cent tax per milliliter on e-liquid, the substance heated, vaporized and inhaled by vape users. Both claimed expected revenue to the state will fall well short of its projected $13.3 million because of the ongoing business closures, with Bartolotta warning “more will likely follow suit” if the tax continues to exist as is.
Some local vape-shop owners approve of the measure. Ace of Vapes owner Brandon Mueller said the proposed tax would be a vast improvement.
“We prefer no tax, but we can work with this one,” he said.
“It would help a lot,” Curry said. He said he had to raise prices by 15 percent to 20 percent to help offset the burden of the tax.
“We were even planning more shops, but now that’s been put on hold,” he added.
Another issue might be brewing at the federal level. Curry said while the 40 percent tax is threatening the vaping business in Pennsylvania, Food and Drug Administration regulations set to begin in August 2018 could effectively wipe out the industry nationally.
Last May, the FDA announced broad regulatory oversight on e-cigarettes, from e-liquid to certain batteries used to power the devices. There is a two-year period before manufacturers must comply to the regulations.
“It would ban over 99 percent of vape products,” Curry said. He said the cost of getting the products approved is about $1 million per product, which would make it almost impossible for even large vape businesses to keep their products on store shelves.
‘Start over’: As for Myers, he is closing his business in Pennsylvania and moving to Florida. Even if the vape tax is repealed, he said he would not set up shop in Pennsylvania again.
“Absolutely not,” he said. “They’ve seen how (over 110 businesses) have closed, and it’s like our complaints have been falling on deaf ears."
He said Florida respects small-business owners while Pennsylvania legislators ignore them. “They knew how to right their wrongs, and instead they finished for the year and went on their Christmas vacation.”
Myers said he will now move to a state that respects him as an entrepreneur.
“I believe a state that can’t appreciate my efforts doesn’t deserve my money,” he said.
“Now, I’m going to start over,” Myers added.