87R2051 SRA-D
By: Johnson S.B. No. 248
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of cigarettes, tobacco products, and
e-cigarettes and the administration of taxes imposed on the sale or
use of certain of those products; requiring a permit; imposing a
fee; providing administrative penalties.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle G, Title 2, Health and Safety Code, is
amended by adding Chapter 147 to read as follows:
CHAPTER 147. E-CIGARETTE RETAILER PERMITS
Sec. 147.0001. DEFINITIONS. In this chapter:
(1) "E-cigarette" has the meaning assigned by Section
161.081.
(2) "E-cigarette retailer" means a person who engages
in the business of selling e-cigarettes to consumers, including a
person who sells e-cigarettes to consumers through a marketplace.
(3) "Marketplace" has the meaning assigned by Section
151.0242, Tax Code.
(4) "Permit holder" means a person who obtains a
permit under Section 147.0005.
Sec. 147.0002. INAPPLICABILITY TO CERTAIN PRODUCTS. This
chapter does not apply to a product described by Section 161.0815.
Sec. 147.0003. RULES. The comptroller may adopt rules to
implement this chapter, including rules exempting a person who
sells e-cigarettes to consumers through a marketplace from the
requirements of this chapter.
Sec. 147.0004. E-CIGARETTE RETAILER PERMIT REQUIRED. (a)
A person may not engage in business as an e-cigarette retailer in
this state unless the person has been issued a permit from the
comptroller. A person shall obtain a permit for each place of
business the person owns or operates at which sales of e-cigarettes
are made.
(b) The comptroller shall prescribe the form and content of
an application for a permit and provide the form on request.
(c) The applicant shall accurately complete all information
required by the application and provide the comptroller with
additional information the comptroller considers necessary.
(d) The comptroller may require each corporation,
association, joint venture, syndicate, partnership, or
proprietorship to provide:
(1) financial information regarding the applicant;
and
(2) the identity of each officer, director,
stockholder owning 10 percent or more of the outstanding stock,
partner, member, owner, or managing employee.
(e) Each applicant that applies for a permit to sell
e-cigarettes from a vehicle must provide the make, model, vehicle
identification number, registration number, and any other
information concerning the vehicle the comptroller requires.
(f) All financial information provided under this section
is confidential and not subject to Chapter 552, Government Code.
(g) Permits for engaging in business as an e-cigarette
retailer are governed exclusively by the provisions of this code.
Sec. 147.0005. ISSUANCE OF PERMIT. (a) The comptroller
shall issue a permit to an applicant if the comptroller:
(1) has received an application and fee;
(2) does not reject the application and deny the
permit under Section 147.0006; and
(3) determines that issuing the permit will not
jeopardize the administration and enforcement of this chapter.
(b) The permit shall be issued for a designated place of
business, except as provided by Section 147.0009.
(c) The permits are nonassignable.
(d) The permit must indicate the type of permit and
authorize the sale of e-cigarettes in this state. The permit must
show that it is revocable and shall be forfeited or suspended if the
conditions of issuance, provisions of this chapter, or rules of the
comptroller are violated.
Sec. 147.0006. DENIAL OF PERMIT. The comptroller may
reject an application and deny a permit if the comptroller finds,
after notice and opportunity for hearing, any of the following:
(1) the premises where business will be conducted are
not adequate to protect the e-cigarettes; or
(2) the applicant or managing employee, or if the
applicant is a corporation, an officer, director, manager, or any
stockholder who holds directly or through family or partner
relationship 10 percent or more of the corporation's stock, or, if
the applicant is a partnership, a partner or manager:
(A) has failed to disclose any information
required by Sections 147.0004(c), (d), and (e), including previous
business experience, financial condition of the applicant, present
or previous business affiliations, previous employment, and any
conviction of a felony, or has made a false statement in the
application; or
(B) has previously violated provisions of this
chapter.
Sec. 147.0007. PERMIT PERIOD; FEES. (a) A permit required
by this chapter expires on the last day of May of each even-numbered
year.
(b) An application for a permit required by this chapter
must be accompanied by a fee of:
(1) one-half of the amount of the fee for a retailer's
permit required by Section 154.111(b), Tax Code, if the applicant
holds a valid retailer's permit under Section 154.101, 154.102, or
155.041, Tax Code; or
(2) the amount of the fee for a retailer's permit
required by Section 154.111(b), Tax Code.
(c) For a new or renewal permit required by Section
147.0004, the comptroller shall prorate the fee according to the
number of months remaining during the period that the permit is to
be in effect.
(d) A person who does not obtain a renewal permit in a timely
manner must pay a late fee of $50 in addition to the application fee
for the permit.
(e) If on the date of issuance a permit will expire within
three months, the comptroller may collect the prorated permit fee
or the fee for the current period and, with the consent of the
permit holder, may collect the fee for the next permit period and
issue a permit or permits for both periods, as applicable.
(f) A person issued a permit for a place of business that
permanently closes before the permit expiration date is not
entitled to a refund of the permit fee.
Sec. 147.0008. PAYMENT FOR PERMITS. (a) An applicant for a
permit required by Section 147.0004 shall send the required fee
with the application.
(b) The payment must be made in cash or by money order,
check, or credit card.
(c) The comptroller may not issue a permit in exchange for a
check until after the comptroller receives full payment on the
check.
Sec. 147.0009. DISPLAY OF PERMIT. (a) A permit holder
shall keep the permit on public display at the place of business for
which the permit was issued.
(b) A permit holder who has a permit assigned to a vehicle
shall post the permit in a conspicuous place on the vehicle.
Sec. 147.0010. REVENUE. Revenue from the sale of
e-cigarette retailer's permits shall be deposited to the general
revenue fund and may be appropriated only as provided by this
section. The money may be appropriated first to the comptroller for
administering:
(1) permitting of retailers under this chapter and
Chapters 154 and 155, Tax Code; and
(2) disciplinary actions taken under Section
161.0901.
Sec. 147.0011. FINAL SUSPENSION OR REVOCATION OF PERMIT.
(a) The comptroller may revoke or suspend a permit holder's permit
if the comptroller finds, after notice and hearing as provided by
this section, that the permit holder violated this chapter or a rule
adopted under this chapter.
(b) If the comptroller intends to suspend or revoke a
permit, the comptroller shall provide the permit holder with
written notice that includes a statement:
(1) of the reason for the intended revocation or
suspension;
(2) that the permit holder is entitled to a hearing by
the comptroller on the proposed suspension or revocation; and
(3) of the date, time, and place of the hearing.
(c) The comptroller shall deliver the written notice by
personal service or by mail to the permit holder's mailing address
as it appears in the comptroller's records. Service by mail is
complete when the notice is deposited with the United States Postal
Service.
(d) The comptroller shall give the permit holder notice
before the 10th day before the final hearing.
(e) A permit holder may appeal the comptroller's decision to
a district court in Travis County not later than the 30th day after
the date the comptroller's decision becomes final.
(f) A person whose permit is suspended or revoked may not
sell, offer for sale, or distribute e-cigarettes from the place of
business to which the permit applied until a new permit is granted
or the suspension is removed.
Sec. 147.0012. SUMMARY SUSPENSION OF PERMIT. (a) The
comptroller may suspend a permit holder's permit without notice or
a hearing for the permit holder's failure to comply with this
chapter or a rule adopted under this chapter if the permit holder's
continued operation constitutes an immediate and substantial
threat.
(b) If the comptroller summarily suspends a permit holder's
permit, proceedings for a preliminary hearing before the
comptroller or the comptroller's representative must be initiated
simultaneously with the summary suspension. The preliminary
hearing shall be set for a date not later than the 10th day after the
date of the summary suspension, unless the parties agree to a later
date.
(c) At the preliminary hearing, the permit holder must show
cause why the permit should not remain suspended pending a final
hearing on suspension or revocation.
(d) Chapter 2001, Government Code, does not apply to a
summary suspension under this section.
(e) To initiate a proceeding to suspend summarily a permit
holder's permit, the comptroller shall serve notice on the permit
holder informing the permit holder of the right to a preliminary
hearing before the comptroller or the comptroller's representative
and of the time and place of the preliminary hearing. The notice
must be personally served on the permit holder or an officer,
employee, or agent of the permit holder or sent by certified or
registered mail, return receipt requested, to the permit holder's
mailing address as it appears in the comptroller's records. The
notice must state the alleged violations that constitute the
grounds for summary suspension. The suspension is effective at the
time the notice is served. If notice is served in person, the
permit holder shall immediately surrender the permit to the
comptroller. If notice is served by mail, the permit holder shall
immediately return the permit to the comptroller.
(f) Section 147.0011, governing hearings for final
suspension or revocation of a permit under this chapter, governs a
final administrative hearing.
Sec. 147.0013. HEARINGS. Unless otherwise provided by this
chapter, the comptroller shall conduct all hearings required by
this chapter in accordance with Chapter 2001, Government Code. The
comptroller may designate one or more representatives to conduct
the hearings and may prescribe the rules of procedure governing the
hearings.
SECTION 2. Sections 161.081(1-a), (2), and (4), Health and
Safety Code, are amended to read as follows:
(1-a) "E-cigarette" means an electronic cigarette or
any other device that simulates smoking by using a mechanical
heating element, battery, or electronic circuit to deliver nicotine
or other substances to the individual inhaling from the device or a
consumable liquid solution or other material aerosolized or
vaporized during the use of an electronic cigarette or other device
described by this subdivision, regardless of whether the liquid or
other material contains nicotine. The term does not include a
prescription medical device unrelated to the cessation of smoking.
The term includes:
(A) a device described by this subdivision
regardless of whether the device is manufactured, distributed, or
sold as an e-cigarette, e-cigar, or e-pipe or under another product
name or description; and
(B) a component, part, or accessory for the
device, regardless of whether the component, part, or accessory is
sold separately from the device.
(2) "Permit holder" has the meaning assigned by
Section 147.0001 of this code or Section 154.001 or 155.001, Tax
Code, as applicable.
(4) "Retailer" means a person who engages in the
practice of selling cigarettes, e-cigarettes, or tobacco products
to consumers and includes the owner of a coin-operated cigarette,
e-cigarette, or tobacco product vending machine. The term includes
a retailer as [that term is] defined by Section 154.001 or 155.001,
Tax Code, and an e-cigarette retailer as defined by Section
147.0001 of this code, as applicable.
SECTION 3. Section 161.083(d), Health and Safety Code, is
amended to read as follows:
(d) Notwithstanding any other provision of law, a violation
of this section is not a violation of this subchapter for purposes
of Section 161.0901 [154.1142 or 155.0592, Tax Code].
SECTION 4. Subchapter H, Chapter 161, Health and Safety
Code, is amended by adding Section 161.0901 to read as follows:
Sec. 161.0901. DISCIPLINARY ACTION AGAINST CIGARETTE,
E-CIGARETTE, AND TOBACCO PRODUCT RETAILERS. (a) A retailer is
subject to disciplinary action as provided by this section if an
agent or employee of the retailer commits an offense under this
subchapter or Subchapter K.
(b) If the comptroller finds, after notice and an
opportunity for a hearing as provided by Chapter 2001, Government
Code, that a permit holder has violated this subchapter or
Subchapter K at a place of business for which a permit is issued,
the comptroller may suspend the permit for that place of business
and administratively assess a fine as follows:
(1) if the permit holder has not been found to have
violated this subchapter or Subchapter K at that place of business
during the 24-month period preceding the violation, the comptroller
may require the permit holder to pay a fine in an amount not to
exceed $1,000;
(2) if the permit holder has been found to have
violated this subchapter or Subchapter K at that place of business
once during the 24-month period preceding the violation, the
comptroller may require the permit holder to pay a fine in an amount
not to exceed $2,000; and
(3) if the permit holder has been found to have
violated this subchapter or Subchapter K at that place of business
at least twice during the 24-month period preceding the violation,
the comptroller may:
(A) require the permit holder to pay a fine in an
amount not to exceed $3,000; and
(B) suspend the permit for that place of business
for not more than five days.
(c) Except as provided by Subsection (e), if the permit
holder has been found to have violated this subchapter or
Subchapter K on four or more previous and separate occasions at the
same place of business during the 24-month period preceding the
violation, the comptroller shall revoke the permit issued under
Chapter 147 of this code or Chapter 154 or 155, Tax Code, as
applicable. If the permit holder does not hold a permit under
Chapter 147 of this code or Chapter 154 or 155, Tax Code, the
comptroller shall revoke the permit issued under Section 151.201,
Tax Code.
(d) A permit holder whose permit has been revoked under this
section may not apply for a permit for the same place of business
before the expiration of six months after the effective date of the
revocation.
(e) For purposes of this section, the comptroller may
suspend a permit but may not revoke the permit under Subsection (c)
if the comptroller finds that:
(1) the employer has not violated this subchapter or
Subchapter K more than seven times at the place of business for
which the permit is issued in the 48-month period preceding the
violation in question;
(2) the employer requires its employees to attend a
comptroller-approved seller training program;
(3) the employees have actually attended a
comptroller-approved seller training program; and
(4) the employer has not directly or indirectly
encouraged the employees to violate the law.
(f) The comptroller may adopt rules to implement this
section.
SECTION 5. The heading to Subchapter K, Chapter 161, Health
and Safety Code, is amended to read as follows:
SUBCHAPTER K. PROHIBITION OF CERTAIN CIGARETTE, E-CIGARETTE, OR
TOBACCO PRODUCT ADVERTISING; FEE
SECTION 6. Section 161.121, Health and Safety Code, is
amended by adding Subdivision (2-a) to read as follows:
(2-a) "E-cigarette" has the meaning assigned by
Section 161.081.
SECTION 7. Sections 161.122(a), (b), and (e), Health and
Safety Code, are amended to read as follows:
(a) Except as provided by this section, a sign containing an
advertisement for cigarettes, e-cigarettes, or tobacco products
may not be located closer than 1,000 feet to a church or school.
(b) The measurement of the distance between the sign
containing an advertisement for cigarettes, e-cigarettes, or
tobacco products and an institution listed in Subsection (a) is
from the nearest property line of the institution to a point on a
street or highway closest to the sign, along street lines and in
direct lines across intersections.
(e) Subsection (a) does not apply to a sign containing an
advertisement for cigarettes, e-cigarettes, or tobacco products
that, before September 1, 1997, was located closer than 1,000 feet
to a church or school but that was not located closer than 500 feet
to the church or school.
SECTION 8. Section 161.123(a), Health and Safety Code, is
amended to read as follows:
(a) A purchaser of advertising is liable for and shall remit
to the comptroller a fee that is 10 percent of the gross sales price
of any outdoor advertising of cigarettes, e-cigarettes, and tobacco
products in this state.
SECTION 9. Section 111.00455(b), Tax Code, is amended to
read as follows:
(b) The following are not contested cases under Subsection
(a) and Section 2003.101, Government Code:
(1) a show cause hearing or any hearing not related to
the collection, receipt, administration, or enforcement of the
amount of a tax or fee imposed, or the penalty or interest
associated with that amount, except for a hearing under Section
151.157(f), 151.1575(c), or 151.712(g) of this code or Section
161.0901, Health and Safety Code[, 154.1142, or 155.0592];
(2) a property value study hearing under Subchapter M,
Chapter 403, Government Code;
(3) a hearing in which the issue relates to:
(A) Chapters 72-75, Property Code;
(B) forfeiture of a right to do business;
(C) a certificate of authority;
(D) articles of incorporation;
(E) a penalty imposed under Section 151.703(d);
(F) the refusal or failure to settle under
Section 111.101; or
(G) a request for or revocation of an exemption
from taxation; and
(4) any other hearing not related to the collection,
receipt, administration, or enforcement of the amount of a tax or
fee imposed, or the penalty or interest associated with that
amount.
SECTION 10. Section 154.1135(b), Tax Code, is amended to
read as follows:
(b) The payment must be made in cash or by money order, [or]
check, or credit card.
SECTION 11. Section 154.121(b), Tax Code, is amended to
read as follows:
(b) Revenue from the sale of retailer's permits shall be
deposited to the general revenue fund and may be appropriated only
as provided by this section. The money may be appropriated first to
the comptroller for administering:
(1) permitting [administration of licensing] of
retailers under this chapter, Chapter [or Chapter] 155 of this
code, and Chapter 147, Health and Safety Code; and
(2) disciplinary actions taken under Section
161.0901, Health and Safety Code.
SECTION 12. Section 155.050(b), Tax Code, is amended to
read as follows:
(b) The payment must be made in cash or by money order, [or]
check, or credit card.
SECTION 13. Section 155.058(b), Tax Code, is amended to
read as follows:
(b) Revenue from the sale of retailer's permits shall be
deposited to the general revenue fund and may be appropriated only
as provided by this section. The money may be appropriated first to
the comptroller for administering:
(1) permitting [administration of licensing] of
retailers under this chapter, Chapter [or Chapter] 154 of this
code, and Chapter 147, Health and Safety Code; and
(2) disciplinary actions taken under Section
161.0901, Health and Safety Code.
SECTION 14. (a) Section 161.124, Health and Safety Code, is
repealed.
(b) The following provisions of the Tax Code are repealed:
(1) Section 154.1142;
(2) Section 154.1143;
(3) Section 155.0592; and
(4) Section 155.0593.
SECTION 15. Section 161.0901, Health and Safety Code, as
added by this Act, applies only to a violation that occurs on or
after the effective date of this Act. A violation that occurs
before the effective date of this Act is governed by the law in
effect on the date the violation occurred, and the former law is
continued in effect for that purpose.
SECTION 16. (a) Notwithstanding Section 147.0004, Health
and Safety Code, as added by this Act, a person is not required to
hold a permit under that section to engage in business as a retailer
of e-cigarettes in this state until January 1, 2022.
(b) The comptroller of public accounts shall prescribe the
form and content of an application for a permit under Section
147.0004, Health and Safety Code, as added by this Act, and begin
accepting applications for the permit not later than October 1,
2021.
SECTION 17. This Act takes effect September 1, 2021.