HSB 725 (LSB 6277YC (2) 90)

HOUSE FILE _____ 

BY  (PROPOSED COMMITTEE ON WAYS AND MEANS BILL BY CHAIRPERSON KAUFMANN)

A BILL FOR

An Act relating to heated tobacco products, and providing for taxation of heated tobacco products.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 421B.2, subsection 2, Code 2024, is amended to read as follows:
   2.  “Cigarettes” shall mean and include any roll for smoking, made wholly or in part of tobacco, irrespective of size or shape and whether or not such tobacco is flavored, adulterated or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco, and include a heated tobacco product as defined in section 453A.1.
    Sec. 2.  Section 453A.1, subsection 4, Code 2024, is amended to read as follows:
   4.  “Cigarette” means any roll for smoking made wholly or in part of tobacco, or any substitute for tobacco, irrespective of size or shape and irrespective of tobacco or any substitute for tobacco being flavored, adulterated, or mixed with any other ingredient, where such roll has a wrapper or cover made of paper or any other material. However, “cigarette” shall not be construed to include cigars or heated tobacco products.
    Sec. 3.  Section 453A.1, Code 2024, is amended by adding the following new subsection:
   NEW SUBSECTION.  15A.  “Heated tobacco product” means a product containing tobacco that produces an inhalable aerosol by heating the tobacco by means of a device without combustion of the tobacco or by heat generated from a combustion source that only or primarily heats rather than burns the tobacco. “Heated tobacco product” does not include a cigarette.
    Sec. 4.  Section 453A.1, subsection 28, Code 2024, is amended to read as follows:
   28.  “Tobacco products” means cigars; little cigars as defined in section 453A.42, subsection 6; cheroots; stogies; periques; granulated; plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff, snuff flour; cavendish; plug and twist tobacco; fine-cut and other chewing tobaccos; shorts; or refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe as a heated tobacco product or otherwise, or both for chewing and smoking; but does not mean cigarettes.
    Sec. 5.  Section 453A.42, subsection 16, Code 2024, is amended by striking the subsection and inserting in lieu thereof the following:
   16.  “Tobacco products” means the same as defined in section 453A.1.
    Sec. 6.  Section 453A.43, subsection 2, Code 2024, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  f.  The taxes imposed by this subsection shall not apply to heated tobacco products.
    Sec. 7.  Section 453C.1, subsection 4, paragraph a, Code 2024, is amended by adding the following new subparagraph:
   NEW SUBPARAGRAPH.  (4)  A heated tobacco product as defined in section 453A.1.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to heated tobacco products and provides for taxation of heated tobacco products as a tobacco product.
   The bill amends Code section 421B.2(2) by including heated tobacco products in the definition of cigarettes for the purposes of cigarette sales including the determining of the basic cost of cigarettes and the selling of cigarettes at less than cost under Code chapter 421B (cigarette sales).
   The bill amends Code section 453A.1(4) to provide that the definition of “cigarette” does not include a heated tobacco product for the purposes of Code chapter 453A (cigarette and tobacco taxes and regulation of alternative nicotine products and vapor products). 
   The bill amends Code section 453A.1, to define “heated tobacco product” for the purposes of Code chapter 453A. Under the bill, “heated tobacco product” means a product containing tobacco that produces an inhalable aerosol by heating the tobacco by means of a device without combustion of the tobacco or by heat generated from a combustion source that only or primarily heats rather than burns the tobacco; “heated tobacco product” does not include a cigarette.
   The bill amends Code section 453A.1(28) by including heated tobacco products in the definition of “tobacco products” for the purposes of Code chapter 453A (cigars, other tobacco products, and alternative nicotine and vapor products). The bill also amends Code section 453A.42(16) by defining “tobacco products” for the purposes of subchapter II of Code chapter 453A the same as defined for the entire Code chapter under Code section 453A.1.
   Under current law, a tax is imposed on tobacco products in the state and upon any person engaged in business as a distributor of tobacco products at a rate of 22 percent and an additional 28 percent of the wholesale sales price of the tobacco products, except little cigars and snuff. By including heated tobacco products in the definition of “tobacco products”, heated tobacco products are subject to this tax. However, the bill exempts heated tobacco products from the taxes imposed upon the use or storage by consumers of tobacco products in the state, and upon consumers, at a rate of 22 percent and an additional rate of 28 percent of the cost of tobacco products.
   The bill amends Code section 453C.1(4)(a) to include in the definition of “cigarette” a heated tobacco product for the purposes of Code chapter 453C (tobacco product manufacturers —— financial obligations).