Business & Real Estate

Think cigarettes cost too much? Wait until Saturday

The cost of cigarettes sold in California will go up significantly, starting Saturday.

That’s when the provisions of Proposition 56 – formally known as the California Healthcare, Research and Prevention Tobacco Tax Act of 2016 and approved by voters last November– go into effect.

The cigarette tax rate on Saturday spikes from the current 87 cents to $2.87 per pack of 20 cigarettes.

For most smokers, that will put the cost of a standard pack of cigarettes in the $8 to $9 ballpark.

In addition, also effective Saturday, the distribution of “nicotine delivery devices” – a segment that includes electronic cigarettes, e-cigars, e-pipes, vape pens, and e-hookahs – sold in combination with substances containing nicotine will be subject to a tax rate of 27.3 percent of the wholesale cost of the product. Those devices have not been subject to the tobacco products tax.

California’s Board of Equalization noted that nicotine delivery devices sold independently and not in combination with any liquid or substance containing nicotine are not subject to excise tax. That includes batteries, battery chargers, carrying cases or “any other accessory used in the operation of a nicotine delivery device.”

U.S. Food and Drug Administration-approved products designed to help consumers reduce or quit smoking, such as nicotine patches, are not subject to the tax.

Cigarettes are not the only consumer item going up in cost starting Saturday. Sales of lead-acid batteries, the type commonly used in motor vehicles, will be subject to two $1 fees.

The fee is expected to generate $26 million annually. Collected revenue will be deposited into the Lead-Acid Battery Cleanup Fund, used to monitor, clean up or remove in-state sites that may have been contaminated by a lead-acid battery recycling facility.

Beginning April 1, 2022, BOE said manufacturers will no longer be required to collect and remit the $1 fee. Instead, consumers will pay a $2 fee upon purchase of a replacement lead-acid battery.

Mark Glover: 916-321-1184, @markhglover

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