House File 2677 - Reprinted HOUSE FILE 2677 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 682) (As Amended and Passed by the House April 3, 2024 ) A BILL FOR An Act relating to the regulation of vapor products, and 1 providing penalties. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 HF 2677 (3) 90 pf/jh/md
H.F. 2677 Section 1. Section 453A.19, Code 2024, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 5. For the purpose of enabling the 3 department to determine compliance with subchapter III, the 4 department shall have the right to inspect any premises of the 5 holder of an Iowa permit located within the state of Iowa where 6 vapor products are stored, transported, sold, or offered for 7 sale or exchanged, to examine all stocks of vapor products of 8 the permit holder, and to examine all of the records required 9 to be kept or any other records that may be kept incident to 10 the conduct of the vapor products business of the permit holder 11 or any other person dealing in vapor products. It shall be 12 unlawful for any such permit holder to fail to produce upon 13 demand of the department any records required to be kept, or to 14 hinder or prevent in any manner the inspection of the records 15 or the examination of the premises or stock as specified in 16 this subsection. 17 Sec. 2. Section 453A.35, subsection 1, paragraph b, Code 18 2024, is amended to read as follows: 19 b. The revenues generated from the tax on cigarettes 20 pursuant to section 453A.6, subsection 1 , and from the tax on 21 tobacco products as specified in section 453A.43, subsections 22 1, 2, 3, and 4 , and from the fees and penalties specified in 23 subchapter III shall be credited to the health care trust fund 24 created in section 453A.35A . 25 Sec. 3. Section 453A.35A, Code 2024, is amended to read as 26 follows: 27 453A.35A Health care trust fund. 28 1. A health care trust fund is created in the office of 29 the treasurer of state. The fund consists of the revenues 30 generated from the tax on cigarettes pursuant to section 31 453A.6, subsection 1 , and from the tax on tobacco products 32 as specified in section 453A.43, subsections 1, 2, 3, and 4 , 33 and from the fees and penalties specified in subchapter III, 34 that are credited to the health care trust fund, annually, 35 -1- HF 2677 (3) 90 pf/jh/md 1/ 9
H.F. 2677 pursuant to section 453A.35 . Moneys in the fund shall be 1 separate from the general fund of the state and shall not be 2 considered part of the general fund of the state. However, the 3 fund shall be considered a special account for the purposes 4 of section 8.53 relating to generally accepted accounting 5 principles. Moneys in the fund shall be used only as specified 6 in this section and shall be appropriated only for the uses 7 specified. Moneys in the fund are not subject to section 8.33 8 and shall not be transferred, used, obligated, appropriated, 9 or otherwise encumbered, except as provided in this section . 10 Notwithstanding section 12C.7, subsection 2 , interest or 11 earnings on moneys deposited in the fund shall be credited to 12 the fund. 13 2. Moneys in the fund shall be used only for purposes 14 related to health care, substance use disorder treatment and 15 prevention, and tobacco use prevention, cessation, and control , 16 including but not limited to the administration and enforcement 17 of subchapter III . 18 Sec. 4. NEW SECTION . 453A.52 Vapor products directory 19 established requirements. 20 1. By August 1, annually, following the date the director 21 first makes the vapor products directory available as specified 22 in section 453A.52A, every vapor products manufacturer where 23 vapor products are sold in the state, whether directly or 24 through a distributor, wholesaler, retailer, or similar 25 intermediary or intermediaries, shall certify under penalty of 26 perjury on a form and in the manner prescribed by the director, 27 that the vapor products manufacturer agrees to comply with this 28 subchapter and to one of the following: 29 a. That the vapor products manufacturer has received a 30 marketing authorization or similar order for the vapor product 31 from the United States food and drug administration pursuant 32 to 21 U.S.C. 387j. 33 b. That the vapor product was marketed in the United 34 States as of August 8, 2016, the vapor products manufacturer 35 -2- HF 2677 (3) 90 pf/jh/md 2/ 9
H.F. 2677 submitted a premarket tobacco product application for the vapor 1 product to the United States food and drug administration 2 pursuant to 21 U.S.C. 387j on or before September 9, 2020, 3 and the application either remains under review by the United 4 States food and drug administration or a final decision on the 5 application has not otherwise taken effect. 6 2. A vapor products manufacturer shall submit a 7 certification form that separately lists each of the vapor 8 products manufacturers vapor products sold in this state. 9 3. Each initial and annual certification form required to 10 be submitted under this section shall be accompanied by both 11 of the following: 12 a. A copy of the marketing authorization or other order 13 for each vapor product issued by the United States food and 14 drug administration pursuant to 21 U.S.C. 387j, or evidence 15 that the premarket tobacco product application for each vapor 16 product was submitted to the United States food and drug 17 administration and a final authorization or order has not yet 18 taken effect. 19 b. A payment of one hundred dollars for each vapor product 20 listed in the certification. 21 4. A vapor products manufacturer required to submit a 22 certification form under this section shall notify the director 23 within thirty business days of any material change to the 24 certification form, including the issuance or denial of a 25 marketing authorization or other order by the United States 26 food and drug administration pursuant to 21 U.S.C. 387j, or 27 any other order or action by the United States food and drug 28 administration that affects the authorization of the vapor 29 product to be introduced or delivered into interstate commerce 30 for commercial distribution in the United States. 31 5. a. The director shall maintain and make publicly 32 available a vapor products directory that lists all 33 vapor products manufacturers and vapor products for which 34 certification forms have been submitted. 35 -3- HF 2677 (3) 90 pf/jh/md 3/ 9
H.F. 2677 b. The director shall make the directory available on the 1 departments internet site. 2 c. The director shall update the directory as necessary in 3 order to correct mistakes, ensure accuracy, and add or remove 4 vapor products on at least a monthly basis. 5 d. The director shall notify each retailer, distributor, and 6 wholesaler of any change to the directory on at least a monthly 7 basis via electronic communication. 8 6. a. The director shall provide a vapor products 9 manufacturer with notice and an opportunity to cure 10 deficiencies before removing the vapor products manufacturer or 11 a vapor product from the directory. 12 b. The director shall not remove a vapor products 13 manufacturer or the vapor products manufacturers vapor product 14 from the directory until at least fifteen business days after 15 the vapor products manufacturer has been given notice of an 16 intended action. Notice shall be sufficient and be deemed 17 immediately received by a vapor products manufacturer if the 18 notice is sent either electronically or by facsimile to an 19 electronic mail address or facsimile number, as applicable, 20 provided by the vapor products manufacturer in the vapor 21 products manufacturers most recent certification filed under 22 this section. 23 c. The vapor products manufacturer shall have fifteen 24 business days from the date of service of the notice of 25 intended action to establish that the vapor products 26 manufacturer or the vapor product should be included in the 27 directory. 28 d. A determination by the director to not include or to 29 remove a vapor products manufacturer or a vapor product from 30 the directory shall be subject to review by the filing of a 31 civil action for prospective declaratory or injunctive relief. 32 7. If a vapor product is removed from the directory, 33 the director shall notify each retailer, distributor, 34 and wholesaler of the removal of the vapor product and 35 -4- HF 2677 (3) 90 pf/jh/md 4/ 9
H.F. 2677 the effective date of such removal from the directory via 1 electronic communication. 2 8. If a vapor product is removed from the directory, each 3 retailer, distributor, and wholesaler shall have twenty-one 4 business days from the day such vapor product is removed from 5 the directory to remove the vapor product from its inventory 6 and return the vapor product to the vapor products manufacturer 7 for disposal. After twenty-one business days following removal 8 from the directory, the vapor products of a vapor products 9 manufacturer identified in the notice of removal are contraband 10 and are subject to seizure, forfeiture, and destruction, and 11 shall not be purchased or sold in the state. The cost of such 12 seizure, forfeiture, and destruction shall be borne by the 13 person from whom the vapor products are confiscated. 14 Sec. 5. NEW SECTION . 453A.52A Vapor products 15 requirements. 16 Beginning October 1, 2024, or on the date the director 17 first makes the vapor products directory available for public 18 inspection on the departments internet site, whichever is 19 later, all of the following shall apply to vapor products in 20 this state: 21 1. A person shall not sell or offer for sale a vapor product 22 in this state that is not included in the vapor products 23 directory, and a vapor products manufacturer shall not sell, 24 either directly or through a distributor, wholesaler, retailer, 25 or similar intermediary or intermediaries, a vapor product 26 in this state that is not included in the vapor products 27 directory. 28 2. A retailer shall purchase vapor products for resale to 29 consumers only from a distributor or subjobber with a valid 30 license issued pursuant to this chapter. 31 Sec. 6. NEW SECTION . 453A.52B Penalties. 32 1. A retailer, distributor, or wholesaler who sells or 33 offers for sale a vapor product in this state that is not 34 included in the vapor products directory established in 35 -5- HF 2677 (3) 90 pf/jh/md 5/ 9
H.F. 2677 this subchapter shall be subject to all of the following, as 1 applicable: 2 a. A civil penalty of three hundred dollars per day for each 3 vapor product offered for sale in violation of this subsection 4 until the offending vapor product is removed from the market 5 or until the offending vapor product is properly listed on the 6 directory. 7 b. For a second violation within a period of two years, a 8 retailer shall be assessed a civil penalty of one thousand five 9 hundred dollars or the retailers permit shall be suspended for 10 a period of thirty days. 11 c. For a third violation within a period of three years, a 12 retailer shall be assessed a civil penalty of one thousand five 13 hundred dollars and the retailers permit shall be suspended 14 for a period of thirty days. 15 d. For a fourth violation within a period of three years, a 16 retailer shall be assessed a civil penalty of one thousand five 17 hundred dollars and the retailers permit shall be suspended 18 for a period of sixty days. 19 e. For a fifth violation within a period of four years, the 20 retailers permit shall be revoked. 21 2. A vapor products manufacturer whose vapor products are 22 not listed in the vapor products directory and are sold in this 23 state, whether directly or through a distributor, wholesaler, 24 retailer, or similar intermediary or intermediaries, is subject 25 to a civil penalty of one thousand dollars per day for each 26 vapor product offered for sale in violation of this subsection 27 until the offending vapor product is removed from the market 28 or until the offending vapor product is properly listed on the 29 directory. 30 3. Any vapor products manufacturer that knowingly makes a 31 false representation in any of the information required by this 32 subchapter is guilty of a serious misdemeanor for each false 33 representation. 34 4. Knowingly shipping or receiving vapor products in 35 -6- HF 2677 (3) 90 pf/jh/md 6/ 9
H.F. 2677 violation of this subchapter is an unfair practice and a 1 violation of section 714.16. 2 5. In any action brought by the state to enforce this 3 subchapter, the state shall be entitled to recover the costs 4 of investigation and prosecution, expert witness fees, court 5 costs, and reasonable attorney fees. 6 Sec. 7. NEW SECTION . 453A.52C Compliance checks. 7 1. Each distributor or retailer that distributes or sells 8 vapor products in this state shall be subject to unannounced 9 compliance checks conducted by the department or peace officers 10 as defined in section 801.4 for purposes of enforcing this 11 subchapter. Peace officers who conduct compliance checks 12 pursuant to this section shall forward the results of any 13 compliance check to the department in a manner prescribed by 14 the department within thirty business days after the compliance 15 check is conducted. 16 2. Any unannounced follow-up compliance checks of a 17 noncompliant retailer or distributor shall be conducted within 18 thirty business days after any violation of this subchapter. 19 3. The director shall publish the results of all compliance 20 checks performed under this section at least annually and shall 21 make the results available to the public upon request. 22 Sec. 8. NEW SECTION . 453A.52D Agent for service of process. 23 1. A nonresident vapor products manufacturer that has not 24 registered to do business in the state as a foreign corporation 25 or business entity shall, as a condition precedent to being 26 included or retained in the vapor products directory, appoint 27 and continually engage without interruption the services of 28 an agent in this state to act as agent for service of process 29 on whom all process, and any action or proceeding against the 30 vapor products manufacturer concerning or arising out of the 31 enforcement of this subchapter, may be served in any manner 32 authorized by law. Such service shall constitute legal and 33 valid service of process on the vapor products manufacturer. 34 The vapor products manufacturer shall provide the name, 35 -7- HF 2677 (3) 90 pf/jh/md 7/ 9
H.F. 2677 address, telephone number, and proof of the appointment and 1 availability of such agent to the director. 2 2. The vapor products manufacturer shall provide notice 3 to the director thirty calendar days prior to termination of 4 the authority of an agent and shall further provide proof to 5 the satisfaction of the director of the appointment of a new 6 agent no less than five calendar days prior to the termination 7 of an existing agent appointment. In the event an agent 8 terminates an agency appointment, the manufacturer shall notify 9 the director of the termination within five calendar days and 10 shall include proof to the satisfaction of the director of the 11 appointment of a new agent. 12 3. A vapor products manufacturer whose vapor products 13 are sold in this state, who has not appointed and engaged 14 the services of an agent as required by this section, shall 15 be deemed to have appointed the secretary of state as its 16 agent for service of process. However, the appointment of the 17 secretary of state as agent shall not satisfy the condition 18 precedent for the vapor products manufacturer to be included or 19 retained in the vapor products directory. 20 Sec. 9. NEW SECTION . 453A.52E Proceeds paid to health care 21 trust fund. 22 The revenues generated from the payment of fees and 23 penalties provided for under this subchapter shall be credited 24 to the health care trust fund created in section 453A.35A and 25 used for the administration and enforcement of this subchapter. 26 Sec. 10. NEW SECTION . 453A.52F Annual reports. 27 By January 15, annually, following the date the director 28 first makes the vapor products directory available as specified 29 in section 453A.52A, the director shall submit a report to the 30 general assembly regarding the status of the vapor products 31 directory, vapor products manufacturers, the vapor products 32 included in the directory, revenue and expenditures related to 33 administration of this subchapter, and enforcement activities 34 undertaken pursuant to this subchapter. 35 -8- HF 2677 (3) 90 pf/jh/md 8/ 9
H.F. 2677 Sec. 11. NEW SECTION . 453A.52G Adoption of rules. 1 The director shall adopt rules pursuant to chapter 17A to 2 administer this subchapter. 3 Sec. 12. CODE EDITOR DIRECTIVES. 4 1. The Code editor is directed to create a new subchapter IV 5 in chapter 453A as follows: Subchapter IV shall be entitled 6 Uniform Application of Chapter. 7 2. The Code editor shall transfer section 453A.56 to the new 8 subchapter IV. 9 3. The Code editor is directed to create a new subchapter 10 III in chapter 453A as follows: Subchapter III shall be 11 entitled Vapor Products Directory and Regulation and include 12 sections 453A.52A through 453A.52G. 13 4. The Code editor may modify subchapter titles if necessary 14 and is directed to correct internal references in the Code as 15 necessary due to enactment of this section. 16 -9- HF 2677 (3) 90 pf/jh/md 9/ 9