LEGISLATIVE SERVICES AGENCY
OFFICE OF FISCAL AND MANAGEMENT ANALYSIS
FISCAL IMPACT STATEMENT
LS 6559 NOTE PREPARED: Jan 1, 2025
BILL NUMBER: HB 1410 BILL AMENDED:
SUBJECT: Ban on Sale of Flavored Tobacco and E-liquids.
FIRST AUTHOR: Rep. Jackson BILL STATUS: As Introduced
FIRST SPONSOR:
FUNDS AFFECTED:XGENERAL IMPACT: State & Local
XDEDICATED
FEDERAL
Summary of Legislation: This bill prohibits the sale of flavored tobacco products and their components,
including: (1) cigarettes, electronic cigarettes, and smokeless tobacco; and (2) tobacco products that have
a characterizing flavor. It also provides that a person or entity that sells a flavored tobacco product commits
a Class C misdemeanor and may have the person's or entity's tobacco sales certificate revoked by the Alcohol
and Tobacco Commission.
Effective Date: July 1, 2025.
Explanation of State Expenditures: Alcohol and Tobacco Commission (ATC): The ATC would enforce
the bill’s prohibition on the sale of flavored tobacco products. The ATC may investigate violations, impose
penalties, and revoke or suspend tobacco sales certificates for violations of the bill’s provisions. The bill’s
requirements would increase the ATC’s workload and potentially increase enforcement costs.
Explanation of State Revenues: Summary - To the extent the bill reduces sales of cigarettes, e-cigarettes,
and other tobacco products, revenue from Cigarette and Tobacco Products, E-cigarette, and Sales Taxes
would decrease from the expected revenue beginning in FY 2026. The estimated total revenue decline is
between $46.2 M and $115.6 M in FY 2026 and $45.3 M to $113.3 M in FY 2027. [The table below shows
the estimated revenue loss from each tax impacted by the bill.] The revenue loss to the General Fund could
be approximately $32.3 M to $80.7 M in FY 2026 and $31.6 M to $79.1 M in FY 2027. However, the actual
impact on revenue would depend on the extent to which consumers that would normally purchase flavored
tobacco products decide to substitute unflavored tobacco products.
In addition, there would be an increase in penalties from the prohibition on the sale of flavored tobacco
products, and the prohibition may reduce tobacco sales certificates, leading to a decrease in renewal fees.
HB 1410 1 Estimated Revenue Loss (Millions)
Revenue Source FY 2026 FY 2027
Cigarette Tax $25.5 - $63.9$24.4 - $60.9
Other Tobacco Products Tax $6.4 - $16.0 $6.7 - $16.8
E-Cigarette Tax $0.4 - $1.0 $0.3 - $0.8
Sales Tax $13.9 - $34.7$13.9 - $34.8
Total $46.2 - $115.6$45.3 - $113.3
Additional Information -
Cigarette, Tobacco Products, E-cigarette, and Sales Taxes: The estimated revenue loss is based on changes
in revenue in other states that have implemented a ban on flavored tobacco products. Massachusetts
(beginning in 2020) and California (beginning in 2022) both prohibit the sale of flavored e-cigarettes and
menthol cigarettes. Both states saw a significant decrease to cigarette tax revenue after the ban. The estimates
assume that expected revenue would decrease by 10% to 25%.
The Federal Trade Commission reports that in CY 2022, the market share of menthol-flavored cigarettes was
36% of total cigarette sales in the U.S. The share of flavored tobacco products (other than cigarettes), closed
system cartridges, and e-cigarettes is also significant but varies by type of product. The share of e-cigarette
sales attributable to flavored products was an estimated 81% as of June 2024, according to the CDC
Foundation.
Cigarette Tax revenue is distributed to the following funds: General Fund (56.84%), Healthy Indiana Plan
Trust Fund (27.05%), Pension Relief Fund (5.43%), Cigarette Tax Fund (4.22%), State Retiree Health
Benefit Trust Fund (4%), and General Fund for Medicaid reimbursements (2.46%). Twenty-five percent of
Other Tobacco Products Tax revenue is deposited in the Affordable Housing and Community Development
Fund, and the remaining 75% is distributed in the same manner as the Cigarette Tax.
All revenue from the Electronic Cigarette Tax is deposited into the General Fund.
Sales Tax revenue is deposited in the General Fund (99.838%), Commuter Rail Service Fund (0.131%), and
Industrial Rail Service Fund (0.031%).
Tobacco Sales Certificates: The bill provides that a retailer’s tobacco sales certificate may be revoked if they
sell flavored tobacco products. To the extent that the bill results in fewer active tobacco sales certificates,
revenue from renewal fees could decrease. The $200 fee for a certificate is paid every three years and is
deposited in the Enforcement and Administration Fund. [As of November 2024, there are 8,298 active
tobacco sales certificates with 1,399 that have been renewed so far in 2024.]
Penalty Provision: If additional court cases occur and fines are collected, revenue to both the Common
School Fund (from fines) and the state General Fund (from court fees) would increase. The maximum fine
for a Class C misdemeanor is $500. The total fee revenue per case would range between $113 and $138. The
amount of court fees deposited will vary depending on whether the case is filed in a court of record or a
municipal court. The following linked document describes the fees and distribution of the revenue: Court
HB 1410 2 fees imposed in criminal, juvenile, and civil violation cases.
Explanation of Local Expenditures: Penalty Provision: A Class C misdemeanor is punishable by up to 60
days in jail.
Explanation of Local Revenues: Cigarette and Tobacco Products Tax: Revenue distributed to cities and
towns would decrease to the extent that Cigarette and Tobacco Products Tax revenue declines. Distributions
could decrease by an estimated $0.9 M to $2.1 M in FY 2026 and $0.8 M to $2.1 M in FY 2027. [Cities and
towns receive two-thirds of revenue distributed to the Cigarette Tax Fund.]
Penalty Provision: If additional court actions occur and a guilty verdict is entered, more revenue will be
collected by certain local units. If the case is filed in a court of record, the county general fund will receive
$47.40 and qualifying municipalities will receive a share of $3.60. If the case is filed in a municipal court,
the county receives $30, and the municipality will receive $46. The following linked document describes the
fees and distribution of the revenue: Court fees imposed in criminal, juvenile, and civil violation cases.
State Agencies Affected: Alcohol and Tobacco Commission.
Local Agencies Affected: Trial courts, local law enforcement agencies; Cities and towns.
Information Sources: State Revenue Forecast, December 17, 2024. Chris Serak, Alcohol and Tobacco
Commission. Peoplesoft Financial Data. Legislative Services Agency. Indiana Handbook of Taxes,
Revenues, and Appropriations, FY 2024. Federal Trade Commission Cigarette Report for 2022. CDC
Foundation. Monitoring U.S. E-Cigarette Sales: National Trends. September 2024. Centers for Disease
Control and Prevention, The Tax Burden on Tobacco, 1970-2019. Annual Report of Multi-Agency Illegal
Tobacco Task Force, Massachusetts, February 2024. Cigarette and Tobacco Revenue, California Department
of Tax and Fee Administration, https://www.cdtfa.ca.gov/DataPortal/dataset.htm?url=CigTaxSurTaxRev.
States and Localities that have Restricted the Sale of Flavored Tobacco Products, Campaign for Tobacco-
Free Kids, October 2024. Indiana Supreme Court, Indiana Trial Court Fee Manual.
Fiscal Analyst: Nate Bodnar, 317-234-9476.
HB 1410 3