Four years after Gov. Dunleavy vetoed a similar measure, lawmakers passed a bill imposing the state’s first tax on electronic cigarettes and related products.
The legislature’s approval of Senate Bill 24 was a victory for Senate President Gary Stevens. It was the third such bill sponsored by the Kodiak Republican, who is retiring this year.
“This bill is about protecting our children from becoming addicted to nicotine,” Stevens said in testimony to the House Finance Committee on May 7.
The bill is intended to counter the multibillion-dollar tobacco industry’s efforts “to addict young people to these substances” in the face of declining use of traditional cigarettes, he said.
E-cigarette products use battery-operated devices to produce vapors that are inhaled, a contrast with traditional tobacco that is burned. They were not widely marketed in 2006, the last time Alaska’s state tobacco tax was amended. While many Alaska municipalities have updated their tax systems to include e-cigarette products, the state had not.
If it becomes law, the bill would impose a 25% tax on retail products, as well as prohibit purchases by anyone under 21, the same legal age for tobacco purchases.
Supporters of the bill said the tax and the age restriction would discourage youth use of the product, just as higher taxes and other restrictions contributed to a reduction in youth smoking.
“We know that tobacco and nicotine are highly addictive drugs. The younger you start, the more severe your addiction is likely to be, and if we can delay your introduction to the product, the less likely you are to become addicted. Young people are also price-sensitive,” Juneau Rep. Sara Hannan, who carried Stevens’ bill in the House, said in floor debate on May 19, the second-to-last day of the session.
Opponents objected to the idea of a new tax, and they also argued that vaping should be treated as more benign than smoking.
“My concern is that this isn’t a tobacco bill. This is a tax bill. This is tax, tax, tax,” said Eagle River Rep. Jamie Allard. She added that she believes 18- and 19-year-olds should have the right to smoke or vape.
“My point about this whole thing is freedom. They’re not doing anything wrong, and now you’re imposing a law to take people’s freedom away that doesn’t impair them. So, what’s next? We need to stop. These are adults,” she said.
The bill passed the House 24-16, and the Senate concurred the next day by a vote of 15-5.
Stevens’ first bill on the subject passed in 2022 by wide margins, but Dunleavy vetoed it, citing his desire to avoid new taxes. Another version died in 2024 after members of the House, then with a Republican majority, stripped the e-cigarette tax provisions from it and added a reduction in marijuana taxes.
A key difference between the 2022 bill and the new bill is the way the tax is applied. The previously passed bill would have imposed a 45% tax at the wholesale level. The newly passed bill applies a 25% tax on the retail level.
A change in the bill during legislative deliberations dropped the maximum fine for a minor possessing tobacco or nicotine products from $300, as proposed in the original bill, to $100.
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