Vape tax bill passes Alaska Legislature with hopes to boost state revenue, discourage youth smoking

SB 24 also raises the state’s legal smoking age from 19 to 21, permits indoor cigar lounges

Vapes in the downtown Alaska Pipeline business on Friday, May 29, 2026. (Jasz Garrett / Juneau Independent)

By Jasz Garrett

Juneau Independent

In a House debate that sported laughter during its tense moments, Senate Bill 24 passed the Alaska Legislature with a local representative hoping it’ll make it past the governor’s desk this time around. A bill adding taxes on nicotine vapes and pouches is among two dozen bills Gov. Mike Dunleavy has to veto or sign by the end of Thursday.

“A cigarette is a cigarette is a cigarette,” Rep. Sara Hannan, D-Juneau, said during floor debate.

If the bill is signed into law, it will be the first time synthetic nicotine products and electronic smoking products are added to Alaska’s tax regime on tobacco. 

Due to the way the state’s tobacco taxation statutes are written (naming each individual product) vapes and Zyns have avoided a tax “many believe was already supposed to be in place on them.” Alaska’s state tobacco tax was last adjusted in 2006.

“They have argued and defied, even though our Department of Revenue has said for 15 years, ‘We believe they're obligated to pay this tax’ — they've not paid it,” Hannan said in an interview. “So this makes it clear that, like all other tobacco products, they are going to be taxed, and I think that's substantial.”

She said the topic has been under debate for the last eight years she’s served in the Alaska Legislature.

Senate President Gary Stevens, R-Kodiak, sponsored the bill. Hannan carried it in the House. The bill passed the House 24-16 after several amendments, before the Senate concurred by a vote of 15-5.

Dunleavy vetoed a similar measure four years ago, but this bill differs by imposing a retail sales tax on vapes rather than an excise tax at the wholesale. Instead of a 45% tax at the wholesale level, the newly passed bill would apply a 25% tax at the retail level.

“He thought it was too high of a tax and this is a lower tax, and in essence is parity at the consumption level at retail, parity with cigarettes,” Hannan said. “So I hope that the governor signs the bill.”

During floor debate, Rep. Jeremy Bynum, R-Ketchikan, expressed concern about creating a new retail tax system he said could put additional burden on retailers and small businesses across the state. 

One noteworthy amendment that made it through, by Rep. Kevin McCabe, R-Big Lake, allows indoor smoking at designated cigar lounges in Alaska. 

“This amendment is brought to you by laundry soap, air freshener, mouthwash, and breathmint industries, as well as wives and girlfriends who would rather their significant others not smoke cigars in the shop, in the garage, on the patio, or in the driveway,” he said, garnering chuckles. 

McCabe said the amendment creates a narrow, carefully tailored exemption for retail cigar stores under Alaska’s indoor smoking statutes.

Hannan said she was not supportive of the amendment and, if the bill passes the governor’s desk, it means Juneau may face legal challenges to ensure the municipality can still regulate indoor smoking. 

Rep. Garret Nelson, R-Sutton, supported McCabe’s amendment. 

“We allow cannabis, we allow alcohol, we allow greasy cheeseburgers, but we don't allow tobacco, and I think it's an appropriate amendment,” he said, adding there are successful cigar bars in the Lower 48. “I think that it allows people to run legitimate businesses.” 

Among the reasons legislators opposed SB 24 was an argument that adult choices shouldn’t be penalized.

“My concern is that this isn’t a tobacco bill. This is a tax bill. This is tax, tax, tax,” said Rep. Jamie Allard, R-Eagle River. 

“My point about this whole thing is freedom,” she said. “They’re not doing anything wrong, and now you’re imposing a law to take people’s freedom away that doesn’t impair them. So what’s next? We need to stop. These are adults.”

The bill increases the age at which an Alaskan can legally purchase, possess and consume tobacco. If it becomes law, SB 24 will also move the state into line with a federal law enacted in 2019, changing the legal age from 19 to 21 years old. 

Hannan noted people who receive a citation for underage consuming can file it with the court, similarly to how they would for underage drinking or a traffic violation. There is no longer a mandatory court appearance and the maximum fine for a minor in possession was reduced from $300 to $100.

“Why should the government ever intervene on anyone's — a libertarian viewpoint — right to do whatever they want to their own body? Well, because there's a social cost to all of us,” Hannan told the Independent. “Tobacco is a leading contributor to major sectors of preventable disease, from heart disease and cancers, and we as a society pay a very huge cost in our healthcare costs and care for people. So whether you smoke or not, the costs of treating people who smoke, who develop cancers and coronary heart disease, is shared by all of us.” 

Alaska has a high rate of tobacco-contributed health costs that are borne by the state, according to the Tobacco Prevention and Control Program. Hannan said while the bill adds revenue, its primary goal is to discourage youth from smoking. Stevens, the bill’s sponsor, also said that the state needs to counter the industry’s appeal to youth. 

“My inspiration to be concerned about vape is price sensitivity of very young consumers, i.e. teenagers,” Hannan said. “It seems to be a product that appeals very heavily to new smokers who, over a generation, have sort of come to think of traditional combustible cigarettes as a horrible thing, but vaping was totally acceptable. Yet the health consumption data doesn't show a huge difference. So, besides revenue for the state, I think price-sensitive young consumers, it will hopefully forestall their usage.”

Some representatives on the House floor argued that vapor products are significantly less harmful than traditional combustible cigarettes. Most electronic cigarettes contain nicotine, which is addictive and harms brain development. Their vapor also contains cancer-causing chemicals and heavy metals, according to the CDC. More research into the harm reduction potential of vapor products is needed, especially for the long-term effects of vaping, according to the American Heart Association. 

• Contact Jasz Garrett at jasz@juneauindependent.com or (907) 723-9356.