H.F. _____ Section 1. Section 421B.2, subsection 2, Code 2025, is 1 amended to read as follows: 2 2. “Cigarettes” shall mean and include any roll for smoking, 3 made wholly or in part of tobacco, irrespective of size or 4 shape and whether or not such tobacco is flavored, adulterated 5 or mixed with any other ingredient, the wrapper or cover of 6 which is made of paper or any other substance or material 7 except tobacco , and include a heated tobacco product as defined 8 in section 453A.1 . 9 Sec. 2. Section 453A.1, subsection 4, Code 2025, is amended 10 to read as follows: 11 4. “Cigarette” means any roll for smoking made wholly or in 12 part of tobacco, or any substitute for tobacco, irrespective of 13 size or shape and irrespective of tobacco or any substitute for 14 tobacco being flavored, adulterated, or mixed with any other 15 ingredient, where such roll has a wrapper or cover made of 16 paper or any other material. “Cigarette” shall be construed to 17 include heated tobacco products. However, “cigarette” shall not 18 be construed to include cigars. 19 Sec. 3. Section 453A.1, Code 2025, is amended by adding the 20 following new subsection: 21 NEW SUBSECTION . 15A. “Heated tobacco product” means a 22 product containing tobacco that produces an inhalable aerosol 23 by heating the tobacco by means of a device without combustion 24 of the tobacco or by heat generated from a combustion source 25 that only or primarily heats rather than burns the tobacco. 26 Sec. 4. Section 453A.1, subsection 29, Code 2025, is amended 27 to read as follows: 28 29. “Vapor product” means any noncombustible product, 29 which may or may not contain nicotine, that employs a heating 30 element, power source, electronic circuit, or other electronic, 31 chemical, or mechanical means, regardless of shape or size, 32 that can be used to produce vapor from a solution or other 33 substance liquid . “Vapor product” includes an electronic 34 cigarette, electronic cigar, electronic cigarillo, electronic 35 -1- LSB 1590YC (3) 91 jm/jh 1/ 4

H.F. _____ pipe, or similar product or device, and any cartridge or other 1 container of a solution or other substance liquid , which may 2 or may not contain nicotine, that is intended to be used with 3 or in an electronic cigarette, electronic cigar, electronic 4 cigarillo, electronic pipe, or similar product or device. 5 “Vapor product” does not include a product regulated as a drug 6 or device by the United States food and drug administration 7 under chapter V of the federal Food, Drug, and Cosmetic Act. 8 Sec. 5. Section 453A.6, subsection 1, Code 2025, is amended 9 to read as follows: 10 1. a. There Except as provided in paragraph “b” , there is 11 imposed, and shall be collected and paid to the department, a 12 tax on all cigarettes used or otherwise disposed of in this 13 state for any purpose equal to six and eight-tenths cents on 14 each cigarette. 15 b. There is imposed, and shall be collected and paid to the 16 department, a tax on heated tobacco products used or otherwise 17 disposed of in this state for any purpose equal to three and 18 four-tenths cents on each consumable unit containing a heated 19 tobacco product. 20 Sec. 6. Section 453A.42, Code 2025, is amended by adding the 21 following new subsection: 22 NEW SUBSECTION . 5A. “Heated tobacco product” means the same 23 as defined in section 453A.1, except “heated tobacco product” 24 does not include a vapor product. 25 Sec. 7. Section 453A.42, subsection 16, Code 2025, is 26 amended to read as follows: 27 16. “Tobacco products” means cigars; little cigars as 28 defined herein; cheroots; stogies; periques; granulated, plug 29 cut, crimp cut, ready rubbed, and other smoking tobacco; 30 snuff; cavendish; plug and twist tobacco; fine-cut and other 31 chewing tobaccos; shorts; refuse scraps, clippings, cuttings 32 and sweepings of tobacco, and other kinds and forms of tobacco, 33 prepared in such manner as to be suitable for chewing or 34 smoking in a pipe or otherwise, or both for chewing and 35 -2- LSB 1590YC (3) 91 jm/jh 2/ 4

H.F. _____ smoking; but shall not include cigarettes or heated tobacco 1 products as defined in section 453A.1 , subsection 4 . 2 Sec. 8. Section 453C.1, subsection 4, paragraph a, Code 3 2025, is amended by adding the following new subparagraph: 4 NEW SUBPARAGRAPH . (4) Any heated tobacco product as defined 5 in section 453A.1. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill relates to the regulation and taxation of tobacco 10 products and heated tobacco products. 11 The bill amends Code section 421B.2 by including heated 12 tobacco products in the definition of cigarette for the purpose 13 of cigarette sales including the determining of the basic cost 14 of cigarettes and the selling of cigarettes at less than cost 15 under Code chapter 421B. 16 The bill amends Code section 453A.1(4) to provide that the 17 definition of “cigarette” includes heated tobacco products for 18 purposes of Code chapter 453A (cigarette and tobacco taxes 19 and regulation of alternative nicotine products and vapor 20 products). 21 The bill defines “heated tobacco products” for purposes of 22 Code chapter 453A, subchapter I (cigarettes and alternative 23 nicotine products and vapor products), to mean a product 24 containing tobacco that produces an inhalable aerosol by 25 heating the tobacco by means of a device without combustion 26 of the tobacco or by heat generated from a combustion source 27 that only or primarily heats rather than burns the tobacco. 28 The bill defines “heated tobacco products” the same for the 29 purposes of Code chapter 453, subchapter II (cigars, other 30 tobacco products, and alternative nicotine and vapor products), 31 except the definition specifically excludes “vapor products” 32 defined in Code section 453A.1(29). 33 The bill amends Code section 453A.1(29) to provide that the 34 definition of “vapor product” include liquid nicotine rather 35 -3- LSB 1590YC (3) 91 jm/jh 3/ 4

H.F. _____ than just nicotine, and replaces the use of the term “other 1 substance” in the definition with the term “liquid”. 2 Under current law in Code chapter 453A, subchapter I, a tax 3 is imposed under Code section 453A.6 on all cigarettes equal to 4 6.80 cents on each cigarette. However, the bill imposes a tax 5 on each cigarette that is a unit containing a heated tobacco 6 product under Code chapter 453A, subchapter I, that is equal 7 to 3.40 cents. 8 Under current law in Code chapter 453A, subchapter II, 9 a tax is imposed under Code section 453A.43 on all tobacco 10 products in this state at a rate of 22 percent of the wholesale 11 price of the tobacco products, except little cigars and snuff. 12 Currently, cigarettes are also excluded from the 22 percent tax 13 on the wholesale price. By amending the definition of “tobacco 14 products” in Code chapter 453A, subchapter II, to exclude 15 heated tobacco products, the bill excludes heated tobacco 16 products including vapor products from the 22 percent tax on 17 the wholesale price of tobacco products. 18 The bill defines “cigarette” to include heated tobacco 19 products for purposes of regulating cigarettes under Code 20 chapter 453C (tobacco product manufacturers —— financial 21 obligations). 22 -4- LSB 1590YC (3) 91 jm/jh 4/ 4