Widespread Tax Evasion Among Online Vape Retailers Undermines California’s E-cigarette Excise Tax Laws

A recent study published by our lab in Tobacco Control (2025) reveals extensive noncompliance by online vaping retailers with California's 12.5% Electronic Cigarette Excise Tax (CECET) and related tobacco licensing regulations. Despite explicit state and federal mandates—including the Prevent All Cigarette Trafficking (PACT) Act—we found that most online retailers are not adhering to the law.

In October 2023, we attempted 156 purchases from 78 online vape retailers shipping to San Diego County, California. Our findings were alarming: 84.5% of retailers did not charge the mandatory 12.5% excise tax, with compliance rates similarly low across intrastate, interstate, and international transactions.

Additionally, only 40% of these retailers held the required California tobacco retail license. Licensed retailers showed slightly better tax compliance (27.3%) compared to unlicensed retailers (9.1%), yet overall adherence remained exceptionally low.

Improving compliance with existing tax regulations could significantly enhance California’s tobacco control efforts, potentially recovering millions in tax revenue. Strengthening oversight and enforcement of the online market could also help ensure vaping products are priced appropriately, reducing youth access and supporting effective public health initiatives.

One packing slip from our study where $0 was paid in tax.

For more detailed information or access to our study data, please contact us at info@tobaccoecommercelab.com.

Continued Press on Online Vaping Retailer Nonadherence

We have been receiving additional press on our research of online vaping retailer noncompliance with age verification, shipping, and flavor restrictions. You can read the newest article covering the story at The Washington Post (linked).

Below is an excerpt from the article:

"The problem was outlined by University of California at San Diego researchers who found that when they ordered 99 flavored vape products online, 81 percent arrived through the Postal Service — despite laws banning that. No buyers had their IDs scanned upon delivery as required by law, according to research published Nov. 11 in the journal JAMA. More than two-third of the buyers in San Diego received packages at their homes even though the city bans online sales of flavored vapes.

'It’s incredibly easy to buy flavored vaping products online — even in areas where they are restricted,' said lead author Eric C. Leas, an assistant professor at the Herbert Wertheim School of Public Health at UCSD."

Our research appears on the front page of The Washington Post.

If you would like to access data from this research, please reach out to us at info@tobaccoecommercelab.com and tell us what you need and how you intend to use it.

Online Retailer Nonadherence to Age Verification, Shipping, and Flavor Restrictions on E-Cigarettes

Greetings,

Our lab’s research on noncompliance among e-commerce vaping retailers was recently published in JAMA on November 11, 2024. The results suggest that it is incredibly easy to buy flavored vaping products online even in areas where they are restricted. They also suggest that, for the most part, online retailers disregard both federal and state laws pertaining to shipping requirements and age verification. This is especially an issue for efforts to limit youth vaping.

This study was motivated by the 2020 Preventing Online Sales of E-Cigarettes to Children Act which bans the shipment of vaping products via USPS and requires ID age verification upon delivery and also SB-793—California’s statewide restriction on the sale of flavored tobacco.

We conducted the study last October, 2023 by attempting to purchase 156 flavored vaping products across 78 e-commerce websites. Purchases were made in pairs with one buyer in San Diego, where e-commerce vaping sales are restricted by a local ordinance, and the other buyer in different jurisdiction in San Diego County, California, where there was no local ordinance.

A total of 105 flavored vaping products were completed when none should have been to be compliant with SB-793. There was no difference in the rate of deliveries between buyers in areas with a local restriction or not. Among those delivered, only 1 buyer had their ID scanned as required by law. Most did not have any interaction with the delivery personnel. Moreover, 80.8% of the products were shipped via USPS, despite the federal ban on using this service. An additional 8.8% were shipped via couriers that have corporate policies restricting tobacco shipments, including UPS, FedEX, and DHL.

One solution we believe is to start routinely conducting compliance checks to monitor and enforce compliance among online retailers.

We have detailed information on the websites we purchased from and also images of the products and shipping labels, etc. If you would like to access this data, please reach out to us at info@tobaccoecommercelab.com and tell us what you need and how you intend to use it.

Further coverage available at:

Los Angeles Times

CNN

We will reach out again next week with an update.