SF 475 (LSB 1918SV (2) 91)

SENATE FILE 475

BY  COMMITTEE ON HEALTH AND HUMAN SERVICES

(SUCCESSOR TO SSB 1137)

A BILL FOR

An Act imposing a tax on certain products containing nicotine or nonnicotine substances, creating the Iowa cancer research fund, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  453A.6A  Additional taxes imposed.
   1.  For purposes of this section:
   a.  “E-liquid” means a liquid solution containing nicotine, nicotine analog, a nonnicotine substance, or other material consumed during the process of vaporization or aerosolization and is intended to be used with or in a vapor product. “E-liquid” does not include any product regulated as a drug or device by the United States department of agriculture under chapter V of the federal Food, Drug, and Cosmetic Act.
   b.  “Nicotine pouch” means a smokeless preportioned pouch containing nicotine designed to be placed between the lip and the gum where the nicotine is absorbed into the bloodstream. A “nicotine pouch” is not a tobacco product.
   c.  “Retail sales price” means the same as “sales price” as defined in section 423.1.
   d.  “Vapor cartridge” means a prefilled disposable cartridge or pod containing nicotine, nicotine analog, a nonnicotine substance, or other material consumed during the process of vaporization or aerosolization and is intended to be used with or in a vapor product. “Vapor cartridge” does not include any product regulated as a drug or device by the United States department of agriculture under chapter V of the federal Food, Drug, and Cosmetic Act.
   2.  a.  The following taxes shall be imposed, collected, and paid to the department on the following products sold at retail in the following amounts:
   (1)  For a vapor cartridge, one dollar and fifteen cents per cartridge.
   (2)  For a nicotine pouch, six and eight-tenths cents per pouch.
   b.  The following taxes shall be imposed and collected, and paid to the department in the following amounts upon the retail sales price:
   (1)  For a vapor product requiring the use of e-liquids, fifteen percent.
   (2)  For e-liquids sold separately from a vapor cartridge, fifteen percent.
   3.  The taxes imposed pursuant to this section are in addition to any other taxes imposed by law.
    Sec. 2.  Section 453A.35, subsection 1, paragraph a, Code 2025, is amended to read as follows:
   a.  With the exception of revenues credited to the health care trust fund pursuant to paragraph “b” and revenues credited to the Iowa cancer research fund pursuant to paragraph “c”, the proceeds derived from the sale of stamps and the payment of fees and penalties provided for under this chapter, and the permit fees received from all permits issued by the department, shall be credited to the general fund of the state.
    Sec. 3.  Section 453A.35, subsection 1, Code 2025, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  c.  The revenues generated from the additional tax in section 453A.6A shall be credited to the Iowa cancer research fund created in section 453A.35B.
    Sec. 4.  NEW SECTION.  453A.35B  Iowa cancer research fund.
   1.  An Iowa cancer research fund is created in the office of the treasurer of state under the authority of the department of health and human services. The fund consists of the revenues generated from the additional tax in section 453A.6A. Moneys in the fund shall be separate from the general fund of the state and shall not be considered part of the general fund of the state. Moneys in the fund shall be used only as specified in this section and shall be appropriated only for the uses specified. Moneys in the fund are not subject to section 8.33 and shall not be transferred, used, obligated, appropriated, or otherwise encumbered, except as provided in this section. Notwithstanding section 12C.7, subsection 2, interest or earnings on moneys deposited in the fund shall be credited to the fund.
   2.  Moneys in the fund shall not be disbursed prior to July 1, 2026, and shall only be used for purposes related to supporting and funding cancer research in the state. The department of health and human services shall develop an application process and guidelines for cancer researchers to receive moneys from the fund.
   3.  The department of health and human services shall report on the program pursuant to section 217.21, beginning with the period disbursements commence.
    Sec. 5.  EFFECTIVE DATE.  This Act takes effect January 1, 2026.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill imposes a tax on certain products containing nicotine or nonnicotine substances.
   For a vapor cartridge sold at retail, the bill imposes a $1.15 tax per cartridge. For a nicotine pouch sold at retail, the bill imposes a 6.8 cent tax per pouch. For a vapor product requiring the use of e-liquids, the bill imposes a tax of 15 percent upon the retail sales price. For e-liquids sold separately from a vapor cartridge, the bill imposes a tax of 15 percent upon the retail sales prices.
   The taxes imposed pursuant to the bill are collected by the department of revenue and are in addition to any other taxes imposed by law, including the state sales tax.
   The revenue generated by the bill is credited to the new Iowa cancer research fund (fund), under the authority of the department of health and human services (HHS). The bill specifies moneys in the fund shall not be disbursed prior to July 1, 2026, and shall only be appropriated for purposes related to supporting and funding cancer research in the state. The bill requires HHS to develop an application process and guidelines for cancer researchers to receive moneys from the fund.
   The fund is not subject to reversion and moneys or earnings attributable to the fund are credited to the fund.
   The bill defines “e-liquid”, “nicotine pouch”, “retail sales price”, and “vapor cartridge”.
   The bill takes effect January 1, 2026.