Excise taxes and pricing activities of e-liquid products sold in online vape shops

MaS, etal. Tob Control 2022;0:1–8. doi:10.1136/tobaccocontrol-2021-057033

Excise taxes and pricing activities of e- liquid products

sold in online vapeshops

Shaoying Ma ,

Shuning Jiang,

Meng Ling,

Bo Lu,

Jian Chen,

Ce Shang

Original research

To cite: MaS, JiangS,

LingM, etal. Tob Control

Epub ahead of print: [please

include Day Month Year].

doi:10.1136/

tobaccocontrol-2021-057033

► Additional supplemental

material is published online

only. To view, please visit the

journal online (http:// dx. doi.

org/ 10. 1136/ tobaccocontrol-

2021- 057033).

Center for Tobacco Research,

The Ohio State University

Wexner Medical Center,

Columbus, Ohio, USA

Computer Science and

Engineering, The Ohio State

University, Columbus, Ohio, USA

College of Public Health

Division of Biostatistics,

The Ohio State University,

Columbus, Ohio, USA

Internal Medicine and Center

for Tobacco Research, The Ohio

State University Wexner Medical

Center, Columbus, Ohio, USA

Correspondence to

Dr Ce Shang, Internal Medicine

and Center for Tobacco

Research, The Ohio State

University Wexner Medical

Center, Columbus, OH 43210,

USA; ce. shang@ osumc. edu

Received 3 September 2021

Accepted 23 May 2022

employer(s)) 2022. Re- use

permitted under CC BY- NC. No

commercial re- use. See rights

and permissions. Published

by BMJ.

ABSTRACT

Background Although e- cigarette excise taxes have

great potential to prevent the initiation and escalation of

e- cigarette use, little information is available on pricing

activities of online vape shops, and how well taxation is

implemented during web- based sales remains unclear.

Objectives We examine e- liquid pricing activities

in popular online vape shops that sell nationwide in

the USA and present how those stores charge excise

taxes based on shipping addresses in states and local

jurisdictions that have e- cigarette taxation in place.

Methods We collect e- liquid sales prices from ﬁve

online vape shops using web data extraction, standardise

prices for e- liquid products, and present e- liquid price

distribution in the whole sample and in each store, as

well as variations of excise taxes across states/local

jurisdictions and between stores. The price data were

scraped from the store websites from February to May in

2021.

Results We collected data on 14 477 e- liquid products

from ﬁve stores. The average price of e- liquids is $0.25/

mL, and the median price is $0.20/mL in our sample.

E- liquid products sold online are very affordable and

the average prices are lower compared with price

estimates using other sources (eg, self- reports, sales

data). In addition, online stores charge state excise taxes

inconsistently and fail to comply with county- level or city-

level excise taxes.

Conclusion E- liquid products sold online are priced

low, and stricter enforcement of e- cigarette excise tax is

needed in online purchasing channels.

INTRODUCTION

Use of electronic nicotine delivery systems

(ENDS) products, often called electronic ciga-

rettes (e- cigarettes), increased significantly among

adolescents and young adults (AYAs) during the

past decade.

1 2

Increasing prices through taxation

is considered one of the most effective policy

tools to curb cigarette consumption and there-

fore has been increasingly adopted by states and

localities to regulate e- cigarette use.

3–8

As of May

2021, 28 states, the District of Columbia (DC)

and 9 local jurisdictions in the USA have imposed

excise taxes on e- cigarettes.

9–11

In light of this policy change, a growing

number of studies have estimated the impact

of e- cigarette taxes on a series of behavioural

outcomes, including cigarette smoking and e- cig-

arette use. However, these studies exclusively use

Nielsen Retail Scanner sales data gathered from

brick- and- mortar stores.

3 12–15

Despite being

an important source for e- cigarette prices and

sales, Nielsen Retail Scanner data do not capture

products sold online or in vape shops, which

together accounted for about one- half of e- ciga-

rette sales in the USA during 2019.

Moreover, online stores and vape shops carry a

variety of brands that are not captured in Nielsen

Retail Scanner data, many of which are open- system

e- liquid products.

17–19

These products are generally

less expensive than cartridge- based systems and

disposables. Therefore, by not including price data

from online stores and vape shops, existing studies

may overestimate e- cigarette price levels and bias

the estimates of their impacts on behaviours, such

as the price elasticity of e- cigarette demand.

20 21

Compared with local vape shops, online stores

pose unique challenges to e- cigarette taxation

because it is unclear how these stores apply state and

local e- cigarette excise taxes during online transac-

tions. Further, online vaping stores are among the

most common outlets for e- cigarette purchases,

22–24

supplying 23% of current adult e- cigarette users

and 14%–16% of AYA e- cigarette users.

25–28

particular, due to the complexity of e- cigarette tax

structures (eg, specific excise taxes based on volume

or unit, and/or ad valorem excise taxes based on

WHAT IS ALREADY KNOWN ON THIS TOPIC

⇒ Twenty- three per cent of current adult e-

cigarette users and 14%–16% of youth and

young adult e- cigarette users in the USA

reported purchasing their products from online

stores.

WHAT THIS STUDY ADDS

⇒ A snapshot of prices and taxes of e- liquid

products sold in online stores.

⇒ The average price of over 14 000 e- liquid

products sold in ﬁve online stores was $0.25/

mL, and the average volume size per bottle was

68 mL.

⇒ The evidence suggests that online e- liquid

products are sold at a relatively low price, and

that tax compliance is inconsistent and low.

HOW THIS STUDY MIGHT AFFECT RESEARCH,

PRACTICE AND/OR POLICY

⇒ The choice of e- cigarette tax bases such as

existing state- level taxes based on wholesale

prices may leave room for retailers and

wholesalers to manipulate tax levels.

⇒ Policy innovations and compliance checks may

be needed to regulate products sold online.

⇒ Future studies will beneﬁt from rapid

surveillance of the characteristics and sales of

e- cigarette products sold online.

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Original research

wholesale or retail prices),

9–11

online stores may have difficulty

complying with regulations.

In March of 2021, the Preventing All Cigarette Trafficking

(PACT) Act was amended by the Congress to include new regu-

lations on vaping products.

The amendment extends the PACT

Act’s age verification delivery requirements to e- cigarettes, bans

mailing vaping products via the US Postal Service, and requires

online sellers of vaping products to comply with state- level and

local- level e- cigarette excise taxes.

29 30

However, how well online

sales outlets comply with this regulation is unclear.

Web data extraction presents a unique opportunity to comple-

ment e- cigarette price data collected from brick- and- mortar

stores. There are numerous brands of e- cigarettes sold online

and in vape shops that are not captured in Nielsen Retail Scanner

data.

17–19

Although researchers can evaluate the price distribu-

tion of e- cigarettes using self- reported survey data, the price

estimates are susceptible to measurement errors for a variety of

reasons.

First, unlike conventional cigarettes that are sold in

packs of 20 sticks, e- cigarettes come in a variety of pack sizes

and volumes. It is challenging for respondents to accurately

report the pack or volume size for the products they purchased.

Second, there are many different models of e- cigarettes such as

disposables, rechargeables, pods, cartridges, etc. It is challenging

for users of multiple e- cigarette models to accurately report the

prices of each model they own. These data reporting challenges

also arise when evaluating the association between marijuana

prices and demand, because the market has a similarly large

number of product forms/models and brands.

31 32

In a study that

assesses the data quality of marijuana prices, the authors suggest

using web data extraction instead of self- reported prices to accu-

rately estimate the price distribution.

To address this data limitation, evaluate the price difference by

purchase sources, and understand how online stores comply with

state and local e- cigarette excise taxes, this study collects price

data of e- liquid products sold online and documents how online

vape shops charge e- liquid excise taxes, using web scraping.

To the best of our knowledge, our study is the first to present

price distribution, price variability and tax collection of e- liquid

products sold in online vape shops. As the number of states with

e- cigarette excise taxes in place has rapidly increased since 2018,

and as tax bases and rates vary across states, findings from our

study provide insights on effective taxation practices for regu-

lating e- cigarettes. Our study also presents timely evidence on

e- liquid tax compliance with the PACT Act by popular online

vape shops that sell nationwide in the USA.

METHODS

We collected data on e- liquid sales prices and excise taxes from

five popular online vape shops using web data extraction, and

standardised prices to dollar per millilitre to present the price

distribution of e- liquid products. We further documented how

these stores charge excise taxes to e- liquid consumers during

online transactions.

Online vape shops

We use stores 1–5 to describe the online vape shops in our sample,

for the purpose of masking store identities. The selection process

of online stores is detailed in the online supplemental appendix.

We scraped data from store 1 on 17 February 2021; we scraped

data from stores 2 and 4 on 7 April 2021; we obtained data from

store 5 on 4 May 2021; and we extracted data from store 3 on

20 May 2021. For information about store names and links to

websites, see online supplemental table A1.

Excise tax rates and bases on vaping products

The data sources for excise tax rates and bases on e- cigarettes

in 28 states and DC were the Centers for Disease Control and

Prevention and the Public Health Law Center.

9 10

We obtained

information on e- cigarette taxation in nine local jurisdictions

in the USA from Taxation of Emerging Tobacco Products.

of May 2021, there were 38 jurisdictions in the USA that had

an e- cigarette excise tax in place, and most of them imposed

excise taxes on e- liquid products either based on product

volume (mL) or product value (either wholesale or retail price).

Specifically, Chicago imposed excise tax on e- liquid products

at a rate of $1.50 per product unit, plus $1.20/mL of liquid;

Omaha in Nebraska included e- liquid products in the city’s

3% tobacco tax; Delaware, Kansas, Louisiana, New Jersey,

North Carolina, Ohio, Utah, Virginia, Washington, West

Virginia, Wisconsin and Cook County in Illinois imposed excise

taxes on e- liquid products based on volume (mL); California,

Connecticut, Georgia, Illinois, Maine, Massachusetts, Minne-

sota, New Hampshire, Nevada, Oregon, Vermont, Wyoming,

five boroughs in Alaska (Juneau, Northwest Arctic, Petersburg,

Anchorage and Matanuska- Susitna), and Montgomery County

in Maryland imposed excise taxes on e- liquid products based

on a fixed percentage of wholesale price; Colorado, Kentucky,

New Mexico, New York, Pennsylvania, Utah and Washington,

DC imposed excise taxes on e- liquid products based on a fixed

percentage of retail price.

Using addresses in each of the 28 states and DC, as well as the

nine local jurisdictions, we then collected e- liquid excise taxes

charged by the five online stores in our sample, both manually

and through web scraping. Specifically, we collected excise tax

data manually for store 1 between 10 May and 12 May 2021,

store 2 on 26 May 2021, store 3 on 29 June, store 4 on 12

August 2021, and store 5 on 19 July 2021. A research specialist

in our team first went to the website of an online vape shop in

our sample, then selected a specific e- liquid product, and then

entered addresses by hand on the checkout page of each store

website and documented the excise tax charged on that product

based on each shipping address, as shown on the store website.

All research personnel involved in data collection of e- liquid

excise taxes were above 21 years old, and thus were able to enter

each store website in our sample by clicking on the ‘yes’ button

for age verification that appeared on the home page.

While collecting tax data, research staff entered pseudo

personal information (including names, email addresses and

phone numbers) on the checkout webpage, along with pseudo

shipping addresses from each ENDS- taxing jurisdiction. We

used shipping addresses of universities for each of 28 states

and Chicago, and middle/high school addresses for DC and the

remaining eight local jurisdictions (including Juneau Borough,

Northwest Arctic Borough, Petersburg Borough, Anchorage

Borough and Matanuska- Susitna Borough in Alaska; Cook

County in Illinois; Montgomery County in Maryland; and

Omaha in Nebraska).

Excise tax information appeared on the checkout webpage

once the required information was entered, and the research

specialists took screenshots of the tax information. We further

verified the tax information using curated automatic extraction

aided by machine extraction, which essentially followed similar

steps to those in the manual collection. This double- coding

procedure ensures accuracy and consistency.

We chose similar e- liquid products to compare taxes across

stores and across different states and local jurisdictions. None-

theless, there were some variations in product volume and/or

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Original research

price across stores due to product availability and price vari-

ability. Specifically, we chose the following products for five

stores: Tobacco Gold No. 1 (120 mL, 6 mg) by Twist E- Liquids

at $21.95 for store 1, White No. 1 (120 mL, 6 mg) by Twist

E- Liquids at $21.99 for store 2, Tobacco Gold No. 1 (120 mL, 6

mg) by Twist E- Liquids at $16.99 for store 3, Strawberry Water-

melon Bubblegum (100 mL, 6 mg) by Candy King E- Liquid at

$13.99 for store 4, and Pink No. 1 E- Juice (120 mL, 3 mg) by

Twist E- Liquids at $18.99 for store 5. The product we chose for

store 1 and for store 3 was the same, but its price varied between

the two websites.

Standardised price measure

Using data on product price and volume for e- liquids sold in

five online vape shops, we standardised e- liquid price in the

following way:

Standardised price =

actual price of the product

total volume of the product

.Thus, the unit of standardised price is $/mL. We distinguished

actual price from original price for products with discounts or

on sale, and used actual price to calculate standardised price.

For products that have multiple bottles in a sales pack, we

distinguished between total volume per pack and volume per

bottle, and used total volume per pack as the denominator of

our standardised price measure. Total volume of each multi-

bottle product equals volume per bottle times its pack sizes (ie,

number of bottles in the product). Price data used in our analyses

are shared here: https://www.ce-shang.com/vape-shop-product-

information-collection.html.

RESULTS

In table 1, we present summary statistics of product price per

pack (in $), volume per pack (in mL), and standardised price

(in $/mL) for the whole sample (panel A) and by stores (panels

B–F). We scraped in total 14 477 e- liquid products from the five

stores, among which 9685 (66.90%) were in stock at the time

of scraping. After dropping 77 products with missing price or

volume information, we calculated standardised prices for 14

400 e- liquid products.

As shown in table 1, the number of e- liquid products sold in

each store ranged from 1649 to 4568. Panel A summarises the

average results across the five stores. The e- liquid price per pack

had a range of $0.49–$131.89, with an average price of $15.81.

The e- liquid volume per pack varied from 1.4 mL to 1000 mL,

with an average of 83.03 mL. The standardised price ranged

from $0.02 to $3.33, with an average of $0.25/mL.

Table 1 panels B–F show summary statistics for each of the

five stores. Store 4 (panel E) offers e- liquid product(s) at the

lowest price in our sample ($0.02/mL), whereas store 1 (panel

B) offers the most expensive e- liquid product(s) at $3.33/mL.

All five stores offer very cheap e- liquid options as demonstrated

by the minimum and maximum prices in each store. We observe

that four out of five stores had their lowest prices at or below

$0.05/mL and that the same number of stores had their highest

price below $1/mL.

We present the distribution of standardised price of e- liquid

products by store in box plots, as shown in figure 1. The median

of standardised price in each store varies from $0.17/mL to

$0.27/mL. Among the five stores, store 1 has the greatest price

variability. All five stores have right- skewed distributions of stan-

dardised prices, which means median price is lower than average

price in each store. Most of the e- liquid products in our data are

priced under $0.3/mL. Out of the 14 400 e- liquid products in

our sample, 10 609 (73.67%) of them are cheaper than $0.3/mL.

There are some differences in median price across stores, but

the differences are relatively small. Outside values are excluded

when plotting figure 1, but they are nonetheless included in the

analyses.

In table 2, we show 5%, 10%, 25%, 50%, 75%, 90% and

95% percentiles of standardised prices for the whole sample

and for each store. The distribution in general suggests that

prices are skewed to the low end—the difference between the 5

percentile and the 25 percentile standardised prices was merely

about $0.03–$0.05 per mL. In contrast, the difference between

the 75 percentile and 95 percentile standardised prices ranges

between $0.07 and $0.2. As shown in figure 1 and tables 1 and

2, e- liquids are very affordable, with plenty of price minimisa-

tion opportunities.

Table 1 Summary statistics

n Mean SD Minimum Maximum

Panel A: whole sample

Product price ($) 14 400 15.81 9.19 0.49 131.89

Volume (mL) 14 400 83.03 67.85 1.40 1000.00

Standardised price ($/mL) 14 400 0.25 0.14 0.02 3.33

Panel B: store 1

Product price ($) 1649 17.62 7.01 3.49 89.95

Volume (mL) 1649 66.97 33.83 1.40 300.00

Standardised price ($/mL) 1649 0.33 0.23 0.05 3.33

Panel C: store 2

Product price ($) 2803 15.06 2.13 7.99 23.99

Volume (mL) 2803 62.62 29.02 30.00 120.00

Standardised price ($/mL) 2803 0.29 0.13 0.11 0.67

Panel D: store 3

Product price ($) 4568 12.84 2.87 2.49 27.99

Volume (mL) 4568 75.47 31.72 10.00 200.00

Standardised price ($/mL) 4568 0.21 0.11 0.05 0.60

Panel E: store 4

Product price ($) 3512 20.29 16.05 0.49 131.89

Volume (mL) 3512 116.05 114.25 15.00 1000.00

Standardised price ($/mL) 3512 0.23 0.12 0.02 0.53

Panel F: store 5

Product price ($) 1868 14.17 5.54 5.99 74.99

Volume (mL) 1868 84.26 56.34 15.00 500.00

Standardised price ($/mL) 1868 0.22 0.12 0.05 0.57

Product price and volume are per sales pack and may contain one or more e- liquid bottles.

Figure 1 Price distribution by store (box plots).

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Original research

In addition to percentiles, table 2 also presents price variability

in the whole sample and in each store, using IQR to mean ratio.

Store 3 has the lowest IQR to mean ratio (0.48) and thus the

lowest price variability among the five stores, whereas store 4

has the greatest IQR to mean ratio (0.89) or price variability. The

IQR to mean ratio across the five stores was 0.92, suggesting that

the between- store price variation was greater than the within-

store price variation.

We present the distribution of standardised prices for the

whole sample and for each store using kernel density estimation,

as shown in figure 2. Based on figure 2 (1)–(6), there are outliers

in the sample, and they are mostly from store 1. We excluded

e- liquid products with standardised prices greater than $0.6/mL,

and plotted kernel density estimates again for the whole sample

and for store 1, in figure 2 (7)–(8). As shown in figure 2 (3)–(8),

the price distribution is rather similar across stores. Among the

14 400 e- liquid products in our sample, 132 of them are priced

higher than $0.6/mL, and 128 of those are in store 1.

In table 3, we present the results of e- liquid excise tax compli-

ance along with the effective dates of e- cigarette taxation in each

state/local jurisdiction. Due to product availability, we chose a

similar—but not the same—e- liquid product for store 2 rela-

tive to store 1 to check the e- liquid excise tax for each address.

Specifically, we chose White No. 1 by the same brand (Twist

E- Liquid) with the same volume and nicotine concentration and

a very close price ($21.99).

The results demonstrate the many challenges to imposing

excise taxes on e- liquids that are sold online. First, the rate of

e- liquid excise tax compliance is low, and only three out of five

stores charge e- liquid excise taxes at checkout. Second, among

stores that impose excise taxes on e- liquids, the accuracy of

excise tax amounts is low. For example, store 1 only charges

excise taxes correctly in 11 out of 28 states. Third, it is particu-

larly challenging for stores to appropriately charge excise taxes

on e- liquid products shipped to ENDS- taxing local jurisdictions.

None of the stores impose county or city excise taxes on e- liq-

uids, except for store 2 on e- liquids shipped to Montgomery

County in Maryland. Fourth, ad valorem excise taxes based on

wholesale prices could vary drastically by stores. For example,

for sales of similarly priced e- liquid products to states including

Illinois, Vermont, Nevada, New Hampshire, Maine, Massachu-

setts and Wyoming, store 1 charges excise taxes twice as high as

the excise taxes charged by store 2. In summary, online stores

do not impose e- liquid excise taxes accurately or consistently in

the market.

In addition, although standardising prices does not require

information on volume size per bottle or before- discount prices,

this information could be valuble for policymakers who are

interested in regulating e- liquid bottle sizes or price promotions.

Therefore, we present the frequency table of e- liquid volume per

bottle in online supplemental table A1. On average, the volume

size per bottle was 67.86 mL and the most frequent sizes were

30 mL (24.75%), 60 mL (38.33%), 100 mL (26.97%) and 120

mL (7.42%) per bottle. We further present distribution plots

of e- liquid volume per bottle by store in online supplemental

figures A1 and A2, and the before- discount price per pack in

online supplemental figures A3 and A4.

DISCUSSION AND CONCLUSION

The increase in e- cigarette popularity, especially among youth

and young adults, has raised public health concerns and

prompted many states and localities in the USA to impose

excise taxes on e- cigarettes. As a result, it is important to obtain

accurate measures of e- cigarette prices in order to estimate

the consequences of e- cigarette taxation policies. However, a

comprehensive dataset that captures the full spectrum of e- ciga-

rette prices is lacking.

17–19

Specifically, Nielsen Retail Scanner data—a major data source

for e- cigarette prices—are primarily collected from brick- and-

mortar stores, which does not capture e- cigarette products sold

in specialty vape shops or online stores. Alternatively, e- ciga-

rette price data measured using survey questionnaires contain

self- report errors and are likely biased due to consumers’ price

minimisation behaviours.

Furthermore, it is particularly chal-

lenging to measure e- liquid prices used in open systems, because

many brands are not captured either by survey or by Nielsen

data.

To address this data limitation, we scrape e- liquid product

information including prices and volume sizes from online

vape stores. Our study finds that the average price of e- liquid

products sold online is $0.25/mL, with an IQR of 0.23. This

price level is lower compared with e- liquid prices reported from

other sources. For example, Cheng et al examined the 2016

Table 2 Price distribution and variability, whole sample and by store

Panel A: percentiles

5% 10% 25% 50% 75% 90% 95%

Whole sample 0.10 0.12 0.14 0.20 0.37 0.43 0.50

Store 1 0.13 0.16 0.18 0.27 0.47 0.60 0.67

Store 2 0.15 0.16 0.18 0.25 0.43 0.50 0.50

Store 3 0.08 0.11 0.13 0.17 0.23 0.43 0.43

Store 4 0.10 0.12 0.13 0.18 0.33 0.43 0.43

Store 5 0.10 0.12 0.14 0.17 0.33 0.40 0.43

Panel B: IQR to mean ratios

IQR IQR to mean ratio

Whole sample 0.23 0.92

Store 1 0.28 0.85

Store 2 0.25 0.85

Store 3 0.10 0.48

Store 4 0.20 0.89

Store 5 0.19 0.87

Percentiles and IQR to mean ratios of standardised price ($/mL) are presented in this table.

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Original research

International Tobacco Control Project US data and estimated

the self- reported prices to be $0.91/mL.

Another study by

Wang et al used the Nielsen Retail Scanner data in 2016 and

estimated the price of one bottle of e- liquid to be $6.83 per

bottle (roughly $1/mL if the average volume size per bottle is 68

mL).

Although these price estimates are from previous years,

they are more than three times larger compared with the average

price we observe in online stores, suggesting that online stores

may supply consumers with low- priced products. This finding

highlights the importance of collecting and understanding price

data from sources other than brick- and- mortar stores, further

suggesting that studies can benefit from using price information

beyond the Nielsen Retail Scanner data to avoid potential biases

in price measures.

Our data collection further aids the survey questionnaire design

and analyses. Specifically, price estimation using self- reported

answers to survey questionnaires often contains measurement

errors. One common approach is to trim data points within

lowest and highest 1–5 percentiles.

Our results suggest that

low prices such as $0.02/mL (minimum price in our data) and

high prices such as $3.33/mL (maximum price in our data) are

plausible and therefore should not be trimmed. We also find that

volume sizes such as 30 mL, 60 mL, 100 mL and 120 mL are

the most common, so those values could replace the open- ended

question that has been used to elicit volume sizes in surveys.

We also present a snapshot of excise taxes charged by each

store for specific e- liquid products based on different shipping

addresses. As of May 2021, 28 states, DC, and 9 local jurisdic-

tions have had e- cigarette excise taxes in place, and the tax base,

as well as tax rate, greatly vary across jurisdictions. We show that

for shipping addresses in those states and local jurisdictions that

have e- cigarette taxation policies, excise taxes charged by online

vape shops lack accuracy and consistency for the same or similar

e- liquid products. E- cigarette tax structures that differ across

states and local jurisdictions make it somewhat difficult for

online store owners to calculate and charge e- liquid excise tax

correctly and stay compliant with taxation laws. As requirements

in the PACT Act amendment went into effect in March 2021,

we check the tax compliance of online vape shops during May–

August 2021, and find that two out of five stores (stores 4 and 5)

Distribution of e-liquid prices, whole sample Distribution of e-liquid prices, store 1

(1) (2)

Distribution of e-liquid prices, store 2 Distribution of e-liquid prices, store 3

(3) (4)

Distribution of e-liquid prices, store 4 Distribution of e-liquid prices, store 5

(5) (6)

Figure 2 Price distribution by store (kernel density estimates).

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Original research

Table 3 Effective dates of taxation and e- liquid excise taxes charged by stores

Jurisdiction

E- cigarette

excise tax

effective date

Excise tax on 120 mL e- liquid

(that is nicotine- containing)

sold at retail price of $21.95,

based on taxation policies as

of May 2021

E- liquid excise taxes charged by stores

Store 1

Tobacco Gold No. 1 by

Twist E- Liquid 120 mL

6 mg $21.95

Store 2

White No. 1 by

Twist E- Liquid

120 mL 6 mg

$21.99

Store 3

Tobacco Gold

No. 1 by Twist

E- Liquid 120

mL 6 mg

$16.99

Store 4

Strawberry

Watermelon

Bubblegum by

Candy King E-

Liquid 100 mL 6

mg $13.99

Store 5

Pink No.

1 E- Juice

by Twist

E- Liquid 120

mL 3 mg

$18.99

28 states, and DC

Minnesota 1 Aug 2010 95% of wholesale price $9.60 $10.45 $11.00 $0 $0

North Carolina 1 June 2015 $6.00 $6.00 $6.00 $0 $0 $0

Louisiana 1 July 2015 $6.00 $6.00 $6.00 N/A* $0 $0

West Virginia 1 July 2016 $9.00 $9.00 $9.00 $0 $0 $0

Pennsylvania 13 July 2016 $8.78 $8.78 $4.40 $11.40 $0 $0

California 1 Apr 2017 56.93% of wholesale price $5.75 $0.00 $0 $0 $0

Kansas 1 July 2017 $6.00 $6.00 $6.00 N/A* $0 $0

Delaware 1 Jan 2018 $6.00 $6.00 $6.00 N/A* $0 $0

New Jersey 30 Sep 2018 $2.20 $2.20* $2.20 $0 $0 N/A*

Illinois 1 July 2019 15% of wholesale price $3.29 $1.65 $0 $0 $0

New Mexico 1 July 2019 $2.74 $1.26 $1.38 N/A* $0 $0

Utah 1 July 2019 $12.29 N/A* $6.16 N/A* $0 N/A*

Vermont 1 July 2019 92% of wholesale price $20.19* $10.12 N/A* $0 N/A*

Wisconsin 5 July 2019 $6.00 $0 $0 $0 $0 $0

Connecticut 1 Oct 2019 10% of wholesale price $2.20 $1.10 $0 $0 $0

Washington 1 Oct 2019 $32.40 $10.80 $10.80 $0 $0 $0

Ohio 17 Oct 2019 $12.00 $12.00 $12.00 $18.00 $0 $0

New York 1 Dec 2019 $4.39 $4.39* $4.40 $0 $0 N/A*

Nevada 1 Jan 2020 30% of wholesale price $6.59 $3.30 N/A* $0 $0

New Hampshire 1 Jan 2020 8% of wholesale price $1.76 $0.88 N/A* $0 $0

Maine 2 Jan 2020 43% of wholesale price $9.44* $4.73 N/A* $0 N/A*

Massachusetts 1 June 2020 75% of wholesale price $16.46* $8.25 N/A* $0 N/A*

Virginia 1 July 2020 $7.92 $7.92 $7.92 $1.20† $0 $0

Wyoming 1 July 2020 15% of wholesale price $3.29 $1.65 N/A* $0 $0

Kentucky 1 Aug 2020 $3.29 $3.29 $1.65 $0 $0 $0

Colorado 1 Jan 2021 $6.59 $3.03 $3.30 $0 $0 $0

Georgia 1 Jan 2021 7% of wholesale price $0 $0.77 N/A* $0 N/A*

Oregon 1 Jan 2021 65% of wholesale price $6.57 $7.15 $0 $0 $0

DC 1 Oct 2015 91% of wholesale price $9.19 $10.12 N/A* $0 $0

9 local jurisdictions

Juneau Borough,

Alaska

1 Apr 2015 45% of wholesale price $0 $0 $0 $0 $0

Northwest Arctic

Borough, Alaska

N/A 45% of wholesale price $0 $0 $0 $0 $0

Petersburg Borough,

Alaska

N/A 45% of wholesale price $0 $0 $0 $0 $0

Anchorage Borough,

Alaska

1 Jan 2021 55% of wholesale price $0 $0 $0 $0 $0

Matanuska- Susitna

Borough, Alaska

N/A 55% of wholesale price $0 $0 $0 $0 $0

Chicago, Illinois 1 Jan 2016 $145.50 $0 $0 $0 $0 N/A*

Cook County, Illinois 1 May 2016 $24.00 $0 $0 $0 $0 $0

Montgomery

County, Maryland

19 Aug 2015 30% of wholesale price $0 $2.64 $0 $0 $0

Omaha, Nebraska 2019 3% tobacco tax $0 $0 $0 $0 $0

Bold values indicate values in the 3rd column equal to those in the 4th column.

*E- liquid product was shown as not allowed to ship in the corresponding state/local jurisdiction on store webpage.

†For Virginia address, store 3 charged $7.20 for shipping cost and excise tax, and state e- liquid excise tax was not explicitly stated; given that shipping cost (when charged on

this website) was $6 for other contiguous states in the USA, we inferred that store 3 charged vapour tax of $1.20 for Virginia address.

DC, District of Columbia.

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Original research

in our sample did not impose any excise taxes on e- liquid prod-

ucts, one store (store 3) imposed taxes on shipping to a limited

number of states and two stores (stores 1 and 2) imposed taxes

on e- liquids shipped to the majority of taxing states. However,

even among stores that charged taxes on e- liquids shipped to

taxing states, the amount of taxes was not calculated consis-

tently. Furthermore, all stores failed to charge county- level or

city- level e- cigarette taxes, except store 2 on e- liquids shipped to

Montgomery, Maryland. Overall compliance with the PACT Act

among online stores that we sampled is low.

There are challenges in calculating e- cigarette taxes based on

wholesale prices. Most traditional tobacco products, including

cigarettes, are distributed through a three- tier system—that is,

manufacturers or importers, distributors or wholesalers, and

retailers. On the other hand, e- cigarette products are often not

distributed in the same three- tier system. The e- cigarette market

has a much larger number of small manufacturers, and those

manufacturers may sell vaping products directly to customers

via online stores and vape shops, or they might sell to retailers

without going through wholesale distributors.

Based on our observation, when online stores are required to

apply taxes based on wholesale prices,

9 10 28

they tend to use

different wholesale price bases for the same product in different

states. For example, when store 1 calculates taxes for sales to

Minnesota (95% of wholesale prices) and Oregon (65% of

wholesale prices), they use a wholesale price base that is about

half of the listed price (roughly $10), suggesting a wholesale- to-

retail markup rate of 100%. However, for sales to states such

as Illinois (15% of wholesale prices) and Connecticut (10% of

wholesale prices), they directly use the listed prices (roughly $20)

as the base to calculate taxes. In addition, although the taxes

based on volume are more consistently applied than taxes based

on wholesale prices, the amount of taxes charged by stores could

still deviate from the excise tax rate. For example, we found

that stores charged taxes at a much lower rate for shipments

to the state of Washington. Although we cannot generalise this

practice to all online stores, this evidence suggests inconsistency

in tax calculation and that there is room for pricing strategies

for online sales. States and localities will need to consider setting

consistent standards and adopting implementation strategies to

collect the full amount of taxes from products sold online.

Our study has several limitations. First, we checked tax

compliance based on a single e- liquid product for each store in

our sample, which is not comprehensive. We are currently devel-

oping new tools to scrape excise tax data for all e- liquid products

in each online store and will reassess tax compliance in future

analyses. Second, we used a convenience sampling strategy and

chose online stores based on simple Google and Reddit search

results, which may be subject to curation based on viewer loca-

tions, browsing histories and Google advertising. Nonetheless,

we did not intend to collect representative samples of online

stores.

Furthermore, to address the data quality issues, we cross-

verified stores from Google and Reddit searches, and one store

(store 2) appeared in both searches, suggesting a consensus on

store popularity. In addition, the number of e- liquid products

sold in each store was quite large, and the five stores together

cover 241 unique brands, which provides some assurance that

our sampling covered a significant proportion of products. We

also find that the e- liquid price distribution was similar across

the five stores, further indicating that the price data we scraped

reflect the common pricing strategies in the online market.

Lastly, we scraped e- liquid prices from each online store on a

rather arbitrary date and did not track e- liquid pricing activities

over time. However, with continuing effort, in future studies we

will be able to track prices, check consistency over time, plot the

time trend of e- liquid pricing, and assess how taxes are passed to

prices as the rates and structures change.

Despite the limitations, our study is the first in- depth investiga-

tion of the pricing and taxing strategies of e- liquid products sold

online. The evidence suggests that online e- liquid products are

sold at a relatively low price, and that tax compliance is inconsis-

tent and low. The choice of e- cigarette tax bases such as existing

state- level taxes based on wholesale prices may leave room for

retailers and wholesalers to manipulate tax levels. Policy innova-

tions and compliance checks may be needed to regulate products

sold online. In addition, future studies will benefit from rapid

surveillance of the characteristics and sales of e- cigarette prod-

ucts sold online.

Twitter Shaoying Ma @ShaoyingMa

Contributors Conceptualisation—CS and SM. Methodology—JC, SJ, ML, BL,

CS and SM. Software—SJ, ML, CS and SM. Validation—CS. Formal analysis—SM.

Investigation—SM and CS. Resources—CS and JC. Data curation—SJ and SM.

Writing (original draft preparation)—SM. Writing (review and editing)—CS,

JC, BL, SJ and ML. Visualisation—SM and CS. Supervision—CS and JC. Project

administration—SM and SJ. Funding acquisition—CS and JC. All authors have read

and agreed to the published version of the manuscript. CS is responsible for the

overall content as the guarantor.

Funding This study is funded by the Ohio State University Comprehensive Cancer

Center (OS- UCCC) Center for Tobacco Research Pilot Grant (Contact PI: Ce Shang;

1/1/2021- 06/30/2021). CS and SM are funded by the National Cancer Institute

(R21CA249757; PI: Ce Shang; 9/16/2021- 8/30/2023).

Competing interests None declared.

Patient consent for publication Not required.

Ethics approval This study does not involve human subjects and the

determination of no human subjects was approved by the OSU Institutional Review

Board (IRB).

Provenance and peer review Not commissioned; externally peer reviewed.

Data availability statement All data relevant to the study are included in

the article or uploaded as supplemental information. The data are included as

supplemental ﬁle.

Supplemental material This content has been supplied by the author(s).

It has not been vetted by BMJ Publishing Group Limited (BMJ) and may not

have been peer- reviewed. Any opinions or recommendations discussed are

solely those of the author(s) and are not endorsed by BMJ. BMJ disclaims all

liability and responsibility arising from any reliance placed on the content.

Where the content includes any translated material, BMJ does not warrant the

accuracy and reliability of the translations (including but not limited to local

regulations, clinical guidelines, terminology, drug names and drug dosages), and

is not responsible for any error and/or omissions arising from translation and

adaptation or otherwise.

Open access This is an open access article distributed in accordance with the

Creative Commons Attribution Non Commercial (CC BY- NC 4.0) license, which

permits others to distribute, remix, adapt, build upon this work non- commercially,

and license their derivative works on different terms, provided the original work is

properly cited, appropriate credit is given, any changes made indicated, and the use

is non- commercial. See:http://creativecommons.org/licenses/by-nc/4.0/.

ORCID iDs

ShaoyingMa http://orcid.org/0000-0002-6086-0622

CeShang http://orcid.org/0000-0002-8838-4250

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