Read the full stored bill text
House
File
2406
-
Introduced
HOUSE
FILE
2406
BY
BARKER
,
BRADLEY
,
BERGAN
,
MOMMSEN
,
and
LATHAM
A
BILL
FOR
An
Act
relating
to
administration
of
and
taxation
on
1
tobacco-related
products
including
imposing
a
tax
on
2
alternative
nicotine
products
and
vapor
products.
3
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
4
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DIVISION
I
1
TAXATION
ON
TOBACCO-RELATED
PRODUCTS
2
Section
1.
Section
453A.1,
Code
2026,
is
amended
by
adding
3
the
following
new
subsection:
4
NEW
SUBSECTION
.
18A.
“Nicotine”
means
any
form
of
the
5
chemical
nicotine,
including
any
salt
or
complex,
from
6
any
source,
and
includes
nicotinic
alkaloids
and
nicotine
7
analogs
and
any
substance
intended
to
mimic
or
replicate
8
the
pharmacological
effect
of
nicotine.
For
purposes
of
9
this
subsection,
any
communication
by,
or
on
behalf
of,
the
10
manufacturer,
distributor,
or
retailer
of
a
tobacco
product
11
that
indicates
that
the
product
contains
a
nicotine
analog
12
constitutes
presumptive
evidence
that
the
product
contains
a
13
nicotine
analog
and
meets
the
definition
of
nicotine.
14
Sec.
2.
Section
453A.1,
subsection
28,
Code
2026,
is
amended
15
to
read
as
follows:
16
28.
“Tobacco
products”
means
cigars;
little
cigars
as
17
defined
in
section
453A.42,
subsection
6
;
cheroots;
stogies;
18
periques;
granulated;
plug
cut,
crimp
cut,
ready
rubbed,
19
and
other
smoking
tobacco;
snuff,
snuff
flour;
cavendish;
20
plug
and
twist
tobacco;
fine-cut
and
other
chewing
tobaccos;
21
shorts;
or
refuse
scraps,
clippings,
cuttings
and
sweepings
of
22
tobacco,
and
other
kinds
and
forms
of
tobacco,
prepared
in
such
23
manner
as
to
be
suitable
for
chewing
or
smoking
in
a
pipe
or
24
otherwise,
or
both
for
chewing
and
smoking
consumption
in
any
25
manner
;
but
does
not
mean
cigarettes.
26
Sec.
3.
Section
453A.6,
subsection
1,
Code
2026,
is
amended
27
to
read
as
follows:
28
1.
There
is
imposed,
and
shall
be
collected
and
paid
to
the
29
department,
a
tax
on
all
cigarettes
used
or
otherwise
disposed
30
of
in
this
state
for
any
purpose
equal
to
six
fourteen
and
31
eight-tenths
three-tenths
cents
on
each
cigarette.
32
Sec.
4.
Section
453A.6,
subsection
8,
paragraph
a,
Code
33
2026,
is
amended
to
read
as
follows:
34
a.
Pay
directly
to
the
department,
in
lieu
of
the
tax
under
35
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subsection
1
,
a
tax
equal
to
three
and
six
six
and
forty-three
1
hundredths
cents
on
each
cigarette
dispensed
from
such
machine.
2
Payments
made
under
this
paragraph
shall
be
remitted
to
the
3
department
electronically.
4
Sec.
5.
Section
453A.6,
Code
2026,
is
amended
by
adding
the
5
following
new
subsection:
6
NEW
SUBSECTION
.
9.
a.
Beginning
on
January
1,
2029,
and
7
for
each
January
1
thereafter,
the
department
shall
adjust
the
8
rate
of
the
tax
imposed
in
subsections
1
and
8
if
required
9
under
paragraph
“b”
,
which
shall
include
any
adjustment
made
in
10
prior
calendar
years
under
this
subsection,
by
multiplying
the
11
rate
of
tax
imposed
under
subsections
1
and
8,
respectively,
12
by
the
inflation
adjustment
determined
under
paragraph
“b”
to
13
determine
the
new
rate
of
tax
for
the
calendar
year.
14
b.
(1)
Beginning
with
the
calendar
year
January
1,
2027,
15
and
for
each
calendar
year
thereafter,
the
department
shall
16
determine
the
average
retail
price
by
surveying
cigarette
17
retailers
and
vendors
on
a
statewide
basis
in
a
manner
and
time
18
determined
by
the
department.
The
department
shall
calculate
19
the
inflation
adjustment
for
the
calendar
year
in
which
the
new
20
tax
rate
takes
effect
by
comparing
the
average
retail
price
of
21
cigarettes
in
the
current
survey
with
the
average
retail
price
22
of
cigarettes
in
the
survey
from
the
previous
calendar
year.
23
(a)
If
the
survey
indicates
the
average
retail
sales
price
24
of
cigarettes
has
increased
relative
to
the
average
retail
25
sales
price
in
the
survey
from
the
previous
calendar
year,
the
26
inflation
adjustment
used
in
paragraph
“a”
shall
be
the
quotient
27
of
the
average
retail
sales
price
of
the
current
survey
and
28
the
average
retail
sales
price
of
the
survey
from
the
previous
29
calendar
year.
30
(b)
If
the
survey
indicates
that
the
average
retail
price
31
of
cigarettes
has
not
increased
relative
to
the
average
retail
32
price
of
the
survey
from
the
previous
calendar
year,
then
the
33
department
shall
not
make
an
inflation
adjustment.
34
(2)
The
department
shall
exclude
from
the
survey
any
price
35
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increase
attributable
to
any
increase
in
state
or
federal
tax
1
rates.
2
c.
If
a
tax
rate
is
adjusted
pursuant
to
this
subsection,
3
the
department
shall
cause
an
advisory
notice
containing
4
the
new
tax
rate
to
be
published
in
the
Iowa
administrative
5
bulletin
and
on
the
internet
site
of
the
department
of
revenue.
6
The
calculation
and
publication
of
the
adjusted
tax
rate
by
the
7
director
of
revenue
is
exempt
from
chapter
17A,
and
shall
be
8
submitted
for
publication
by
the
first
December
31
following
9
the
determination
date
to
adjust
a
tax
rate.
10
Sec.
6.
Section
453A.39,
Code
2026,
is
amended
by
adding
the
11
following
new
subsection:
12
NEW
SUBSECTION
.
3.
A
package
of
alternative
nicotine
13
products
shall
not
contain
more
than
twenty
separately
14
consumable
products
within
the
package.
15
Sec.
7.
Section
453A.42,
subsections
2
and
16,
Code
2026,
16
are
amended
to
read
as
follows:
17
2.
“Consumer”
means
any
person
who
has
title
to
or
18
possession
of
tobacco
products
,
alternative
nicotine
products,
19
or
vapor
products
in
storage,
for
use
or
other
consumption
in
20
this
state.
21
16.
“Tobacco
products”
means
cigars;
little
cigars
as
22
defined
herein
;
cheroots;
stogies;
periques;
granulated,
plug
23
cut,
crimp
cut,
ready
rubbed,
and
other
smoking
tobacco;
snuff;
24
snuff
flour;
cavendish;
plug
and
twist
tobacco;
fine-cut
and
25
other
chewing
tobaccos;
shorts;
or
refuse
scraps,
clippings,
26
cuttings
and
sweepings
of
tobacco,
and
other
kinds
and
forms
of
27
tobacco,
prepared
in
such
manner
as
to
be
suitable
for
chewing
28
or
smoking
in
a
pipe
or
otherwise,
or
both
for
chewing
and
29
smoking
consumption
in
any
manner
;
but
shall
not
include
does
30
not
mean
cigarettes
as
defined
in
section
453A.1,
subsection
4
.
31
Sec.
8.
Section
453A.43,
Code
2026,
is
amended
to
read
as
32
follows:
33
453A.43
Tax
on
tobacco
products.
34
1.
a.
A
tax
is
imposed
upon
all
tobacco
products
,
35
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alternative
nicotine
products,
and
vapor
products
in
this
1
state
and
upon
any
person
engaged
in
business
as
a
distributor
2
of
tobacco
products,
alternative
nicotine
products,
or
vapor
3
products
at
the
rate
of
twenty-two
fifty
percent
of
the
4
wholesale
sales
price
of
the
tobacco
products,
except
little
5
cigars
and
snuff
as
defined
in
section
453A.42
alternative
6
nicotine
products,
or
vapor
products
.
Notwithstanding
the
rate
7
of
tax
imposed
in
this
paragraph
“a”
,
a
different
rate
of
tax
8
shall
be
imposed
on
the
wholesale
sales
price
if
applicable
9
under
paragraph
“b”
,
and
little
cigars
shall
be
subject
to
the
10
tax
as
specified
pursuant
to
paragraph
“c”
.
11
b.
In
addition
to
the
tax
imposed
under
paragraph
“a”
,
a
12
tax
is
imposed
upon
all
tobacco
products
in
this
state
and
upon
13
any
person
engaged
in
business
as
a
distributor
of
tobacco
14
products,
at
the
rate
of
twenty-eight
percent
of
the
wholesale
15
sales
price
of
the
tobacco
products,
except
little
cigars
and
16
snuff
as
defined
in
section
453A.42
.
17
c.
Notwithstanding
the
rate
of
tax
imposed
pursuant
to
18
paragraphs
“a”
and
“b”
,
if
the
tobacco
product
is
a
cigar,
the
19
total
amount
of
the
tax
imposed
pursuant
to
paragraphs
“a”
and
20
“b”
combined
shall
not
exceed
fifty
cents
per
cigar.
21
b.
When
the
rate
of
tax
imposed
on
the
wholesale
sales
22
price
equals
less
than
two
dollars
and
eighty-six
cents
under
23
paragraph
“a”
,
the
rate
of
tax
imposed
on
the
wholesale
sales
24
price
under
paragraph
“a”
shall
be
recalculated
and
imposed
at
a
25
rate
equaling
two
dollars
and
eighty-six
cents.
26
d.
c.
Little
cigars
shall
be
subject
to
the
same
rate
of
27
tax
imposed
upon
cigarettes
in
section
453A.6
,
payable
at
the
28
time
and
in
the
manner
provided
in
section
453A.6
;
and
stamps
29
shall
be
affixed
as
provided
in
subchapter
I
of
this
chapter
.
30
Snuff
shall
be
subject
to
the
tax
as
provided
in
subsections
3
31
and
4
.
32
e.
d.
The
taxes
on
tobacco
products,
alternative
nicotine
33
products,
vapor
products,
excluding
little
cigars
and
snuff
,
34
shall
be
imposed
at
the
time
the
distributor
does
any
of
the
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following:
1
(1)
Brings,
or
causes
to
be
brought,
into
this
state
from
2
outside
the
state
tobacco
products
for
sale.
3
(2)
Makes,
manufactures,
or
fabricates
tobacco
products
in
4
this
state
for
sale
in
this
state.
5
(3)
Ships
or
transports
tobacco
products
to
retailers
in
6
this
state,
to
be
sold
by
those
retailers.
7
2.
a.
A
tax
is
imposed
upon
the
use
or
storage
by
consumers
8
of
tobacco
products
,
alternative
nicotine
products,
and
9
vapor
products
in
this
state,
and
upon
the
consumers,
at
the
10
rate
of
twenty-two
fifty
percent
of
the
cost
of
the
tobacco
11
products
,
alternative
nicotine
products,
or
vapor
products
.
12
Notwithstanding
the
rate
of
tax
imposed
in
this
paragraph
“a”
,
13
a
different
rate
of
tax
shall
be
imposed
on
the
use
or
storage,
14
if
applicable,
under
paragraph
“b”
.
15
b.
In
addition
to
the
tax
imposed
in
paragraph
“a”
,
a
tax
16
is
imposed
upon
the
use
or
storage
by
consumers
of
tobacco
17
products
in
this
state,
and
upon
the
consumers,
at
a
rate
of
18
twenty-eight
percent
of
the
cost
of
the
tobacco
products.
19
c.
Notwithstanding
the
rate
of
tax
imposed
pursuant
to
20
paragraphs
“a”
and
“b”
,
if
the
tobacco
product
is
a
cigar,
the
21
total
amount
of
the
tax
imposed
pursuant
to
paragraphs
“a”
and
22
“b”
combined
shall
not
exceed
fifty
cents
per
cigar.
23
b.
When
the
rate
of
tax
imposed
on
the
use
or
storage
equals
24
less
than
two
dollars
and
eighty-six
cents
under
paragraph
“a”
,
25
the
rate
of
tax
imposed
on
the
use
or
storage
under
paragraph
26
“a”
shall
be
recalculated
and
imposed
at
a
rate
equaling
two
27
dollars
and
eighty-six
cents.
28
d.
c.
The
taxes
imposed
by
this
subsection
shall
not
apply
29
if
the
taxes
imposed
by
subsection
1
on
the
tobacco
products
30
have
been
paid.
31
e.
d.
The
taxes
imposed
under
this
subsection
shall
not
32
apply
to
the
use
or
storage
of
tobacco
products
in
quantities
33
of:
34
(1)
Less
than
twenty-five
cigars.
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(2)
Less
than
one
pound
smoking
or
chewing
tobacco
or
other
1
tobacco
products
not
specifically
mentioned
herein,
in
the
2
possession
of
any
one
consumer.
3
3.
A
tax
is
imposed
upon
all
snuff
in
this
state
and
upon
4
any
person
engaged
in
business
as
a
distributor
of
snuff
at
5
the
rate
of
one
dollar
and
nineteen
cents
per
ounce,
with
a
6
proportionate
tax
at
the
same
rate
on
all
fractional
parts
of
7
an
ounce
of
snuff.
The
tax
shall
be
computed
based
on
the
net
8
weight
listed
by
the
manufacturer.
The
tax
on
snuff
shall
be
9
imposed
at
the
time
the
distributor
does
any
of
the
following:
10
a.
Brings
or
causes
to
be
brought
into
this
state
from
11
outside
the
state,
snuff
for
sale.
12
b.
Makes,
manufactures,
or
fabricates
snuff
in
this
state
13
for
sale
in
this
state.
14
c.
Ships
or
transports
snuff
to
retailers
in
this
state,
to
15
be
sold
by
those
retailers.
16
4.
a.
A
tax
is
imposed
upon
the
use
or
storage
by
consumers
17
of
snuff
in
this
state,
and
upon
the
consumers,
at
the
rate
of
18
one
dollar
and
nineteen
cents
per
ounce
with
a
proportionate
19
tax
at
the
same
rate
on
all
fractional
parts
of
an
ounce
of
20
snuff.
The
tax
shall
be
computed
based
on
the
net
weight
as
21
listed
by
the
manufacturer.
22
b.
The
tax
imposed
by
this
subsection
shall
not
apply
if
the
23
tax
imposed
by
subsection
3
on
snuff
has
been
paid.
24
c.
The
tax
shall
not
apply
to
the
use
or
storage
of
snuff
in
25
quantities
of
less
than
ten
ounces.
26
5.
3.
Any
tobacco
product
,
alternative
nicotine
product,
27
or
vapor
product
with
respect
to
which
a
tax
has
once
been
28
imposed
under
this
subchapter
shall
not
again
be
subject
to
tax
29
under
this
subchapter
,
except
as
provided
in
section
453A.40
30
or
453A.47C
.
31
6.
4.
The
tax
imposed
by
this
section
shall
not
apply
with
32
respect
to
any
tobacco
product
which
under
the
Constitution
33
and
laws
of
the
United
States
may
not
be
made
the
subject
of
34
taxation
by
this
state.
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7.
5.
The
tax
imposed
by
this
section
shall
be
in
addition
1
to
all
other
occupation
or
privilege
taxes
or
license
fees
now
2
or
hereafter
imposed
by
any
city
or
county.
3
8.
6.
All
excise
taxes
collected
under
this
chapter
by
a
4
distributor
or
any
individual
are
deemed
to
be
held
in
trust
5
for
the
state
of
Iowa.
6
DIVISION
II
7
CONFORMING
CHANGES
8
Sec.
9.
Section
331.303,
subsection
3,
Code
2026,
is
amended
9
to
read
as
follows:
10
3.
Act
upon
applications
for
cigarette
,
tobacco
product,
11
alternative
nicotine
product,
and
vapor
product
tax
permits
in
12
accordance
with
chapter
453A
.
13
Sec.
10.
Section
331.653,
subsection
11,
Code
2026,
is
14
amended
to
read
as
follows:
15
11.
Carry
out
duties
relating
to
the
seizure
and
forfeiture
16
of
cigarettes,
tobacco
products,
alternative
nicotine
products,
17
and
vapor
products,
vehicles,
and
other
property
used
in
18
violation
of
cigarette
,
tobacco
product,
alternative
nicotine
19
product,
and
vapor
product
tax
laws
as
provided
in
section
20
453A.32
.
21
Sec.
11.
Section
331.756,
subsection
19,
Code
2026,
is
22
amended
to
read
as
follows:
23
19.
Assist,
at
the
request
of
the
director
of
revenue,
24
in
the
enforcement
of
cigar
and
cigarette,
tobacco
product,
25
alternative
nicotine
product,
and
vapor
product
tax
laws
as
26
provided
in
sections
453A.32
and
453A.49
.
27
Sec.
12.
Section
453A.1,
subsections
19
and
21,
Code
2026,
28
are
amended
to
read
as
follows:
29
19.
“Package”
or
“pack”
means
a
container
of
any
kind
in
30
which
cigarettes
,
or
tobacco
products
,
alternative
nicotine
31
products,
or
vapor
products
are
offered
for
sale,
sold,
or
32
otherwise
distributed
to
consumers.
33
21.
“Place
of
business”
is
construed
to
mean
and
include
34
any
place
where
cigarettes
,
alternative
nicotine
products,
35
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or
vapor
products
are
sold
or
where
cigarettes
,
alternative
1
nicotine
products,
or
vapor
products
are
stored
within
or
2
without
the
state
of
Iowa
by
the
holder
of
an
Iowa
permit
or
3
kept
for
the
purpose
of
sale
or
consumption;
or
if
sold
from
4
any
vehicle
or
train,
the
vehicle
or
train
on
which
or
from
5
which
such
cigarettes
,
alternative
nicotine
products,
or
vapor
6
products
are
sold
shall
constitute
a
place
of
business;
or
for
7
a
business
within
or
without
the
state
that
conducts
delivery
8
sales,
any
place
where
alternative
nicotine
products
or
vapor
9
products
are
sold
or
where
alternative
nicotine
products
or
10
vapor
products
are
kept
for
the
purpose
of
sale.
11
Sec.
13.
Section
453A.15,
subsections
1,
2,
and
4,
Code
12
2026,
are
amended
to
read
as
follows:
13
1.
The
director
may
prescribe
the
forms
necessary
for
the
14
efficient
administration
of
this
subchapter
and
may
require
15
uniform
books
and
records
to
be
used
and
kept
by
each
permit
16
holder
or
other
person
as
deemed
necessary.
The
director
may
17
also
require
each
permit
holder
or
other
person
to
keep
and
18
retain
in
the
director’s
possession
evidence
on
prescribed
19
forms
of
all
transactions
involving
the
purchase
and
sale
of
20
cigarettes
,
tobacco
products,
alternative
nicotine
products,
21
or
vapor
products,
or
the
purchase
and
use
of
stamps.
The
22
evidence
shall
be
kept
for
a
period
of
three
years
from
the
23
date
of
each
transaction,
for
the
inspection
at
all
times
by
24
the
department.
25
2.
Where
a
state
permit
holder
sells
cigarettes
,
tobacco
26
products,
alternative
nicotine
products,
or
vapor
products
27
at
retail,
the
holder
shall
be
required
to
maintain
detailed
28
records
for
sales
of
cigarettes
,
tobacco
products,
alternative
29
nicotine
products,
or
vapor
products
to
be
sold
at
retail
and
30
the
cigarette
such
sales
records
shall
be
kept
separate
and
31
apart.
32
4.
Every
permit
holder
or
other
person
shall,
when
requested
33
by
the
department,
make
additional
reports
as
the
department
34
deems
necessary
and
proper
and
shall
at
the
request
of
the
35
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department
furnish
full
and
complete
information
pertaining
to
1
any
transaction
of
the
permit
holder
or
other
person
involving
2
the
purchase
or
sale
or
use
of
cigarettes
,
tobacco
products,
3
alternative
nicotine
products,
or
vapor
products,
or
purchase
4
of
cigarette
stamps.
5
Sec.
14.
Section
453A.24,
Code
2026,
is
amended
to
read
as
6
follows:
7
453A.24
Carrier
to
permit
access
to
records.
8
1.
Every
common
carrier
or
person
in
this
state
having
9
custody
of
books
or
records
showing
the
transportation
of
10
cigarettes
,
tobacco
products,
alternative
nicotine
products,
or
11
vapor
products,
both
interstate
and
intrastate
,
shall
give
and
12
allow
the
department
free
access
to
those
books
and
records.
13
2.
The
director
may
require
by
rule
that
common
carriers
14
or
the
appropriate
persons
provide
monthly
reports
to
the
15
department
detailing
all
information
the
department
deems
16
necessary
on
shipments
into
and
out
of
Iowa
of
cigarettes
,
17
and
tobacco
products
,
alternative
nicotine
products,
or
vapor
18
products
as
set
forth
in
this
subchapter
I
and
subchapter
19
II
of
this
chapter
.
A
report
required
to
be
submitted
20
by
the
director
pursuant
to
this
section
shall
be
filed
21
electronically.
22
Sec.
15.
Section
453A.32,
subsection
6,
Code
2026,
is
23
amended
to
read
as
follows:
24
6.
The
provisions
of
this
section
applying
to
cigarettes
25
shall
also
apply
to
tobacco
products
,
alternative
nicotine
26
products,
and
vapor
products
taxed
under
subchapter
II
of
this
27
chapter
.
28
Sec.
16.
Section
453A.33,
Code
2026,
is
amended
to
read
as
29
follows:
30
453A.33
Seizure
not
to
affect
criminal
prosecution.
31
The
seizure,
forfeiture,
and
sale
of
cigarettes,
tobacco
32
products,
alternative
nicotine
products,
vapor
products,
and
33
other
property
under
the
terms
and
conditions
set
out
in
34
section
453A.32
,
shall
not
constitute
any
defense
to
the
person
35
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owning
or
having
control
or
possession
of
the
property
from
1
criminal
prosecution
for
any
act
or
omission
made
or
offense
2
committed
under
this
chapter
or
from
liability
to
pay
penalties
3
provided
by
this
chapter
.
4
Sec.
17.
Section
453A.35,
subsection
1,
paragraph
b,
Code
5
2026,
is
amended
to
read
as
follows:
6
b.
The
revenues
generated
from
the
tax
on
cigarettes
7
pursuant
to
section
453A.6,
subsection
1
subsections
1
and
8
8
,
from
the
tax
on
tobacco
products
as
specified
in
section
9
453A.43,
subsections
1,
2,
3,
and
4
,
and
from
the
fees
and
10
penalties
specified
in
subchapter
III
shall
be
credited
to
the
11
health
care
trust
fund
created
in
section
453A.35A
.
12
Sec.
18.
Section
453A.35A,
subsection
1,
Code
2026,
is
13
amended
to
read
as
follows:
14
1.
A
health
care
trust
fund
is
created
in
the
office
of
15
the
treasurer
of
state.
The
fund
consists
of
the
revenues
16
generated
from
the
tax
on
cigarettes
pursuant
to
section
17
453A.6,
subsection
1
subsections
1
and
8
,
from
the
tax
on
18
tobacco
products
,
alternative
nicotine
products,
and
vapor
19
products
as
specified
in
section
453A.43,
subsections
1
,
2,
20
3,
and
4
2
,
and
from
the
fees
and
penalties
specified
in
21
subchapter
III
,
that
are
credited
to
the
health
care
trust
22
fund,
annually,
pursuant
to
section
453A.35
.
Moneys
in
the
23
fund
shall
be
separate
from
the
general
fund
of
the
state
24
and
shall
not
be
considered
part
of
the
general
fund
of
the
25
state.
Moneys
in
the
fund
shall
be
used
only
as
specified
26
in
this
section
and
shall
be
appropriated
only
for
the
uses
27
specified.
Moneys
in
the
fund
are
not
subject
to
section
8.33
28
and
shall
not
be
transferred,
used,
obligated,
appropriated,
29
or
otherwise
encumbered,
except
as
provided
in
this
section
.
30
Notwithstanding
section
12C.7,
subsection
2
,
interest
or
31
earnings
on
moneys
deposited
in
the
fund
shall
be
credited
to
32
the
fund.
33
Sec.
19.
Section
453A.39,
subsection
1,
Code
2026,
is
34
amended
to
read
as
follows:
35
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1.
A
manufacturer,
distributor,
wholesaler,
retailer,
or
1
distributing
agent,
or
an
agent
thereof
of
a
manufacturer,
2
distributor,
wholesaler,
retailer,
or
distributing
agent
,
shall
3
not
give
away
cigarettes
,
or
tobacco
products
,
alternative
4
nicotine
products,
or
vapor
products
at
any
time
in
connection
5
with
the
manufacturer’s,
distributor’s,
wholesaler’s,
6
retailer’s,
or
distributing
agent’s
business
or
for
promotion
7
of
the
business
or
product,
except
as
provided
in
subsection
2
.
8
Sec.
20.
Section
453A.40,
subsection
1,
Code
2026,
is
9
amended
to
read
as
follows:
10
1.
All
persons
required
to
obtain
a
permit
or
to
be
licensed
11
under
section
453A.13
or
section
453A.44
having
in
their
12
possession
and
held
for
resale
on
the
effective
date
of
an
13
increase
in
the
tax
rate
cigarettes,
little
cigars,
or
tobacco
14
products
,
alternative
nicotine
products,
or
vapor
products
upon
15
which
the
tax
under
section
453A.6
or
453A.43
has
been
paid,
16
unused
cigarette
tax
stamps
which
have
been
paid
for
under
17
section
453A.8
,
unused
metered
imprints
which
have
been
paid
18
for
under
section
453A.12
,
or
tobacco
products
for
which
the
19
tax
has
not
been
paid
under
section
453A.46
shall
be
subject
to
20
an
inventory
tax
on
the
items
as
provided
in
this
section
.
21
Sec.
21.
Section
453A.42,
subsections
1,
2,
8,
9,
10,
12,
22
14,
and
17,
Code
2026,
are
amended
to
read
as
follows:
23
1.
“Business”
means
any
trade,
occupation,
activity,
24
or
enterprise
engaged
in
for
the
purpose
of
selling
or
25
distributing
tobacco
products
,
alternative
nicotine
products,
26
or
vapor
products
in
this
state.
27
2.
“Consumer”
means
any
person
who
has
title
to
or
28
possession
of
tobacco
products
,
alternative
nicotine
products,
29
or
vapor
products
in
storage,
for
use
or
other
consumption
in
30
this
state.
31
8.
“Person”
means
any
individual,
firm,
association,
32
partnership,
joint
stock
company,
joint
adventure
venture
,
33
corporation,
trustee,
agency,
or
receiver,
or
any
legal
34
representative
of
any
of
the
foregoing
individual,
firm,
35
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association,
partnership,
joint
stock
company,
joint
venture,
1
corporation,
trustee,
agency,
or
receiver
.
2
9.
“Place
of
business”
means
any
place
where
tobacco
3
products
are
sold
or
where
tobacco
products
,
alternative
4
nicotine
products,
or
vapor
products
are
manufactured,
stored,
5
or
kept
for
the
purpose
of
sale
or
consumption,
including
any
6
vessel,
vehicle,
airplane,
train,
or
vending
machine;
or
for
7
a
business
within
or
without
the
state
that
conducts
delivery
8
sales,
any
place
where
alternative
nicotine
products
or
vapor
9
products
are
sold
or
where
alternative
nicotine
products
or
10
vapor
products
are
kept
for
the
purpose
of
sale,
including
11
delivery
sales.
12
10.
“Retail
outlet”
means
each
place
of
business
from
which
13
tobacco
products
,
alternative
nicotine
products,
or
vapor
14
products
are
sold
to
consumers.
15
12.
“Sale”
means
any
transfer,
exchange,
or
barter,
in
any
16
manner
or
by
any
means
whatsoever,
for
a
consideration,
and
17
includes
and
means
all
sales
made
by
any
person.
It
includes
18
a
gift
by
a
person
engaged
in
the
business
of
selling
tobacco
19
products,
alternative
nicotine
products,
or
vapor
products
20
for
advertising,
as
a
means
of
evading
the
provisions
of
this
21
subchapter
,
or
for
any
other
purposes
whatsoever.
22
14.
“Storage”
means
any
keeping
or
retention
of
tobacco
23
products
,
alternative
nicotine
products,
or
vapor
products
for
24
use
or
consumption
in
this
state.
25
17.
“Use”
means
the
exercise
of
any
right
or
power
26
incidental
to
the
ownership
of
tobacco
products
,
alternative
27
nicotine
products,
or
vapor
products
.
28
Sec.
22.
Section
453A.45,
subsection
3,
Code
2026,
is
29
amended
to
read
as
follows:
30
3.
Every
retailer
and
subjobber
shall
procure
itemized
31
invoices
of
all
tobacco
products
,
alternative
nicotine
32
products,
and
vapor
products
purchased.
The
invoices
shall
33
show
the
name
and
address
of
the
seller
and
the
date
of
34
purchase.
The
retailer
and
subjobber
shall
preserve
a
legible
35
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copy
of
each
invoice
for
three
years
from
the
date
of
purchase.
1
Invoices
shall
be
available
for
inspection
by
the
director
or
2
the
director’s
authorized
agents
or
employees
at
the
retailer’s
3
or
subjobber’s
place
of
business.
4
Sec.
23.
Section
453A.48,
subsection
3,
Code
2026,
is
5
amended
to
read
as
follows:
6
3.
The
director
may
exchange
information
with
the
officers
7
and
agencies
of
other
states
administering
laws
relating
to
the
8
taxation
of
tobacco
products
,
alternative
nicotine
products,
9
or
vapor
products
.
10
Sec.
24.
Section
453A.51,
Code
2026,
is
amended
to
read
as
11
follows:
12
453A.51
Assessment
of
cost
of
audit.
13
The
department
may
employ
auditors
or
other
persons
to
14
audit
and
examine
the
books
and
records
of
a
permit
holder
15
or
other
person
dealing
in
tobacco
products
,
alternative
16
nicotine
products,
and
vapor
products
to
ascertain
whether
17
the
permit
holder
or
other
person
has
paid
the
amount
of
the
18
taxes
required
to
be
paid
by
the
permit
holder
or
other
person
19
under
the
provisions
of
this
chapter
.
If
the
taxes
have
not
20
been
paid,
as
required,
the
department
shall
assess
against
21
the
permit
holder
or
other
person,
as
additional
penalty,
the
22
reasonable
expenses
and
costs
of
the
investigation
and
audit.
23
EXPLANATION
24
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
25
the
explanation’s
substance
by
the
members
of
the
general
assembly.
26
This
bill
relates
to
administration
of
and
taxation
27
on
tobacco-related
products
including
imposing
a
tax
on
28
alternative
nicotine
products
and
vapor
products.
29
DIVISION
I
——
TAXATION
ON
TOBACCO-RELATED
PRODUCTS.
30
TOBACCO
PRODUCTS
DEFINITION.
The
bill
modifies
the
31
definition
of
tobacco
products
to
include
any
form
of
tobacco
32
for
chewing
or
smoking
consumption
in
any
manner.
33
NICOTINE
DEFINITION.
The
bill
defines
“nicotine”
to
mean
34
any
form
of
the
chemical
nicotine,
including
any
salt
or
35
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complex,
from
any
source,
and
includes
nicotinic
alkaloids
1
and
nicotine
analogs
and
any
substance
intended
to
mimic
2
or
replicate
the
pharmacological
effect
of
nicotine.
The
3
bill
specifies
for
purposes
of
the
definition
of
nicotine,
4
any
communication
by,
or
on
behalf
of,
the
manufacturer,
5
distributor,
or
retailer
of
a
tobacco
product
that
indicates
6
that
the
product
contains
a
nicotine
analog
constitutes
7
presumptive
evidence
that
the
product
contains
a
nicotine
8
analog.
9
CIGARETTE
TAXATION.
The
bill
raises
the
cigarette
tax
from
10
6.8
cents
per
cigarette
to
14.3
cents
per
cigarette.
The
11
overall
tax
on
a
pack
of
cigarettes
(20
cigarettes)
goes
from
12
$1.36
to
$2.86.
13
The
bill
also
raises
the
tax
on
loose
tobacco
products
14
inserted
into
a
vending
machine
from
which
assembled
cigarettes
15
are
dispensed.
The
tax
is
increased
from
3.06
cents
on
each
16
cigarette
dispensed
from
the
vending
machine
to
6.43
cents.
17
The
bill
creates
an
administrative
process
where
the
18
cigarette
tax
may
be
increased
in
proportion
to
any
retail
19
sales
price
increases
from
year
to
year.
The
bill
requires
20
the
department
of
revenue
(department)
to
conduct
a
statewide
21
survey
of
retail
cigarette
prices
to
determine
the
amount
of
22
increase
from
year
to
year.
The
tax
is
not
increased
if
the
23
retail
sales
price
of
cigarettes
does
not
increase
from
year
to
24
year.
In
conducting
the
statewide
survey
of
retail
cigarette
25
prices,
the
bill
prohibits
the
department
from
considering
26
state
or
federal
tax
increases
on
cigarettes
in
the
survey.
27
If
the
cigarette
tax
is
increased
through
the
administrative
28
process,
the
bill
requires
the
department
to
publish
the
new
29
rate
in
the
Iowa
administrative
bulletin
and
publish
the
new
30
rate
on
the
internet
site
of
the
department
by
December
31
31
following
the
determination
date
to
adjust
the
tax
rate.
The
32
calculation
and
publication
of
the
adjusted
rate
is
exempt
from
33
Code
chapter
17A
(Iowa
administrative
procedures
Act).
34
By
increasing
the
cigarette
tax
in
the
bill,
the
inventory
35
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tax
is
also
assessed
on
cigarettes
remaining
in
inventories
1
taxed
under
the
previous
tax
rate
that
is
equal
to
the
2
difference
between
the
previous
tax
rate
and
the
new
tax
rate.
3
Code
section
453A.35
specifies
that
revenues
from
the
tax
4
on
cigarettes
are
deposited
into
the
health
care
trust
fund
5
created
in
Code
section
453A.35A.
6
ALTERNATIVE
NICOTINE
PRODUCTS
——
LIMITATIONS.
The
bill
7
prohibits
a
package
of
alternative
nicotine
products
from
8
containing
more
than
20
separately
consumable
products
within
9
the
package.
10
TOBACCO
PRODUCTS
DEFINITION.
The
bill
modifies
the
11
definition
of
tobacco
products
to
include
snuff
and
snuff
flour
12
and
makes
other
changes
to
the
definition.
13
TOBACCO
PRODUCT,
ALTERNATIVE
NICOTINE
PRODUCT,
AND
14
VAPOR
PRODUCT
TAXATION.
Currently,
a
tax
is
imposed
on
the
15
distributor
of
all
tobacco
products
(excluding
cigarettes,
16
little
cigars,
and
snuff)
at
a
rate
of
22
percent
of
the
17
wholesale
sales
price
under
Code
section
453A.43(1)(a)
and
at
18
a
rate
of
28
percent
under
Code
section
453A.43(1)(b)
for
a
19
combined
rate
of
50
percent
tax
on
the
wholesale
sales
price.
20
The
bill
combines
the
22
percent
rate
and
the
28
percent
rate
21
and
imposes
the
combined
50
percent
rate
on
the
wholesale
22
sales
price
on
more
products
including
alternative
nicotine
23
products,
vapor
products,
cigars,
and
snuff.
When
the
tax
on
24
the
wholesale
sales
price
of
any
product
is
imposed
in
the
25
bill,
the
bill
specifies
the
resulting
amount
shall
not
be
26
below
$2.86.
Due
to
the
imposition
of
the
50
percent
tax
on
the
27
wholesale
sales
price
of
cigars
and
snuff,
the
bill
strikes
the
28
50
cent
taxation
on
cigars
and
the
$1.19
per
ounce
tax
imposed
29
on
snuff.
30
The
bill
applies
the
same
minimum
$2.86
rate
upon
consumers
31
for
the
use
or
storage
of
tobacco
products,
alternative
32
nicotine
products,
and
vapor
products,
if
the
tax
imposed
on
33
wholesale
sales
price
tax
has
not
otherwise
been
paid
at
the
34
wholesale
level.
35
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By
imposing
new
tax
rates
on
alternative
nicotine
products,
1
vapor
products,
cigars,
and
snuff,
the
inventory
tax
may
be
2
assessed
on
any
nicotine
products,
vapor
products,
cigars,
and
3
snuff
remaining
in
inventories
taxed
under
the
previous
tax
4
rate
that
is
equal
to
the
difference
between
the
previous
tax
5
rate
and
the
new
tax
rate.
6
DIVISION
II
——
CONFORMING
CHANGES.
The
bill
make
numerous
7
conforming
changes
by
adding
alternative
nicotine
products
and
8
vapor
products
to
reflect
the
changes
made
by
the
bill.
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