New Jersey introduces excise tax on liquid nicotine

Effective September 29, 2018, the State of New Jersey imposes the Tobacco and Nicotine Products Wholesale Sales and Use Tax upon the sale, use, or distribution of liquid nicotine within the State by a distributor or wholesaler to a retail dealer or consumer. The tax is imposed at a rate of $0.10 per milliliter of e-liquid.

On June 21 the New Jersey State Legislature passed Assembly Bill 4132 which introduced an excise tax of 10 cents per milliliter of e-liquid containing nicotine. The bill also requires wholesalers, distributors and retailers to pay a one-time inventory tax (also referred to as a floor tax) on the nicotine-containing e-liquid they have in stock on the first day of the first month after enactment.

Governor Phil Murphy signed the bill into Law on July 1. Ordinarily this would imply that vape businesses would be required to pay the floor tax for inventory held on August 1. However, industry stakeholders and the leadership of the General Assembly agreed to postpone the effective date of the legislation until 90 days after enactment in order to give the parties more time to prepare for implementing the tax change.