Senate Study Bill 1137 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON HEALTH AND HUMAN SERVICES BILL BY CHAIRPERSON KLIMESH) A BILL FOR An Act imposing a tax on certain products containing nicotine 1 or nonnicotine substances, and including effective date and 2 applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1918XC (8) 91 jm/jh
S.F. _____ Section 1. NEW SECTION . 453A.6A Additional taxes imposed. 1 1. For purposes of this section: 2 a. E-liquid means a liquid solution containing nicotine, 3 nicotine analog, a nonnicotine substance, or other material 4 consumed during the process of vaporization or aerosolization 5 and is intended to be used with or in a vapor product. 6 E-liquid does not include any product regulated as a drug or 7 device by the United States department of agriculture under 8 chapter V of the federal Food, Drug, and Cosmetic Act. 9 b. Nicotine pouch means a smokeless preportioned pouch 10 containing nicotine designed to be placed between the lip and 11 the gum where the nicotine is absorbed into the bloodstream. A 12 nicotine pouch is not a tobacco product. 13 c. Retail sales price means the same as sales price as 14 defined in section 423.1. 15 d. Vapor cartridge means a prefilled disposable cartridge 16 or pod containing nicotine, nicotine analog, a nonnicotine 17 substance, or other material consumed during the process of 18 vaporization or aerosolization and is intended to be used with 19 or in a vapor product. Vapor cartridge does not include any 20 product regulated as a drug or device by the United States 21 department of agriculture under chapter V of the federal Food, 22 Drug, and Cosmetic Act. 23 2. a. The following taxes shall be imposed, collected, and 24 paid to the department on the following products sold at retail 25 in the following amounts: 26 (1) For a vapor cartridge, one dollar and fifteen cents per 27 cartridge. 28 (2) For a nicotine pouch, six and eight-tenths cents per 29 pouch. 30 b. The following taxes shall be imposed and collected, and 31 paid to the department in the following amounts upon the retail 32 sales price: 33 (1) For a vapor product requiring the use of e-liquids, 34 fifteen percent. 35 -1- LSB 1918XC (8) 91 jm/jh 1/ 4
S.F. _____ (2) For e-liquids sold separately from a vapor cartridge, 1 fifteen percent. 2 3. The taxes imposed pursuant to this section are in 3 addition to any other taxes imposed by law. 4 Sec. 2. Section 453A.35, subsection 1, paragraph a, Code 5 2025, is amended to read as follows: 6 a. With the exception of revenues credited to the health 7 care trust fund pursuant to paragraph b and revenues credited 8 to the Iowa cancer research fund pursuant to paragraph c , 9 the proceeds derived from the sale of stamps and the payment 10 of fees and penalties provided for under this chapter , and the 11 permit fees received from all permits issued by the department, 12 shall be credited to the general fund of the state. 13 Sec. 3. Section 453A.35, subsection 1, Code 2025, is amended 14 by adding the following new paragraph: 15 NEW PARAGRAPH . c. The revenues generated from the 16 additional tax in section 453A.6A shall be credited to the Iowa 17 cancer research fund created in section 453A.35B. 18 Sec. 4. NEW SECTION . 453A.35B Iowa cancer research fund. 19 1. An Iowa cancer research fund is created in the office of 20 the treasurer of state under the authority of the department of 21 health and human services. The fund consists of the revenues 22 generated from the additional tax in section 453A.6A. Moneys 23 in the fund shall be separate from the general fund of the 24 state and shall not be considered part of the general fund of 25 the 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 2. Moneys in the fund shall not be disbursed prior to 34 July 1, 2026, and shall only be used for purposes related 35 -2- LSB 1918XC (8) 91 jm/jh 2/ 4
S.F. _____ to supporting and funding cancer research in the state. The 1 department of health and human services shall develop an 2 application process and guidelines for cancer researchers to 3 receive moneys from the fund. 4 3. The department of health and human services shall report 5 on the program pursuant to section 217.21, beginning with the 6 period disbursements commence. 7 Sec. 5. EMERGENCY RULES. The department of revenue shall 8 adopt emergency rules under section 17A.4, subsection 3, and 9 section 17A.5, subsection 2, paragraph b, to implement the 10 provisions of this Act within sixty business days of the 11 effective date of this Act and shall submit such rules to the 12 administrative rules coordinator and the administrative code 13 editor pursuant to section 17A.5, subsection 1, within the same 14 period. The rules shall be effective immediately upon filing 15 unless a later date is specified in the rules. Any rules 16 adopted in accordance with this section shall also be published 17 as a notice of intended action as provided in section 17A.4. 18 Sec. 6. EFFECTIVE DATE. This Act, being deemed of immediate 19 importance, takes effect upon enactment. 20 Sec. 7. APPLICABILITY. This Act applies to retail sales of 21 e-liquids, nicotine pouches, and vapor cartridges made on or 22 after July 1, 2025. 23 EXPLANATION 24 The inclusion of this explanation does not constitute agreement with 25 the explanations substance by the members of the general assembly. 26 This bill imposes a tax on certain products containing 27 nicotine or nonnicotine substances. 28 For a vapor cartridge sold at retail, the bill imposes a 29 $1.15 tax per cartridge. For a nicotine pouch sold at retail, 30 the bill imposes a 6.8 cent tax per pouch. For a vapor product 31 requiring the use of e-liquids, the bill imposes a tax of 32 15 percent upon the retail sales price. For e-liquids sold 33 separately from a vapor cartridge, the bill imposes a tax of 15 34 percent upon the retail sales prices. 35 -3- LSB 1918XC (8) 91 jm/jh 3/ 4
S.F. _____ The taxes imposed pursuant to the bill are collected by the 1 department of revenue and are in addition to any other taxes 2 imposed by law, including the state sales tax. 3 The revenue generated by the bill is credited to the new 4 Iowa cancer research fund (fund), under the authority of the 5 department of health and human services (HHS). The bill 6 specifies moneys in the fund shall not be disbursed prior to 7 July 1, 2026, and shall only be appropriated for purposes 8 related to supporting and funding cancer research in the state. 9 The bill requires HHS to develop an application process and 10 guidelines for cancer researchers to receive moneys from the 11 fund. 12 The fund is not subject to reversion and moneys or earnings 13 attributable to the fund are credited to the fund. 14 The bill defines e-liquid, nicotine pouch, retail sales 15 price, and vapor cartridge. 16 The bill takes effect upon enactment in order for the 17 department of revenue to adopt emergency rules to implement 18 the bill. The bill applies to the retail sales of e-liquids, 19 nicotine pouches, and vapor cartridges made on or after July 20 1, 2025. 21 -4- LSB 1918XC (8) 91 jm/jh 4/ 4