 We're going to take our first kind of walkthrough of the banning of flavored tobacco products. I've got a whole list of witnesses. This is crossover week, which means all the bills have to be out by Friday. This one came to us from another committee, so we have an extra week to do it. But we have a very full agenda. We've just added the insulin bill. There's a couple of somewhat controversial proposed agendas or amendments, so. Do we want to be passed out by the manager? Yeah, so it's back on for discussion with the amendments, and that's why we passed over it today. So that's been added to the end, and I do have to bail my car out by 5.30, or I can try to hear tomorrow. I'll give you a reminder. You're going to treat me again. I can walk. Okay, so what I'm saying is to all the witnesses, please keep your testimony to five minutes. This is finance. We're not going into health. We're just interested in money. So I'm going to, Jen, you want to come up and walk us through. We are not a paperless committee audience, so you have the bill in your packet. And that says voted out, right, is draft 2.3. So that's, I believe, what came out of health involved. That is true. Jennifer, please let me get a council for the record. So this is a bill that would ban labor tobacco products and be liquids. Focusing just on the money pieces of it, what you need to know is first that it would eliminate the ban on and penalty for possession of all cigarette tobacco vaping products by people under 21 years of age. So there's currently a $25 penalty for possession that would go away. The other piece, the main price of the bill is that it would ban the retail sale, not possession, but retail sale of flavored cigarettes, e-cigarettes, and e-liquids. So only tobacco flavored products would be allowed. This includes a ban on menthol cigarettes. And the penalty is up to $100 for a first offense and up to $500 for a subsequent offense, which is the same as the sale, the penalty for a sale to, to act as products to a minor to be assessed on the owner or operator by the establishment. Now the federal government has already banned flavored. They are e-cigarette. They are doing, there are three categories, and it's been a while since we've talked about this here, but there are three different categories of, or types of flavored e-cigarette products. There are the pods that go with like a jewel device and things like that. Those are the ones that the feds have started regulating. They are also the ones that come as one whole, like a disposable e-cigarette. You use it, you throw away $69. And you think you're out of big lighters. You kind of, you buy it, you use it twice, you throw it away, or big pens. And then the third one is the open tank ones that people can refill with flavors of their choice. The pod cartridge ones are the ones that the federal government is beginning to take enforcement action on those manufacturers that did not get pre-market food hold. And so I think they're actually going to start the enforcement action in May. That's the last I had looked at that. Those are the ones along with the disposables that are most used by you. Now we've also raised the age to 21. 21, right. And that started September 1st. That's right. So it's illegal to buy them now if you're under 21. That's right. Paying possess. Well, yes, it is currently against the law to possess. This bill would eliminate the penalty for possession. And that, I know, law enforcement has some reservations. They try to build a good relationship with youth and then stop kids from smoking or something. So the penalty for possession has been a little controversial and they don't want to make criminals out of kids. So, okay. So as far as who is most likely to use what, I will defer to the various witnesses here. Okay. Any questions from Jen at this point? This bans all flavors. All flavors? Anything? Heights? Yes. Tobacco? Cigars? Chew? I'm sure little cigars. They're on here. Yes. And as far as the flavors, it goes pretty broad talking about any characterizing. So it has a term, E-liquid, which is whatever substance somebody's using with any cigarette. And the, so it applies to flavored E-liquids and flavored tobacco products and flavored tobacco substitutes. And the flavors, characterizing flavor is a taste or aroma other than that of tobacco, in part either prior to or during consumption of a tobacco product or tobacco substitute or component and part of a byproduct. Includes tastes and aromas relating to any fruit, chocolate, vanilla, honey. I added maple because we're Vermont. That wasn't actually, I think, on any other states list. But maple, candy, cocoa, dessert, alcoholic beverage, mint, menthol, wintergreen, herb or spice, or other food or drink, or to any conceptual flavor that imparts a taste or aroma that is distinguishable from tobacco for probably not relate to any particular known flavor. I'm not sure where Unicorn poop fits in here. I think that fits into the concept. But that is a big sell-up. It's gone. It would be, right. So nobody would be allowed to purchase it in permit. They could use it if they had purchased it somewhere else. Okay. Okay. I have a chair to ask. This was at your committee. Yes. This came out. Some of us, with a reluctant vote, some of us both did our best to do some amendments. We lost. Okay. But I believe in the end it came out with the unanimous vote just because the overall thing, at least for me, was worth doing even though I lost. Thank you. Jim, in the testimony, was there anybody that had, that you heard, had the ability to tell us what the impact of the move to 2011 in terms of youth access? Not that I recall, though. I mean, I've heard all the testimony. It's only been in effect for a few months. I got how much data they had. Testimony. Okay. Thank you. Jim. Oh, you're actually going to get to stay. I'm going to stay for a bit. This morning, Jen had three bills on the floor, and we had two or three bills in committee that we needed her for. So, a little. It was pretty busy. Okay. So, we're going to start with Patrick Cleanore. And... Hello. How are you? You're good. And the routine here is that everything is recorded, and there's no austerity. So, just we ask you to give your name and if you represent anybody other than yourself, a business. Sure. My name is Patrick Cleanore. I'm Chief Economist of Fiscal Economics Incorporated. It's a consulting firm out of Alexandria, Virginia. Altria has asked me to come here today and give you my thoughts about the effects of the flavor ban on revenue. Altria? Yes. Altria is? Tobacco. Tobacco coming. Tobacco coming. Okay. No, it's coffee alarms. Okay. Okay. Now we know what you're saying. Thank you. And you wanted to talk about the revenue effects. Well, that's my expertise. I've worked on tobacco revenue for about 20 years prior to my current position. I was Chief Economist of the Tax Foundation in D.C. So I've worked on sort of border issues quite a bit. And when I first looked at revenues, I mean, when I first looked at Vermont's cigarette tax revenues and I looked at their consumption because, you know, you're often trying to figure out border effects, right? And if consumption roughly matches purchases, tax-paid purchases, what do you think? Well, there's not much of a border effect going on. At first glance, that appeared to be the case in Vermont. However, when you decompose things, as I did, you find that, you know, Vermont gets about, Vermont's the beneficiary of border sales on two of its borders, those being New York and Massachusetts. And it loses quite a bit of sales on New Hampshire side and roughly those two balance. And so you ask, well, why is that important? It's important because if you enacted a flavor ban, you would lose sales. You would decrease your outflow of cigarettes to Massachusetts and New York. And you would increase the flow to New Hampshire. And I calculated under two scenarios. First, you know, there's substitution, right? Some people will simply stop using flavor product and switch normal cigarettes. And other people won't do that. So you have to figure out the degree of substitution that's going to occur. And I figured that in the case where you had no substitution, Vermont would lose about $20 million a year in just cigarette sales, cigarette excise, and sales tax revenue. In addition to that, there would be those other tobacco products you'd lose revenue on. And in addition to that, you also, you know, the value of a retail space is a function of how attractive it is to, as a retail space. And if you, you know, the rules change, that will diminish to some degree. And property taxes will be affected by that. In addition, income tax, you know, is a store sale. More people start shopping across the border of, say, retail staff are going to learn less revenue and you'll get less income tax revenue. So you have those tertiary effects as well. But I estimated under, if you hadn't, if you hadn't, if people refused to go to the non-flavored brands, you'd lose about $20 million a year. And then sort of the opposite of the case, we'd have about half switch over. It's about $10 million a year. So they're substantial, the amount of revenue you're likely to lose in just sales and excise tax revenue from a dam like this. And I modeled this. I used the assumptions that your fiscal office in the Department of Taxation has calculated. So I just used their estimates of the flows in this direction. So, you know, just a simple model. Those, they could replicate if they wanted to. Well, we had joint fiscal, let's have a fiscal note. I know we had, for the claimant dates, they were at $5.5 million. That wasn't everything else. Right, which is, I mean, cigarette, now you've seen the market with more cigarettes. And these others are relatively small shares. So you're likely to have a much larger effect when you do all products, not just, you know, vapes, it's a relatively very small portion of the market. And about 17% of cigarettes sold in the state currently are flavored. And then, for the other things like chewing tobacco and things like those, those are much higher. You know, those are 80 or 90% flavored. So you have to, you know, so it's kind of a complicated analysis. But I found significant revenue losses as a result of the, and again, it's just dynamic you have to think about of losing sales in New York and Massachusetts and then, because those shoppers don't want to come in and then increasing border activity going into New Hampshire. But you got, you're well familiar with this dynamic. Oh yeah. Yeah, I know. I work a lot on this issue, so. Okay. So does your analysis differ than what our joint fiscal? I just, I used the, like, yeah, some chart. I just started to come to this. Well, they put out, that's numbers. They put out a paper in 2017 where they estimated, they talk about, you know, they give the percentages. They say in their, you know, they give the negatives of the border flows. So I just use those estimates to create my own little model and then did the other. Yeah. So they would, they did it, they would come up basically identically. We have a fiscal note. Okay. Great. I was just trying to get a sense. We're getting new information. Oh, I thought it was good. We originally got a 5.5 million for the flavored vapes. Okay. And then. Who's that matching? This is everything. Right. It's a much broader field than just the vapes, which is where we started out. The joint fiscal note that we have now is a 2020 note. I mean, he's indicated that he's made his calculations on the basis of something that JFO put out in 2017. It was a length of your background. Right. Yeah. And I just passed him a copy of the current JFO document. So I'd like to add one thing. My analysis assumes there's no increase in smuggling in this state. That's a big problem that you should take into consideration because that's really, like, you think, well, smuggling, that can't be that big of a deal, right? In New York state, they lose about 70% of their cigarette sales to illicit, to, you know, basically people trucking cigarettes up from Virginia and selling them with counterfeit stamps and things like that. So that's enough. My analysis did not take that into account. Currently, I guess it's estimated you lose around 5%. My guess is that will go up markedly if you can take a big flavor ban. Because you're asking people who have smoked cigarettes for maybe 50 years to either switch to a different brand that they've just led a non-interest in or come up with another source. OK. We're going to, we've got, we're moving right along here. But I think you're saying we could, and I believe the state of Virginia got fined or convicted for sending cigarettes to New York City. About three, they sell out three times more per, well, it'll be about six times more per capita than New York. So those flows are there. OK. Right, thank you. All right. OK. Ken Elliott. Welcome. It's not welcome back here. Thank you, Senator Cummings and members of the committee. I appreciate the opportunity to be here. My name's Ken Elliott. I represent the vapor technology association. And I think it's important for me to tell you who we are and who we're not. Senator Cummings has heard me say a couple of times. Vapor technology association represents retailers, manufacturers, wholesalers of a small to medium size feature predominantly in the United States. We're not big tobacco is not members of our association and jewels not a member of our association. So I'm here to suggest that banning flavors would not only not prevent youth usage, but also harm adults at cost of the state. As discussed, you've already had raising the purchase age of 21 and instituted a 92% sales tax, wholesale tax on these products, all designed with preventing youth usage in mind. The question was asked earlier, legislative council about do we know the impact of that? I don't think you do fully know the impact of what that's doing to youth usage. But what we do know is that from the division of liquor control that they have a 95% compliance rate, I think the gentleman testified in the health committee that that was the single largest jump in the shortest period of time that they'd ever seen in compliance for these kinds of products. I have their statement from February that I'm glad to share with the committee relating to that. So it suggests that there is some evidence that that's not only preventing young people from walking in a retail location and buying these products, but also helping stop the flow of older people from buying them and selling to kids. Second, and more to exactly what you're interested in is the economic impact of this. There are about 288 jobs associated with this category of products, vaping products specifically here in the state of Vermont. There's a total economic input, an output of about $34 million. And we estimate a total state and local tax revenue of $3.6 million. I'm glad to share with you the analysis, and we shared the numbers that we had come up with, although we thought the banning of flavors would do to the general fund in terms of $3 million. And Graham actually wrote back that that $3.6 million across all taxes sounds pretty close because the $3 million that Tom gave does not include the sales and use tax for localities or local options. And so I have that statement. I also have our, there's two pages here, our economic analysis of what we came up with and what it means in terms of jobs and the sort of things that I'm glad to share with you. And the reason why I say that I don't think that banning of flavors actually prevents youth usages is because there's actually for some Vermont-specific data that helps us understand what's going on behind this. And what we know is that 92% of kids use some sort of closed pod-based system. I think the reference earlier was that those pods have been banned. That ban actually went into effect on February the 6th of this year. So those flavored pods for pod-based systems that overwhelmingly are used by kids in the state of Vermont are no longer available in the United States. There's a separate process that was referenced called the PMTA pre-market-to-back application process, which the deadline for is May 12th of this year. In that process, if you have not submitted a PMTA application regardless of whether it's a closed system or an open system or disposable product, if you've not submitted a PMTA application as of May 12th, you're illegal for use in this market. So you have to have submitted an application to be legal on the shelves in the state of Vermont. So what I'm suggesting is that number one, the ban doesn't really affect the youth usage because those products have already been banned from the market. And the second thing that we know is that over 90% of youth access this product through social sources, meaning they get it through somebody who's already bought it and sold it to them. Your T-21 law is designed to cut off that flow because more likely a kid knows somebody that's 18 or 19 and they can use T-21 to buy a form. And we know that 90% of kids try these products for some reason other than flavors. And that's from the Vermont survey. 10% said they tried the product because of flavors. 90% said they tried it for some other reason, most of which is curiosity or peer pressure. So banning flavors doesn't shut off any of that, doesn't control any of that. So that's why we were in favor of some other measures designed to get it out and talk to them. I have a health committee. I'm glad to talk about some of those things. And finally, you have a medical marijuana law in place that allows for edible products. You can buy cookies with this product. And you figure it out a way to make those products available for adults while keeping the night out ahead into kids. I would submit that we can work together and find a more meaningful way that does that without banning flavors that are overwhelmingly used by adult-tentable systems. So thank you, Senator. I'm glad to take any questions. Thank you. Thank you. Sean Bartlett. This is one of the most spacious rooms in the building. So this isn't my professional thing that you've got to tell me. But my name is Sean Bartlett. I'm an operation manager for Jolli Community Stores. I've been in this industry 40 years, actually 45, because I was working at AP. I'm one of them. I'm one of them. Boy, that's what I am. I'm on the down-earth of his head. I call myself a blue-collar-white-collar worker. The company I work for, Jolli Associates, is also from our company. They're owned by two people. No stock, older, nothing. Here we are at this table. I've been at this table a few times in the past about smoking legislation and different things and prices, but I just feel somebody's got to be here. So that's why I'm here. I appreciate your time. I'm a very passionate person. I'm just crossing my voice. That's just me. No offense if I offended anybody here. No, that's fine. This is open form. I'm here to discuss the actions possibly related to flavored tobacco products. Not to also hear that smokeless tobacco, such as sold, drizzly, you know, TP, like cigars, other things. I guess we're here. And the reason I hope I'm right if we all agree just quick, because only in five minutes. Because we're trying to keep these items from kids. Is that kind of true here? Is that the consensus? So, because I was going to ask each of you to be able to move on. So with that being said, keeping against kids, I'm all for it. I'm not a smoker, but I'm just like, no, I'm a grandfather now, so I'm happy I have three kids. So with that being said, there is the House in the federal government already passed and are looking into some things of this nature. So just like I felt, the government did a very good job in the VAPES. You know, they looked at it. It was a child issue, they believed. It was getting abused or whatever. And they're fascinated by the technology which most kids are. The products we're talking about, you know, and I think the federal government, we raised age to 21. They did a way to look for the flavors. I think we addressed that with the youth and stuff. And the mandate of 21 is the other reason I'm here. I thought for years, guys, it should be 21. And I'm in the industry. I thought 18, 21, why not? Because it was a revenue source in general. But I'm glad we did do that personally. I'm in that business, but I believe in that. But that being said, 21 is 21. And that showed we're not targeting youth. We're not targeting kids in high schools or anything. If people aren't getting this product, they're getting it in so much way, immediately. And it could be black market downroader or some adult buying it for them. Noncompliance rates, which our company in general, I advise noncompliance rates for alcohol and tobacco. I'm very proud of that. The state works great with me. We have meetings every month at different locations. And it's been a great relationship working together like I believe the government should be. So that's been great. I'm sorry, I'm a little over here. But why are we targeting these products is my question. It's about children keeping away. I think we've addressed that. I think the federal government's addressed that. I think the 21's addressed that. I think we go around and do things to stay. And we're really trying to, retailers here really do care. We have POS systems that read our stuff. I mean, I think we go above and beyond. And it's been, none of us want to go up there to sell tickets. We're not selling tickets in general. Why would the state want to lose its tax revenue? I don't understand. These times that we want to have revenue to start new programs, help people out. Times are tough with what's going on right now in today's world. Why is this the time to look at this? Now, if it was all for health, there would be one thing. I think I can say from the point of view of the health department and the advocates, there was some pretty compelling evidence that smoking is not good for you. It has health problems. That's the motivation behind it. And this is a strong statement. A lot of people don't want to hear that. Then why don't we just make it illegal today? But we can't talk out of both sides. And the other thing is that in my past, when I've been here, they talk about people to have it. It's not fair. Gold is low income. They could go against race or greed or color, whatever you are. And it's not right to target people that have been doing this for years. There's a lot of education out there. As far as the kids would use it, and the cigars, and the OTP, and I just want to give you a few statistics. Jolly Loom, other company that I work for. Menthol Cigarettes. We attack menthol cigarettes. In the state of Vermont, just what we lose on excise tax and loan, we lose $429,361.24, based on my sales. Sales tax of $80,431.06. That's just the menthol, so that's a half a million dollars. Smallest tobacco, which is your grizzly, your choosing act, right? I alone will lose four. The state loan will use fours, $173,600.84. And the sales tax on that, $76,551.19. On OTP, cigars, and all this, you will lose $190,906.32, with a sales tax of $1,166,000. I'm sorry about that. $16,655. The e-sig, since we changed the tax just in the last six months, lost $470,882.38 in the sales tax of $39,882.75. And like I said, the e-sig thing, it's been dealt with. It's there, the feds are on, I think. I want to tell you a little more statistics. In our business, my business is 15% methyl out there, okay? So that's 15% methyl. In my business, smokeless, 81% of all the seals we've had are smokeless tobacco. And these statistics are just based on the flavors, guys. These have nothing to do with the other products I sell. That's how much I lose just by doing this flavor here. And if you'd like, I have copies for you folks. So both of your sales is on things like flavored chew? 55% of my tobacco sales are flavored. 81% of my skull sales are that. 15% of my menthol are that. Okay. Right? So total tax generated our company alone was $1,778,232.53 that we lose. And we've already lost a lot just from last year. And I understand the vague part of it, but do not target these products that have been out there. And the other thing I'd like to bring up, and I can pass those out for anybody who wants to. Sorry, guys. I'm trying to hurry with my time. Here's all my data back up. Oh, I can't. I can't. Here's the other thing. I think we're going down a slippery slope. And what I'm saying by that is, you know, I lost my notes, but I don't need them anymore. So I think we're going down a slippery slope. I really do. Why are we targeting a specific category that's legal for 21 years of age and older? That's adults folks. That's adults. That's why I made that broad statement. All right, if we're doing that, beer, which I love the cracker, which I love, I'm going to let you do it. But I'm doing it for a reason. Right here, we have maple nipple. We have cocoa. We have passion fruit. We have cream malt. We have graham cracker. I assume you still sell Boone's Farm? Ah, brilliant. That's what I was saying. That was a big concern. So listen, traffic, traffic is traffic. That's our industry. We're the number one and number two in traffic beer thing. Do we want it? But if we're saying this is because of youth, how can we say it at the same time in the mouth of this? On top of it's cannabis. What's going on with cannabis in the future? Right? Is it going to be apples? Is it going to be gummy? How is that enough? So you know why? Because it's a 21 and it's responsible and it's an adult. Here's some other pictures. Thank you. We've got maple whiskey. Hmm, maple industry. Peach. Peach, you know. I just got different vacas. Yeah. And thank you. So I just brought those. It does just make the point. I think everybody's trying to be responsible. I understand the kid thing. I don't want kids doing this. But if we go down here and target different categories that are legal, I think it's a wrong thing. I think it's a slippery slope where you can pick and choose between different categories. I just think it's a wrong thing. I just want to make one other statement. Based on these sales, if this continues and stuff, we already put off over two million dollars in projects because I told the younger I can't afford it. My job is to keep people employed. My company, Health Insurance, they don't pay nine and a half percent of their health insurance. I have 401k plans, 50 cents on a dollar. I'm going to have to, in Vermont, we have 38, overall, 45 stores over my 38. I seriously believe I'm going to have to use it. This is on the fence. One full-time employee per store. And that's real. I also already have put off two renovations and that's the truth. I'm trying to go in there, I think, ahead. I guess that's it. I've got to be strict. But I appreciate your time, but, I mean, this is not the time. And like I said, the federal is already working on this stuff. You know, there's nothing to cover before that works. I appreciate kids. I appreciate safety. I appreciate you guys putting in time to be here this year. But we are not following 21 years. The people can't make the decisions, and folks, you know, we need the other help. But thank you for your time. Appreciate it. Thank you. Those are good photographs. You might have another career. Yeah. Okay. Casey Harrington. Oh, no. Thank you. Welcome. Thank you. Thank you. I'm Casey Harrington. I'm the owner of the Beverage Fair in the Bury right here in Central Vermont. We employ about 20 full-time employees. And I agree with basically just about everything that Don said and the other people here. We're independent. We don't have the stars that Jolly does. But being here in Central Vermont, the one thing that I'd like to talk... No, we're just getting our next witnesses on the phone. The one thing that I'd really like to bring to the attention of people is New Hampshire sales. Central Vermont, you don't think it's a border town, but Woodsville, New Hampshire is 30 miles away. And if you go through that Super Bowl matter on a Saturday, three-quarters of the vehicles there are Vermont plates. They're getting their booze there. They're getting their cigarettes. They're doing a lot of shopping there. And this is one more reason for them to go. I mean, you get a case of soda. There's no deposit. So, I mean, it's just one more thing to drive people into New Hampshire. Per capita, they have the most smokers. They sell the most cigarettes per capita out of any state. And it's not because everybody in New Hampshire is smoking. It's because there's an influx. Probably do with that with alcohol, too. Excuse me? I said they probably do that with alcohol. Yeah, that statistic falls true with alcohol, too. So this is just one more reason for them to go. And I truly believe it's not going to hurt people from smoking. I'm open for any questions. Any questions from the committee? All right, thank you. Thank you very much. Okay, our next witness is on the phone. And I don't know if Graham will get here in time. Hi, Frank. We have his written estimates. Hi, Frank. Yes, hi, Mark. Frank, this is Senator Incomings. You are with the Senate Finance Committee and a room full of interested folks. And we just ask you to introduce yourself, who you represent, and the floor is yours. And we're asking you to kind of hold your testimony to around five minutes. Great. Well, thank you for the opportunity to talk with you by phone today. So I'm Frank Shulka. I'm a distinguished professor of public health and economics at the University of Illinois in Chicago. Much of that time doing research and economics of tobacco and tobacco control. So looking at the impact of taxes and prices and tobacco control policies on adult tobaccos. But then also looking at some of the broader economic impacts as a result of those types of policies. So what I want to talk a little bit about is today is some of the work of my colleagues. And I am looking at the impact of which I know you are considering there for months. What the potential impact would be on tax revenues and what some of the other economic effects might be. So I'm part of a project that's called the International Situation Study. This is a project where we do surveys with smokers in countries around the world. Including the U.S. and Canada and 27 other countries at this point. Looking at how tobacco control policies are implemented and what impact they have on tobacco use and what some of the other effects are. The policies in terms of flavor bands are well researched in this area. It's just starting to undermine things from the experience which will actually be presented this week at a conference called the Annual Beings of the Society for Research on Negative Teens in Tobacco. So in Canada they started out with provincial level policies a few years ago and then in 2017 adopted a national policy. And as part of this ITC project we surveyed smokers before and after the policy went into effect and then we can start to look at what impact it had on smoking behaviors to see how people quit to respond to the policy or how their consumption patterns changed for example. So what we found in Canada when they implemented this policy was that it did have a real public health impact in terms of smokers to quit. It created a risk that they would have otherwise. So smokers of menthol cigarettes for example ended up twice as likely to successfully quit smoking for at least six months compared to its gotten from menthol smokers before and after this policy was implemented. The other thing that we're able to see is how this impacted those who continue to smoke from what we see there is that many of the menthol smokers ended up switching to non-menthol cigarettes in certain years. It would be a key thing in trying to understand what the potential impact is on tax revenues. So it provided a written testimony that walks through some of the findings that we have from the survey data talking about smoking behavior and then using these results to try to estimate what the likely impact would be on tax revenues in Vermont. So what we found was that about 55% of the menthol smokers ended up switching from menthol cigarettes to non-menthol cigarettes in response to the flavor ban. What we found was that some of the others switched over products which were bathing products for example that were non-menthol some switched to a combination of bathing products and non-menthol cigarettes. What I did was to use that estimate combined with an estimate of the impact on quitting smoking to see what the potential effects on revenues were. So what I had to do for Vermont based on some data that I have that looks at how many smokers are menthol smokers how many smokers are non-menthol smokers that come from the faculty supplements in the current population survey I used some of the same data that the state's been using to look at the proportion of cigarette sales for example in our menthol cigarettes to come up with the rough estimate of how much cigarette response to this proposed flavor ban. What I estimated there would be about a 3.4% reduction in cigarette sales so given 4.6 million dollars in tax revenues so I went on and tried to look at what the impact would be on tax revenues from other tobacco product sales and the illiquid taxes and make it a bit more difficult around the detailed data available on those but again using some of the state's estimates about the share it could be between 20% and 40% of cigarette sales and then making the same assumptions about distribution from flavor products to non-flavored products I estimated there to be about somewhere between a 1.1 to 2.2 million dollar reduction in tax revenues for the taxes on other tobacco products and the illiquid taxes so putting those two together I can see about a 5.7 to 6.8 million dollar reduction in revenues and I think this is going to be anything an overestimate because it doesn't account for some of the other substitution that I talked about to other tax tobacco products but smokers or users of flavor tobacco products it also doesn't account for some of the relapses you might see among smokers that quit tobacco products which end up being that they'll send that money and other goods and services that also generate tax revenue so you'll see some offsets with increases in tax revenue and elsewhere I know they don't have much time but the other key point that I want to make is that there are likely to be some smokers, some flavored that do try to avoid the policy but it's not going to be an off-off that's the public health impact to lead to larger revenue losses and you can see that just looking at some of your experiences in the past with tobacco tax increases were the same arguments were being made and I think the other key point is in terms of its broader economic impact I think the key thing here is that again if people aren't buying tobacco products that were flavored with some policy that money doesn't just disappear from the economy it's going to generate other goods and services and that's going to create jobs with lots of potential losses tobacco sector and moreover when we look at these experiences particularly around convenience store business and the research that we've done in the past we see that tobacco control policies are almost certain to occur in response to this policy so again some more details in the written testimony if people have questions I'm happy to answer any comments I know we heard in health and welfare that Canada had banned menthol cigarettes and no one knew the results so it's helpful to know that someone does know the results but did Canada ban all flavors tobacco products? yes, but they haven't gone as far as what you're proposing here in terms of banning flavored e-lips for example and that is part of what we saw in the Canadian experience where there was some substitution actually very little I think about two and a half percent of smokers that did switch to then flavored vaping products as a result of the policy but we also saw some that switched to non menthol or non flavored vaping products as well okay committee, any questions? that's very helpful, thank you it's helpful, thank you very much thank you very much okay, thank you okay Graham he was kind of in the same ballpark yes they do not need more the public space did you just not spit I don't know but I've got cameras coming in so we're going to stick with cigarettes okay I'm going to ask you not to come in yet because I've got a full house do I don't want to catch anything that's in this room that's right okay so Graham how much money are you going to lose from the joint fiscal office I'm here to present a distal note and also some supplemental information I think the committee has on my revenue estimates for S288 which would be an act of banning flavored tobacco products to be liquid and so I'll just get rid of the punch here we estimate that this would result in a direct revenue loss of 5.45 million dollars I'll just move to year 21 about 4.76 of this would be to the general fund from reduced cigarette and tobacco tax revenues and an additional 690,000 to the education fund from reduced sales and used tax revenues and this is estimated to decline slightly over time as public health initiative slowly a little away at cigarette tax revenues and that's what Tom Tibet has laid out in his forecast so I can get more detail on the estimate or I can go into how that's broken out by type of tobacco if that's all the pool committee I don't know if you have a quick question so is that everything that these members have to do with the tobacco the chew everything the other tobacco products the chews, divs, stuff like that and then flavored cigarettes which means mental cigarettes or e-cigarettes does this include what we get is that there's some kind of federal match or something like that because at one point I heard larger numbers that was in something I believe Senator Kitchell was concerned because we did away with the tobacco fund when we were it used to be dedicated to Medicaid it isn't now because as part of that having to prove to Wall Street that all our money was available it all goes to the general fund but Senator Kitchell says this is what they use for federal match these dollars this estimate does not include any federal match because the abolition of the state health resources fund last year means that any cigarette revenues essentially go into the general pool of dollars for the general fund I don't know to what extent those dollars actually line up with Medicaid dollars so we do not include that match and so I want to emphasize on this estimate that a lot of it depends on the actual quit rate so to what extent quit using these products upon banning them and I just want to highlight that there is some literature academic literature and survey data on this but even a small amount of difference in the quit rate could lead to a significant change in the revenue loss so for instance for the flavored cigarettes for menthol cigarettes I think I have a quit rate of just over 35% if you change that by 10% then you're talking an additional one and a half million dollars of revenue loss so it really swings the revenue these are our best estimates myself and Tonka vet after looking at these so I just would highlight that as part of this estimate and then switching over to this sheet you can see how this is broken down so the vast majority of this revenue loss comes from the sales of menthol cigarettes that would be banned so up to 4.7 6 million dollars that would be lost to the general fund 5.6 comes from menthol cigarettes and we haven't had enough time because we banned May 21 for e-cigarettes we haven't had a year's worth we haven't had a year's worth okay we can't do that from the floor but we don't know what that loss would have been we'll lose it but New Hampshire is close and there is so it's but it's in that 4 to 5 million dollar category I can't quite remember what the revenue loss for tobacco 21 was I can say that in this estimate in that the relative because there's obviously some we had to assume compliance rates under the tobacco 21 we carried those over to this estimate so even though we don't have full information I don't know to be honest whether we would ever have information on Vermont specific tobacco 21 users we also banned online purchases but we will probably never know how successful that was we carried the same compliance rate over for under 21 across all tobacco basic products for the electronic cigarettes you passed last year in the 92% wholesale tax on that we know that we are collecting roughly $3 million a year from that tax and that is built in this estimate and that was on an estimate last year of $850,000 so we are collecting significant more revenue from that tax that I did because this is good and bad no we are going to lose it we will lose it for sure but yeah okay and there's a loophole in the federal law I believe that this closes which is they have banned flavored vapes other than that ball from the production but there are disposable one time use things they haven't banned and I think those would still be available this estimate builds in the fact that that happened in January but that directed from the federal government came down I didn't change the recommendations that much okay so this bill does or doesn't include banning the one timers it does, it bans everything everything that is not tobacco flavor and the argument in health and welfare is this is a public health issue the counter argument is traditionally we have worked at stopping youth from starting smoking because it's like drinking earlier you start the more likely you are to be addicted and have a harder time and I think are we down to 3% or 7% 7% youth smoking so we've been very successful there the five million is also about the budget for the health department's prevention programs I think one of the things we've been seeing from the comments in the bill the cancer society and the art association I don't have any of those documents by file I don't see any fast out we've done in the mailbox that's because I said we were not taking health tests but in terms of usage and the whole issue of youth what we're talking about in the documents was that there had been a swing statistically in the use of menthol products for example among youth and that's what they were changing and that has obviously got to be relevant to the issue of taxation if there's a switch from one product to another that has to have a tax impact on the way the other I don't know the extent to which you were able to use any of the materials that the proponents have been circulating for quite some time in your analysis and I really have no question yeah I think what you're talking about is roughly like the quit rate we ban menthol cigarettes they move someplace else and so we spoke to the advocates and we also read several studies on this we came up for the cigarette of a quit rate of roughly just over a third so what that means is that those people with a third of the current menthol user we just quit flat out so that's your loss of memory the other 70 or 75% would go to other cigarettes or another tobacco product possibly so we've got cannabis out there and I understand we also have hemp cigarettes which I'm trying to get the bill so I tax right so there are substitutes available and so that's the most difficult part of the assessment is trying to make that specific factor so the research that I had seen was roughly about a third of the menthol cigarettes and a little bit less than the other types but some of the research also depended upon the jurisdiction so I read a paper in New York New York City banned flavored cigarettes that the revenue just dropped off so most people just quit straight up so like I said a 10% change in the quit rate can lead to a swing of a couple million dollars so this is our best guess at this point that's all we can do how do you account for people that just go out of the city by their nearest cities don't ever try to buy booze or beer in the store if you're out buying a drink and that is well understood I would guess the study itself was a survey of menthol cigarette users in the city and they reported the quits so it wasn't as a revenue I don't believe it was this one but again those are surveys that's where the Virginia cigarettes were getting sure but I think generally the estimate of around a third is I wouldn't say it's just me picking a number there are more than one study that showed a third and that was information also that was being related to me going from the advocates who have looked at this issue quite a bit I wouldn't say it's completely out of the ordinary the other thing to remember here is that Vermont for menthol cigarettes it's not prevalent because the users of menthol cigarettes tend to be younger and they tend to be more ethnically diverse so Vermont is a relatively Caucasian state that's older so our rates of menthol cigarette usage okay thank you is there any breakdown of these numbers for proposals other than other than the ban so if you hypothetically said we didn't want ban flavored e-cigarettes what you would do is take this sheet and just subtract the e-cigarettes line from the totals so that's why I produced these numbers you can see this broken out by various categories so if you wanted to go in much more detail it would be a completely different estimate but this is how we built our estimates looking at these three three legs of the school of tobacco taxes that we received and so if you decided not to ban one of or leave flavors in for one of these that would be that would reduce the left revenue loss and this all started we've been taxing tobacco as high as we dare for years I would point this committee to put a tax on babes that got beat up a year before it got passed um we've been working in taxing tobacco to discourage youth smoking quite successful at that and then babes hit the market and they were cool and they were new and they tasted like you know cherry or whatever and there was this huge uptick and when we started with this bill it was banning babes flavored babes um that I believe included menthol and it was um closing the federal loophole with because the feds are banning flavors but this did the bit quick thing the one time disposable and in the committee it got expanded to everyone and everything based on its good public health policy to me and some of the others that got out voted it's also a matter of personal freedom or choice and we know the revenues but I think that's what we've got to think about we've got another week before this has to come out and if you want we can get the health testimony in here um I've tried to keep this as focused on the revenue impact really our jurisdiction so that's it we are 15 minutes over