Senate File 2480 H-8467 Amend Senate File 2480, as amended, passed, and reprinted by 1 the Senate, as follows: 2 1. By striking everything after the enacting clause and 3 inserting: 4 < Section 1. Section 453A.1, subsections 1 and 29, Code 2026, 5 are amended to read as follows: 6 1. “Alternative nicotine product” means a product, not 7 consisting of or containing tobacco, that provides for the 8 ingestion into the body of nicotine, or a nicotine analog, 9 whether by chewing, absorbing, dissolving, inhaling, snorting, 10 or sniffing, or by any other means. “Alternative nicotine 11 product” does not include cigarettes, tobacco products, or vapor 12 products, or a product that is regulated as a drug or device by 13 the United States food and drug administration under chapter V 14 of the Federal Food, Drug, and Cosmetic Act. 15 29. a. “Vapor product” means any noncombustible product, 16 which may or may not contain nicotine or a nicotine analog , 17 that employs a heating element, power source, electronic 18 circuit, or other electronic, chemical, or mechanical means, 19 regardless of shape or size, that can be used to produce vapor 20 from a solution or other substance. “Vapor product” includes an 21 but is not limited to the following: 22 (1) Any product or device marketed, manufactured, 23 distributed, or sold as an electronic cigarette, electronic 24 cigar, electronic cigarillo, electronic pipe, or similar 25 product or device , and any . 26 (2) Any cartridge or other container of a solution or other 27 substance, which may or may not contain nicotine or a nicotine 28 analog , that is intended to be used with or in an electronic 29 cigarette, electronic cigar, electronic cigarillo, electronic 30 pipe, or similar product or device. 31 (3) Any component, part, or accessory of such a product 32 or device that is used during the operation of the product or 33 device when sold in combination with any substance containing 34 nicotine, a nicotine analog, tobacco, or tobacco derivative. 35 -1- SF 2480.4330 (2) 91 jm/jh 1/ 12 #1.

b. “Vapor product” does not include a any of the following: 1 (1) A product regulated as a drug or device by the United 2 States food and drug administration under chapter V of the 3 Federal Food, Drug, and Cosmetic Act. 4 (2) Any component, part, or accessory of such a product 5 or device that is used during the operation of the product 6 or device when not sold in combination with any substance 7 containing nicotine, a nicotine analog, tobacco, or tobacco 8 derivative. 9 Sec. 2. Section 453A.1, Code 2026, is amended by adding the 10 following new subsection: 11 NEW SUBSECTION . 18A. “Nicotine analog” means a substance 12 that has a chemical structure that is substantially similar to 13 nicotine, or that has an effect on the central nervous system 14 that is substantially similar to, or greater than, the effects 15 of nicotine on the central nervous system. 16 Sec. 3. Section 453A.35A, subsection 1, Code 2026, is 17 amended to read as follows: 18 1. a. A health care trust fund is created in the office 19 of the treasurer of state. The fund consists of the revenues 20 generated from the tax on cigarettes pursuant to section 21 453A.6, subsection 1 , from the tax on tobacco products as 22 specified in section 453A.43, subsections 1, 2, 3, and 4 , 23 from the additional taxes on alternative nicotine and vapor 24 products pursuant to section 453A.43A, and from the fees and 25 penalties specified in subchapter III , that are credited to 26 the health care trust fund, annually, pursuant to section 27 453A.35 . Moneys in the fund shall be separate from the 28 general fund of the state and shall not be considered part of 29 the general fund of the state. Moneys Except as otherwise 30 provided, moneys in the fund shall be used only as specified 31 in this section and shall be appropriated only for the uses 32 specified. Moneys in the fund are not subject to section 8.33 33 and shall not be transferred, used, obligated, appropriated, 34 or otherwise encumbered, except as provided in this section . 35 -2- SF 2480.4330 (2) 91 jm/jh 2/ 12

Notwithstanding section 12C.7, subsection 2 , interest or 1 earnings on moneys deposited in the fund shall be credited to 2 the fund. 3 b. (1) For the fiscal year beginning July 1, 2027, and each 4 fiscal year thereafter, fifteen million dollars is appropriated 5 from the health care trust fund to the state board of regents 6 for the purpose of conducting pediatric cancer research, 7 clinical therapy access, and providing physician-scientist 8 leadership at the state university of Iowa stead family 9 children’s hospital. 10 (2) By December 31, 2028, and each December 31 thereafter, 11 the state board of regents shall submit a report to the general 12 assembly describing the research programs initiated or advanced 13 as a result of the appropriations made to the hospital, the 14 number of patients served, including patients enrolled in 15 clinical trials or therapy, and any outcomes to the extent 16 available, on the efficacy of the funded programs, trials, or 17 therapies. 18 Sec. 4. Section 453A.40, subsections 1 and 3, Code 2026, are 19 amended to read as follows: 20 1. All persons required to obtain a permit or to be licensed 21 under section 453A.13 or section 453A.44 having in their 22 possession and held for resale on the effective date of an 23 increase in the tax rate cigarettes, little cigars, or tobacco 24 products , alternative nicotine products, or vapor products upon 25 which the tax under section 453A.6 , or 453A.43 , or 453A.43A 26 has been paid, unused cigarette tax stamps which have been 27 paid for under section 453A.8 , unused metered imprints which 28 have been paid for under section 453A.12 , or tobacco products , 29 alternative nicotine products, or vapor products for which the 30 tax has not been paid under section 453A.46 shall be subject to 31 an inventory tax on the items as provided in this section . 32 3. The rate of the inventory tax on each item subject to 33 the tax as specified in subsection 1 is equal to the difference 34 between the amount paid on each item under section 453A.6 , 35 -3- SF 2480.4330 (2) 91 jm/jh 3/ 12

453A.8 , 453A.12 , or 453A.43 , or 453A.43A prior to the tax 1 increase and the amount that is to be paid on each similar item 2 under section 453A.6 , 453A.8 , 453A.12 , or 453A.43 , or 453A.43A 3 after the tax increase except that in computing the rate of the 4 inventory tax any discount allowed or allowable under section 5 453A.8 shall not be considered. 6 Sec. 5. Section 453A.42, subsections 5, 7, 15, and 18, Code 7 2026, are amended to read as follows: 8 5. “Distributor” means any and each of the following: 9 a. Any person engaged in the business of selling tobacco 10 products , alternative nicotine products, or vapor products 11 in this state who brings, or causes to be brought, into this 12 state from without the state any tobacco products , alternative 13 nicotine products, or vapor products for sale ; . 14 b. Any person who makes, manufactures, or fabricates tobacco 15 products , alternative nicotine products, or vapor products in 16 this state for sale in this state ; . 17 c. Any person engaged in the business of selling tobacco 18 products , alternative nicotine products, or vapor products 19 without this state who ships or transports tobacco products , 20 alternative nicotine products, or vapor products to retailers 21 in this state, to be sold by those retailers. 22 7. “Manufacturer” means a person who manufactures and sells 23 tobacco products , alternative nicotine products, or vapor 24 products . 25 15. “Subjobber” means any person, other than a manufacturer 26 or distributor, who buys tobacco products , alternative nicotine 27 products, or vapor products from a distributor and sells them 28 to persons other than the ultimate consumers. 29 18. “Wholesale sales price” means the established price 30 for which a manufacturer sells a tobacco product , alternative 31 nicotine product, or vapor product to a distributor, exclusive 32 of any discount or other reduction. 33 Sec. 6. NEW SECTION . 453A.43A Additional taxes on 34 alternative nicotine and vapor products. 35 -4- SF 2480.4330 (2) 91 jm/jh 4/ 12

1. a. (1) A tax is imposed upon all alternative nicotine 1 products and all vapor products in this state and upon any 2 person engaged as a distributor of alternative nicotine 3 products and vapor products, at the following rates: 4 (a) On alternative nicotine products, five cents per 5 container containing up to twenty units, and a proportionate 6 tax at the same rate on each unit in excess of twenty units. 7 (b) On vapor products, five cents per milliliter of a 8 solution containing nicotine or a nicotine analog and a 9 proportionate tax at the same rate on any fractions of a 10 milliliter. 11 (2) The tax imposed pursuant to subparagraph (1) shall be 12 imposed based on the net volume of the solution as listed by 13 the manufacturer. 14 b. The tax on alternative nicotine products and vapor 15 products shall be imposed at the time the distributor does any 16 of the following: 17 (1) Brings, or causes to be brought, into this state from 18 outside the state alternative nicotine products or vapor 19 products for sale. 20 (2) Makes, manufactures, or fabricates alternative nicotine 21 products or vapor products in this state for sale in this 22 state. 23 (3) Ships or transports alternative nicotine products or 24 vapor products to retailers in this state, to be sold by the 25 retailers. 26 2. A tax is imposed upon the use or storage of alternative 27 nicotine products or vapor products in this state, and upon 28 any person who uses or stores alternative nicotine products 29 or vapor products, at the following rates, if the tax imposed 30 under subsection 1 has not been paid: 31 a. (1) On alternative nicotine products, five cents per 32 container containing up to twenty units, and a proportionate 33 tax at the same rate on each unit in excess of twenty units. 34 (2) On vapor products, five cents per milliliter of a 35 -5- SF 2480.4330 (2) 91 jm/jh 5/ 12

solution containing nicotine or a nicotine analog and a 1 proportionate tax at the same rate on any fractions of a 2 milliliter. 3 b. The tax imposed pursuant to paragraph “a” shall be 4 imposed based on the net volume of the solution as listed by 5 the manufacturer. 6 3. Any alternative nicotine product or vapor product 7 with respect to which a tax has once been imposed under 8 this subchapter shall not again be subject to tax under this 9 subchapter. 10 4. The tax imposed by this section shall not apply with 11 respect to any alternative nicotine product or vapor product 12 which under the constitution and laws of the United States may 13 not be made the subject of taxation by this state. 14 5. The tax imposed by this section shall be in addition to 15 any other taxes imposed by law. 16 6. All excise taxes collected under this section by any 17 person are deemed to be held in trust for the state of Iowa. 18 Sec. 7. Section 453A.44, subsections 1, 3, and 10, Code 19 2026, are amended to read as follows: 20 1. No A person shall not engage in the business of a 21 distributor or subjobber of tobacco products at any place of 22 business without first having received a license from the 23 director to engage in that business at that place of business. 24 3. A person without this state who ships or transports 25 tobacco products , alternative nicotine products, or vapor 26 products to retailers in this state, to be sold by those 27 retailers, may make application for a license as a distributor, 28 be granted a license by the director, and thereafter be subject 29 to all the provisions of this subchapter and entitled to act as 30 a licensed distributor. 31 10. The director may revoke, cancel, or suspend the 32 license or licenses of any distributor or subjobber for 33 violation of any of the provisions of this subchapter , or 34 any other act applicable to the sale of tobacco products, 35 -6- SF 2480.4330 (2) 91 jm/jh 6/ 12

alternative nicotine products, or vapor products, or any rule 1 or regulations promulgated by the director in furtherance of 2 this subchapter . No A license shall not be revoked, canceled, 3 or suspended except after notice and a hearing by the director 4 as provided in section 453A.48 . 5 Sec. 8. Section 453A.45, Code 2026, is amended to read as 6 follows: 7 453A.45 Licensees, duties. 8 1. a. Every distributor shall keep at each licensed 9 place of business complete and accurate records for that 10 place of business, including itemized invoices, of tobacco 11 products , alternative nicotine products, or vapor products 12 held, purchased, manufactured, brought in or caused to be 13 brought in from without the state, or shipped or transported to 14 retailers in this state, and of all sales of tobacco products , 15 alternative nicotine products, or vapor products made, except 16 sales to the ultimate consumer. 17 b. When a licensed distributor sells tobacco products , 18 alternative nicotine products, or vapor products exclusively to 19 the ultimate consumer at the address given in the license, an 20 invoice of those sales is not required, but itemized invoices 21 shall be made of all tobacco products , alternative nicotine 22 products, or vapor products transferred to other retail 23 outlets owned or controlled by that licensed distributor. All 24 books, records, and other papers and documents required by 25 this subsection to be kept shall be preserved for a period 26 of at least three years after the date of the documents or 27 the date of the entries appearing in the records, unless the 28 director, in writing, authorized their destruction or disposal 29 at an earlier date. At any time during usual business hours, 30 the director, or the director’s duly authorized agents or 31 employees, may enter any place of business of a distributor, 32 without a search warrant, and inspect the premises, the records 33 required to be kept under this subsection , and the tobacco 34 products , alternative nicotine products, or vapor products 35 -7- SF 2480.4330 (2) 91 jm/jh 7/ 12

contained therein, to determine if all the provisions of this 1 subchapter are being fully complied with. If the director, 2 or any such agent or employee, is denied free access or is 3 hindered or interfered with in making the examination, the 4 license of the distributor at that premises is subject to 5 revocation by the director. 6 2. Every person who sells tobacco products , alternative 7 nicotine products, or vapor products to persons other than the 8 ultimate consumer shall render with each sale itemized invoices 9 showing the seller’s name and address, the purchaser’s name and 10 address, the date of sale, and all prices and discounts. The 11 person shall preserve legible copies of all these invoices for 12 three years from the date of sale. 13 3. Every retailer and subjobber shall procure itemized 14 invoices of all tobacco products , alternative nicotine 15 products, or vapor products purchased. The invoices shall show 16 the name and address of the seller and the date of purchase. 17 The retailer and subjobber shall preserve a legible copy 18 of each invoice for three years from the date of purchase. 19 Invoices shall be available for inspection by the director or 20 the director’s authorized agents or employees at the retailer’s 21 or subjobber’s place of business. 22 4. Records of all deliveries or shipments of tobacco 23 products , alternative nicotine products, or vapor products from 24 any public warehouse of first destination in this state which 25 is subject to the provisions of and licensed under chapter 26 554 shall be kept by the warehouse and be available to the 27 director for inspection. They The records shall show the name 28 and address of the consignee, the date, the quantity of tobacco 29 products , alternative nicotine products, or vapor products 30 delivered, and such other information as the commissioner may 31 require. These The records shall be preserved for three years 32 from the date of delivery of the tobacco products , alternative 33 nicotine products, or vapor products . 34 5. a. The transportation of tobacco products , alternative 35 -8- SF 2480.4330 (2) 91 jm/jh 8/ 12

nicotine products, or vapor products into this state by means 1 other than common carrier must be reported to the director 2 within thirty days with the following exceptions: 3 (1) The transportation of not more than fifty cigars, not 4 more than ten ounces of snuff or snuff powder, or not more 5 than one pound of smoking or chewing tobacco or other tobacco 6 products not specifically mentioned herein; 7 (2) Transportation by a person with a place of business 8 outside the state, who is licensed as a distributor under 9 section 453A.44 , or tobacco products , alternative nicotine 10 products, or vapor products sold by such person to a retailer 11 in this state. 12 b. The report shall be made on forms provided by the 13 director. A report required under this subsection shall be 14 filed electronically. A report required to be submitted 15 electronically under this subsection that is filed in a manner 16 other than in an electronic format specified by the department 17 shall not be considered a valid submission unless the director 18 has permitted the submission of such a report through an 19 alternative method pursuant to section 453A.57 . 20 c. Common carriers transporting tobacco products , 21 alternative nicotine products, or vapor products into this 22 state shall file with the director reports of all such 23 shipments other than those which are delivered to public 24 warehouses of first destination in this state which are 25 licensed under the provisions of chapter 554 . Such reports 26 shall be filed electronically with the department on or before 27 the tenth day of each month and shall show with respect to 28 deliveries made in the preceding month all of the following: 29 (1) The date. 30 (2) The point of origin. 31 (3) The point of delivery. 32 (4) The name of the consignee. 33 (5) A description and the quantity of tobacco products , 34 alternative nicotine products, or vapor products delivered. 35 -9- SF 2480.4330 (2) 91 jm/jh 9/ 12

(6) Such other information as the director may require. 1 d. Any person who fails or refuses to transmit to the 2 director the required reports or whoever refuses to permit the 3 examination of the records by the director shall be guilty 4 of a serious misdemeanor. In addition, any person who fails 5 to timely submit a report required under this section is 6 subject to a penalty in the amount of fifty dollars for each 7 occurrence. 8 Sec. 9. Section 453A.46, subsection 1, paragraph a, 9 subparagraph (1), Code 2026, is amended to read as follows: 10 (1) On or before the twentieth day of each calendar month 11 every distributor with a place of business in this state shall 12 file a return with the director showing for the preceding 13 calendar month the quantity and wholesale sales price of 14 each tobacco product , alternative nicotine product, or vapor 15 product brought, or caused to be brought, into this state for 16 sale; made, manufactured, or fabricated in this state for sale 17 in this state; and any other information the director may 18 require. Every licensed distributor outside this state shall 19 in like manner file a return with the director showing for the 20 preceding calendar month the quantity and wholesale sales price 21 of each tobacco product , alternative nicotine product, or vapor 22 product shipped or transported to retailers in this state to be 23 sold by those retailers and any other information the director 24 may require. Returns shall be made upon forms made available 25 in electronic form and prescribed by the director and shall 26 contain other information as the director may require. Each 27 return shall be accompanied by a remittance for the full tax 28 liability shown on the return, less a discount as fixed by the 29 director not to exceed five percent of the tax. Within three 30 years after the return is filed or within three years after the 31 return became due, whichever is later, the department shall 32 examine it, determine the correct amount of tax, and assess the 33 tax against the taxpayer for any deficiency. The period for 34 examination and determination of the correct amount of tax is 35 -10- SF 2480.4330 (2) 91 jm/jh 10/ 12

unlimited in the case of a false or fraudulent return made with 1 the intent to evade tax, or in the case of a failure to file a 2 return. 3 Sec. 10. Section 453A.46, subsection 6, Code 2026, is 4 amended to read as follows: 5 6. On or before the twentieth day of each calendar month, 6 every consumer who, during the preceding calendar month, 7 has acquired title to or possession of tobacco products , 8 alternative nicotine products, or vapor products for use or 9 storage in this state, and upon which tobacco products the 10 tax taxes imposed by section 453A.43 has or 453A.43A have not 11 been paid, shall file a return with the director showing the 12 quantity of tobacco products , alternative nicotine products, 13 or vapor products so acquired. The return shall be made upon 14 a form furnished and prescribed by the director, and shall 15 contain other information as the director may require. The 16 return shall be accompanied by a remittance for the full unpaid 17 tax liability shown by it. Within three years after the return 18 is filed or within three years after the return became due, 19 whichever is later, the department shall examine it, determine 20 the correct amount of tax, and assess the tax against the 21 taxpayer for any deficiency. The period for examination and 22 determination of the correct amount of tax is unlimited in the 23 case of a false or fraudulent return made with the intent to 24 evade tax, or in the case of a failure to file a return. 25 Sec. 11. Section 453A.47, Code 2026, is amended to read as 26 follows: 27 453A.47 Refunds, credits. 28 Where tobacco products , alternative nicotine products, or 29 vapor products upon which the tax imposed by this subchapter 30 has been reported and paid are shipped or transported by the 31 distributor to consumers to be consumed without the state or 32 to retailers or subjobbers without the state to be sold by 33 those retailers or subjobbers without the state or are returned 34 to the manufacturer by the distributor or destroyed by the 35 -11- SF 2480.4330 (2) 91 jm/jh 11/ 12

distributor, refund of such tax or credit may be made to the 1 distributor in accordance with regulations prescribed by the 2 director. Any overpayment of the tax imposed under section 3 453A.43 or 453A.43A may be made to the taxpayer in accordance 4 with regulations prescribed by the director. The director 5 shall cause any such refund of tax to be paid out of the general 6 fund of the state, and so much of said fund as may be necessary 7 is hereby appropriated for that purpose. 8 Sec. 12. Section 453A.47C, subsections 3 and 4, Code 2026, 9 are amended to read as follows: 10 3. A retailer required to possess or possessing a permit 11 under section 453A.13 or 453A.47A to make delivery sales 12 of alternative nicotine products or vapor products within 13 this state shall be deemed to have waived all claims that 14 such retailer lacks physical presence within this state for 15 purposes of collecting and remitting sales and use tax and the 16 additional tax provided in section 453A.43A . 17 4. A retailer making taxable delivery sales of alternative 18 nicotine products or vapor products within this state shall 19 remit to the department all sales and use tax due on such sales 20 at the times and in the manner provided by chapter 423 , and 21 remit the additional tax as provided in section 453A.43A . 22 Sec. 13. Section 453A.48, subsection 3, Code 2026, is 23 amended to read as follows: 24 3. The director may exchange information with the officers 25 and agencies of other states administering laws relating to the 26 taxation of tobacco products , alternative nicotine products, 27 and vapor products . 28 Sec. 14. EFFECTIVE DATE. This Act takes effect January 1, 29 2027. > 30 ______________________________ BAETH of Polk -12- SF 2480.4330 (2) 91 jm/jh 12/ 12