Senate File 2417 - Introduced SENATE FILE 2417 BY COMMITTEE ON WAYS AND MEANS (SUCCESSOR TO SSB 3186) A BILL FOR An Act establishing an excise tax on the sales price of 1 consumable hemp products sold or purchased at bars or 2 restaurants. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 6353SV (2) 90 jm/jh

S.F. 2417 Section 1. Section 423.3, Code 2024, is amended by adding 1 the following new subsection: 2 NEW SUBSECTION . 110. The sales price from the sale or 3 purchase of consumable hemp products subject to the excise tax 4 under chapter 423H. 5 Sec. 2. NEW SECTION . 423H.1 Definitions. 6 1. For the purposes of this chapter, unless the context 7 otherwise requires: 8 a. “Bar” means an establishment where one may purchase 9 alcoholic beverages, as defined in section 123.3, for 10 consumption on the premises and in which the serving of food is 11 only incidental to the consumption of those beverages. 12 b. “Consumable hemp product” means the same as defined in 13 section 204.2. 14 c. “Department” means the department of revenue. 15 d. “Restaurant” means an eating establishment that offers 16 food to the public or guests, and includes the bar area within 17 a restaurant. 18 e. “Retailer” means a bar or restaurant. 19 f. “Sales price” or “purchase price” means the same as 20 defined in section 423.1. 21 2. All other words and phrases used in this chapter and 22 defined in section 423.1 have the meaning given them by section 23 423.1 for the purposes of this chapter. 24 Sec. 3. NEW SECTION . 423H.2 Tax imposed. 25 A tax of twenty-five percent is imposed on the sales price or 26 purchase price of consumable hemp products sold by a retailer 27 in the state of Iowa. This tax shall be collected and paid to 28 the department by the retailer who sells the consumable hemp 29 product. 30 Sec. 4. NEW SECTION . 423H.3 Exemptions. 31 There is exempted from tax imposed by this chapter the 32 following: 33 1. The sales price from the sales of consumable hemp 34 products that this state is prohibited from taxing under the 35 -1- LSB 6353SV (2) 90 jm/jh 1/ 3

S.F. 2417 Constitution of the United States or the Constitution of the 1 State of Iowa. 2 2. The sales price or purchase price of sales for resale of 3 consumable hemp products. 4 Sec. 5. NEW SECTION . 423H.4 Administration by director. 5 1. The director of revenue shall administer the excise 6 tax on consumable hemp products as nearly as possible in 7 conjunction with the administration of the state sales tax law, 8 except that portion of the law which implements the streamlined 9 sales and use tax agreement. The director shall provide 10 appropriate forms, or provide on the regular state tax forms, 11 for reporting the sale of consumable hemp products excise 12 tax liability. All moneys received and all refunds shall be 13 deposited in or withdrawn from the general fund of the state. 14 2. The director may require all persons who are engaged 15 in the business of deriving any sales price or purchase 16 price subject to tax under this chapter to register with 17 the department. The director may also require a tax permit 18 applicable only to this chapter for any retailer not collecting 19 taxes under chapter 423. 20 3. Section 422.25, subsection 4, sections 422.30, 422.67, 21 and 422.68, section 422.69, subsection 1, sections 422.70, 22 422.71, 422.72, 422.74, and 422.75, section 423.14, subsection 23 1, and sections 423.23, 423.24, 423.25, 423.31 through 24 423.35, 423.37 through 423.42, and 423.47, consistent with 25 the provisions of this chapter, apply with respect to the tax 26 authorized under this chapter, in the same manner and with 27 the same effect as if the excise taxes on consumable hemp 28 product sales were retail sales taxes within the meaning of 29 those statutes. Notwithstanding this subsection, the director 30 shall provide for monthly filing of returns and for other than 31 monthly filing of returns both as prescribed in section 423.31. 32 All taxes collected under this chapter by a retailer are deemed 33 to be held in trust for the state of Iowa. 34 EXPLANATION 35 -2- LSB 6353SV (2) 90 jm/jh 2/ 3

S.F. 2417 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill establishes an excise tax on the sales price 3 of consumable hemp products sold or purchased at bars and 4 restaurants in this state. 5 The bill imposes an excise tax of 25 percent on the sales 6 price of consumable hemp products sold at a bar or restaurant, 7 but exempts the sales price of such consumable hemp products 8 from the sales tax. The bill defines “bar” and “restaurant”. 9 The department of revenue (DOR) is required to administer 10 the excise tax. The bill requires DOR to administer the 11 excise tax as nearly as possible in conjunction with the 12 administration of the state sales and use tax laws. 13 The moneys collected from the excise tax imposed in the bill 14 are deposited into the general fund of the state. 15 -3- LSB 6353SV (2) 90 jm/jh 3/ 3