House File 2710 - Introduced HOUSE FILE 2710 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO HSB 723) A BILL FOR An Act relating to the duties and responsibilities of the 1 department of revenue including sports wagering, the 2 lottery, cigarette and tobacco taxes, alcoholic beverages, 3 and including effective date provisions. 4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 5 TLSB 5330HV (2) 90 jm/jh

H.F. 2710 DIVISION I 1 SPORTS WAGERING 2 Section 1. Section 99F.18, Code 2024, is amended to read as 3 follows: 4 99F.18 Tax on winnings. 5 1. All winnings derived from slot machines operated 6 pursuant to this chapter are Iowa earned income and are subject 7 to state and federal income tax laws. An amount deducted from 8 winnings for payment of the state tax, pursuant to section 9 422.16, subsection 2 , shall be remitted to the department of 10 revenue on behalf of the winner. 11 2. All winnings from sports wagering authorized under this 12 chapter are Iowa earned income and subject to state and federal 13 income tax laws. An amount deducted from winnings for payment 14 of state tax pursuant to section 422.16, subsection 2, shall be 15 remitted to the department of revenue on behalf of the winner. 16 Sec. 2. Section 422.16, subsection 2, paragraph d, Code 17 2024, is amended to read as follows: 18 d. For the purposes of this subsection , state income tax 19 shall be withheld on winnings in excess of six hundred dollars 20 derived from gambling activities authorized under chapter 21 99B or 99G . State income tax shall be withheld on winnings 22 in excess of one thousand dollars from gambling activities 23 authorized under chapter 99D . State income tax shall be 24 withheld on winnings in excess of one thousand two hundred 25 dollars derived from slot machines authorized under chapter 26 99F. State income tax shall be withheld on winnings from 27 sports wagering authorized under chapter 99F whenever federal 28 income tax is required to be withheld from the same winnings in 29 accordance with the Internal Revenue Code. 30 DIVISION II 31 LOTTERY 32 Sec. 3. Section 99G.3, Code 2024, is amended by adding the 33 following new subsections: 34 NEW SUBSECTION . 3A. “Bona fide social relationship” means 35 -1- LSB 5330HV (2) 90 jm/jh 1/ 23

H.F. 2710 a real, genuine, unfeigned social relationship between two or 1 more persons, where each person has an established knowledge of 2 the other, which has not arisen for the purpose of gambling. 3 NEW SUBSECTION . 9A. “Lottery courier” means a person who 4 offers or undertakes to procure tickets or shares in lottery 5 games from a lottery retailer on behalf of another person, and 6 who does not have a bona fide social relationship with that 7 other person. 8 Sec. 4. Section 99G.24, subsection 7, Code 2024, is amended 9 by adding the following new paragraph: 10 NEW PARAGRAPH . j. The department determines, based upon 11 available information, that either the structure or activities 12 of the applicant’s business is likely to violate provisions of 13 this chapter, or any regulation, policy, or procedure of the 14 division. 15 Sec. 5. Section 99G.30, Code 2024, is amended by adding the 16 following new subsections: 17 NEW SUBSECTION . 8. A person shall not do any of the 18 following: 19 a. Act or operate as a lottery courier. 20 b. Do business with a lottery courier. 21 NEW SUBSECTION . 9. A retailer shall not knowingly sell 22 tickets or shares in a lottery game to any of the following: 23 a. A lottery courier. 24 b. An employee or agent of a lottery courier. 25 Sec. 6. Section 99G.31, subsection 3, paragraph g, Code 26 2024, is amended by striking the paragraph and inserting in 27 lieu thereof the following: 28 g. A ticket or share issued by the division shall not 29 be purchased by and no prize shall be paid to any of the 30 following: 31 (1) A member of the board. 32 (2) An officer or employee of the department. 33 (3) An officer or employee of the state providing services 34 to the department to administer this chapter if such officer 35 -2- LSB 5330HV (2) 90 jm/jh 2/ 23

H.F. 2710 or employee has access to confidential information which may 1 compromise the integrity of the lottery. 2 (4) A spouse, child, sibling, or parent residing as a member 3 of the same household in the principal place of residence of 4 any person described in subparagraphs (1) through (3). 5 Sec. 7. Section 99G.34, Code 2024, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 9. Ticket order history; ticket inventory; 8 or any records that if disclosed could impair or adversely 9 impact the security, integrity, or fairness of a lottery game 10 or the security of lottery retailers. 11 DIVISION III 12 CIGARETTE AND TOBACCO TAXES AND REPORTS —— ELECTRONIC FILING 13 Sec. 8. Section 453A.1, subsection 27, Code 2024, is amended 14 to read as follows: 15 27. “State permit” shall mean and include all permits issued 16 by the department to distributors, wholesalers, and retailers 17 under this chapter except the permits issued to retailers 18 approved by cities and counties pursuant to sections 453A.13 19 and 453A.47A . 20 Sec. 9. Section 453A.6, subsection 8, paragraph a, Code 21 2024, is amended to read as follows: 22 a. Pay directly to the department, in lieu of the tax 23 under subsection 1 , a tax equal to three and six hundredths 24 cents on each cigarette dispensed from such machine. Payments 25 made under this paragraph shall be remitted to the department 26 electronically. 27 Sec. 10. Section 453A.8, subsection 2, Code 2024, is amended 28 to read as follows: 29 2. Orders for cigarette tax stamps, including the payment 30 for such stamps, shall be sent direct made to the department 31 electronically on a form to be prescribed by the director, 32 except as provided in subsection 6 . 33 Sec. 11. Section 453A.13, subsection 2, paragraph a, Code 34 2024, is amended to read as follows: 35 -3- LSB 5330HV (2) 90 jm/jh 3/ 23

H.F. 2710 a. The department shall issue state permits to distributors, 1 wholesalers, and cigarette vendors, and retailers that 2 make delivery sales of alternative nicotine products and 3 vapor products, subject to the conditions provided in this 4 subchapter . If an out-of-state retailer makes delivery 5 sales of alternative nicotine products or vapor products, an 6 application shall be filed with the department electronically 7 and a permit shall be issued for the out-of-state retailer’s 8 principal place of business. Cities may issue approve retail 9 permits to retailers permit applications for applicants with 10 a place of business located within their respective limits. 11 County boards of supervisors may issue approve retail permits 12 to retailers permit applications for applicants with a place of 13 business in their respective counties, outside of the corporate 14 limits of cities. Upon approval of a retail permit application 15 by a city or county, the department shall issue the permit to 16 the applicant on behalf of the city or county, in the manner 17 determined by the department. A city or county shall use the 18 electronic portal of the department to process retail permit 19 applications. A city or county that is unable to use the 20 electronic portal of the department may request permission from 21 the director to process retail applications by another method. 22 Sec. 12. Section 453A.13, subsection 2, paragraph c, Code 23 2024, is amended to read as follows: 24 c. A city or county shall submit a duplicate of any 25 application for a retail permit to the department within thirty 26 days of the issuance. The department shall submit the current 27 list of all retail permits issued to the department of health 28 and human services by the last day of each quarter of a state 29 fiscal year. 30 Sec. 13. Section 453A.13, subsection 3, paragraph a, Code 31 2024, is amended to read as follows: 32 a. All permits provided for in this subchapter shall expire 33 on June 30 of each year. A permit shall not be granted or 34 issued until the applicant has paid the fees to the department 35 -4- LSB 5330HV (2) 90 jm/jh 4/ 23

H.F. 2710 required in this subchapter for the next period ending on June 1 30 next, to the department or the city or county granting the 2 permit, the fees provided for in this subchapter . The annual 3 state permit fee for a distributor, cigarette vendor, and 4 wholesaler is one hundred dollars when the permit is granted 5 during the months of July, August, or September. However, 6 whenever a state permit holder operates more than one place of 7 business, a duplicate state permit shall be issued for each 8 additional place of business on payment of five dollars for 9 each duplicate state permit, but refunds as provided in this 10 subchapter do not apply to any duplicate permit issued. 11 Sec. 14. Section 453A.13, subsection 5, unnumbered 12 paragraph 1, Code 2024, is amended to read as follows: 13 Permits shall be issued only upon applications accompanied 14 by the fee indicated above, and by an adequate bond as provided 15 in section 453A.14 , and upon forms furnished by the department 16 upon written request . The failure to furnish such forms shall 17 be no excuse for the failure to file the forms unless absolute 18 refusal is shown. Applications, any supporting documentation, 19 and the associated fees required by this section shall be 20 submitted to the department electronically. The forms shall 21 set forth all of the following: 22 Sec. 15. Section 453A.13, subsection 9, unnumbered 23 paragraph 1, Code 2024, is amended to read as follows: 24 Each permit issued shall describe clearly the place of 25 business for which it is issued, shall be nonassignable, 26 consecutively numbered, designating the kind of permit, and 27 shall authorize the sale of cigarettes, alternative nicotine 28 products, or vapor products in this state subject to the 29 limitations and restrictions herein contained. The retail 30 permits shall be upon forms furnished by the department or on 31 forms made available or approved by the department . 32 Sec. 16. Section 453A.14, subsection 1, unnumbered 33 paragraph 1, Code 2024, is amended to read as follows: 34 No A state or manufacturer’s permit shall not be issued until 35 -5- LSB 5330HV (2) 90 jm/jh 5/ 23

H.F. 2710 the applicant files a bond, with good and sufficient surety, 1 to be approved by the director, which bond shall be in favor of 2 the state and conditioned upon the payment of taxes, damages, 3 fines, penalties, and costs adjudged against the permit holder 4 for violation of any of the provisions of this subchapter . The 5 bonds shall be on forms prescribed by the director and shall be 6 filed electronically. A bond filed under this section shall be 7 in one of the following amounts: 8 Sec. 17. Section 453A.14, subsection 2, Code 2024, is 9 amended to read as follows: 10 2. A person shall not engage in interstate business unless 11 the person files a bond, with good and sufficient surety in an 12 amount of not less than one thousand dollars. A bond required 13 by this subsection shall be on forms prescribed by the director 14 and shall be filed electronically. The amount of the bond 15 required of the person shall be fixed by the director, subject 16 to the minimum limitation provided in this section . The bond 17 is subject to approval by the director and shall be payable to 18 the state in Des Moines, Polk county, and conditioned upon the 19 payment of taxes, damages, fines, penalties, and costs adjudged 20 against the person for violation of any of the requirements of 21 this subchapter affecting the person, on a form prescribed by 22 the director. 23 Sec. 18. Section 453A.15, subsection 7, Code 2024, is 24 amended to read as follows: 25 7. The director may require by rule that Any reports 26 required to be made under this subchapter shall be filed by 27 electronic transmission electronically . 28 Sec. 19. Section 453A.16, Code 2024, is amended to read as 29 follows: 30 453A.16 Manufacturer’s permit. 31 The department may, upon application of any manufacturer, 32 issue without charge to the manufacturer a manufacturer’s 33 permit. The application shall contain information as 34 the director shall prescribe and the application shall be 35 -6- LSB 5330HV (2) 90 jm/jh 6/ 23

H.F. 2710 submitted to the department electronically . The holder of a 1 manufacturer’s permit is authorized to purchase stamps from 2 the department, and must affix stamps to individual packages 3 of cigarettes outside of this state, prior to their shipment 4 into the state unless the cigarettes are shipped to an Iowa 5 permitted distributor or an Iowa permitted distributor’s agent. 6 Sec. 20. Section 453A.17, subsection 1, Code 2024, is 7 amended to read as follows: 8 1. Every distributing agent in the state, now engaged, 9 or who desires to become engaged, in the business of storing 10 unstamped cigarettes which are received in interstate commerce 11 for distribution or delivery only upon order received from 12 without the state or to be sold outside the state, shall 13 file with the department electronically , an application for 14 a distributing agent’s permit, on a form prescribed by the 15 director , to be furnished upon written request . The failure 16 to furnish shall be no excuse for the failure to file the same 17 unless an absolute refusal is shown. Said form shall set 18 forth the name under which such distributing agent transacts 19 or intends to transact such business as a distributing agent, 20 the principal office and place of business in Iowa to which 21 the permit is to apply, and if other than an individual, the 22 principal officers or members thereof and their addresses. The 23 director may require any other information in said application. 24 No distributing agent shall engage in such business until 25 such application has been filed and fee in the sum of one 26 hundred dollars paid for the permit and until the permit has 27 been obtained. Such permit shall expire on June 30 following 28 the date of issuance. All of the provisions of the last 29 two paragraphs of section 453A.14 , relative to bonds, are 30 incorporated herein and by this reference made applicable to 31 distributing agents. Upon failure to furnish adequate bond 32 as required, the permit shall be revoked without hearing. An 33 application shall be filed and a permit obtained for each place 34 of business owned or operated by a distributing agent. 35 -7- LSB 5330HV (2) 90 jm/jh 7/ 23

H.F. 2710 Sec. 21. Section 453A.18, Code 2024, is amended to read as 1 follows: 2 453A.18 Forms for records and reports. 3 The department shall furnish or make available in electronic 4 form, without charge, to holders of the various permits, forms 5 in sufficient quantities to enable permit holders to make the 6 reports required to be made under this subchapter . The permit 7 holders shall furnish at their own expense the books, records, 8 and invoices, required to be used and kept, but the books, 9 records, and invoices shall be in exact conformity to the forms 10 prescribed for that purpose by the director, and shall be kept 11 and used in the manner prescribed by the director. However, 12 the director may, by express order in certain cases, authorize 13 permit holders to keep their records in a manner and upon forms 14 other than those prescribed. The authorization may be revoked 15 at any time. A report, book, record, invoice, and any other 16 document required to be submitted to the department under this 17 subchapter shall be submitted electronically. 18 Sec. 22. Section 453A.23, subsections 1 and 2, Code 2024, 19 are amended to read as follows: 20 1. Subject to this subchapter , a retailer’s permit may be 21 issued by the department to any dining car company, sleeping 22 car company, railroad or railway company. The permit shall 23 authorize the holder to keep for sale, and sell, cigarettes 24 at retail on any dining car, sleeping car, or passenger car 25 operated by the applicant in, through, or across the state of 26 Iowa, subject to all of the restrictions imposed upon retailers 27 under this subchapter . The application for the permit shall 28 be in the form and contain the information required by the 29 director and each application submitted under this section 30 shall be submitted to the department electronically . Each 31 permit is good throughout the state. Only one permit is 32 required for all cars operated in this state by the applicant, 33 but a duplicate of the permit shall be posted in each car 34 in which cigarettes are sold and no further permit shall be 35 -8- LSB 5330HV (2) 90 jm/jh 8/ 23

H.F. 2710 required or tax levied for the privilege of selling cigarettes 1 in the cars. No cigarettes Cigarettes shall not be sold in 2 the cars without having affixed thereto stamps evidencing the 3 payment of the tax as provided in this subchapter . 4 2. As a condition precedent to the issuing of a retailer’s 5 permit for railway car, the applicant shall file with the 6 department a bond in favor of the state for the benefit of 7 all parties interested in the amount of five hundred dollars 8 conditioned upon the payment of all taxes, fines and penalties 9 and costs in this subchapter . A bond filed under this 10 subsection shall be on forms prescribed by the director and 11 shall be filed electronically. 12 Sec. 23. Section 453A.24, subsection 2, Code 2024, is 13 amended to read as follows: 14 2. The director may require by rule that common carriers 15 or the appropriate persons provide monthly reports to the 16 department detailing all information the department deems 17 necessary on shipments into and out of Iowa of cigarettes 18 and tobacco products as set forth in this subchapter I and 19 subchapter II of this chapter . The director may require by 20 rule that the reports A report required to be submitted by the 21 director pursuant to this section shall be filed by electronic 22 transmission electronically . 23 Sec. 24. Section 453A.35, subsection 1, paragraph a, Code 24 2024, is amended to read as follows: 25 a. With the exception of revenues credited to the health 26 care trust fund pursuant to paragraph “b” , the proceeds derived 27 from the sale of stamps and the payment of fees and penalties 28 provided for under this chapter , and the permit fees received 29 from all state permits issued by the department, shall be 30 credited to the general fund of the state. 31 Sec. 25. Section 453A.35, subsection 2, Code 2024, is 32 amended to read as follows: 33 2. All permit fees provided for in this chapter and 34 collected by the department on behalf of cities in the issuance 35 -9- LSB 5330HV (2) 90 jm/jh 9/ 23

H.F. 2710 of permits granted by the cities shall be paid remitted by 1 the department to the treasurer of the city where the permit 2 is effective, or to another city officer as designated by the 3 council, and shall be credited to the general fund of the 4 city. Permit fees so collected by the department on behalf of 5 counties shall be paid remitted to the county treasurer of the 6 county where the permit is effective . 7 Sec. 26. Section 453A.39, subsection 2, paragraph a, Code 8 2024, is amended to read as follows: 9 a. All cigarette samples shall be shipped only to a 10 distributor that has a permit to stamp cigarettes or little 11 cigars with Iowa tax. All cigarette samples must have a 12 cigarette stamp. The manufacturer shipping samples under this 13 section shall send an affidavit to the director stating the 14 shipment information, including the date shipped, quantity, and 15 to whom the samples were shipped. The distributor receiving 16 the shipment shall send an affidavit to the director stating 17 the shipment information, including the date shipped, quantity, 18 and from whom the samples were shipped. These affidavits shall 19 be duly notarized and submitted to the director at the time of 20 shipment and receipt of the samples. The distributor shall 21 pay the tax on samples by separate remittance along with the 22 affidavit. The affidavit and remittance required under this 23 paragraph shall be submitted to the department electronically. 24 Sec. 27. Section 453A.40, subsection 2, Code 2024, is 25 amended to read as follows: 26 2. Persons subject to the inventory tax imposed under this 27 section shall take an inventory as of the close of the business 28 day next preceding the effective date of the increased tax rate 29 of those items subject to the inventory tax for the purpose of 30 determining the tax due. These persons shall report the tax 31 on forms provided by the department of revenue and remit the 32 tax due within thirty days of the prescribed inventory date. 33 The report and remittance required under this subsection shall 34 be submitted to the department electronically. The department 35 -10- LSB 5330HV (2) 90 jm/jh 10/ 23

H.F. 2710 of revenue shall adopt rules as are necessary to carry out this 1 section . 2 Sec. 28. NEW SECTION . 453A.41 Submitting documents —— 3 alternative method. 4 A person subject to this subchapter who is required to submit 5 an application, bond, fee, report, return, remittance, or other 6 documentation electronically and who is unable to do so, may 7 request permission from the director to make the submission 8 using an alternative method. 9 Sec. 29. Section 453A.45, subsection 5, paragraphs b and c, 10 Code 2024, are amended to read as follows: 11 b. The report shall be made on forms provided by the 12 director. The director may require by rule that the A report 13 required under this subsection shall be filed by electronic 14 transmission electronically . 15 c. Common carriers transporting tobacco products into 16 this state shall file with the director reports of all such 17 shipments other than those which are delivered to public 18 warehouses of first destination in this state which are 19 licensed under the provisions of chapter 554 . Such reports 20 shall be filed electronically with the department on or before 21 the tenth day of each month and shall show with respect to 22 deliveries made in the preceding month all of the following: 23 (1) The date. 24 (2) The point of origin. 25 (3) The point of delivery. 26 (4) The name of the consignee. 27 (5) A description and the quantity of tobacco products 28 delivered. 29 (6) Such other information as the director may require. 30 Sec. 30. Section 453A.46, subsection 1, paragraph a, 31 subparagraph (1), Code 2024, is amended to read as follows: 32 (1) On or before the twentieth day of each calendar month 33 every distributor with a place of business in this state shall 34 file a return with the director showing for the preceding 35 -11- LSB 5330HV (2) 90 jm/jh 11/ 23

H.F. 2710 calendar month the quantity and wholesale sales price of each 1 tobacco product brought, or caused to be brought, into this 2 state for sale; made, manufactured, or fabricated in this state 3 for sale in this state; and any other information the director 4 may require. Every licensed distributor outside this state 5 shall in like manner file a return with the director showing 6 for the preceding calendar month the quantity and wholesale 7 sales price of each tobacco product shipped or transported to 8 retailers in this state to be sold by those retailers and any 9 other information the director may require. Returns shall 10 be made upon forms furnished or made available in electronic 11 form and prescribed by the director and shall contain other 12 information as the director may require. Each return shall be 13 accompanied by a remittance for the full tax liability shown 14 on the return, less a discount as fixed by the director not to 15 exceed five percent of the tax. Within three years after the 16 return is filed or within three years after the return became 17 due, whichever is later, the department shall examine it, 18 determine the correct amount of tax, and assess the tax against 19 the taxpayer for any deficiency. The period for examination 20 and determination of the correct amount of tax is unlimited in 21 the case of a false or fraudulent return made with the intent 22 to evade tax, or in the case of a failure to file a return. 23 Sec. 31. Section 453A.46, subsection 7, Code 2024, is 24 amended by striking the subsection and inserting in lieu 25 thereof the following: 26 7. A return and remittance required to be submitted under 27 this subchapter shall be filed electronically. 28 Sec. 32. Section 453A.47A, subsection 6, Code 2024, is 29 amended to read as follows: 30 6. Issuance. Cities may issue approve retail permits 31 to permit applications of retailers located within their 32 respective limits. County boards of supervisors may issue 33 approve retail permits to permit applications of retailers 34 located in their respective counties, outside of the corporate 35 -12- LSB 5330HV (2) 90 jm/jh 12/ 23

H.F. 2710 limits of cities. The city or county shall submit a duplicate 1 of any application for a retail permit to the department within 2 thirty days of issuance of a permit. Upon approval of a retail 3 permit application by a city or county, the department shall 4 issue the permit to the applicant on behalf of the city or 5 county, in the manner determined by the department. A city 6 or county shall use the electronic portal of the department 7 to process retail permit applications. A city or county that 8 is unable to use the electronic portal of the department 9 may request permission from the director to process retail 10 applications by another method. The department shall submit 11 the current list of all retail permits issued to the department 12 of health and human services by the last day of each quarter of 13 a state fiscal year. 14 Sec. 33. Section 453A.47A, subsection 7, paragraph a, 15 unnumbered paragraph 1, Code 2024, is amended to read as 16 follows: 17 All permits provided for in this subchapter shall expire on 18 June 30 of each year. A permit shall not be granted or issued 19 until the applicant has paid the fees provided for to the 20 department required in this section for the next period ending 21 on June 30 next, to the city or county granting the permit . The 22 fee for retail permits is as follows when the permit is granted 23 during the month of July, August, or September: 24 Sec. 34. Section 453A.47A, subsection 9, unnumbered 25 paragraph 1, Code 2024, is amended to read as follows: 26 Retail permits shall be issued only upon applications, 27 accompanied by the fee indicated above, made upon forms 28 furnished by the department upon written request . The failure 29 to furnish such forms shall be no excuse for the failure to 30 file the form unless absolute refusal is shown. Applications, 31 any supporting documentation, and the associated fees 32 required by this section shall be submitted to the department 33 electronically. The forms shall specify: 34 Sec. 35. Section 453A.47A, subsection 10, paragraph b, Code 35 -13- LSB 5330HV (2) 90 jm/jh 13/ 23

H.F. 2710 2024, is amended to read as follows: 1 b. Every retailer shall, when requested by the department, 2 make additional reports as the department deems necessary and 3 proper and shall at the request of the department furnish full 4 and complete information pertaining to any transaction of the 5 retailer involving the purchase or sale or use of tobacco, 6 tobacco products, alternative nicotine products, or vapor 7 products. A report required to be submitted to the department 8 pursuant to this subsection shall be filed electronically. 9 Sec. 36. NEW SECTION . 453A.52 Submitting documents —— 10 alternative method. 11 A person subject to this subchapter who is required to submit 12 an application, bond, fee, report, return, remittance, or other 13 documentation electronically and who is unable to do so, may 14 request permission from the director to make the submission 15 using an alternative method. 16 Sec. 37. Section 453C.1, subsection 10, Code 2024, is 17 amended to read as follows: 18 10. “Units sold” means the number of individual cigarettes 19 sold in the state by the applicable tobacco product 20 manufacturer, whether directly or through a distributor, 21 retailer, or similar intermediary or intermediaries, during the 22 year in question, as measured by excise taxes collected by the 23 state on in packs bearing required to bear the excise stamp of 24 the state or on in the case of roll-your-own tobacco containers 25 on which a tax is due pursuant to chapter 453A . The department 26 of revenue shall adopt rules as are necessary to ascertain 27 the amount of state excise tax paid on the cigarettes of such 28 tobacco product manufacturer for each year. 29 Sec. 38. Section 453D.5, subsection 1, Code 2024, is amended 30 to read as follows: 31 1. No later than twenty calendar days after the end of 32 each calendar quarter, and more frequently if so directed by 33 the director, each stamping agent and distributor shall submit 34 information as the director requires to facilitate compliance 35 -14- LSB 5330HV (2) 90 jm/jh 14/ 23

H.F. 2710 with this chapter , including but not limited to a list by brand 1 family of the total number of cigarettes, or, in the case of 2 roll-your-own tobacco, the equivalent stick count, for which 3 the stamping agent or distributor affixed stamps during the 4 previous calendar quarter or otherwise paid the tax due for 5 the cigarettes. The stamping agent and distributor shall 6 maintain, and make available to the director, all invoices and 7 documentation of sales of all nonparticipating manufacturer 8 cigarettes and any other information relied upon in reporting 9 to the director for a period of five years. Violations of this 10 subsection are subject to civil penalties as established in 11 section 453A.31, subsection 1 , paragraph “b” . Any information 12 submitted pursuant to this subsection shall be submitted to the 13 director electronically. 14 Sec. 39. EFFECTIVE DATE. This division of this Act takes 15 effect January 1, 2025, for returns, payments, remittances, 16 reports, books, records, invoices, and any other document 17 required to be electronically filed with or submitted to the 18 department on or after that date. 19 DIVISION IV 20 ALCOHOLIC BEVERAGES 21 Sec. 40. Section 123.3, subsections 10 and 32, Code 2024, 22 are amended to read as follows: 23 10. “Canned cocktail” means a mixed drink or cocktail 24 primarily composed of alcoholic liquor that is premixed and 25 packaged in a metal can and contains more than one-half of one 26 percent of alcohol by volume but not more than fifteen percent 27 of alcohol by volume. A mixed drink or cocktail mixed and 28 packaged in a metal can pursuant to section 123.49, subsection 29 2 , paragraph “d” , subparagraph (3), shall not be considered a 30 canned cocktail. 31 32. “Mixed drink or cocktail” means an alcoholic beverage, 32 composed in whole or in part of alcoholic liquor or wine , that 33 is combined with other alcoholic beverages or nonalcoholic 34 beverages or ingredients including but not limited to ice, 35 -15- LSB 5330HV (2) 90 jm/jh 15/ 23

H.F. 2710 water, soft drinks, or flavorings. 1 Sec. 41. Section 123.5, subsection 3, Code 2024, is amended 2 to read as follows: 3 3. Members of the commission shall be chosen on the basis 4 of managerial ability and experience as business executives. 5 Not more than two members of the commission may be the holder 6 of or have an interest in a permit or license to manufacture 7 alcoholic liquor, wine, or beer or to sell alcoholic liquor, 8 wine, or beer at wholesale or retail directly or indirectly; 9 individually; as a member of a partnership or an association; 10 as a member, owner, or stockholder, except as an institutional 11 investor, of a corporation or other entity; or as a relative to 12 a person by blood or marriage within the second degree do any 13 of the following: 14 a. Hold a permit or license to manufacture alcoholic 15 beverages or sell alcoholic beverages at wholesale or retail . 16 b. Have an interest in the manufacture of or dealing in 17 alcoholic beverages or in an enterprise or industry in which 18 alcoholic beverages are required. 19 c. Receive a commission or profit on the purchase or sale of 20 alcoholic beverages by any person. 21 d. Have an interest in or mortgage or deed of trust on any 22 land or building where alcoholic beverages are manufactured for 23 sale, offered for sale, or sold or in any personal property 24 used for the manufacturing or sale of alcoholic beverages. 25 Sec. 42. Section 123.5, Code 2024, is amended by adding the 26 following new subsections: 27 NEW SUBSECTION . 3A. In addition to the requirements of 28 chapter 68B, members of the commission shall not do any of the 29 following: 30 a. Hold any other office or position under the laws of this 31 state, or any other state or territory or of the United States. 32 b. Directly or indirectly use the office of the member 33 to influence, persuade, or induce any person to adopt their 34 political views or to favor any particular candidate for an 35 -16- LSB 5330HV (2) 90 jm/jh 16/ 23

H.F. 2710 elective or appointive public office. 1 c. Directly or indirectly, solicit or accept, in any manner 2 or way, any money or other thing of value for any person 3 seeking an elective or appointive public office, or to any 4 political party or any group of persons seeking to become a 5 political party. 6 NEW SUBSECTION . 6. This section does not prohibit a 7 commission member from lawfully purchasing and keeping 8 alcoholic beverages in the possession of the commission member. 9 Sec. 43. Section 123.13, Code 2024, is amended by striking 10 the section and inserting in lieu thereof the following: 11 123.13 Prohibitions —— director and employees. 12 1. For purposes of this section, “director” means the 13 director of the department. 14 2. The requirements of this section are in addition to the 15 requirements of chapter 68B. 16 3. The director shall not directly or indirectly; 17 individually; as a member of a partnership or an association; 18 as a member, owner, or stockholder, except as an institutional 19 investor of a corporation or other entity; or as a relative to 20 a person by blood or marriage within the second degree do any 21 of the following: 22 a. Have an interest in the manufacture of or dealing in 23 alcoholic beverages, or in an enterprise or industry in which 24 alcoholic beverages are required. 25 b. Receive a commission or profit from the purchase or sale 26 of an alcoholic beverage by any person. 27 c. Have an interest in, or mortgage or deed of trust on, any 28 land or building where alcoholic beverages are manufactured for 29 sale, offered for sale, or sold, or in any personal property 30 used in the manufacture or sale of alcoholic beverages. 31 4. An employee of the department shall not license, permit, 32 or participate in the licensing or permitting of a person, 33 business, or organization that requires a license or permit 34 under the laws and rules governing alcoholic beverages, if the 35 -17- LSB 5330HV (2) 90 jm/jh 17/ 23

H.F. 2710 employee has an ownership interest related to that person, 1 business, or organization. 2 5. An employee of the department shall not enforce any 3 law or rule governing alcoholic beverages against a person, 4 business, or organization that requires a license or permit 5 under the laws and rules governing alcoholic beverages, if the 6 employee has an ownership interest related to that person, 7 business, or organization. 8 6. The director or an employee violating this section or 9 any other provisions of this chapter shall, in addition to any 10 other penalties provided by law, be subject to suspension or 11 discharge from employment. 12 7. This section does not prohibit the director or an 13 employee of the department from lawfully purchasing and keeping 14 alcoholic beverages in the possession of the director or the 15 employee. 16 Sec. 44. Section 123.30, subsection 3, paragraph b, 17 subparagraph (2), subparagraph division (c), Code 2024, is 18 amended to read as follows: 19 (c) The holder of a special class “C” retail alcohol 20 license shall be authorized to sell wine and beer to patrons 21 by the individual drink for consumption on the premises only. 22 However, wine and beer in original unopened containers may also 23 be sold for consumption off the premises. In addition, a mixed 24 drink or cocktail that does not contain alcoholic liquor may be 25 sold for consumption off premises subject to the requirements 26 of section 123.49, subsection 2, paragraph “d” . 27 Sec. 45. Section 123.31C, subsection 1, Code 2024, is 28 amended to read as follows: 29 1. A person holding a special class “C” retail native 30 wine license may sell beer and native wine only at retail for 31 consumption on or off the premises. Sales of beer and native 32 wine for consumption off the premises made pursuant to this 33 section shall be made in original containers except as provided 34 in subsection 5 . A sale of a mixed drink or cocktail that does 35 -18- LSB 5330HV (2) 90 jm/jh 18/ 23