The Government announced today it will change the law to legalise the sale of nicotine e-cigarettes. Products will be legally sold at some point next year.
The change is a big win for the e-cigarette industry – its products won’t be in plain packaging, nor will the hefty taxes on normal tobacco be applied.
My submission to the New Zealand consultation is here.
My argument, in summary, below.
The New Zealand government recently announced a public consultation into the regulation of electronic cigarettes. The over-arching policy objectives are:
- The reduction of harm from tobacco smoking
- The prevention of harm from electronic cigarettes
- Product safety
To that end the New Zealand government is looking to introduce regulation that will meet those objectives while providing a regulatory framework that is currently lacking in the area.
This submission addresses the policy objectives and makes recommendations for a regulatory framework that targets nicotine consumption more generally where cigarettes, e-cigarettes, nicotine gum, nicotine patches, nicotine lozenges, and the like are all seen as delivery mechanisms or alternate technologies to facilitate nicotine consumption.
Implicit within the consultation document is the notion of “good nicotine” and “bad nicotine”. “Bad nicotine” apparently is sourced from the extant tobacco industry:
There are indications that tobacco industry involvement in the production and marketing of e-cigarettes has been increasing over the last few years. … A report on e-cigarettes to the sixth WHO FCTC Convention of Parties in 2014 included observations and considerations of the role of the tobacco industry and expressed concern about their growing involvement.
By contrast, “good nicotine” comes from other sources:
On the other hand, the long-term use of small quantities of nicotine in approved nicotine replacement therapy (NRT) products (such as gum, patches or lozenges) is considered to be safe.
Policy should target harm and not industry. Nobody would ever express concern about the airline industry or automobile industry making its product safer – neither should the tobacco industry be criticised for making its product safer. Nowhere in the consultation document is there an explanation provided, or a logical argument advanced, as to why electronic cigarettes should be considered any different from any other nicotine delivery technology. It is simply assumed that electronic cigarettes are similar to combustible cigarettes and that they are dissimilar to gum, patches, or lozenges. The consultation document asserts:
It has been suggested that the availability of these products could undermine current tobacco control initiatives.
To the extent that almost anything is possible this statement is trivially true. Yet the existence of other nicotine delivery technologies has not undermined tobacco control. In fact, they are considered to be integral to tobacco control. What electronic cigarettes are likely to do, however, is undermine the tobacco control industry. Those individuals and institutions that earn their living from combatting “bad nicotine” or exist to combat “bad nicotine” while promoting “good nicotine” face technological disruption just as have the print media, the taxi industry, the accommodation industry, and so on. Incumbents resisting new innovation and technology is not rare nor unknown.
The important question, however, is the appropriate regulation of electronic cigarettes. Given the decline in disorder costs associated with electronic cigarettes relative to combustible cigarettes the trade – off between disorder costs and dictatorship costs is very different for the two products. Under the assumption that tobacco control exists to target the harm caused by combustible tobacco consumption and not to impose harm on the tobacco industry, it seems that the lower level of externalities and internalities associated with electronic cigarettes implies a much lower level of regulation for electronic cigarettes. Product safety features should be regulated consistent with other electronic devices.
Nicotine is a stimulant that is safe for consumption in small quantities. Public education campaigns warning individuals of excessive consumption of stimulants is warranted. So too an argument can be made for the prohibition of sale to minors. Nicotine should be taxed. The irony is that “bad nicotine” is very highly taxed, whereas some forms of “good nicotine” are subsidised via the health system. Government should develop a coherent policy framework to tax all nicotine on a similar basis. It may well be the case that combustible cigarettes be subject to Pigouvian taxation – but that argument does not apply (as much) to electronic cigarettes.
It isn’t clear, however, why there should be a legislative ban on location dependent consumption. Of course, there is nothing stopping private individuals or organisations from banning the use of electronic cigarettes on their private property. There is no ban on the use of nicotine gum or lozenges in private or public spaces and a similar argument can be made for electronic cigarettes. There is no basis for a branding ban. To the extent that government would want to promote electronic cigarettes over combustible cigarettes (given the reduced levels of harm), branding and advertising should be encouraged just as nicotine gum and lozenges are branded and advertised.
There can be no argument for graphic health warnings on electronic cigarettes. This would, in the first instance, constitute false and misleading advertising; the long – term consequences of electronic cigarettes are not fully known and any photographs used in the graphic warnings would have to relate to a different product, viz. combustible cigarettes. In any event other nicotine products do not have graphic health warnings associated with them.
Recommendations and Conclusion
Combustible cigarettes are being subject to technological disruption – with the effect of making nicotine consumption a lot safer than has been historically the case. In turn this implies that tobacco control policy is being disrupted and, more importantly, the tobacco control industry is being disrupted too. As such we can expect to observe attempts to regulate electronic cigarettes much like combustible cigarettes and not like other nicotine delivery technologies such as gum and lozenges.
To the extent that it is now widely accepted that the health risks associated with electronic cigarettes are much lower than combustible cigarettes it is clear that regulating the two products (delivery technologies) in a like manner would be inappropriate. This regulatory approach would not benefit nicotine consumers, nor contribute to government revenue, nor would it target harm. The only beneficiaries of such a regulatory approach would be to benefit the tobacco control industry – it would in effect be a subsidy to those individuals and organisation that earn a living or justify their existence from tobacco control activities.
The primary role of regulation should be to target harm. The disorder costs associated with nicotine consumption relate to asymmetric information and the various externalities and internalities that result from combustible cigarettes. The disorder costs associated with electronic cigarettes are lower than those associated with combustible cigarettes implying a different approach to regulation and a much lower level of regulation.
It is true that the long term consequences of electronic cigarettes are unknown. This does not justify the so – called precautionary principle. The long term consequences of many new technologies is unknown or unclear. The important point, however, is that new technology could be either benign or malign. If government does feel the need to regulate electronic cigarettes in a similar fashion to combustible cigarettes then sunset clauses should be introduced to ensure that regulations are easily updated as new research becomes available.
At present minors cannot legally access nicotine products and there is no compelling case to modify that restriction. A ban on vending machines is consistent with that restriction. Nicotine delivery technologies should be regulated relative the harm they cause. Less harm should imply lower levels of regulation. More generally tobacco control should target harm and consumers, not provide industry subsidies to the control industry. Nicotine products should be taxed consistently and coherently according to the Ramsay principle with Pigouvian taxation applied in the event of externalities. Advertising and branding should be encouraged and there is no truthful case to be made for graphic health warnings.