Vape stores say new tax will force them to close

Just six months after opening Fifth Avenue Vapor in New Kensington, store owner Rob Farr said he will soon be forced to close the shop.

Within the next few months, he will attempt to sell his inventory of electronic cigarettes and the liquids and devices that people use when smoking them, he told Christine Manganas of the Tribune-Review.

Erik Gregory, co-owner of Vape-O-holix Vape Shop in Tarentum, said he plans to fight for his business for as long as he can. He also recently opened a "vape bar" in Delmont.

Farr and Gregory are just two small vapor — vape — shop owners out of roughly 300 statewide that will be impacted by the 40 percent tax on all vapor inventories in Pennsylvania.

Imposed by Gov. Tom Wolf and the state Legislature in an effort to increase state revenue, the tax could force a majority of the shops to shut down, vape shop owners believe.

"We're fighting a huge battle," Gregory said.

Beginning on Oct. 1, a 40 percent wholesale tax will be levied on all vapor products, including smoking devices and liquids. In addition, a 40 percent inventory tax must be paid by Dec. 30.

Electronic cigarettes, or smoking simulation devices, deliver a liquid made up of propylene glycol, flavoring and nicotine.

It imitates smoking cigarettes, but people inhale vapor instead of smoke, according to the Smoke-Free Alternative Trade Association.

Besides the 6 percent sales tax statewide — 7 percent in Allegheny County — there is not an additional tax on vapor products.

The state Legislature recently closed a huge deficit in the new 2016-17 state budget that imposes higher taxes on cigarettes, smokeless tobacco and digital downloads for videos, books and music.

In May, the federal Food and Drug Administration began requiring vape shop owners and manufacturers to seek approval for their merchandise, which is even more added cost to them.

The increased state cigarette tax — a buck more per pack, raising the average price to $7 — along with the tax on electronic cigarettes and smokeless tobacco are projected to generate $497 million a year, according to a statement by Wolf's spokesman, Jeffrey Sheridan.

Sheridan said there was "widespread support" from Republicans and Democrats in both state chambers for the tax.

But the Commonwealth Foundation, a conservative organization that supports free markets and limited government, and a state lawmaker are working to provide an alternative plan that would be less harmful to business owners' wallets.

State Rep. Jeff Wheeland, a Republican from Williamsport, is set to introduce legislation to replace the tax hike with a 5-cents-per-milliliter tax, which would tax customers based on the amount of e-liquid purchased for their devices instead of taxing all vapor products such as smoking devices and accessories like batteries.

"These are truly the small mom-and-pop, scrappy entrepreneurs that we talk so much about wanting to help in Pennsylvania," said Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation. "These are our job creators, and these are the businesses the state budget is actually destroying.

"It's destroying thousands of jobs and creating millions in lost revenue for a relatively small sum for the state," Stelle added.

When the tax takes effect come October, Stelle said, customers will turn to the Internet and out-of-state resources.

"The only one losing out is Pennsylvania," she said. "Other states will see a boom from this."

Alle-Kiski Valley vape shop owners Farr and Gregory agree.

"I think vaping will continue to grow, whether it's brick-and-mortar (stores) or whether it goes (to online sales)," Gregory said. "Either way, it's not going away."

Gregory and co-owner Jim Vida run the Tarentum store, and up until the tax announcement, they were planning on increasing their staff.

Instead, Gregory said, they will just do their best to stay in business.

He and others advocating against the tax are questioning why an industry that he believes is a healthier alternative to cigarette smoking is being targeted by the state.

"It seems the state is more concerned about the health of their pockets rather than the health of their people," Gregory said.

Whether vaping is better than smoking cigarettes is hotly debated. It still contains nicotine and other harmful chemicals, and doctors question its safety.

Farr said that once he closes Fifth Avenue Vapor, he will do his best to point customers in the right direction of reasonably priced products.

But he does not know what will come next for him.

"This is my income," Farr said. "I have three kids, and I don't know what I'm going to do to take care of them."

Stelle and the Commonwealth Foundation warn people that "as a state that's desperate for revenue, it might be your business next year."

all of the swears

Hot takes from the Steelers-Patriots mess

Look, we know you probably don't want to relive it. We sure as hell don't. But we were on Twitter checking on AB's status, so we figured we'd compile some of the best takes.

Keep reading ... Show less
Ho Ho No

Criminal Claus gets himself stuck in chimney, forced to call 911

Guess he didn't really think it through.

Keep reading ... Show less
Let's see now ...

First thoughts after seeing 'The Last Jedi' (Spoilers here!)

Wow, what a ride!

Keep reading ... Show less
watch yourself

Don't be that guy who buys fake Steelers-Patriots tickets

You could be out in the cold if you try to buy tickets for Sunday's game between the Steelers and New England Patriots at Heinz Field from a scalper.

Keep reading ... Show less
see the sights

10 places off the beaten path to take in Christmas in Pittsburgh

You probably know of the iconic places to take in the holidays in Pittsburgh — the ice rink at PPG Place, the windows at the former Macy's, the creche at the U.S. Steel Tower.

But how about taking a day and checking out some of the other sights?

Keep reading ... Show less
Far out!

May the Force be with the Steelers and this 'Star Wars'-themed team poster

So, did your favorite Steeler make the team's "Star Wars"-themed team poster?

Keep reading ... Show less
500 Days (of sellout hockey)

Longest home sellout streaks in sports

On the last Hockey Night In Pittsburgh that wasn't a sellout, America had the following: George W. Bush was President; Beyonce's Irreplaceable was the No. 1 song on Billboard's Hot 100 chart; gas costs averaged $2.24 per gallon; Mike Tomlin had been head coach of the Steelers for all of two weeks, and Apple was finalizing a television advertisement to introduce the iPhone.

Keep reading ... Show less
Holly jolly

Who does the best version of the top Christmas songs?

Christmas songs are like Christmas cookies: There's so many, we get them once a year, and everyone has an opinion on who does it best.

Keep reading ... Show less