HB529INTRODUCED
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HB529
ARRTLSS-1
By Representative Faulkner
RFD: Ways and Means General Fund
First Read: 03-Apr-25
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5 ARRTLSS-1 03/28/2025 TEW (F)dj 2025-1079
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First Read: 03-Apr-25
SYNOPSIS:
Under existing law, no additional tax is levied
on consumable vapor products beyond the general sales
tax.
This bill would levy a tax on these products and
provide for the reporting, collection, and distribution
of the proceeds from this tax.
This bill would also provide for the permitting
of retailers of these products and would impose
criminal penalties for violations of this act.
A BILL
TO BE ENTITLED
AN ACT
Relating to consumable vapor product; to levy a tax on
these products and provide for the reporting, collection, and
distribution of the proceeds from these taxes; to provide for
recordkeeping; to amend Sections 28-11-2, 28-11-7 and
28-11-17.1, Code of Alabama 1975, to provide for the
permitting of retailers of these products; and to provide
criminal penalties for violations of these provisions.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. For the purposes of Sections 1 through 6,
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Section 1. For the purposes of Sections 1 through 6,
the following terms have the respective meanings ascribed to
them by this section:
(1) CONSUMABLE VAPOR PRODUCT. The same meaning as the
term defined in Section 40-23-1, Code of Alabama 1975.
(2) DEPARTMENT. The Alabama Department of Revenue.
(3) PERSON. Any individual, corporation, partnership,
limited liability company, association, limited liability
partnership, or other organization that engages in any
for-profit or not-for-profit activities.
Section 2. (a) Beginning October 1, 2026, there is
levied an excise tax upon all consumable vapor product sold at
wholesale in this state or imported into this state for use,
consumption, or sale at retail. The tax shall be ten cents
($0.10) per milliliter of a consumable vapor product. The tax
shall not apply to sales between licensed wholesalers, being
the purpose and intent of this provision that the tax levied
is a levy on the ultimate consumer or user of consumable vapor
products with the wholesaler acting merely as an agent of the
state for the collection and payment of the tax to the state.
(b)(1) Except as provided in subdivision (2), the tax
shall be in addition to all other licenses and taxes levied by
law.
(2) The tax levied in subsection (a) shall be exclusive
and shall be in lieu of any other or additional county or
municipal taxes or license fees imposed on the sale or use of
consumable vapor products, and any act of the Legislature or
an ordinance or resolution by a taxing authority passed or
enacted on or before October 1, 2026, imposing a local tax or
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enacted on or before October 1, 2026, imposing a local tax or
local license fee on consumable vapor products is void.
(c) The tax shall not apply to any consumable vapor
product exported from this state for which proof of export is
available in the form of a bill of lading, shipping document,
and/or invoice.
Section 3. The proceeds from the tax levied in Section
2 and the penalties collected under the provisions of this act
shall be remitted to the department, which shall retain the
amount necessary to fund the administrative costs of
collecting the tax. The balance of the proceeds collected
shall be distributed quarterly as follows:
(1) Fifty percent to the State Treasury to the State
General Fund.
(2) Twenty-five percent to the counties in the state on
a basis of the ratio of the population of each county to the
total population of all counties in the state, as determined
in the most recent federal census prior to the distribution.
(3) Twenty-five percent to the municipalities in the
state on a basis of the ratio of the population of each
municipality to the total population of all municipalities in
the state, as determined in the most recent federal census
prior to distribution.
Section 4. (a)(1) Before any person engages in the
business of selling consumable vapor products on which the tax
levied in Section 2 has not been paid to the department, the
person shall apply for a license in a manner provided by rule
of the department. The license shall be a condition precedent
to engaging or continuing in the business of selling vapor
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to engaging or continuing in the business of selling vapor
product. Failure to submit a properly completed license
application may result in a delay in processing the
application or denial of the license.
(2) The department shall assess the penalties under
Section 40-25-16.1, Code of Alabama 1975, on any person who
engages in the business of selling any consumable vapor
product for which a license is required by this act without
having first obtained and subsequently retained a valid
license.
(b) On or before the 20th day of each month, each
person on whom the tax is imposed shall submit a statement to
the department showing the amounts utilized in the measurement
of the tax and all other information required by the
department and shall pay to the department the amount of tax
shown due.
(c) A licensee who timely files a return with the
payment due may deduct from the amount of tax payable with the
return a discount of 4.75 percent of the amount of tax payable
to the state. If the person does not remit the full amount
listed as due on the tax return, any discount claimed by the
person is disallowed.
(d) It is the duty of every person receiving, storing,
selling, or handling consumable vapor products subject to the
tax to keep and preserve all documents relating to the
purchase, sale, exchange, or receipt of all consumable vapor
products subject to the tax. Any authorized representative of
the department may audit and inspect this documentation during
normal business hours of the seller. The purchaser shall
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normal business hours of the seller. The purchaser shall
retain all purchase invoices from the source for every
purchase of consumable vapor products received for a period of
90 days at the purchaser's location. At the end of the 90
days, the purchase records shall be maintained with the
required books and records for a period of three years from
the date of purchase.
Section 5. (a) Any person subject to this act who fails
to make any report required of them by the department or who
fails to keep any of the records required by this act shall be
guilty of a Class B misdemeanor. Each month of such failure
shall constitute a separate offense. Consumable vapor products
shall be included in the informational report for tobacco
products filed with the department pursuant to and subject to
the penalties of Section 40-23-260, Code of Alabama 1975.
(b) Any taxpayer who violates this section may be
restrained from continuing in business, and the proper
prosecution shall be instituted in the name of the State of
Alabama by the Attorney General or by the counsel of the
department until the person complies with this act.
Section 6. (a) The Alabama Alcoholic Beverage Control
Board or any law enforcement officer may confiscate any
consumable vapor product in the possession of a person selling
or offering for sale consumable vapor products that does not
hold the permit required pursuant to Section 28-11-7, Code of
Alabama 1975.
(b) Any product confiscated pursuant to this section
shall be contraband and destroyed in a manner provided by the
board.
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board.
Section 7. Sections 28-11-2, 28-11-7, and 28-11-17.1
Code of Alabama 1975, are amended to read as follows:
"§28-11-2
For purposes of this chapter, the following terms have
the following meanings unless the context clearly indicates
otherwise:
(1) ALTERNATIVE NICOTINE PRODUCT. The term alternative
nicotine product includes any product that consists of or
contains nicotine that can be ingested into the body by
chewing, smoking, absorbing, dissolving, inhaling, snorting,
sniffing, or by any other means. The term does not include a
tobacco product, electronic nicotine delivery system, or any
product that has been approved by the United States Food and
Drug Administration for sale as a tobacco cessation product or
for other medical purposes and that is being marketed and sold
solely for that purpose.
(2) BOARD. The Alabama Alcoholic Beverage Control
Board.
(3) CHILD-RESISTANT PACKAGING. Liquid nicotine
container packaging meeting the requirements of 15 U.S.C. §
1472a.
(4) COMMISSIONER. The Commissioner of the Department of
Revenue.
(5) DISTRIBUTION. To sell, barter, exchange, or give
tobacco or tobacco products for promotional purposes or for
gratis.
(6) ELECTRONIC NICOTINE DELIVERY SYSTEM. Any electronic
device that uses a battery and heating element in combination
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device that uses a battery and heating element in combination
with an e-liquid or tobacco to produce a vapor that delivers
nicotine to the individual inhaling from the device to
simulate smoking, and includes, but is not limited to,
products that may be offered to, purchased by, or marketed to
consumers as an electronic cigarette, electronic cigar,
electronic cigarillo, electronic pipe, electronic hookah, vape
pen, vape tool, vaping device, or any variation of these
terms. The term also includes any e-liquid intended to be
vaporized in any device included in this subdivision.
(7) ELECTRONIC NICOTINE DELIVERY SYSTEM RETAILER. Any
retail business which offers for sale electronic nicotine
delivery systems.
(8) E-LIQUID. A liquid that contains nicotine and may
include flavorings or other ingredients that are intended for
use in an electronic nicotine delivery system . This term also
includes "consumable vapor product" as the term is defined in
Section 40-23-1.
(9) E-LIQUID MANUFACTURER. Any person who manufactures,
fabricates, assembles, processes, mixes, prepares, labels,
repacks, or relabels an e-liquid to be sealed in final
packaging intended for consumer use. This term includes an
owner of a brand or formula for an e-liquid who contracts with
another person to complete the fabrication and assembly of the
product to the brand or formula owner's standards.
(10) FDA. The United States Food and Drug
Administration.
(11) LIQUID NICOTINE CONTAINER. A bottle or other
container of a liquid product that is intended to be vaporized
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container of a liquid product that is intended to be vaporized
and inhaled using an electronic nicotine delivery system. The
term does not include a container holding liquid that is
intended for use in a vapor product if the container is
pre-filled and sealed by the manufacturer and is not intended
to be opened by the consumer.
(12) MINOR. Any individual under the age of 19 years.
(13) PERSON. Any natural person, firm, partnership,
association, company, corporation, or other entity. Person
does not include a manufacturer or wholesaler of tobacco or
tobacco products nor does it include employees of the permit
holder.
(14) PROOF OF IDENTIFICATION. Any one or more of the
following documents used for purposes of determining the age
of an individual purchasing, attempting to purchase, or
receiving tobacco, tobacco products, electronic nicotine
delivery systems, or alternative nicotine products:
a. A valid driver's license issued by any state and
bearing the photograph of the presenting individual.
b. United States Uniform Service Identification.
c. A valid passport.
d. A valid identification card issued by any state
agency for the purpose of identification and bearing the
photograph and date of birth of the presenting individual.
e. For legal mail order purposes only, a valid signed
certification that will verify the individual is 21 years of
age or older.
(15) RESPONSIBLE VENDOR PROGRAM. A program administered
by the board to encourage and support vendors in training
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by the board to encourage and support vendors in training
employees in legal and responsible sales practices.
(16) SAMPLER. Any business or person who distributes
tobacco or tobacco products for promotional purposes.
(17) SELF-SERVICE DISPLAY. A display that contains
tobacco or tobacco products and is located in an area openly
accessible to purchasers at retail and from which the
purchasers can readily access tobacco or tobacco products
without the assistance of the tobacco permit holder or an
employee of the permit holder. A display case that holds
tobacco or tobacco products behind locked doors does not
constitute a self-service display.
(18) SPECIALTY RETAILER OF ELECTRONIC NICOTINE DELIVERY
SYSTEMS. A business establishment at which any of the
following are true:
a. The sale of electronic nicotine delivery systems
accounts for more than 35 percent of the total quarterly gross
receipts for the establishment.
b. Twenty percent or more of the public retail floor
space is allocated for the offering, displaying, or storage of
electronic nicotine delivery systems.
c. Twenty percent or more of the total shelf space,
including retail floor shelf space and shelf space in areas
accessible only to employees, is allocated for the offering,
displaying, or storage of electronic nicotine delivery
systems.
d. The retail space features a self-service display for
electronic nicotine delivery systems.
e. Samples of electronic nicotine delivery systems are
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e. Samples of electronic nicotine delivery systems are
offered to customers.
f. Liquids intended to be vaporized through the use of
an electronic nicotine delivery system are produced at the
facility or are produced by the owner of the establishment or
any of its agents or employees for sale at the establishment.
(19) TOBACCO or TOBACCO PRODUCT. Any product made or
derived from tobacco that is intended for human consumption,
including any component, part, or accessory of a tobacco
product, except for raw materials other than tobacco used in
manufacturing a component, part, or accessory of a tobacco
product, but does not include an article that is a drug under
Section 201(g)(1) of the Federal Food, Drug, and Cosmetic Act,
a device under Section 201(h) of the Federal Food, Drug, and
Cosmetic Act, or a combination product described in Section
503(g) of the Federal Food, Drug, and Cosmetic Act.
(20) TOBACCO PERMIT. A permit issued by the board to
allow the permit holder to engage in the distribution of
tobacco, tobacco products, electronic nicotine delivery
systems, or alternative nicotine products at the location
identified in the permit.
(21) TOBACCO SPECIALTY STORE. A business that derives
at least 75 percent of its revenue from tobacco or tobacco
products."
"§28-11-7
(a)(1) Any person who distributes tobacco , or tobacco
products, electronic nicotine delivery systems, or alternative
nicotine products within this state shall first obtain a
permit from the board for each location of distribution. There
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permit from the board for each location of distribution. There
is no fee for the permit.
(2) Any person who distributes alternative nicotine
products or electronic nicotine delivery systems within this
state shall first obtain a permit from the board for each
location of distribution. An annual fee of one hundred fifty
dollars ($150) is established for this permit. The proceeds
from this permit fee shall be credited to the board and used
for the operational costs of enforcing this chapter.
(b) Any person who maintains a tobacco, tobacco
product, electronic nicotine delivery system, or alternative
nicotine product vending machine on his or her property in
this state shall first obtain a permit from the board for each
machine at each machine location. The permit for each machine
shall be posted in a conspicuous place on the machine.
(c) A permit shall be valid only for the location
specified in the permit application.
(d) A permit is not transferable or assignable and
shall be renewed annually. Notwithstanding the foregoing, if a
location for which a permit is obtained is sold or
transferred, the permit shall be transferred to the person
obtaining control of the location and shall be valid for 30
days after the transfer during which time a new permit shall
be obtained.
(e) If feasible, the board by rule may adopt procedures
for the issuance and renewal of permits which combine tobacco
permit procedures with the application and licensing
procedures for alcoholic beverages."
"§28-11-17.1
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"§28-11-17.1
(a)(1) Beginning March 1, 2022, or other date not more
than 30 days following a premarket tobacco application
submission deadline issued by the FDA, whichever is later,
every e-liquid manufacturer and manufacturer of alternative
nicotine products whose products are sold in this state,
whether directly or through a distributor, retailer, or
similar intermediary or intermediaries, shall execute and
deliver on a form prescribed by the commissioner, a
certification to the commissioner certifying, under penalty of
perjury, either of the following:
a. The product was on the market in the United States
as of August 8, 2016, and the manufacturer has applied for a
marketing order pursuant to 21 U.S.C. § 387j for the e-liquid,
e-liquid in combination with an electronic nicotine delivery
system, or alternative nicotine product that was on the market
in the United States as of April 12, 2022 and the manufacturer
applied for a marketing order pursuant to 21 U.S.C. § 387j on
or before May 14, 2022; , whichever is applicable, by
submitting a premarket tobacco product application on or
before September 9, 2020, to the FDA; and either of the
following is true:
1. The premarket tobacco product application for the
product remains under review by the FDA.
2. The FDA has issued a no marketing order for the
e-liquid, e-liquid in combination with an electronic nicotine
delivery system, or alternative nicotine product, whichever is
applicable, from the FDA; however, the agency or a federal
court has issued a stay order or injunction during the
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court has issued a stay order or injunction during the
pendency of the manufacturer's appeal of the no marketing
order.
b. The manufacturer has received a marketing order or
other authorization under 21 U.S.C. § 387j for the e-liquid,
e-liquid in combination with an electronic nicotine delivery
system, or alternative nicotine product, whichever is
applicable, from the FDA.
(2) In addition to the requirements in subdivision (1),
each manufacturer shall provide a copy of the cover page of
the premarket tobacco application with evidence of receipt of
the application by the FDA or a copy of the cover page of the
marketing order or other authorization issued pursuant to 21
U.S.C. § 387j, whichever is applicable.
(b) Any manufacturer submitting a certification
pursuant to subsection (a) shall notify the commissioner
within 30 days of any material change to the certification,
including issuance by the FDA of any of the following:
(1) A market order or other authorization pursuant to
21 U.S.C. § 387j.
(2) An order requiring a manufacturer to remove a
product from the market either temporarily or permanently.
(3) Any notice of action taken by the FDA affecting the
ability of the new product to be introduced or delivered into
interstate commerce for commercial distribution.
(4) Any change in policy that results in a product no
longer being exempt from federal enforcement oversight.
(c) The commissioner shall develop and maintain a
directory listing all e-liquid manufacturers and manufacturers
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directory listing all e-liquid manufacturers and manufacturers
of alternative nicotine products that have provided
certifications that comply with subsection (a) and all
products that are listed in those certifications.
(d) The commissioner shall do all of the following:
(1) Make the directory available for public inspection
on its website by May 1, 2022.
(2) Update the directory as necessary in order to
correct mistakes and to add or remove e-liquid manufacturers,
manufacturers of alternative nicotine products, or products
manufactured by those manufacturers consistent with the
requirements of subsections (a) and (b) on a monthly basis.
(3) Send monthly notifications to each wholesaler,
jobber, semijobber, retailer, importer, or distributor of
tobacco products that have qualified or registered with the
Department of Revenue, by electronic communication, containing
a list of all changes that have been made to the directory in
the previous month. In lieu of sending monthly notifications,
the commissioner may make the information available in a
prominent place on the Department of Revenue's public website.
(4) Information required to be listed in the directory
shall not be subject to the confidentiality and disclosure
provisions in Section 40-2A-10.
(e) Notwithstanding subsection (a), if an e-liquid
manufacturer or manufacturer of alternative nicotine products
can demonstrate to the commissioner that the FDA has issued a
rule, guidance, or any other formal statement that temporarily
exempts a product from the federal premarket tobacco
application requirements, the product may be added to the
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application requirements, the product may be added to the
directory upon request by the manufacturer if the manufacturer
provides sufficient evidence that the product is compliant
with the federal rule, guidance, or other formal statement, as
applicable.
(f) Each certifying e-liquid manufacturer and
manufacturer of alternative nicotine products shall pay an
initial fee of two thousand dollars ($2,000) to offset the
costs incurred by the department for processing the
certifications and operating the directory. The commissioner
shall collect an annual renewal fee of five hundred dollars
($500) to offset the costs associated with maintaining the
directory and satisfying the requirements of this section. The
fees received under this section by the department shall be
used by the department exclusively for processing the
certifications and operating and maintaining the directory.
After the payment of these expenses, two-thirds of the
remaining funds shall be deposited into the General Fund, and
the remaining one-third shall be distributed evenly to the
Alabama State Law Enforcement Agency and to the board.
(g) Beginning on September 1, 2021, no e-liquid,
e-liquid in combination with an electronic nicotine delivery
system, or alternative nicotine product that, in the case of
any such product, contains synthetic nicotine or nicotine
derived from a source other than tobacco may be sold or
otherwise distributed in this state without first obtaining
approval from the FDA for sale as a drug under Section
201(g)(1) of the Federal Food, Drug, and Cosmetic Act, a
device under Section 201(h) of the Federal Food, Drug, and
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device under Section 201(h) of the Federal Food, Drug, and
Cosmetic Act, a combination product described in Section
503(g) of the Federal Food, Drug, and Cosmetic Act, or some
other medical purpose.
(h)(1) Beginning May 1, 2022, or on the date that the
Department of Revenue first makes the directory available for
public inspection on its website as provided in subsection
(d), whichever is later, an e-liquid manufacturer or
manufacturer of alternative nicotine products who offers for
sale a product not listed on the directory is subject to a one
thousand dollars ($1,000) daily fine for each product offered
for sale in violation of this section until the offending
product is removed from the market or until the offending
product is properly listed on the directory.
(2) Any other violation of this section shall result in
a fine of five hundred dollars ($500) per offense.
(i) The commissioner shall adopt rules for the
implementation and enforcement of this section."
Section 8. The department shall enforce this act and
may adopt rules to administer and enforce this act.
Section 9. This act shall become effective on October
1, 2025.
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