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Senate Study Bill 3007 - IntroducedA Bill ForAn Act 1relating to the regulation of certain tobacco and
2hemp-related products, and providing penalties.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2Regulation of device retailers
3 Section 1. NEW SECTION. 453E.1 Definitions.
4As used in this chapter, unless the context otherwise
5requires:
61. “Business” means any trade, occupation, activity,
7or enterprise engaged in for the purpose of selling or
8distributing tobacco products and devices in this state.
92. “Consumer” means any person who has title to or
10possession of devices in storage, for use or other consumption
11in this state.
123. “Controlled substance” means controlled substance as
13defined in section 124.101.
144. “Delivery sale” means any sale of a device to a purchaser
15in this state where the purchaser submits the order for
16such sale by means of a telephonic or other method of voice
17transmission, mail or any other delivery service, or the
18internet or other online service and the device is delivered by
19use of mail or a delivery service. The sale of a device shall
20constitute a delivery sale regardless of whether the seller is
21located in this state. “Delivery sale” does not include a sale
22to a distributor or retailer of a device not for personal use.
235. “Department” means the department of revenue.
246. “Device” means an item that is a glass or metal pipe
25designed to ingest a substance through combustion that would
26otherwise be defined as drug paraphernalia pursuant to 21
27U.S.C. §863(d) but is exempt under 21 U.S.C. §863(f)(2) because
28the item is intended for use with tobacco products.
297. “Device retailer” means a tobacco retailer who is also
30engaged in selling devices to the ultimate consumer.
318. “Director” means the director of revenue.
329. “Place of business” means any place where tobacco
33products and devices are sold, stored, or kept for the purpose
34of sale or consumption; or for a business within or without the
35state that conducts delivery sales, any place where tobacco
-1-1products and devices are sold or are kept for the purpose of
2sale, including delivery sales.
310. “Retail outlet” means each place of business from which
4tobacco products and devices are sold to consumers.
511. “Sale” means any transfer, exchange, or barter, in
6any manner or by any means whatsoever, for consideration, and
7includes and means all sales made by any person.
812. “Tobacco products” means cigars; little cigars;
9cheroots; stogies; periques; granulated, plug cut, crimp cut,
10ready rubbed, and other smoking tobacco; snuff; cavendish;
11plug and twist tobacco; fine-cut and other chewing tobaccos;
12shorts; refuse scraps, clippings, cuttings and sweepings of
13tobacco, and other kinds and forms of tobacco, prepared in
14such manner as to be suitable for chewing or smoking in a pipe
15or otherwise, or both for chewing and smoking; but shall not
16include cigarettes as defined in section 453A.1.
1713. “Tobacco retailer” means a retailer as defined in
18section 453A.42.
1914. “Use” means the exercise of any right or power
20incidental to the ownership of tobacco products or devices.
21 Sec. 2. NEW SECTION. 453E.2 Administration — rules.
221. The director shall administer this chapter. The director
23shall collect, supervise, and enforce the collection of all
24fees, taxes, and civil penalties imposed under this chapter and
25deposit them in the specialty courts program fund created in
26section 453E.6.
272. The director may adopt rules pursuant to chapter 17A that
28are necessary to enforce this chapter.
293. The director may designate employees to administer
30and enforce the provisions of this chapter, including the
31collection of all taxes provided for in this chapter. In the
32enforcement, the director may request aid from the attorney
33general, the special agents of the state, any county attorney,
34or any peace officer. The director may appoint clerks and
35additional help as may be needed to administer this chapter.
-2-1 Sec. 3. NEW SECTION. 453E.3 Device retailers — permits —
2fees.
31. Permits required. A person shall not engage in the
4business of a device retailer at any place of business or
5through delivery sales, unless the person complies with all of
6the following:
7a. The person has received and holds a permit as a tobacco
8retailer pursuant to section 453A.47A that has not been
9suspended or revoked and is not expired; complies with the
10provisions of chapter 453A applicable to a tobacco retailer;
11and sells tobacco products in addition to devices at the retail
12outlet or through delivery sales.
13b. The person has received and holds a permit as a device
14retailer pursuant to this section that has not been suspended
15or revoked and is not expired, and complies with the provisions
16of this chapter.
172. No sales without device retailer permit. A device
18retailer shall not sell devices until an application has been
19filed and the fee prescribed paid for a permit and until such
20permit is obtained and only while such permit is not suspended,
21revoked, or expired.
223. Number of device retailer permits. An application shall
23be filed and a permit obtained for each place of business owned
24or operated by a device retailer located in the state. If an
25out-of-state device retailer makes delivery sales of devices,
26an application shall be filed with the department and a permit
27shall be issued for the out-of-state retailer’s principal place
28of business.
294. Issuance. Cities may issue device retailer permits
30to device retailers located within their respective limits.
31County boards of supervisors may issue device retailer permits
32to device retailers located in their respective counties,
33outside of the corporate limits of cities. The city or county
34shall submit a duplicate of any application for a device
35retailer permit to the alcoholic beverages division of the
-3-1department of commerce within thirty days of issuance of a
2device retailer permit. The alcoholic beverages division of
3the department of commerce shall submit the current list of
4all device retailer permits issued to the department of public
5health by the last day of each quarter of a state fiscal year.
65. Fees — expiration. All device retailer permits provided
7for in this section shall expire on June 30 of each year. A
8device retailer permit shall not be granted or issued until the
9applicant has paid the fees provided for in this section for
10the period ending June 30 next, to the city or county granting
11the device retailer permit. The fee for a device retailer
12permit is one thousand dollars.
136. Application. Device retailer permits shall be issued
14only upon application, accompanied by the one thousand dollar
15fee, made upon forms furnished by the department upon written
16request. The failure to furnish such forms shall be no excuse
17for the failure to file the form unless absolute refusal is
18shown. The forms shall specify all of the following:
19a. The manner under which the device retailer transacts or
20intends to transact business as a device retailer.
21b. The principal office, residence, and place of business,
22to which the device retailer permit is to apply.
23c. If the applicant is not an individual, the principal
24officers or members of the applicant, not to exceed three, and
25their addresses.
26d. Such other information as the director shall by rule
27prescribe.
287. Records and reports of device retailers.
29a. The director shall prescribe the forms necessary for
30the efficient administration of this section and may require
31uniform books and records to be used and kept by each device
32retailer or other person as deemed necessary.
33b. Every device retailer shall, when requested by the
34department, make additional reports as the department deems
35necessary and proper and shall at the request of the department
-4-1furnish full and complete information pertaining to any
2transaction of the device retailer involving the purchase or
3sale of devices, including the number of devices sold.
48. Requirements for sale.
5a. A device retailer shall not sell, give, or otherwise
6supply a device to any person under eighteen years of age and
7must verify the age of all purchasers of devices. Valid proof
8of the purchaser’s identity and age shall be obtained at the
9time the device is supplied to the purchaser.
10b. A device retailer shall only display and sell devices in
11a location where the device retailer ensures that the devices
12are not visible to a person younger than eighteen years of
13age and where no person younger than eighteen years of age is
14present or permitted to enter at any time.
15 Sec. 4. NEW SECTION. 453E.4 Delivery sale of devices —
16permit — requirements.
171. a. A person shall not mail, ship, or otherwise cause
18to be delivered any device in connection with a delivery sale
19to any other person within this state unless the person has
20applied for and holds a device delivery sale permit as provided
21in this section.
22b. A person applying for a device delivery sale permit shall
23submit an application for the permit electronically, or in a
24manner prescribed by the director.
25c. An application submitted pursuant to paragraph “b” shall
26be accompanied by a permit fee in the amount of one thousand
27dollars.
28d. The director may in accordance with this section issue a
29device delivery sale permit which shall be valid for one year
30from the date of issuance unless it is sooner suspended or
31revoked for a violation of this section.
32e. A permit issued pursuant to this section may be renewed
33annually by submitting a renewal application in a manner
34prescribed by the director, accompanied by the one thousand
35dollar permit fee.
-5- 12. The delivery sale of devices pursuant to this
2section shall be subject to the following requirements and
3restrictions:
4a. All devices delivered by delivery sale directly to a
5resident of this state shall be delivered only by a device
6delivery sale permit holder.
7b. A device delivery sale permit holder shall only deliver
8devices by delivery sale to a resident of this state who is at
9least eighteen years of age for the resident’s personal use and
10not for resale.
11c. All devices delivered by delivery sale directly to a
12resident of this state shall be conspicuously labeled with the
13words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 18 OR OLDER
14REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
15alternative wording preapproved by the director.
16d. A device delivery sale permit holder shall obtain valid
17proof of identity and age prior to delivery, and shall obtain
18the signature of an adult as a condition of delivery.
19e. A device delivery sale permit holder shall maintain
20records of devices delivered which include the name of the
21device manufacturer, quantity of devices delivered, recipient’s
22name and address and verification of age on an electronic or
23paper form of signature from the recipient of the device, and
24sales and excise taxes paid. Records shall be submitted to
25the director on a monthly basis in a form and manner to be
26determined by the director. Records shall be maintained for at
27least five years.
283. A device delivery sale permit holder shall remit to the
29director an amount equivalent to the applicable sales tax and
30excise tax on devices subject to delivery sale at the rates
31specified in section 423.2 and section 453E.5, as applicable,
32for deposit as provided in section 453E.6. The amount shall
33be remitted at the time and in the manner provided in section
34453E.5.
354. A device delivery sale permit holder shall be deemed to
-6-1have consented to the jurisdiction of the director or any other
2agency or court in this state concerning enforcement of this
3section and any related laws, rules, or regulations. A device
4delivery sale permit holder shall allow the director to perform
5an audit of records of devices upon request.
6 Sec. 5. NEW SECTION. 453E.5 Sales and use tax on sales and
7delivery sales of devices — examination of records and premises
8— subpoena for witnesses and papers.
91. A sale or delivery sale of a device within this state
10shall be subject to the sales tax provided in chapter 423,
11subchapter II. All the provisions for the lien of the tax, its
12collection, and all actions as provided in the uniform sales
13and use tax administration Act, chapter 423, shall apply to the
14tax imposed in this chapter.
152. There is levied and imposed an excise tax on a device
16purchased for use in this state through a sale or delivery sale
17in this state as follows:
18a. If the purchase price of the device is twenty dollars or
19less, an excise tax of ten dollars.
20b. If the purchase price of the device is more than twenty
21dollars, an excise tax of twenty dollars.
223. A device delivery sale permit holder shall be deemed to
23have waived all claims that such permit holder lacks physical
24presence within this state for purposes of collecting and
25remitting the sales and excise taxes.
264. A device delivery sale permit holder making taxable
27delivery sales of devices within this state and a device
28retailer shall remit to the department all sales and excise
29taxes due on such sales at the times and in the manner as
30established by rule of the director.
315. The director shall adopt rules pursuant to chapter 17A to
32administer this section.
336. Moneys collected under this section shall be deposited in
34the specialty courts program fund created in section 453E.6.
357. a. For the purpose of enabling the department to
-7-1determine the tax liability of device delivery sale permit
2holders, device retailers, or any other person dealing in
3devices or to determine whether a tax liability has been
4incurred, the department shall have the right to inspect any
5premises of the device delivery sale permit holder, device
6retailer, or other person dealing in devices located within
7or without the state of Iowa where devices are manufactured,
8produced, made, stored, transported, sold, or offered for sale
9or exchange, and to examine all of the records required to be
10kept or any other records that may be kept incident to the
11conduct of the business of said device delivery sale permit
12holder, retailer, or any other person dealing in devices.
13b. The department shall also have the right as an incident
14to determining the tax liability, or whether a tax liability
15has been incurred, to examine all stocks of devices and to
16remain upon the premises for such length of time as may be
17necessary to fully determine the tax liability, or whether a
18tax liability has been incurred.
19c. It shall be unlawful for a permit holder to fail to
20produce upon demand of the department any records required to
21be kept or to hinder or prevent in any manner the inspection of
22the records or the examination of the premises.
23d. In the case of any departmental inspection conducted
24under this section requiring department personnel to travel
25outside the state of Iowa, any additional costs incurred by
26the department for out-of-state travel expenses shall be borne
27by the device delivery sale permit holder, retailer, or other
28person dealing in devices. These additional costs shall be
29those costs in excess of the costs of a similar inspection
30conducted at the geographical point located within the state
31of Iowa nearest to the out-of-state inspection point. In
32lieu of conducting an on-premises out-of-state inspection,
33the department shall have the authority to direct the device
34delivery sale permit holder, retailer, or other person dealing
35in devices to assemble and transport all records described
-8-1in this subsection to the nearest practical and convenient
2geographical location in Iowa for inspection by the department.
3 Sec. 6. NEW SECTION. 453E.6 Specialty courts program fund.
41. A specialty courts program fund is created in the state
5treasury under the control of the director of the department
6of corrections. Moneys from permit fees, with the exception
7of permit fees collected by cities or counties in the issuance
8of permits, penalties, sales and use taxes, and other amounts
9collected under this chapter shall be deposited in the fund.
10Permit fees collected by cities or counties under this chapter
11shall be paid to the treasurer of the city where the permit is
12effective, or to another city officer as designated by the city
13council, and credited to the general fund of the city. Permit
14fees collected by counties under this chapter shall be paid to
15the county treasurer and credited to the general fund of the
16county.
172. Moneys in the fund shall be used only as provided
18in appropriations from the fund for the purpose of the
19support of specialty courts to address underlying substance
20use disorder-related and mental health-related issues that
21contribute to the contact of individuals with the justice
22system.
233. The fund shall be separate from the general fund of the
24state and shall not be considered part of the general fund of
25the state. The moneys in the fund shall not be considered
26revenue of the state, but rather shall be moneys of the fund.
27The moneys in the fund are not subject to reversion to the
28general fund of the state under section 8.33 and shall not
29be transferred, used, obligated, appropriated, or otherwise
30encumbered, except to provide for the purposes of this section.
31Notwithstanding section 12C.7, subsection 2, interest or
32earnings on moneys deposited in the fund shall be credited to
33the fund.
344. The treasurer of state shall provide a quarterly
35report of fund activities and balances to the director of the
-9-1department of corrections.
2 Sec. 7. NEW SECTION. 453E.7 Permits — suspension —
3revocation — penalties.
41. The provisions of chapter 453A including the permit
5suspension and revocation provisions and the civil penalties
6established in section 453A.22 shall apply to tobacco retailers
7who are also device retailer permit holders or device delivery
8sale permit holders under this chapter. The provisions of
9chapter 453A applicable to persons other than tobacco retailers
10who violate chapter 453A shall also apply to persons who
11violate this chapter.
122. A person holding a device retailer permit or a
13device delivery sale permit under this chapter who violates
14this chapter by marketing or selling a device to be used
15or attempted to be used in combination with a controlled
16substance to knowingly or intentionally and primarily inject,
17ingest, inhale, or otherwise introduce into the human body a
18controlled substance, resulting in the device constituting drug
19paraphernalia pursuant to section 124.414, commits a simple
20misdemeanor in violation of section 124.414 and is also subject
21to permit revocation.
223. a. If a person holding a device retailer permit or a
23device delivery sale permit issued by the department under this
24chapter has willfully violated this chapter, the department
25shall revoke the permit upon notice and hearing. The hearing
26before the department may be held at a site in the state as the
27department may direct. The notice shall be given by mailing a
28copy to the permit holder’s place of business as it appears on
29the application for a permit. If, upon hearing, the department
30finds that the violation has occurred, the department may
31revoke the permit.
32b. If a device retailer permit or a device delivery
33sale permit is suspended or revoked under this section, the
34suspension or revocation shall only apply to the place of
35business at which the violation occurred and shall not apply to
-10-1any other place of business to which the permit applies but at
2which the violation did not occur.
3c. The department or local authority shall report the
4suspension or revocation of a device retailer permit or a
5device delivery sale permit under this section to the alcoholic
6beverages division of the department of commerce within thirty
7days of the suspension or revocation of the permit.
84. In addition to any other applicable penalties, a device
9retailer permit holder or a device delivery sale permit holder
10who violates this chapter shall be subject to the following:
11a. For a first violation, a civil penalty of five hundred
12dollars.
13b. For a second violation, a civil penalty of one thousand
14dollars.
15c. A third violation constitutes grounds for suspension or
16revocation of the permit under this chapter.
175. A person other than a device retailer permit holder or a
18device delivery sale permit holder who violates this chapter
19shall be subject to the following penalties:
20a. For a first violation, a civil penalty of one thousand
21dollars.
22b. For a second violation, a civil penalty of two thousand
23dollars.
24c. For a third or subsequent violation, a civil penalty of
25five thousand dollars.
26DIVISION II
27HEMP PRODUCTS — RETAIL SALES
28 Sec. 8. NEW SECTION. 126.24 Hemp products — retail sales
29— claims.
30Unless a state or federal agency has substantiated and
31approved the efficacy and safety claims of a product based
32on competent and reliable scientific evidence, a person
33engaging in the retail sale in this state of a hemp product
34that contains hemp-derived cannabidiol, or in the retail sale
35of a cosmetic, personal care product, or product intended for
-11-1human or animal consumption to which hemp-derived cannabidiol
2has been added in compliance with section 204.7, subsection
39, shall include on the product’s principal display panel,
4a statement that the product may or may not contain the
5ingredients stated on the label, that the efficacy and safety
6of the product have not been substantiated or approved by
7a state or federal agency based on competent and reliable
8scientific evidence, and that the consumer should use the
9product at the consumer’s own risk.
10EXPLANATION
11The inclusion of this explanation does not constitute agreement with
12the explanation’s substance by the members of the general assembly.
13This bill relates to the regulation of certain tobacco and
14hemp-related products.
15Division I of the bill requires a person who engages in
16the business of a device retailer through a retail outlet
17or delivery sales to receive and hold a permit as a tobacco
18retailer, comply with provisions applicable to a tobacco
19retailer, sell tobacco products in addition to devices at the
20retail outlet or through delivery sales, and hold a permit
21as a device retailer. The bill provides for the application
22for and issuance of device retailer permits by cities and
23counties depending upon the location of the retailer; requires
24the payment of a $1,000 fee for each permit; and provides for
25annual expiration of the permits. The bill also requires
26device retailer permit holders to keep certain records and
27submit reports to the department of revenue; establishes
28requirements for the sale of devices including that a device
29retailer shall not sell, give, or otherwise supply a device to
30any person under 18 years of age and must verify the age of
31all purchasers of devices; and provides that a device retailer
32shall only display and sell devices in a location where the
33device retailer ensures that the devices are not visible to a
34person younger than 18 years of age and where no person younger
35than 18 years of age is present or permitted to enter at any
-12-1time.
2The bill establishes requirements for the delivery sale
3of devices including permit requirements and restrictions
4including all devices delivered by delivery sale directly to
5a resident of this state shall be delivered by a holder of
6a device delivery sale permit; that a device delivery sale
7permit holder shall only deliver devices by delivery sale to
8a resident of this state who is at least 18 years of age, for
9the resident’s personal use and consumption and not for resale;
10all devices delivered by delivery sale directly to a resident
11of this state shall be conspicuously labeled with the words
12“CONTAINS DEVICE: SIGNATURE OF PERSON AGE 18 OR OLDER REQUIRED
13FOR DELIVERY” or with an alternative wording preapproved by
14the director of revenue; a device delivery sale permit holder
15shall obtain valid proof of identity and age prior to delivery,
16and shall obtain the signature of an adult as a condition of
17delivery; and that a device delivery sale permit holder shall
18maintain records of devices delivered which include certain
19information that must be maintained for five years.
20The bill provides for the imposition, collection, and
21payment of sales and excise taxes on the retail sale, including
22delivery sales, of devices. Moneys collected, with the
23exception of city and county permit fees, are to be deposited
24in the specialty courts program fund created in the bill to
25be used for the purpose of the support of specialty courts
26to address underlying substance use disorder-related and
27mental health-related issues that contribute to the contact of
28individuals with the justice system.
29The bill provides penalties for violations of the bill.
30The applicable provisions of Code chapter 453A (cigarette and
31tobacco taxes and regulation of alternative nicotine products
32and vapor products) including penalties and license suspension
33and revocation provisions and penalties applicable to those
34other than permit holders apply to tobacco retailers who are
35also device retailer permit holders or device delivery sale
-13-1permit holders as well as to those who are not permit holders.
2Additionally, a person holding a device retailer permit
3or a device delivery sale permit who violates the bill by
4marketing or selling a device to be used or attempted to be
5used in combination with a controlled substance to knowingly
6or intentionally and primarily inject, ingest, inhale, or
7otherwise introduce into the human body a controlled substance,
8resulting in the device constituting drug paraphernalia,
9commits a simple misdemeanor in violation of Code section
10124.414 and is also subject to permit revocation.
11If a person holding a device retailer permit or a device
12delivery sale permit willfully violates the bill, the
13department shall revoke the permit upon notice and hearing.
14In addition to any other applicable penalties, a device
15retailer permit holder or a device delivery sale permit holder
16who violates the Code chapter is subject to a civil penalty
17of $500 for a first violation, a civil penalty of $1,000 for
18a second violation, and a third violation constitutes grounds
19for suspension or revocation of the permit. A person other
20than a device retailer permit holder or a device delivery sale
21permit holder who violates the Code chapter is subject to a
22civil penalty of $1,000 for a first violation, a civil penalty
23of $2,000 for a second violation, and a civil penalty of $5,000
24for a third or subsequent violation.
25Division II of the bill relates to claims made regarding
26hemp products sold at retail. The bill provides that unless
27a state or federal agency has substantiated and approved the
28efficacy and safety claims of a product based on competent and
29reliable scientific evidence, a person engaging in the retail
30sale in this state of a hemp product that contains hemp-derived
31cannabidiol, or in the retail sale of a cosmetic, personal care
32product, or product intended for human or animal consumption
33to which hemp-derived cannabidiol has been added in compliance
34with Code section 204.7(9), shall include on the product’s
35principal display panel a statement that the product may or
-14-1may not contain the ingredients stated on the label, that the
2efficacy and safety of the product have not been substantiated
3or approved by a state or federal agency based on competent and
4reliable scientific evidence, and that the consumer should use
5the product at the consumer’s own risk.
6The violation of this provision is a serious misdemeanor as
7well as an unfair practice under Code section 714.16.
-15-pf/jh
2hemp-related products, and providing penalties.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1DIVISION I
2Regulation of device retailers
3 Section 1. NEW SECTION. 453E.1 Definitions.
4As used in this chapter, unless the context otherwise
5requires:
61. “Business” means any trade, occupation, activity,
7or enterprise engaged in for the purpose of selling or
8distributing tobacco products and devices in this state.
92. “Consumer” means any person who has title to or
10possession of devices in storage, for use or other consumption
11in this state.
123. “Controlled substance” means controlled substance as
13defined in section 124.101.
144. “Delivery sale” means any sale of a device to a purchaser
15in this state where the purchaser submits the order for
16such sale by means of a telephonic or other method of voice
17transmission, mail or any other delivery service, or the
18internet or other online service and the device is delivered by
19use of mail or a delivery service. The sale of a device shall
20constitute a delivery sale regardless of whether the seller is
21located in this state. “Delivery sale” does not include a sale
22to a distributor or retailer of a device not for personal use.
235. “Department” means the department of revenue.
246. “Device” means an item that is a glass or metal pipe
25designed to ingest a substance through combustion that would
26otherwise be defined as drug paraphernalia pursuant to 21
27U.S.C. §863(d) but is exempt under 21 U.S.C. §863(f)(2) because
28the item is intended for use with tobacco products.
297. “Device retailer” means a tobacco retailer who is also
30engaged in selling devices to the ultimate consumer.
318. “Director” means the director of revenue.
329. “Place of business” means any place where tobacco
33products and devices are sold, stored, or kept for the purpose
34of sale or consumption; or for a business within or without the
35state that conducts delivery sales, any place where tobacco
-1-1products and devices are sold or are kept for the purpose of
2sale, including delivery sales.
310. “Retail outlet” means each place of business from which
4tobacco products and devices are sold to consumers.
511. “Sale” means any transfer, exchange, or barter, in
6any manner or by any means whatsoever, for consideration, and
7includes and means all sales made by any person.
812. “Tobacco products” means cigars; little cigars;
9cheroots; stogies; periques; granulated, plug cut, crimp cut,
10ready rubbed, and other smoking tobacco; snuff; cavendish;
11plug and twist tobacco; fine-cut and other chewing tobaccos;
12shorts; refuse scraps, clippings, cuttings and sweepings of
13tobacco, and other kinds and forms of tobacco, prepared in
14such manner as to be suitable for chewing or smoking in a pipe
15or otherwise, or both for chewing and smoking; but shall not
16include cigarettes as defined in section 453A.1.
1713. “Tobacco retailer” means a retailer as defined in
18section 453A.42.
1914. “Use” means the exercise of any right or power
20incidental to the ownership of tobacco products or devices.
21 Sec. 2. NEW SECTION. 453E.2 Administration — rules.
221. The director shall administer this chapter. The director
23shall collect, supervise, and enforce the collection of all
24fees, taxes, and civil penalties imposed under this chapter and
25deposit them in the specialty courts program fund created in
26section 453E.6.
272. The director may adopt rules pursuant to chapter 17A that
28are necessary to enforce this chapter.
293. The director may designate employees to administer
30and enforce the provisions of this chapter, including the
31collection of all taxes provided for in this chapter. In the
32enforcement, the director may request aid from the attorney
33general, the special agents of the state, any county attorney,
34or any peace officer. The director may appoint clerks and
35additional help as may be needed to administer this chapter.
-2-1 Sec. 3. NEW SECTION. 453E.3 Device retailers — permits —
2fees.
31. Permits required. A person shall not engage in the
4business of a device retailer at any place of business or
5through delivery sales, unless the person complies with all of
6the following:
7a. The person has received and holds a permit as a tobacco
8retailer pursuant to section 453A.47A that has not been
9suspended or revoked and is not expired; complies with the
10provisions of chapter 453A applicable to a tobacco retailer;
11and sells tobacco products in addition to devices at the retail
12outlet or through delivery sales.
13b. The person has received and holds a permit as a device
14retailer pursuant to this section that has not been suspended
15or revoked and is not expired, and complies with the provisions
16of this chapter.
172. No sales without device retailer permit. A device
18retailer shall not sell devices until an application has been
19filed and the fee prescribed paid for a permit and until such
20permit is obtained and only while such permit is not suspended,
21revoked, or expired.
223. Number of device retailer permits. An application shall
23be filed and a permit obtained for each place of business owned
24or operated by a device retailer located in the state. If an
25out-of-state device retailer makes delivery sales of devices,
26an application shall be filed with the department and a permit
27shall be issued for the out-of-state retailer’s principal place
28of business.
294. Issuance. Cities may issue device retailer permits
30to device retailers located within their respective limits.
31County boards of supervisors may issue device retailer permits
32to device retailers located in their respective counties,
33outside of the corporate limits of cities. The city or county
34shall submit a duplicate of any application for a device
35retailer permit to the alcoholic beverages division of the
-3-1department of commerce within thirty days of issuance of a
2device retailer permit. The alcoholic beverages division of
3the department of commerce shall submit the current list of
4all device retailer permits issued to the department of public
5health by the last day of each quarter of a state fiscal year.
65. Fees — expiration. All device retailer permits provided
7for in this section shall expire on June 30 of each year. A
8device retailer permit shall not be granted or issued until the
9applicant has paid the fees provided for in this section for
10the period ending June 30 next, to the city or county granting
11the device retailer permit. The fee for a device retailer
12permit is one thousand dollars.
136. Application. Device retailer permits shall be issued
14only upon application, accompanied by the one thousand dollar
15fee, made upon forms furnished by the department upon written
16request. The failure to furnish such forms shall be no excuse
17for the failure to file the form unless absolute refusal is
18shown. The forms shall specify all of the following:
19a. The manner under which the device retailer transacts or
20intends to transact business as a device retailer.
21b. The principal office, residence, and place of business,
22to which the device retailer permit is to apply.
23c. If the applicant is not an individual, the principal
24officers or members of the applicant, not to exceed three, and
25their addresses.
26d. Such other information as the director shall by rule
27prescribe.
287. Records and reports of device retailers.
29a. The director shall prescribe the forms necessary for
30the efficient administration of this section and may require
31uniform books and records to be used and kept by each device
32retailer or other person as deemed necessary.
33b. Every device retailer shall, when requested by the
34department, make additional reports as the department deems
35necessary and proper and shall at the request of the department
-4-1furnish full and complete information pertaining to any
2transaction of the device retailer involving the purchase or
3sale of devices, including the number of devices sold.
48. Requirements for sale.
5a. A device retailer shall not sell, give, or otherwise
6supply a device to any person under eighteen years of age and
7must verify the age of all purchasers of devices. Valid proof
8of the purchaser’s identity and age shall be obtained at the
9time the device is supplied to the purchaser.
10b. A device retailer shall only display and sell devices in
11a location where the device retailer ensures that the devices
12are not visible to a person younger than eighteen years of
13age and where no person younger than eighteen years of age is
14present or permitted to enter at any time.
15 Sec. 4. NEW SECTION. 453E.4 Delivery sale of devices —
16permit — requirements.
171. a. A person shall not mail, ship, or otherwise cause
18to be delivered any device in connection with a delivery sale
19to any other person within this state unless the person has
20applied for and holds a device delivery sale permit as provided
21in this section.
22b. A person applying for a device delivery sale permit shall
23submit an application for the permit electronically, or in a
24manner prescribed by the director.
25c. An application submitted pursuant to paragraph “b” shall
26be accompanied by a permit fee in the amount of one thousand
27dollars.
28d. The director may in accordance with this section issue a
29device delivery sale permit which shall be valid for one year
30from the date of issuance unless it is sooner suspended or
31revoked for a violation of this section.
32e. A permit issued pursuant to this section may be renewed
33annually by submitting a renewal application in a manner
34prescribed by the director, accompanied by the one thousand
35dollar permit fee.
-5- 12. The delivery sale of devices pursuant to this
2section shall be subject to the following requirements and
3restrictions:
4a. All devices delivered by delivery sale directly to a
5resident of this state shall be delivered only by a device
6delivery sale permit holder.
7b. A device delivery sale permit holder shall only deliver
8devices by delivery sale to a resident of this state who is at
9least eighteen years of age for the resident’s personal use and
10not for resale.
11c. All devices delivered by delivery sale directly to a
12resident of this state shall be conspicuously labeled with the
13words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 18 OR OLDER
14REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
15alternative wording preapproved by the director.
16d. A device delivery sale permit holder shall obtain valid
17proof of identity and age prior to delivery, and shall obtain
18the signature of an adult as a condition of delivery.
19e. A device delivery sale permit holder shall maintain
20records of devices delivered which include the name of the
21device manufacturer, quantity of devices delivered, recipient’s
22name and address and verification of age on an electronic or
23paper form of signature from the recipient of the device, and
24sales and excise taxes paid. Records shall be submitted to
25the director on a monthly basis in a form and manner to be
26determined by the director. Records shall be maintained for at
27least five years.
283. A device delivery sale permit holder shall remit to the
29director an amount equivalent to the applicable sales tax and
30excise tax on devices subject to delivery sale at the rates
31specified in section 423.2 and section 453E.5, as applicable,
32for deposit as provided in section 453E.6. The amount shall
33be remitted at the time and in the manner provided in section
34453E.5.
354. A device delivery sale permit holder shall be deemed to
-6-1have consented to the jurisdiction of the director or any other
2agency or court in this state concerning enforcement of this
3section and any related laws, rules, or regulations. A device
4delivery sale permit holder shall allow the director to perform
5an audit of records of devices upon request.
6 Sec. 5. NEW SECTION. 453E.5 Sales and use tax on sales and
7delivery sales of devices — examination of records and premises
8— subpoena for witnesses and papers.
91. A sale or delivery sale of a device within this state
10shall be subject to the sales tax provided in chapter 423,
11subchapter II. All the provisions for the lien of the tax, its
12collection, and all actions as provided in the uniform sales
13and use tax administration Act, chapter 423, shall apply to the
14tax imposed in this chapter.
152. There is levied and imposed an excise tax on a device
16purchased for use in this state through a sale or delivery sale
17in this state as follows:
18a. If the purchase price of the device is twenty dollars or
19less, an excise tax of ten dollars.
20b. If the purchase price of the device is more than twenty
21dollars, an excise tax of twenty dollars.
223. A device delivery sale permit holder shall be deemed to
23have waived all claims that such permit holder lacks physical
24presence within this state for purposes of collecting and
25remitting the sales and excise taxes.
264. A device delivery sale permit holder making taxable
27delivery sales of devices within this state and a device
28retailer shall remit to the department all sales and excise
29taxes due on such sales at the times and in the manner as
30established by rule of the director.
315. The director shall adopt rules pursuant to chapter 17A to
32administer this section.
336. Moneys collected under this section shall be deposited in
34the specialty courts program fund created in section 453E.6.
357. a. For the purpose of enabling the department to
-7-1determine the tax liability of device delivery sale permit
2holders, device retailers, or any other person dealing in
3devices or to determine whether a tax liability has been
4incurred, the department shall have the right to inspect any
5premises of the device delivery sale permit holder, device
6retailer, or other person dealing in devices located within
7or without the state of Iowa where devices are manufactured,
8produced, made, stored, transported, sold, or offered for sale
9or exchange, and to examine all of the records required to be
10kept or any other records that may be kept incident to the
11conduct of the business of said device delivery sale permit
12holder, retailer, or any other person dealing in devices.
13b. The department shall also have the right as an incident
14to determining the tax liability, or whether a tax liability
15has been incurred, to examine all stocks of devices and to
16remain upon the premises for such length of time as may be
17necessary to fully determine the tax liability, or whether a
18tax liability has been incurred.
19c. It shall be unlawful for a permit holder to fail to
20produce upon demand of the department any records required to
21be kept or to hinder or prevent in any manner the inspection of
22the records or the examination of the premises.
23d. In the case of any departmental inspection conducted
24under this section requiring department personnel to travel
25outside the state of Iowa, any additional costs incurred by
26the department for out-of-state travel expenses shall be borne
27by the device delivery sale permit holder, retailer, or other
28person dealing in devices. These additional costs shall be
29those costs in excess of the costs of a similar inspection
30conducted at the geographical point located within the state
31of Iowa nearest to the out-of-state inspection point. In
32lieu of conducting an on-premises out-of-state inspection,
33the department shall have the authority to direct the device
34delivery sale permit holder, retailer, or other person dealing
35in devices to assemble and transport all records described
-8-1in this subsection to the nearest practical and convenient
2geographical location in Iowa for inspection by the department.
3 Sec. 6. NEW SECTION. 453E.6 Specialty courts program fund.
41. A specialty courts program fund is created in the state
5treasury under the control of the director of the department
6of corrections. Moneys from permit fees, with the exception
7of permit fees collected by cities or counties in the issuance
8of permits, penalties, sales and use taxes, and other amounts
9collected under this chapter shall be deposited in the fund.
10Permit fees collected by cities or counties under this chapter
11shall be paid to the treasurer of the city where the permit is
12effective, or to another city officer as designated by the city
13council, and credited to the general fund of the city. Permit
14fees collected by counties under this chapter shall be paid to
15the county treasurer and credited to the general fund of the
16county.
172. Moneys in the fund shall be used only as provided
18in appropriations from the fund for the purpose of the
19support of specialty courts to address underlying substance
20use disorder-related and mental health-related issues that
21contribute to the contact of individuals with the justice
22system.
233. The fund shall be separate from the general fund of the
24state and shall not be considered part of the general fund of
25the state. The moneys in the fund shall not be considered
26revenue of the state, but rather shall be moneys of the fund.
27The moneys in the fund are not subject to reversion to the
28general fund of the state under section 8.33 and shall not
29be transferred, used, obligated, appropriated, or otherwise
30encumbered, except to provide for the purposes of this section.
31Notwithstanding section 12C.7, subsection 2, interest or
32earnings on moneys deposited in the fund shall be credited to
33the fund.
344. The treasurer of state shall provide a quarterly
35report of fund activities and balances to the director of the
-9-1department of corrections.
2 Sec. 7. NEW SECTION. 453E.7 Permits — suspension —
3revocation — penalties.
41. The provisions of chapter 453A including the permit
5suspension and revocation provisions and the civil penalties
6established in section 453A.22 shall apply to tobacco retailers
7who are also device retailer permit holders or device delivery
8sale permit holders under this chapter. The provisions of
9chapter 453A applicable to persons other than tobacco retailers
10who violate chapter 453A shall also apply to persons who
11violate this chapter.
122. A person holding a device retailer permit or a
13device delivery sale permit under this chapter who violates
14this chapter by marketing or selling a device to be used
15or attempted to be used in combination with a controlled
16substance to knowingly or intentionally and primarily inject,
17ingest, inhale, or otherwise introduce into the human body a
18controlled substance, resulting in the device constituting drug
19paraphernalia pursuant to section 124.414, commits a simple
20misdemeanor in violation of section 124.414 and is also subject
21to permit revocation.
223. a. If a person holding a device retailer permit or a
23device delivery sale permit issued by the department under this
24chapter has willfully violated this chapter, the department
25shall revoke the permit upon notice and hearing. The hearing
26before the department may be held at a site in the state as the
27department may direct. The notice shall be given by mailing a
28copy to the permit holder’s place of business as it appears on
29the application for a permit. If, upon hearing, the department
30finds that the violation has occurred, the department may
31revoke the permit.
32b. If a device retailer permit or a device delivery
33sale permit is suspended or revoked under this section, the
34suspension or revocation shall only apply to the place of
35business at which the violation occurred and shall not apply to
-10-1any other place of business to which the permit applies but at
2which the violation did not occur.
3c. The department or local authority shall report the
4suspension or revocation of a device retailer permit or a
5device delivery sale permit under this section to the alcoholic
6beverages division of the department of commerce within thirty
7days of the suspension or revocation of the permit.
84. In addition to any other applicable penalties, a device
9retailer permit holder or a device delivery sale permit holder
10who violates this chapter shall be subject to the following:
11a. For a first violation, a civil penalty of five hundred
12dollars.
13b. For a second violation, a civil penalty of one thousand
14dollars.
15c. A third violation constitutes grounds for suspension or
16revocation of the permit under this chapter.
175. A person other than a device retailer permit holder or a
18device delivery sale permit holder who violates this chapter
19shall be subject to the following penalties:
20a. For a first violation, a civil penalty of one thousand
21dollars.
22b. For a second violation, a civil penalty of two thousand
23dollars.
24c. For a third or subsequent violation, a civil penalty of
25five thousand dollars.
26DIVISION II
27HEMP PRODUCTS — RETAIL SALES
28 Sec. 8. NEW SECTION. 126.24 Hemp products — retail sales
29— claims.
30Unless a state or federal agency has substantiated and
31approved the efficacy and safety claims of a product based
32on competent and reliable scientific evidence, a person
33engaging in the retail sale in this state of a hemp product
34that contains hemp-derived cannabidiol, or in the retail sale
35of a cosmetic, personal care product, or product intended for
-11-1human or animal consumption to which hemp-derived cannabidiol
2has been added in compliance with section 204.7, subsection
39, shall include on the product’s principal display panel,
4a statement that the product may or may not contain the
5ingredients stated on the label, that the efficacy and safety
6of the product have not been substantiated or approved by
7a state or federal agency based on competent and reliable
8scientific evidence, and that the consumer should use the
9product at the consumer’s own risk.
10EXPLANATION
11The inclusion of this explanation does not constitute agreement with
12the explanation’s substance by the members of the general assembly.
13This bill relates to the regulation of certain tobacco and
14hemp-related products.
15Division I of the bill requires a person who engages in
16the business of a device retailer through a retail outlet
17or delivery sales to receive and hold a permit as a tobacco
18retailer, comply with provisions applicable to a tobacco
19retailer, sell tobacco products in addition to devices at the
20retail outlet or through delivery sales, and hold a permit
21as a device retailer. The bill provides for the application
22for and issuance of device retailer permits by cities and
23counties depending upon the location of the retailer; requires
24the payment of a $1,000 fee for each permit; and provides for
25annual expiration of the permits. The bill also requires
26device retailer permit holders to keep certain records and
27submit reports to the department of revenue; establishes
28requirements for the sale of devices including that a device
29retailer shall not sell, give, or otherwise supply a device to
30any person under 18 years of age and must verify the age of
31all purchasers of devices; and provides that a device retailer
32shall only display and sell devices in a location where the
33device retailer ensures that the devices are not visible to a
34person younger than 18 years of age and where no person younger
35than 18 years of age is present or permitted to enter at any
-12-1time.
2The bill establishes requirements for the delivery sale
3of devices including permit requirements and restrictions
4including all devices delivered by delivery sale directly to
5a resident of this state shall be delivered by a holder of
6a device delivery sale permit; that a device delivery sale
7permit holder shall only deliver devices by delivery sale to
8a resident of this state who is at least 18 years of age, for
9the resident’s personal use and consumption and not for resale;
10all devices delivered by delivery sale directly to a resident
11of this state shall be conspicuously labeled with the words
12“CONTAINS DEVICE: SIGNATURE OF PERSON AGE 18 OR OLDER REQUIRED
13FOR DELIVERY” or with an alternative wording preapproved by
14the director of revenue; a device delivery sale permit holder
15shall obtain valid proof of identity and age prior to delivery,
16and shall obtain the signature of an adult as a condition of
17delivery; and that a device delivery sale permit holder shall
18maintain records of devices delivered which include certain
19information that must be maintained for five years.
20The bill provides for the imposition, collection, and
21payment of sales and excise taxes on the retail sale, including
22delivery sales, of devices. Moneys collected, with the
23exception of city and county permit fees, are to be deposited
24in the specialty courts program fund created in the bill to
25be used for the purpose of the support of specialty courts
26to address underlying substance use disorder-related and
27mental health-related issues that contribute to the contact of
28individuals with the justice system.
29The bill provides penalties for violations of the bill.
30The applicable provisions of Code chapter 453A (cigarette and
31tobacco taxes and regulation of alternative nicotine products
32and vapor products) including penalties and license suspension
33and revocation provisions and penalties applicable to those
34other than permit holders apply to tobacco retailers who are
35also device retailer permit holders or device delivery sale
-13-1permit holders as well as to those who are not permit holders.
2Additionally, a person holding a device retailer permit
3or a device delivery sale permit who violates the bill by
4marketing or selling a device to be used or attempted to be
5used in combination with a controlled substance to knowingly
6or intentionally and primarily inject, ingest, inhale, or
7otherwise introduce into the human body a controlled substance,
8resulting in the device constituting drug paraphernalia,
9commits a simple misdemeanor in violation of Code section
10124.414 and is also subject to permit revocation.
11If a person holding a device retailer permit or a device
12delivery sale permit willfully violates the bill, the
13department shall revoke the permit upon notice and hearing.
14In addition to any other applicable penalties, a device
15retailer permit holder or a device delivery sale permit holder
16who violates the Code chapter is subject to a civil penalty
17of $500 for a first violation, a civil penalty of $1,000 for
18a second violation, and a third violation constitutes grounds
19for suspension or revocation of the permit. A person other
20than a device retailer permit holder or a device delivery sale
21permit holder who violates the Code chapter is subject to a
22civil penalty of $1,000 for a first violation, a civil penalty
23of $2,000 for a second violation, and a civil penalty of $5,000
24for a third or subsequent violation.
25Division II of the bill relates to claims made regarding
26hemp products sold at retail. The bill provides that unless
27a state or federal agency has substantiated and approved the
28efficacy and safety claims of a product based on competent and
29reliable scientific evidence, a person engaging in the retail
30sale in this state of a hemp product that contains hemp-derived
31cannabidiol, or in the retail sale of a cosmetic, personal care
32product, or product intended for human or animal consumption
33to which hemp-derived cannabidiol has been added in compliance
34with Code section 204.7(9), shall include on the product’s
35principal display panel a statement that the product may or
-14-1may not contain the ingredients stated on the label, that the
2efficacy and safety of the product have not been substantiated
3or approved by a state or federal agency based on competent and
4reliable scientific evidence, and that the consumer should use
5the product at the consumer’s own risk.
6The violation of this provision is a serious misdemeanor as
7well as an unfair practice under Code section 714.16.
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