S.F. 226 DIVISION I 1 REGULATION OF DEVICE RETAILERS 2 Section 1. NEW SECTION . 453E.1 Definitions. 3 As used in this chapter, unless the context otherwise 4 requires: 5 1. “Business” means any trade, occupation, activity, 6 or enterprise engaged in for the purpose of selling or 7 distributing tobacco products and devices in this state. 8 2. “Consumer” means any person who has title to or 9 possession of devices in storage, for use or other consumption 10 in this state. 11 3. “Controlled substance” means controlled substance as 12 defined in section 124.101. 13 4. “Delivery sale” means any sale of a device to a purchaser 14 in this state where the purchaser submits the order for 15 such sale by means of a telephonic or other method of voice 16 transmission, mail or any other delivery service, or the 17 internet or other online service and the device is delivered by 18 use of mail or a delivery service. The sale of a device shall 19 constitute a delivery sale regardless of whether the seller is 20 located in this state. “Delivery sale” does not include a sale 21 to a distributor or retailer of a device not for personal use. 22 5. “Department” means the department of revenue. 23 a. “Device” means any equipment or product, made in whole 24 or in part of glass or metal, that is intended or designed for 25 use in manufacturing, compounding, converting, concealing, 26 producing, processing, preparing, injecting, ingesting, 27 inhaling, or otherwise introducing into the human body a 28 controlled substance. “Device” does not include a vapor 29 product. 30 b. In determining whether any particular item constitutes a 31 “device” , the following factors may be considered: 32 (1) The instructions, oral or written, provided with the 33 item concerning its use. 34 (2) Any descriptive materials accompanying the item which 35 -1- LSB 1117SV (1) 89 pf/jh 1/ 16

S.F. 226 explain or depict its use. 1 (3) National and local advertising concerning the item’s 2 use. 3 (4) The manner in which the item is displayed for sale. 4 (5) Whether the owner of the place of business, or anyone in 5 control of the item at the place of business, is a legitimate 6 supplier of like or related items to the community, such as a 7 licensed distributor, manufacturer, or subjobber. 8 (6) Direct or circumstantial evidence of the ratio of sales 9 of the item to the total sales of the place of business. 10 (7) The existence and scope of legitimate uses of the item 11 in the community. 12 (8) Expert testimony concerning the item’s use. 13 c. A particular item may constitute a device notwithstanding 14 any lawful use of the item. 15 7. “Device retailer” means a person engaged in the retail 16 sale of tangible personal property who is also engaged in 17 selling devices to the ultimate consumer. 18 8. “Director” means the director of revenue. 19 9. “Distributor” means the same as defined in section 20 453A.42. 21 10. “Manufacturer” means the same as defined in section 22 453A.42. 23 11. “Place of business” means any place where tobacco 24 products and devices are sold, stored, or kept for the purpose 25 of sale or consumption; or for a business within or without the 26 state that conducts delivery sales, any place where tobacco 27 products and devices are sold or are kept for the purpose of 28 sale, including delivery sales. 29 12. “Retail outlet” means each place of business from which 30 tobacco products and devices are sold to consumers. 31 13. “Sale” means any transfer, exchange, or barter, in 32 any manner or by any means whatsoever, for consideration, and 33 includes and means all sales made by any person. 34 14. “Subjobber” means the same as defined in section 35 -2- LSB 1117SV (1) 89 pf/jh 2/ 16

S.F. 226 453A.42. 1 15. “Tobacco products” means cigars; little cigars; 2 cheroots; stogies; periques; granulated, plug cut, crimp cut, 3 ready rubbed, and other smoking tobacco; snuff; cavendish; 4 plug and twist tobacco; fine-cut and other chewing tobaccos; 5 shorts; refuse scraps, clippings, cuttings and sweepings of 6 tobacco, and other kinds and forms of tobacco, prepared in 7 such manner as to be suitable for chewing or smoking in a pipe 8 or otherwise, or both for chewing and smoking; but shall not 9 include cigarettes as defined in section 453A.1. 10 16. “Tobacco retailer” means a retailer as defined in 11 section 453A.42. 12 17. “Use” means the exercise of any right or power 13 incidental to the ownership of tobacco products or devices. 14 18. “Vapor product” means the same as defined in section 15 453A.1. 16 Sec. 2. NEW SECTION . 453E.2 Administration —— rules —— 17 intent. 18 1. The director shall administer this chapter. The director 19 shall collect, supervise, and enforce the collection of all 20 fees, taxes, and civil penalties imposed under this chapter. 21 2. The director may adopt rules pursuant to chapter 17A that 22 are necessary to enforce this chapter. 23 3. The director may designate employees to administer 24 and enforce the provisions of this chapter, including the 25 collection of all taxes provided for in this chapter. In the 26 enforcement, the director may request aid from the attorney 27 general, the special agents of the state, any county attorney, 28 or any peace officer. The director may appoint clerks and 29 additional help as may be needed to administer this chapter. 30 4. This chapter or the holding of a device retailer permit 31 or a device delivery sale permit under this chapter shall not 32 be construed to provide for any of the following: 33 a. Immunity from prosecution or the limitation of the 34 application of other state law and regulations governing 35 -3- LSB 1117SV (1) 89 pf/jh 3/ 16

S.F. 226 tobacco products, drug paraphernalia, or controlled substances. 1 b. Authorization for the possession, marketing, offering 2 for sale, or selling of a device, the possession, marketing, 3 offering for sale, or selling of which is otherwise prohibited 4 by state or federal law. 5 Sec. 3. NEW SECTION . 453E.3 Device retailers —— permits —— 6 fees. 7 1. Permits required. A person shall not engage in the 8 business of a device retailer at any place of business or 9 through delivery sales, unless the person complies with all of 10 the following: 11 a. The person has received and holds a permit as a tobacco 12 retailer pursuant to section 453A.47A that has not been 13 suspended or revoked and is not expired; complies with the 14 provisions of chapter 453A applicable to a tobacco retailer; 15 and sells tobacco products in addition to devices at the retail 16 outlet or through delivery sales. 17 b. The person has received and holds a permit as a device 18 retailer pursuant to this section that has not been suspended 19 or revoked and is not expired, and complies with the provisions 20 of this chapter. 21 2. No sales without device retailer permit. A device 22 retailer shall not sell devices until an application has been 23 filed and the fee prescribed paid for a permit and until such 24 permit is obtained and only while such permit is not suspended, 25 revoked, or expired. 26 3. Number of device retailer permits. An application shall 27 be filed and a permit obtained for each place of business 28 owned or operated by a device retailer located in the state. 29 If an out-of-state device retailer makes delivery sales of 30 devices, an application shall be filed with the department and 31 a permit shall be issued for the out-of-state device retailer’s 32 principal place of business. 33 4. Issuance. Cities may issue device retailer permits 34 to device retailers located within their respective limits. 35 -4- LSB 1117SV (1) 89 pf/jh 4/ 16

S.F. 226 County boards of supervisors may issue device retailer permits 1 to device retailers located in their respective counties, 2 outside of the corporate limits of cities. The city or county 3 shall submit a duplicate of any application for a device 4 retailer permit to the alcoholic beverages division of the 5 department of commerce within thirty days of issuance of a 6 device retailer permit. The alcoholic beverages division of 7 the department of commerce shall submit the current list of 8 all device retailer permits issued to the department of public 9 health by the last day of each quarter of a state fiscal year. 10 5. Fees —— expiration. All device retailer permits provided 11 for in this section shall expire on June 30 of each year. A 12 device retailer permit shall not be granted or issued until the 13 applicant has paid the fees provided for in this section for 14 the period ending June 30 next, to the city or county granting 15 the device retailer permit. The fee for a device retailer 16 permit is one thousand five hundred dollars. 17 6. Application. Device retailer permits shall be issued 18 only upon application, accompanied by the one thousand five 19 hundred dollar fee, made upon forms furnished by the department 20 upon written request. The failure to furnish such forms 21 shall be no excuse for the failure to file the form unless 22 absolute refusal is shown. The forms shall specify all of the 23 following: 24 a. The manner under which the device retailer transacts or 25 intends to transact business as a device retailer. 26 b. The principal office, residence, and place of business, 27 to which the device retailer permit is to apply. 28 c. If the applicant is not an individual, the names of the 29 partners if the applicant is a partnership or the names of 30 the principal officers or members if the applicant is a legal 31 entity, and their addresses. 32 d. Such other information as the director shall by rule 33 prescribe. 34 7. Records and reports of device retailers. 35 -5- LSB 1117SV (1) 89 pf/jh 5/ 16

S.F. 226 a. The director shall prescribe the forms necessary for 1 the efficient administration of this section and may require 2 uniform books and records to be used and kept by each device 3 retailer or other person as deemed necessary. 4 b. Every device retailer shall, when requested by the 5 department, make additional reports as the department deems 6 necessary and proper and shall at the request of the department 7 furnish full and complete information pertaining to any 8 transaction of the device retailer involving the purchase or 9 sale of devices, including the number of devices sold. 10 8. Requirements for sale. 11 a. A device retailer shall not sell, give, or otherwise 12 supply a device to any person under twenty-one years of age and 13 must verify the age of all purchasers of devices. If a device 14 is purchased at a retail outlet, valid proof of the purchaser’s 15 identity and age shall be obtained at the time the device is 16 supplied to the purchaser. If a device is purchased through a 17 delivery sale, valid proof of the purchaser’s identity and age 18 shall be obtained in accordance with section 453E.4. 19 b. A device retailer shall only display and sell devices 20 in a location of a retail outlet where the device retailer 21 ensures that the devices are not visible to a person younger 22 than twenty-one years of age and where no person younger than 23 twenty-one years of age is present or permitted to enter at any 24 time. 25 Sec. 4. NEW SECTION . 453E.4 Delivery sale of devices —— 26 permit —— requirements. 27 1. a. A person shall not mail, ship, or otherwise cause 28 to be delivered any device in connection with a delivery sale 29 to any other person within this state unless the person has 30 applied for and holds a device delivery sale permit as provided 31 in this section. 32 b. A person applying for a device delivery sale permit shall 33 submit an application for the permit electronically, or in a 34 manner prescribed by the director. 35 -6- LSB 1117SV (1) 89 pf/jh 6/ 16

S.F. 226 c. An application submitted pursuant to paragraph “b” shall 1 be accompanied by a permit fee in the amount of one thousand 2 five hundred dollars. 3 d. The director may in accordance with this section issue a 4 device delivery sale permit which shall be valid for one year 5 from the date of issuance unless it is sooner suspended or 6 revoked for a violation of this section. 7 e. A permit issued pursuant to this section may be renewed 8 annually by submitting a renewal application in a manner 9 prescribed by the director, accompanied by the one thousand 10 five hundred dollar permit fee. 11 2. The delivery sale of devices pursuant to this 12 section shall be subject to the following requirements and 13 restrictions: 14 a. All devices delivered by delivery sale directly to a 15 resident of this state shall be sold only by a device delivery 16 sale permit holder. 17 b. A device delivery sale permit holder shall only deliver 18 devices by delivery sale to a resident of this state who is at 19 least twenty-one years of age for the resident’s personal use 20 and not for resale. 21 c. All devices delivered by delivery sale directly to a 22 resident of this state shall be conspicuously labeled with the 23 words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER 24 REQUIRED FOR DELIVERY” or shall be conspicuously labeled with 25 alternative wording preapproved by the director. 26 d. A device delivery sale permit holder shall obtain 27 valid proof of identity and age prior to delivery, and shall 28 obtain the signature of a person age twenty-one or older as a 29 condition of delivery. 30 e. A device delivery sale permit holder shall maintain 31 records of devices delivered which include the name of the 32 device manufacturer, quantity of devices delivered, recipient’s 33 name and address and verification of age on an electronic or 34 paper form of signature from the recipient of the device, and 35 -7- LSB 1117SV (1) 89 pf/jh 7/ 16

S.F. 226 sales and excise taxes paid. Records shall be submitted to 1 the director on a monthly basis in a form and manner to be 2 determined by the director. Records shall be maintained for at 3 least five years. 4 3. A device delivery sale permit holder shall remit to the 5 director an amount equivalent to the applicable sales tax and 6 excise tax on devices subject to delivery sale at the rates 7 specified in section 423.2 and section 453E.5, as applicable. 8 The amount shall be remitted at the time and in the manner 9 provided in section 453E.5. 10 4. A device delivery sale permit holder shall be deemed to 11 have consented to the jurisdiction of the director or any other 12 agency or court in this state concerning enforcement of this 13 section and any related laws, rules, or regulations. A device 14 delivery sale permit holder shall allow the director to perform 15 an audit of records of devices upon request. 16 Sec. 5. NEW SECTION . 453E.5 Sales and use tax on sales and 17 delivery sales of devices —— examination of records and premises 18 —— subpoena for witnesses and papers. 19 1. A sale or delivery sale of a device within this state 20 shall be subject to the sales tax provided in chapter 423, 21 subchapter II. All the provisions for the lien of the tax, its 22 collection, and all actions as provided in the uniform sales 23 and use tax administration Act, chapter 423, shall apply to the 24 tax imposed in this chapter. 25 2. There is levied and imposed an excise tax on a device 26 purchased in this state through a sale or purchased for use 27 in this state through a delivery sale of forty percent of the 28 purchase price of the device. 29 3. A device delivery sale permit holder shall be deemed to 30 have waived all claims that such permit holder lacks physical 31 presence within this state for purposes of collecting and 32 remitting the sales and excise taxes. 33 4. A device delivery sale permit holder making taxable 34 delivery sales of devices within this state and a device 35 -8- LSB 1117SV (1) 89 pf/jh 8/ 16

S.F. 226 retailer shall remit to the department all sales and excise 1 taxes due on such sales at the times and in the manner as 2 established by rule of the director. 3 5. The director may adopt rules pursuant to chapter 17A to 4 administer this section. 5 6. Excise taxes collected under this section shall be 6 deposited in the specialty courts program fund created in 7 section 453E.6. 8 7. a. For the purpose of enabling the department to 9 determine the tax liability of device delivery sale permit 10 holders, device retailers, or any other person dealing in 11 devices or to determine whether a tax liability has been 12 incurred, the department shall have the right to inspect any 13 premises of the device delivery sale permit holder, device 14 retailer, or other person dealing in devices located within 15 or without the state of Iowa where devices are manufactured, 16 produced, made, stored, transported, sold, or offered for 17 sale or exchange, and to examine all of the records required 18 to be kept or any other records that may be kept incident 19 to the conduct of the business of said device delivery sale 20 permit holder, device retailer, or any other person dealing in 21 devices. 22 b. The department shall also have the right as an incident 23 to determining the tax liability, or whether a tax liability 24 has been incurred, to examine all stocks of devices and to 25 remain upon the premises for such length of time as may be 26 necessary to fully determine the tax liability, or whether a 27 tax liability has been incurred. 28 c. It shall be unlawful for a permit holder to fail to 29 produce upon demand of the department any records required to 30 be kept or to hinder or prevent in any manner the inspection of 31 the records or the examination of the premises. 32 d. In the case of any departmental inspection conducted 33 under this section requiring department personnel to travel 34 outside the state of Iowa, any additional costs incurred by 35 -9- LSB 1117SV (1) 89 pf/jh 9/ 16

S.F. 226 the department for out-of-state travel expenses shall be borne 1 by the device delivery sale permit holder, device retailer, or 2 other person dealing in devices. These additional costs shall 3 be those costs in excess of the costs of a similar inspection 4 conducted at the geographical point located within the state 5 of Iowa nearest to the out-of-state inspection point. In 6 lieu of conducting an on-premises out-of-state inspection, 7 the department shall have the authority to direct the device 8 delivery sale permit holder, device retailer, or other person 9 dealing in devices to assemble and transport all records 10 described in this subsection to the nearest practical and 11 convenient geographical location in Iowa for inspection by the 12 department. 13 Sec. 6. NEW SECTION . 453E.6 Specialty courts program fund. 14 1. A specialty courts program fund is created in the state 15 treasury under the control of the drug policy coordinator of 16 the governor’s office of drug control policy. Moneys from 17 permit fees, with the exception of permit fees collected by 18 cities or counties in the issuance of permits, and excise taxes 19 imposed and collected pursuant to section 453E.5, shall be 20 deposited in the fund. Permit fees collected by cities or 21 counties under this chapter shall be paid to the treasurer of 22 the city where the permit is effective, or to another city 23 officer as designated by the city council, and credited to the 24 general fund of the city. Permit fees collected by counties 25 under this chapter shall be paid to the county treasurer and 26 credited to the general fund of the county. 27 2. Moneys in the fund shall be used only as provided 28 in appropriations from the fund for the purpose of the 29 support of specialty courts to address underlying substance 30 use disorder-related and mental health-related issues that 31 contribute to the contact of individuals with the justice 32 system. 33 3. The fund shall be separate from the general fund of the 34 state and shall not be considered part of the general fund of 35 -10- LSB 1117SV (1) 89 pf/jh 10/ 16

S.F. 226 the state. The moneys in the fund shall not be considered 1 revenue of the state, but rather shall be moneys of the fund. 2 The moneys in the fund are not subject to reversion to the 3 general fund of the state under section 8.33 and shall not 4 be transferred, used, obligated, appropriated, or otherwise 5 encumbered, except to provide for the purposes of this section. 6 Notwithstanding section 12C.7, subsection 2, interest or 7 earnings on moneys deposited in the fund shall be credited to 8 the fund. 9 4. The treasurer of state shall provide a quarterly report 10 of fund activities and balances to the drug policy coordinator 11 of the governor’s office of drug control policy. 12 Sec. 7. NEW SECTION . 453E.7 Permits —— suspension —— 13 revocation —— penalties. 14 1. The provisions of chapter 453A including the permit 15 suspension and revocation provisions and the civil penalties 16 established in section 453A.22 shall apply to tobacco retailers 17 who are also device retailer permit holders or device delivery 18 sale permit holders under this chapter. The provisions of 19 chapter 453A applicable to persons other than tobacco retailers 20 who violate chapter 453A shall also apply to persons who 21 violate this chapter. 22 2. A person holding a device retailer permit or a device 23 delivery sale permit under this chapter who violates this 24 chapter by marketing or selling a device to be used or 25 attempted to be used in combination with a controlled substance 26 to knowingly or intentionally and primarily inject, ingest, 27 inhale, or otherwise introduce into the human body a controlled 28 substance commits a serious misdemeanor and is also subject to 29 permit revocation. 30 3. a. If a person holding a device retailer permit or a 31 device delivery sale permit under this chapter has willfully 32 violated this chapter, the department shall revoke the permit 33 upon notice and hearing. The hearing before the department may 34 be held at a site in the state as the department may direct. 35 -11- LSB 1117SV (1) 89 pf/jh 11/ 16

S.F. 226 The notice shall be given by mailing a copy to the permit 1 holder’s place of business as it appears on the application 2 for a permit. If, upon hearing, the department finds that the 3 violation has occurred, the department may revoke the permit. 4 b. If a device retailer permit or a device delivery 5 sale permit is suspended or revoked under this section, the 6 suspension or revocation shall only apply to the place of 7 business at which the violation occurred and shall not apply to 8 any other place of business to which the permit applies but at 9 which the violation did not occur. 10 c. The department or local authority shall report the 11 suspension or revocation of a device retailer permit or a 12 device delivery sale permit under this section to the alcoholic 13 beverages division of the department of commerce within thirty 14 days of the suspension or revocation of the permit. 15 4. In addition to any other applicable penalties, a device 16 retailer permit holder or a device delivery sale permit holder 17 who violates this chapter shall be subject to the following: 18 a. For a first violation, a civil penalty of five hundred 19 dollars. 20 b. For a second violation, a civil penalty of one thousand 21 dollars. 22 c. A third violation constitutes grounds for suspension or 23 revocation of the permit under this chapter. 24 5. A person other than a device retailer permit holder or a 25 device delivery sale permit holder who violates this chapter, 26 including a person who engages in the business of a device 27 retailer at any place of business or through delivery sales 28 without holding an applicable, valid permit under this chapter, 29 shall be subject to the following penalties: 30 a. For a first violation, a civil penalty of one thousand 31 dollars. 32 b. For a second violation, a civil penalty of two thousand 33 dollars. 34 c. For a third or subsequent violation, a civil penalty of 35 -12- LSB 1117SV (1) 89 pf/jh 12/ 16

S.F. 226 five thousand dollars. 1 DIVISION II 2 HEMP PRODUCTS AND CONSUMABLE HEMP PRODUCTS —— RETAIL SALES 3 Sec. 8. NEW SECTION . 126.24 Hemp products and consumable 4 hemp products —— retail sales —— claims. 5 Unless a state or federal agency has substantiated and 6 approved the efficacy and safety claims of a product based 7 on competent and reliable scientific evidence, a person 8 engaging in the retail sale in this state of a hemp product 9 or a consumable hemp product as defined in section 204.2 10 that contains hemp-derived cannabidiol, shall include on 11 the product’s principal display panel, a statement that the 12 product may or may not contain the ingredients stated on the 13 label, that the efficacy and safety of the product have not 14 been substantiated or approved by a state or federal agency 15 based on competent and reliable scientific evidence, and that 16 the consumer should use the product at the consumer’s own 17 risk. The statement required under this section shall be 18 developed by the board of pharmacy and shall be consistent 19 with the rules adopted by the department of inspections and 20 appeals pursuant to chapter 204 and with applicable federal 21 regulations promulgated by the United States food and drug 22 administration. This section shall not apply to a medical 23 cannabidiol manufacturer licensed pursuant to chapter 124E. 24 EXPLANATION 25 The inclusion of this explanation does not constitute agreement with 26 the explanation’s substance by the members of the general assembly. 27 This bill relates to the regulation of certain tobacco and 28 hemp-related products. 29 Division I of the bill requires a person who engages in 30 the business of a device retailer through a retail outlet 31 or delivery sales to receive and hold a permit as a tobacco 32 retailer, comply with provisions applicable to a tobacco 33 retailer, sell tobacco products in addition to devices at the 34 retail outlet or through delivery sales, and hold a permit 35 -13- LSB 1117SV (1) 89 pf/jh 13/ 16

S.F. 226 as a device retailer. The bill provides for the application 1 for and issuance of device retailer permits by cities and 2 counties depending upon the location of the retailer; requires 3 the payment of a fee for each permit; and provides for annual 4 expiration of the permits. The bill also requires device 5 retailer permit holders to keep certain records and submit 6 reports to the department of revenue; establishes requirements 7 for the sale of devices including that a device retailer shall 8 not sell, give, or otherwise supply a device to any person 9 under 21 years of age and must verify the age of all purchasers 10 of devices; and provides that a device retailer shall only 11 display and sell devices in a location where the device 12 retailer ensures that the devices are not visible to a person 13 younger than 21 years of age and where no person younger than 14 21 years of age is present or permitted to enter at any time. 15 The bill establishes requirements for the delivery sale 16 of devices including permit requirements and restrictions 17 including all devices delivered by delivery sale directly to 18 a resident of this state shall be delivered by a holder of 19 a device delivery sale permit; that a device delivery sale 20 permit holder shall only deliver devices by delivery sale to 21 a resident of this state who is at least 21 years of age, for 22 the resident’s personal use and consumption and not for resale; 23 all devices delivered by delivery sale directly to a resident 24 of this state shall be conspicuously labeled with the words 25 “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED 26 FOR DELIVERY” or with an alternative wording preapproved by 27 the director of revenue; a device delivery sale permit holder 28 shall obtain valid proof of identity and age prior to delivery, 29 and shall obtain the signature of a person age 21 or older 30 as a condition of delivery; and that a device delivery sale 31 permit holder shall maintain records of devices delivered which 32 include certain information that must be maintained for five 33 years. 34 The bill provides for the imposition, collection, and 35 -14- LSB 1117SV (1) 89 pf/jh 14/ 16

S.F. 226 payment of sales and excise taxes on the retail sale, including 1 delivery sales, of devices. Moneys from permit fees, with the 2 exception of city and county permit fees, and excise taxes 3 imposed and collected under the bill, are to be deposited in 4 the specialty courts program fund created in the bill to be 5 used for the purpose of the support of specialty courts to 6 address underlying substance use disorder-related and mental 7 health-related issues that contribute to the contact of 8 individuals with the justice system. 9 The bill provides penalties for violations of the bill. 10 The applicable provisions of Code chapter 453A (cigarette and 11 tobacco taxes and regulation of alternative nicotine products 12 and vapor products) including penalties and license suspension 13 and revocation provisions and penalties applicable to those 14 other than permit holders apply to tobacco retailers who are 15 also device retailer permit holders or device delivery sale 16 permit holders as well as to those who are not permit holders. 17 Additionally, a person holding a device retailer permit 18 or a device delivery sale permit who violates the bill by 19 marketing or selling a device to be used or attempted to be 20 used in combination with a controlled substance to knowingly 21 or intentionally and primarily inject, ingest, inhale, or 22 otherwise introduce into the human body a controlled substance, 23 commits a serious misdemeanor and is also subject to permit 24 revocation. A serious misdemeanor is punishable by confinement 25 for no more than one year and a fine of at least $430 but not 26 more than $2,560. 27 If a person holding a device retailer permit or a device 28 delivery sale permit willfully violates the bill, the 29 department shall revoke the permit upon notice and hearing. 30 In addition to any other applicable penalties, a device 31 retailer permit holder or a device delivery sale permit holder 32 who violates the Code chapter is subject to a civil penalty 33 of $500 for a first violation, a civil penalty of $1,000 for 34 a second violation, and a third violation constitutes grounds 35 -15- LSB 1117SV (1) 89 pf/jh 15/ 16

S.F. 226 for suspension or revocation of the permit. A person other 1 than a device retailer permit holder or a device delivery sale 2 permit holder, including a person who engages in the business 3 of a device retailer at a place of business or through delivery 4 sales without holding an applicable, valid permit under the 5 bill, who violates the Code chapter is subject to a civil 6 penalty of $1,000 for a first violation, a civil penalty of 7 $2,000 for a second violation, and a civil penalty of $5,000 8 for a third or subsequent violation. 9 Division II of the bill relates to claims made regarding 10 hemp products and consumable hemp products sold at retail. 11 The bill provides that unless a state or federal agency has 12 substantiated and approved the efficacy and safety claims of a 13 product based on competent and reliable scientific evidence, 14 a person engaging in the retail sale in this state of a hemp 15 product or a consumable hemp product that contains hemp-derived 16 cannabidiol, shall include on the product’s principal display 17 panel, a statement that the product may or may not contain 18 the ingredients stated on the label, that the efficacy and 19 safety of the product have not been substantiated or approved 20 by a state or federal agency based on competent and reliable 21 scientific evidence, and that the consumer should use the 22 product at the consumer’s own risk. The statement required 23 under the bill shall be developed by the board of pharmacy and 24 shall be consistent with the rules adopted by the department 25 of inspections and appeals pursuant to Code chapter 204 (Iowa 26 hemp Act) and with applicable United States food and drug 27 administration regulations. This provision of the bill does 28 not apply to a medical cannabidiol manufacturer licensed 29 pursuant to Code chapter 124E (medical cannabidiol Act). By 30 operation of law, the violation of this provision is a serious 31 misdemeanor as well as an unfair practice under Code section 32 714.16. 33 -16- LSB 1117SV (1) 89 pf/jh 16/ 16