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Sunday, August 27, 2017

Weaponizing "Dual Use" and "Open Source" Against Vape Taxes and Regulation

What am I saying here:  I think the regulation and taxation of vaping can be soundly defeated.  There is case law and numerous existing technical "standards" that show the way.  The vaping community is not very smart about how to make use of these things to free us all from taxes and regulation.  I get that DIY already exists.  But it's not being used as I describe below to attack taxation and regulation.  Please open you minds!  I am trying to show the way...

So how does an “open source” vaping mod address local taxation, and most likely import restrictions by the FDA on e-cigarettes?

I have several thoughts.  First, just like DIY “open source” means that what’s created is a collaborative effort among people.  Someone puts a “design” out on the internet and someone else downloads it and makes something based on that design.

This is commonly done in the DIY world (not just for mods but for drones, Linux, all sorts of technical things).

Unfortunately, though, in the case of Pennsylvania, there is a 40% tax on “e-cigarettes” which must be addressed.

Most DIY mods simply involve electrical parts freely available on-line (wires, switches, etc.).  However, once you step beyond the parts for a basic push-button or MOSFET switch mod your range of features becomes limited relative to taxation.  The next technology step puts you in the realm of e-cigarette-specific controllers, e.g., a Evolve DNA 200 (, where I believe there is a good case that 40% PA tax is required.  (I think specifically for two reasons, one is that its purpose is explicitly stated as such “a power regulated digital switch-mode DC-DC converter for personal vaporizers” (underline mine) and the “It is the most advanced personal vaporizer controller ever made. The DNA 200 is vaping down to a science.”

So I can sell electronic parts in PA, e.g. a MOSFET, without being subject to a 40% tax, but once I sell a device like the DNA 200 I could reasonably be taxed.

Now in addition to the DNA 200 there are many, many other devices which perform similar functions, i.e., are “digital switch mode DC-DC converter[s]”, sold in PA without tax, that, with the addition of software could perform the same function as a DNA 200.  Out-of-the-box they are just DC-DC converters, but once you program them they can be anything.

I believe that the same “dual use” model comes into play with the FDA. The FDA cannot “regulate” (despite what the say - see this and particularly the video at the end: all software or electronic parts used in an e-cig as an e-cigarette “components or part” where "dual use" is present.  They can try but they will fail because, like the Pennsylvania constitution “Uniformity” clause described below, a USB charger is the same whether sold in Walmart or a vape shop.  Forcing a vendor to label the device as “containing nicotine,” for example, is at the very least, false advertising.

In addition, software to run a mod does not, in my opinion, need to be owned by anyone. It’s function is clear and while it can be refined and altered just like DIY hardware it’s really not rocket science. What also seems clear is that if such software freely available from random download sites it cannot be taxed or regulated.  No one individual is responsible for making it a “tobacco product” and, in my opinion, it can never be a “tobacco product” until someone or something installs it in some kind of e-cigarette.  Similarly such software cannot be taxed because it costs nothing so a percentage tax on zero dollars ($0.00) yields nothing.

So selling a mod that’s both “open source” and "dual use" would be very, very hard to tax or regulate.  I believe that, with out nicotine, there is a similar case for selling what amounts to “flavoring.”  So long as nicotine is not present flavoring for baking, perfume, etc. is also a “dual use” item (see this: 

So what about this “uniformity clause?”  At least here in Pennsylvania the state Constitution, Article VIII, Taxation and Finance, Section 1 says: “Uniformity of Taxation “All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.” (I don't know what the deal is on this in other states...)

What this means is that a USB charger cannot be taxed in a vape shop differently than a USB charger in, say, Walmart.

Similarly, I believe, it you attached a flashlight head (via a 510 connector for example like this: - not sure if it’s real or not but you get the idea) to your mod wouldn't it now be a “dual use” product?

I'd have to say yes...

(As to the e-cig forum folks who don’t understand the “why?” of 510 flashlight heads the answer is taxes and regulation.)

There is precedence (again I am not a lawyer) with the Pennsylvania Liquor Control Board (LCB) case ( where some clever fellow took a “cherry master” (which is effectively a bar “slot machine”) and altered it so that “skill” was required to get a payout.  (Normally in a bar you just play the “slot machine” equivalent until you get a payout, which is illegal under LCB rules.)

Same gaming machine as before but you must play a little “game of skill” to “enhance” your winnings or chances of getting a certain amount.  Not a hard “game of skill” mind you, but a game of skill none-the-less.

So all this means what, exactly?

I think that it means that…

One, creating devices with 510 connectors that require the user to install open source, freely available software to control them the resulting devices cannot be not “e-cigarettes” from the perspective of regulation or taxation.  (So technology exists - which I am going to publish here - which allows you to do the “installation” via your phone.  You buy the mod, synch it with your phone, and away you go…)  What's sold in the vape shop is a useless "brick."  The purchaser, without technical skill, can make it into a mod or a flashlight...

Two, packaging a flashlight head with the mod instead of a tank make the mod “dual use” and no longer subject to taxes or regulation.

Three, separately selling “nic shots” and “flavoring” for baking, perfume, etc. makes “flavoring” dual use (for example, open source “flavoring” sites - all of which exist today).

Four, design and sell mods that an be assembled from component parts which are not, by themselves, vaping items.  So imagine a mod technology kind of like Lego "Mindstorm."   

"Oh, I like this blue switch, the green 510 and the 2-cell battery pack please..."

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