SB 926 - HB 1008
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 9, 2025
Fiscal Analyst: Laura Moore | Email: laura.moore@capitol.tn.gov | Phone: 615-741-2564
SB 926 - HB 1008
SUMMARY OF BILL: Prohibits a person, firm, or corporation from operating as a retailer
selling vapor products without first obtaining a vapor product business license issued by the
Department of Commerce and Insurance (DCI). Prohibits a person, firm, or corporation from
selling at retail a vapor product to a customer except through a face-to-face sales transaction at a
licensed, age-restricted vapor product business.
Increases, from a Class C to a Class A misdemeanor, the penalty for selling or distributing a vapor
product to an individual under 21 years of age.
Requires DCI to promulgate rules and regulations for issuing the vapor product business license
including establishing a procedure for administering citations, issuing orders, and filing appeals
under the new licensing provisions. Requires each licensee to pay an annual fee of $250 to DCI for
each licensed premises. Requires DCI to approve or deny every application for a license within 60
days from the receipt of a completed application.
Requires DCI to investigate the information provided in each vapor product business licensure
application; and if the license is approved, to conduct random inspections or compliance checks of
the licensee at minimum once per year during normal business hours or as deemed appropriate by
the Commissioner. Requires DCI to reinspect within a certain time frame after a notice of a
violation is issued to a licensee. Subjects a licensee to a civil penalty of: (1) $5,000 for a first-time
violation; (2) $10,000 for a second-time violation; (3) $25,000 and a 15-day suspension of the vapor
license for a third or subsequent violation within three years, and; (4) revocation of the license for a
fourth violation within three years.
Declares that persons engaged in the display, exhibition, or sale of vapor products, including
flavored vapor products, at trade shows or exhibitions, are not required to obtain a vapor products
business license provided that certain provisions are met, including that any vapor products offered
for sale, or sold is restricted to persons who are 21 years of age or older.
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FISCAL IMPACT:
STATE GOVERNMENT
REVENUE General Fund
FY25-26 & Subsequent Years >$1,000,000
EXPENDITURES General Fund
FY25-26 $561,600
FY26-27 & Subsequent Years $491,900
Total Positions Required: 6
OTHER FISCAL IMPACT
The impact of the proposed legislation on overall sales of vapor products and accessories cannot
be determined with reasonable certainty. Therefore, any decrease in state or local revenue is
unknown.
Assumptions:
Licensing Program Cost:
• The legislation requires DCI to create, regulate, investigate, and enforce all rules relative to
licensing retailers selling vape products.
• For DCI to fulfill the requirements of the proposed legislation for all such retailers, the
Department will require six additional positions (1 Administrative Assistant 3 position, 2
Regulatory Board Assistant 2 positions, 3 Regulatory Board Investigator positions)
beginning in FY25-26.
• The increase in state expenditures associated with the salary and benefits is as follows:
Title Salary Benefits Positions Total
Administrative Assistant 3 $60,336 $18,038 1 $78,374
Regulatory Board Assistant 2 $60,336 $18,038 2 $156,748
Regulatory Board Investigator $60,336 $18,038 3 $235,122
Total: $470,244
• An additional recurring increase in state expenditures associated with the positions is
estimated to be $21,650 for communications and annual system access.
• There will be a one-time increase in state expenditures of $56,801 for computer and vehicles.
• There will be a one-time rulemaking hearing and an update to DCI’s licensing software at an
estimated $12,900.
• A total increase in state expenditures of $561,595 ($470,244 salary and benefits + $21,650
communications/system access + $56,801 computers and vehicles + $12,900 one-time
software update and rulemaking hearing) in FY25-26.
SB 926 - HB 1008 3
• A total recurring increase in state expenditures of $491,894 ($470,244 + $21,650) in FY26-27
and subsequent years.
Licensing Fee Revenue:
• This legislation requires such licensees to submit an annual renewal fee of $250 for each
licensed premises; it is reasonably assumed that the initial licensing fee will be the same cost
as the renewal fee.
• DCI provides that there is an estimated minimum of 1,500 vape stores.
• Additionally, there are;
o 983 retail package stores (convenience stores/liquor stores);
o 832 retail food stores (grocery) and;
o 2,422 hemp retail stores
• All establishments will be required to obtain a license to see vapor products. The total
number of establishments that will require a new license is estimated to exceed 5,737 (1,500
vape stores + 983 retail package stores + 832 retail food stores+ 2,422 hemp retailers).
• It is assumed that at least 4,000 retailers will apply for and receive a license in FY25-26 in
order to remain compliant with the law to sell vapor products.
• The increase in state revenue to DCI is estimated to exceed $1,000,000 ($250
application/renewal fee x 4,000 licenses) in FY25-26 and subsequent years.
Misdemeanor and Civil Violations and Vapor Product Sales:
• Pursuant to Tenn. Code Ann. §§ 39-17-1504(a) and 39-17-1507(b), it is a Class C
misdemeanor to sell vapor products to a person under 21 years of age, and a Class C
misdemeanor to sell vapor products out of a supervised vending machine unless proof of
age is acquired under certain circumstances.
• The proposed legislation increases, from a Class C to a Class A misdemeanor, the penalty for
selling or distributing a vapor product to an individual under 21 years of age.
• The average time served for a Class A misdemeanor offense is assumed to be 15 days in jail;
the average time served for a Class C misdemeanor offense is assumed to be zero days in jail.
• Currently, the Department of Agriculture (DOA) conducts random, unannounced
inspections at locations where tobacco, smoking hemp, vapor products, or smokeless
nicotine products are sold or distributed
• The proposed legislation requires the DCI to conduct random inspections or compliance
checks of vapor product business licensees at minimum once per year during normal
business hours.
• It is reasonably assumed business owners will comply with such regulations in order to avoid
violation. There is not expected to be a significant impact to penalty revenue collected.
• It is assumed there will not be a significant decrease in expenditures to the DOA as they are
still required to conduct such random inspections.
• The impact of the proposed legislation on overall sales of vapor products and accessories
cannot be determined with reasonable certainty. Therefore, any decrease in state or local
revenue is unknown.
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IMPACT TO COMMERCE:
BUSINESS IMPACT
FISCAL YEAR EXPENSES
FY25-26 & Subsequent Years >$1,000,000
OTHER COMMERCE IMPACT
The proposed legislation imposes restrictions that may require businesses to modify operations, or
discontinue vapor product sales. The extent and timing of any impact to business expenditures
cannot be reasonably determined. The net impact on jobs in this state is unknown.
Assumptions:
• The number of businesses that will stop selling vapor products or transition to retail vapor
product stores is unknown.
• Stores selling vapor products must be licensed by the DCI.
• Some retailers may adjust product offerings or exit the market; therefore, the extent and
timing of any impact to business expenditures cannot be reasonably determined.
• The cost of licensing will be paid primarily by businesses; the fiscal impact on business
expenditures is estimated to exceed $1,000,000 in FY25-26 and subsequent years.
• It is assumed businesses will comply with the regulations provided by the proposed
legislation; therefore, any civil penalty violations are assumed to be not significant.
• The net impact on jobs in this state is unknown.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director