Nicotine Product Tax Amendments

37
59-14-102
59-14-204
59-14-215
59-14-804
59-14-807
0
Nicotine Product Tax Amendments
2026 GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Tyler Clancy
Senate Sponsor: Jerry W Stevenson

Cosponsor:
Ariel Defay
Karen M. Peterson
Cheryl K. Acton
Steve Eliason
Candice B. Pierucci
Emily Buss
Jon Hawkins
Raymond P. Ward
Kay J. Christofferson
Tracy J. Miller
Paul A. Cutler
Clinton D. Okerlund
LONG TITLE
General Description:
This bill modifies provisions related to nicotine product taxes.
Highlighted Provisions:
This bill:
defines terms;
increases the rates of the taxes levied on cigarettes, electronic cigarettes, and
nontherapeutic nicotine devices;
replaces the weight-based tax rate for alternative nicotine products with:
a per product tax rate, for alternative nicotine products that contain pouches; or
a tax rate based on a percentage of the manufacturer's sales price, for alternative
nicotine products that do not contain pouches;
imposes a transitional inventory tax on cigarettes subject to the tax increase described in
this bill;
requires the Division of Finance to transfer the additional revenue generated by the tax
increases described in this bill for electronic cigarettes, nontherapeutic nicotine devices,
and alternative nicotine products to the General Fund; and
makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
Utah Code Sections Affected:
AMENDS:
59-14-102
Effective
07/01/26
, as last amended by Laws of Utah 2025, Chapter 173
59-14-204
Effective
07/01/26
, as last amended by Laws of Utah 2016, Chapter 168
59-14-215
Effective
07/01/26
, as enacted by Laws of Utah 2010, Chapter 415 and last
amended by Coordination Clause, Laws of Utah 2010, Chapter 407
59-14-804
Effective
07/01/26
, as last amended by Laws of Utah 2023, Chapter 300
59-14-807
Effective
07/01/26
Partially Repealed
07/01/30
, as last amended by Laws
of Utah 2025, Chapters 173, 366
Be it enacted by the Legislature of the state of Utah:
Section 1. Section
59-14-102
is amended to read:
59-14-102
Effective
07/01/26
. Definitions.
As used in this chapter:
(1)
"Alternative nicotine product" means the same as that term is defined in Section
76-9-1101
.
(2)
"Cigarette" means a roll made wholly or in part of tobacco:
(a)
regardless of:
(i)
the size of the roll;
(ii)
the shape of the roll;
(iii)
whether the tobacco is flavored, adulterated, or mixed with any other ingredient;
or
(iv)
whether the tobacco is heated or burned; and
(b)
if the roll has a wrapper or cover that is made of paper or any other substance or
material except tobacco.
(3)
"Cigarette rolling machine" means a device or machine that has the capability to
produce at least 150 cigarettes in less than 30 minutes.
(4)
"Cigarette rolling machine operator" means a person who:
(a)
(i)
controls, leases, owns, possesses, or otherwise has available for use a cigarette
rolling machine; and
(ii)
makes the cigarette rolling machine available for use by another person to
produce a cigarette; or
(b)
offers for sale, at retail, a cigarette produced from the cigarette rolling machine.
(5)
"Consumer" means a person that is not required:
(a)
under Section
59-14-201
to obtain a license under Section
59-14-202
;
(b)
under Section
59-14-301
to obtain a license under Section
59-14-202
; or
(c)
to obtain a license under Section
59-14-803
.
(6)
"Counterfeit cigarette" means:
(a)
a cigarette that has a false manufacturing label; or
(b)
a package of cigarettes bearing a counterfeit tax stamp.
(7)
(a)
"Electronic cigarette" means the same as that term is defined in Section
76-9-1101
.
(b)
"Electronic cigarette" does not include a cigarette or a tobacco product.
(8)
"Electronic cigarette product" means the same as that term is defined in Section
76-9-1101
.
(9)
"Electronic cigarette substance" means the same as that term is defined in Section
76-9-1101
.
(10)
"Importer" means a person that imports into the United States, either directly or
indirectly, a finished cigarette for sale or distribution.
(11)
"Indian tribal entity" means a federally recognized Indian tribe, tribal entity, or any
other person doing business as a distributor or retailer of cigarettes on tribal lands
located in the state.
(12)
"Little cigar" means a roll for smoking that:
(a)
is made wholly or in part of tobacco;
(b)
uses an integrated cellulose acetate filter or other similar filter; and
(c)
is wrapped in a substance:
(i)
containing tobacco; and
(ii)
that is not exclusively natural leaf tobacco.
(13)
(a)
Except as provided in Subsection
(13)(b)
, "manufacturer" means a person that:
(i)
manufactures, fabricates, assembles, processes, or labels a finished cigarette; or
(ii)
makes, modifies, mixes, manufactures, fabricates, assembles, processes, labels,
repackages, relabels, or imports an electronic cigarette product or a nicotine
product.
(b)
"Manufacturer" does not include a cigarette rolling machine operator.
(14)
"Moist snuff" means tobacco that:
(a)
is finely cut, ground, or powdered;
(b)
has at least 45% moisture content, as determined by the commission by rule made in
accordance with
Title 63G, Chapter 3, Utah Administrative Rulemaking Act
;
(c)
is not intended to be:
(i)
smoked; or
(ii)
placed in the nasal cavity; and
(d)
except for single-use pouches of loose tobacco, is not packaged, produced, sold, or
distributed in single-use units, including:
(i)
tablets;
(ii)
lozenges;
(iii)
strips;
(iv)
sticks; or
(v)
packages containing multiple single-use units.
(15)
"Nicotine" means the same as that term is defined in Section
76-9-1101
.
(16)
"Nicotine pouch product" means an alternative nicotine product that:
(a)
delivers nicotine in the form of a pouch containing a solid, gel, or paste; and
(b)
is intended for human consumption or placement in the oral cavity for absorption
into the human body by any means other than inhalation.
(16)
(17)
"Nicotine product" means the same as that term is defined in Section
76-9-1101
.
(17)
(18)
"Nontherapeutic nicotine device" means the same as that term is defined in
Section
76-9-1101
.
(18)
(19)
"Nontherapeutic nicotine device substance" means the same as that term is
defined in Section
76-9-1101
.
(19)
(20)
"Nontherapeutic nicotine product" means the same as that term is defined in
Section
76-9-1101
.
(20)
(21)
"Prefilled electronic cigarette" means the same as that term is defined in Section
76-9-1101
.
(21)
(22)
"Prefilled nontherapeutic nicotine device" means the same as that term is defined
in Section
76-9-1101
.
(22)
(23)
"Retailer" means a person that:
(a)
sells or distributes a cigarette, an electronic cigarette product, or a nicotine product to
a consumer in the state; or
(b)
intends to sell or distribute a cigarette, an electronic cigarette product, or a nicotine
product to a consumer in the state.
(23)
(24)
"Stamp" means the indicia required to be placed on a cigarette package that
evidences payment of the tax on cigarettes required by Section
59-14-205
.
(24)
(25)
(a)
"Tobacco product" means a product made of, or containing, tobacco.
(b)
"Tobacco product" includes:
(i)
a cigarette produced from a cigarette rolling machine;
(ii)
a little cigar; or
(iii)
moist snuff.
(c)
"Tobacco product" does not include a cigarette.
(25)
(26)
"Tribal lands" means land held by the United States in trust for a federally
recognized Indian tribe.
Section 2. Section
59-14-204
is amended to read:
59-14-204
Effective
07/01/26
. Tax basis -- Rate -- Future increase -- Cigarette
Tax Restricted Account -- Appropriation and expenditure of revenues.
(1)
Except for cigarettes described under Subsection
59-14-210(3)
, there is levied a tax
upon the sale, use, storage, or distribution of cigarettes in the state.
(2)
The
rates of the tax levied under Subsection
(1)
are, beginning on July 1, 2010:
rate of
the tax levied under Subsection
(1)
is 11 cents on each cigarette.
(a)
8.5 cents on each cigarette, for all cigarettes weighing not more than three pounds
per thousand cigarettes; and
(b)
9.963 cents on each cigarette, for all cigarettes weighing in excess of three pounds
per thousand cigarettes.
(3)
Except as otherwise provided under this chapter, the tax levied under Subsection
(1)

shall be paid by any person who is the manufacturer, jobber, importer, distributor,
wholesaler, retailer, user, or consumer.
(4)
The tax rates specified in this section shall be increased by the commission by the same
amount as any future reduction in the federal excise tax on cigarettes.
(5)
(a)
There is created within the General Fund a restricted account known as the
"Cigarette Tax Restricted Account."
(b)
The Cigarette Tax Restricted Account consists of:
(i)
the first $7,950,000 of the revenues collected from a tax under this section; and
(ii)
any other appropriations the Legislature makes to the Cigarette Tax Restricted
Account.
(c)
For each fiscal year beginning with fiscal year 2011-12 and subject to appropriation
by the Legislature, the Division of Finance shall distribute money from the Cigarette
Tax Restricted Account as follows:
(i)
$250,000 to the Department of Health to be expended for a tobacco prevention
and control media campaign targeted towards children;
(ii)
$2,900,000 to the Department of Health to be expended for tobacco prevention,
reduction, cessation, and control programs;
(iii)
$2,000,000 to the University of Utah Health Sciences Center for the Huntsman
Cancer Institute to be expended for cancer research; and
(iv)
$2,800,000 to the University of Utah Health Sciences Center to be expended for
medical education at the University of Utah School of Medicine.
(d)
In determining how to appropriate revenue deposited into the Cigarette Tax
Restricted Account that is not otherwise appropriated under Subsection
(5)(c)
, the
Legislature shall give particular consideration to enhancing Medicaid provider
reimbursement rates and medical coverage for the uninsured.
Section 3. Section
59-14-215
is amended to read:
59-14-215
Effective
07/01/26
. Transitional inventory tax on cigarettes --
Penalties and interest for failure to comply -- Credit or refund for outdated, unaffixed
stamps.
(1)
In addition to the tax described in Section
59-14-204
, there is imposed, beginning on
July 1,
2010
2026
, an inventory tax on all cigarettes subject to the tax described in
Section
59-14-204
, upon the sale, use, storage, or distribution of those cigarettes in the
state, as follows:
(a)
the tax imposed in this section applies only to cigarettes sold, used, stored, or
distributed in the state on or after July 1,
2010
2026
:
(i)
that have a stamp that reflects that the tax paid on those cigarettes was paid at the
tax rate imposed under Section
59-14-204
that was applicable on June 30,
2010
2026
; and
(ii)
for which the tax imposed in this section has not been paid; and
(b)
the tax imposed in this section is equal to the difference between:
(i)
the tax imposed on those cigarettes under Section
59-14-204
, beginning on July 1,
2010
2026
; and
(ii)
the tax imposed on those cigarettes under Section
59-14-204
on or before June
30,
2010
2026
.
(2)
Except as otherwise provided under this chapter, the tax imposed under this section
shall be paid by any person who is the manufacturer, jobber, importer, distributor,
wholesaler, or retailer.
(3)
A person described in Subsection
(2)
shall remit the tax imposed in this section, on a
return prescribed by the commission, on or before July 31,
2010
2026
.
(4)
Failure of a person to comply with the requirements of this section subjects the person
to the penalties and interest described in Sections
59-1-401
and
59-1-402
.
(5)
The commission may not waive the interest or penalties imposed on a person for failure
to comply with the requirements of this section.
(6)
(a)
Beginning on July 1,
2010
2026
, it is unlawful to affix a stamp to cigarettes that
reflects payment of the tax imposed under Section
59-14-204
at the rate that was
applicable on or before June 30,
2010
2026
.
(b)
A person who violates Subsection
(6)(a)
may be required by the commission to pay
as part of the tax, and in addition to any other penalty provided in this chapter, a
penalty of $25 for each offense, to be assessed and collected by the commission in
accordance with
Chapter 1, Part 14, Assessment, Collections, and Refunds Act
.
(c)
A person who, on or after July 1,
2010
2026
, possesses tax stamps described in
Subsection
(6)(a)
may return the stamps to the commission for a credit or refund.
Section 4. Section
59-14-804
is amended to read:
59-14-804
Effective
07/01/26
. Taxation of electronic cigarette substance,
prefilled electronic cigarette, alternative nicotine product, nontherapeutic nicotine device
substance, and prefilled nontherapeutic nicotine device.
(1)
(a)
Beginning on July 1, 2020, a tax is imposed upon the following:
(i)
an electronic cigarette substance; and
(ii)
a prefilled electronic cigarette.
(b)
Beginning on July 1, 2021, a tax is imposed upon the following:
(i)
a nontherapeutic nicotine device substance; and
(ii)
a prefilled nontherapeutic nicotine device.
(c)
Beginning on July 1, 2021, a tax is imposed upon an alternative nicotine product.
(2)
(a)
The amount of tax imposed under Subsections
(1)(a)
and
(b)
is
.56
.71
multiplied
by the manufacturer's sales price.
(b)
(i)
The amount of tax imposed under Subsection
(1)(c)
on an alternative nicotine
product that is a nicotine pouch product is the sum of:
(A)
$1; and
(B)
5 cents on each pouch contained within the alternative nicotine product in
excess of 20 pouches.
(ii)
The amount of tax imposed under Subsection
(1)(c)
on an alternative nicotine
product that is not a nicotine pouch product is .73 multiplied by the manufacturer's
sales price.
(b)
(i)
The tax under Subsection
(1)(c)
on an alternative nicotine product
is
imposed:
(A)
at a rate of $1.83 per ounce; and
(B)
on the basis of the net weight of the alternative nicotine product as listed by
the manufacturer.
(ii)
If the net weight of the alternative nicotine product is in a quantity that is a
fractional part of one ounce, a proportionate amount of the tax described in
Subsection
(2)(b)(i)(A)
is imposed:
(A)
on that fractional part of one ounce; and
(B)
in accordance with rules made by the commission in accordance with
Title
63G, Chapter 3, Utah Administrative Rulemaking Act
.
(3)
If a product is sold in the same package as a product that is taxed under Subsection
(1)
,
the tax described in Subsection
(2)
shall apply to the wholesale manufacturer's sale price
of the entire packaged product.
(4)
(a)
A manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user shall
pay the tax levied under Subsection
(1)
at the time that an electronic cigarette
substance, a prefilled electronic cigarette, an alternative nicotine product, a
nontherapeutic nicotine device substance, or a prefilled nontherapeutic nicotine
device is first received in the state.
(b)
A manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user may not
resell an electronic cigarette substance, a prefilled electronic cigarette, an alternative
nicotine product, a nontherapeutic nicotine device substance, or a prefilled
nontherapeutic nicotine device to another distributor, another retailer, or a consumer
before paying the tax levied under Subsection
(1)
.
(5)
(a)
The manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user shall
remit the taxes collected in accordance with this section to the commission.
(b)
The commission shall deposit revenues generated by the tax imposed by this section
into the Electronic Cigarette Substance and Nicotine Product Proceeds Restricted
Account created in Section
59-14-807
.
Section 5. Section
59-14-807
is amended to read:
59-14-807
Effective
07/01/26
Partially Repealed
07/01/30
. Electronic
Cigarette Substance and Nicotine Product Proceeds Restricted Account.
(1)
There is created within the General Fund a restricted account known as the "Electronic
Cigarette Substance and Nicotine Product Proceeds Restricted Account."
(2)
The Electronic Cigarette Substance and Nicotine Product Proceeds Restricted Account
consists of:
(a)
revenue collected from the tax imposed by Section
59-14-804
;
(b)
fees and penalties collected under Section
59-14-810
;
(c)
all money received by the attorney general or the Department of Commerce as a
result of any judgment, settlement, or compromise of claims pertaining to alleged
violations of law related to the manufacture, marketing, distribution, or sale of
electronic cigarette products, as defined in Section
76-9-1101
:
(i)
if the total amount of the judgment, settlement, or compromise received by the
state exceeds $1,000,000; and
(ii)
after reimbursement to the attorney general and the Department of Commerce for
expenses related to the matters described in this Subsection
(2)(c)
; and
(d)
amounts appropriated by the Legislature.
(3)
(a)
Subject to Subsections
(3)(b)
and
(c)
, for each fiscal year and subject to
appropriation by the Legislature, the Division of Finance shall distribute from the
Electronic Cigarette Substance and Nicotine Product Proceeds Restricted Account:
(i)
$2,000,000 to the Department of Health and Human Services for enforcement
services aimed at disrupting organizations and networks that provide tobacco
products, electronic cigarette products, nicotine products, or other illegal
controlled substances to minors, which the Department of Health and Human
Services shall allocate to the local health departments using the formula created in
accordance with Section
26A-1-116
;
(ii)
$1,180,000 to the Department of Public Safety for law enforcement officers
aimed at disrupting organizations and networks that provide tobacco products,
electronic cigarette products, nicotine products, and other illegal controlled
substances to minors;
(iii)
$1,000,000 to the Department of Health and Human Services for enforcement
services aimed at disrupting organizations and networks that provide tobacco
products, electronic cigarette products, nicotine products, and other illegal
controlled substances to minors;
(iv)
$3,000,000 to the Department of Health and Human Services for community
partner prevention programs, which the Department of Health and Human
Services shall allocate to the local health departments using the formula created in
accordance with Section
26A-1-116
;
(v)
$1,000,000 to the Department of Health and Human Services for statewide
cessation programs and prevention education;
(vi)
$2,000,000 to the Department of Health and Human Services for alcohol,
tobacco, and other drug prevention, reduction, cessation, and control programs
that promote unified messages and make use of media outlets, including radio,
newspaper, billboards, and television; and
(vii)
$5,084,200 to the State Board of Education for school-based prevention
programs.
(b)
If the amount in the Electronic Cigarette Substance and Nicotine Product Proceeds
Restricted Account is insufficient to cover the distributions described in Subsection
(3)(a)
, the Division of Finance shall make the distributions under Subsection
(3)(a)
:
(i)
sequentially in the order of priority the distributions are listed under Subsection
(3)(a)
;
(ii)
in full or, if insufficient funds are available to satisfy the next distribution in the
sequence, in part; and
(iii)
until the available funds in the Electronic Cigarette Substance and Nicotine
Product Proceeds Restricted Account are exhausted.
(c)
For each fiscal year and subject to appropriation by the Legislature, the Division of
Finance shall distribute from the funds deposited under Section
59-14-810
into the
Electronic Cigarette Substance and Nicotine Product Proceeds Restricted Account:
(i)
to the commission, in an amount equal to the amount necessary to create and
maintain the registry described in Section
59-14-810
;
(ii)
to the Department of Health and Human Services, in an amount necessary for
completing duties described in Section
59-14-810
; and
(iii)
to the Department of Health and Human Services, the remainder to be divided
among the local health departments for inspection and enforcement described in
Sections
26A-1-131
and
59-14-810
.
(4)
(a)
The local health departments shall use the money received in accordance with
Subsection
(3)(a)
for enforcing:
(i)
the regulation provisions described in Section
26B-7-505
;
(ii)
the labeling requirement described in Section
26B-7-505
; and
(iii)
the penalty provisions described in Section
26B-7-518
.
(b)
The Department of Health and Human Services shall use the money received in
accordance with Subsection
(3)(a)(v)
for the Youth Electronic Cigarette, Marijuana,
and Other Drug Prevention Program created in Section
26B-1-428
.
(c)
The local health departments shall use the money received in accordance with
Subsection
(3)(a)(iv)
to issue grants under the Electronic Cigarette, Marijuana, and
Other Drug Prevention Grant Program created in Section
26A-1-129
.
(d)
The State Board of Education shall use the money received in accordance with
Subsection
(3)(a)(vii)
to distribute to local education agencies to pay for:
(i)
(A)
stipends for positive behaviors specialists as described in Subsection
53G-10-407(4)(a)(i)
;
(B)
the cost of administering the positive behaviors plan as described in
Subsection
53G-10-407(4)(a)(ii)
; and
(C)
the cost of implementing an Underage Drinking and Substance Abuse
Prevention Program in grade 4 or 5, as described in Subsection
53G-10-406(3)(b)
; or
(ii)
a comprehensive prevention plan, as that term is defined in Section
53F-2-525
.
(5)
(a)
The fund shall earn interest.
(b)
All interest earned on fund money shall be deposited into the fund.
(6)
For a fiscal year beginning on or after July 1, 2026, the Division of Finance shall
transfer to the General Fund the amount of revenue generated from the taxes imposed
under Section
59-14-804
that exceeds $15,900,000.
(6)
(7)
Subject to legislative appropriations, funds remaining in the Electronic Cigarette
Substance and Nicotine Product Proceeds Restricted Account after the distribution
described in Subsection
(3)
may only be used for:
(a)
funding commission personnel to enforce compliance with the tax collection
requirements of this part; and
(b)
programs and activities related to the prevention and cessation of electronic cigarette,
nicotine products, marijuana, and other drug use.
Section 6.
Effective Date.
This bill takes effect on
July 1, 2026
.
3-10-26 9:05 AM