Tobacco, Tobacco Products

Plain English Breakdown

The official source material does not provide information about current tax rates or their changes.

Tennessee Vapor Product Tax and Penalty Act

This bill changes how vapor products are taxed in Tennessee by updating definitions of 'consumable material' and 'vapor product', and clarifies that fines for selling these products to minors under 21 years old must be issued by the Alcoholic Beverage Commission.

What This Bill Does

• Updates the definition of 'consumable material' used in vapor products to include both natural and synthetic liquid nicotine solutions, as well as analogues.
• Revises the definition of 'vapor product' to better describe noncombustible items that produce or emit vapor using a heating element, battery, electronic circuit, or other mechanism.
• Requires fines for selling vapor products to minors under 21 years old to be issued by the Alcoholic Beverage Commission.

Who It Names or Affects

• Vapor product manufacturers and sellers in Tennessee
• The state's Department of Revenue and Alcoholic Beverage Commission

Terms To Know

Consumable material

A liquid nicotine solution, whether natural or synthetic, or a liquid nicotine analogue intended for use in a vapor product.

Vapor product

A noncombustible item that uses a mechanical heating element, battery, electronic circuit, or other mechanism to produce or emit vapor from consumable materials.

Limits and Unknowns

• The bill does not specify how much revenue will be generated from the sale of liquid nicotine analogues.
• It is unclear how many retailers currently sell these products and whether they are regulated under federal law.

Official Summary Text

Present law requires e
very dealer or distributor of tobacco products
to
pay to the department
of revenue
for exclusive state purposes, taxes in addition to all other taxes or fees, for the privilege of selling cigarettes and tobacco products in this state.
T
he
tax
rate on vapor products is 10% of the wholesale cost price.
As used in this bill, a "v
apor product
" means a
noncombustible product containing consumable material, whether natural or synthetic, that employs a mechanical heating element, battery,
electronic circuit, or other mechanism, regardless of shape or size, that can be used to produce or emit a visible or non-visible vapor
, but such term d
oes not include a product regulated
by
the
federal
Food, Drug, and Cosmetic Act
. As used in that definition, a "c
onsumable material
" means a
liquid nicotine solution intended for use in a vapor product
. This bill revises the definition of "consumable material" to, instead, mean
a liquid nicotine solution, whether natural or synthetic, or a liquid nicotine
analogue intended for use in a vapor product
.

PENALTY

Present law provides that a
retailer, distributor, wholesaler, or importer who sells or offers for sale a vapor product for retail sale in this state to anyone under
21
is subject to a fine of $2,500 for the first offense, and a fine of at least
$
20,000 and loss of licensure for any subsequent offense.

This bill clarifies that such fines are
issued by the alcoholic beverage commission
.

Current Bill Text

SENATE BILL 2293
By Yager

HOUSE BILL 2359
By Hawk
HB2359
009909
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 39,
Chapter 17; Title 43; Title 57 and Title 67, Chapter
4, Part 10, relative to vapor products.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 67-4-1001(7), is amended by
deleting the subdivision and substituting instead:
(7) "Consumable material" means a liquid nicotine solution, whether natural or
synthetic, or a liquid nicotine analogue intended for use in a vapor product;
SECTION 2. Tennessee Code Annotated, Section 67-4-1001(28), is amended by
deleting the subdivision and substituting instead:
(28) "Vapor product":
(A) Means a noncombustible product containing consumable material
that employs a mechanical heating element, battery, electronic circuit, or other
mechanism, regardless of shape or size, that can be used to produce or emit a
visible or non-visible vapor;
(B) Includes an electronic cigarette, electronic cigar, electronic cigarillo,
electronic pipe, or similar product, and any vapor cartridge containing
consumable material or other container of consumable material that is intended
to be used with or in an electronic cigarette, electronic cigar, electronic cigarillo,
electronic pipe, or similar product; and
(C) Does not include a product regulated under Chapter V of the Food,
Drug, and Cosmetic Act (21 U.S.C. § 351 et seq.);

- 2 - 009909

SECTION 3. Tennessee Code Annotated, Section 67-4-1035(d), is amended by
deleting the language "is subject to a fine" and substituting instead the language "is subject to a
fine, issued by the alcoholic beverage commission,".
SECTION 4. This act takes effect upon becoming a law, the public welfare requiring it.