The California Department of Tax and Fee Administration (CDTFA) recently adopted emergency Regulations 4076, Wholesale Cost of Tobacco Products and 4077, Tobacco Product Manufacturer. The regulations interpret and implement the changes made to the Cigarette and Tobacco Products Tax Law (CTPTL) under Proposition 56, California Healthcare, Research and Prevention Tobacco Tax Act of 2016. The new law increases the excise tax on cigarettes by $2.00 per pack which results in an “equivalent” increase in tax for other tobacco products (OTP), e.g., cigars, chewing tobacco, snuff (and now Vapor Products). The new rate set for OTP of 65.08% is significantly higher than the prior rate of 27.30%. The law also expanded the definition of OTP to include electronic cigarettes, also referred to as e-cigarettes, effectively wrapping the evolving and growing vapor industry into the CTPTL. McClellan Davis was provided with the opportunity to work on behalf of the California Smoke Free Organization (CSFO), the largest vapor industry association in California, to help form the new regulations. (Click here to view the formal issue paper which include the new regulations)
