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Senate File 226 - 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.
24a. “Device” means any equipment or product, made in whole
25or in part of glass or metal, that is intended or designed for
26use in manufacturing, compounding, converting, concealing,
27producing, processing, preparing, injecting, ingesting,
28inhaling, or otherwise introducing into the human body a
29controlled substance. “Device” does not include a vapor
30product.
31b. In determining whether any particular item constitutes a
32“device”, the following factors may be considered:
33(1) The instructions, oral or written, provided with the
34item concerning its use.
35(2) Any descriptive materials accompanying the item which
-1-1explain or depict its use.
2(3) National and local advertising concerning the item’s
3use.
4(4) The manner in which the item is displayed for sale.
5(5) Whether the owner of the place of business, or anyone in
6control of the item at the place of business, is a legitimate
7supplier of like or related items to the community, such as a
8licensed distributor, manufacturer, or subjobber.
9(6) Direct or circumstantial evidence of the ratio of sales
10of the item to the total sales of the place of business.
11(7) The existence and scope of legitimate uses of the item
12in the community.
13(8) Expert testimony concerning the item’s use.
14c. A particular item may constitute a device notwithstanding
15any lawful use of the item.
167. “Device retailer” means a person engaged in the retail
17sale of tangible personal property who is also engaged in
18selling devices to the ultimate consumer.
198. “Director” means the director of revenue.
209. “Distributor” means the same as defined in section
21453A.42.
2210. “Manufacturer” means the same as defined in section
23453A.42.
2411. “Place of business” means any place where tobacco
25products and devices are sold, stored, or kept for the purpose
26of sale or consumption; or for a business within or without the
27state that conducts delivery sales, any place where tobacco
28products and devices are sold or are kept for the purpose of
29sale, including delivery sales.
3012. “Retail outlet” means each place of business from which
31tobacco products and devices are sold to consumers.
3213. “Sale” means any transfer, exchange, or barter, in
33any manner or by any means whatsoever, for consideration, and
34includes and means all sales made by any person.
3514. “Subjobber” means the same as defined in section
-2-1453A.42.
215. “Tobacco products” means cigars; little cigars;
3cheroots; stogies; periques; granulated, plug cut, crimp cut,
4ready rubbed, and other smoking tobacco; snuff; cavendish;
5plug and twist tobacco; fine-cut and other chewing tobaccos;
6shorts; refuse scraps, clippings, cuttings and sweepings of
7tobacco, and other kinds and forms of tobacco, prepared in
8such manner as to be suitable for chewing or smoking in a pipe
9or otherwise, or both for chewing and smoking; but shall not
10include cigarettes as defined in section 453A.1.
1116. “Tobacco retailer” means a retailer as defined in
12section 453A.42.
1317. “Use” means the exercise of any right or power
14incidental to the ownership of tobacco products or devices.
1518. “Vapor product” means the same as defined in section
16453A.1.
17 Sec. 2. NEW SECTION. 453E.2 Administration — rules —
18intent.
191. The director shall administer this chapter. The director
20shall collect, supervise, and enforce the collection of all
21fees, taxes, and civil penalties imposed under this chapter.
222. The director may adopt rules pursuant to chapter 17A that
23are necessary to enforce this chapter.
243. The director may designate employees to administer
25and enforce the provisions of this chapter, including the
26collection of all taxes provided for in this chapter. In the
27enforcement, the director may request aid from the attorney
28general, the special agents of the state, any county attorney,
29or any peace officer. The director may appoint clerks and
30additional help as may be needed to administer this chapter.
314. This chapter or the holding of a device retailer permit
32or a device delivery sale permit under this chapter shall not
33be construed to provide for any of the following:
34a. Immunity from prosecution or the limitation of the
35application of other state law and regulations governing
-3-1tobacco products, drug paraphernalia, or controlled substances.
2b. Authorization for the possession, marketing, offering
3for sale, or selling of a device, the possession, marketing,
4offering for sale, or selling of which is otherwise prohibited
5by state or federal law.
6 Sec. 3. NEW SECTION. 453E.3 Device retailers — permits —
7fees.
81. Permits required. A person shall not engage in the
9business of a device retailer at any place of business or
10through delivery sales, unless the person complies with all of
11the following:
12a. The person has received and holds a permit as a tobacco
13retailer pursuant to section 453A.47A that has not been
14suspended or revoked and is not expired; complies with the
15provisions of chapter 453A applicable to a tobacco retailer;
16and sells tobacco products in addition to devices at the retail
17outlet or through delivery sales.
18b. The person has received and holds a permit as a device
19retailer pursuant to this section that has not been suspended
20or revoked and is not expired, and complies with the provisions
21of this chapter.
222. No sales without device retailer permit. A device
23retailer shall not sell devices until an application has been
24filed and the fee prescribed paid for a permit and until such
25permit is obtained and only while such permit is not suspended,
26revoked, or expired.
273. Number of device retailer permits. An application shall
28be filed and a permit obtained for each place of business
29owned or operated by a device retailer located in the state.
30If an out-of-state device retailer makes delivery sales of
31devices, an application shall be filed with the department and
32a permit shall be issued for the out-of-state device retailer’s
33principal place of business.
344. Issuance. Cities may issue device retailer permits
35to device retailers located within their respective limits.
-4-1County boards of supervisors may issue device retailer permits
2to device retailers located in their respective counties,
3outside of the corporate limits of cities. The city or county
4shall submit a duplicate of any application for a device
5retailer permit to the alcoholic beverages division of the
6department of commerce within thirty days of issuance of a
7device retailer permit. The alcoholic beverages division of
8the department of commerce shall submit the current list of
9all device retailer permits issued to the department of public
10health by the last day of each quarter of a state fiscal year.
115. Fees — expiration. All device retailer permits provided
12for in this section shall expire on June 30 of each year. A
13device retailer permit shall not be granted or issued until the
14applicant has paid the fees provided for in this section for
15the period ending June 30 next, to the city or county granting
16the device retailer permit. The fee for a device retailer
17permit is one thousand five hundred dollars.
186. Application. Device retailer permits shall be issued
19only upon application, accompanied by the one thousand five
20hundred dollar fee, made upon forms furnished by the department
21upon written request. The failure to furnish such forms
22shall be no excuse for the failure to file the form unless
23absolute refusal is shown. The forms shall specify all of the
24following:
25a. The manner under which the device retailer transacts or
26intends to transact business as a device retailer.
27b. The principal office, residence, and place of business,
28to which the device retailer permit is to apply.
29c. If the applicant is not an individual, the names of the
30partners if the applicant is a partnership or the names of
31the principal officers or members if the applicant is a legal
32entity, and their addresses.
33d. Such other information as the director shall by rule
34prescribe.
357. Records and reports of device retailers.
-5- 1a. The director shall prescribe the forms necessary for
2the efficient administration of this section and may require
3uniform books and records to be used and kept by each device
4retailer or other person as deemed necessary.
5b. Every device retailer shall, when requested by the
6department, make additional reports as the department deems
7necessary and proper and shall at the request of the department
8furnish full and complete information pertaining to any
9transaction of the device retailer involving the purchase or
10sale of devices, including the number of devices sold.
118. Requirements for sale.
12a. A device retailer shall not sell, give, or otherwise
13supply a device to any person under twenty-one years of age and
14must verify the age of all purchasers of devices. If a device
15is purchased at a retail outlet, valid proof of the purchaser’s
16identity and age shall be obtained at the time the device is
17supplied to the purchaser. If a device is purchased through a
18delivery sale, valid proof of the purchaser’s identity and age
19shall be obtained in accordance with section 453E.4.
20b. A device retailer shall only display and sell devices
21in a location of a retail outlet where the device retailer
22ensures that the devices are not visible to a person younger
23than twenty-one years of age and where no person younger than
24twenty-one years of age is present or permitted to enter at any
25time.
26 Sec. 4. NEW SECTION. 453E.4 Delivery sale of devices —
27permit — requirements.
281. a. A person shall not mail, ship, or otherwise cause
29to be delivered any device in connection with a delivery sale
30to any other person within this state unless the person has
31applied for and holds a device delivery sale permit as provided
32in this section.
33b. A person applying for a device delivery sale permit shall
34submit an application for the permit electronically, or in a
35manner prescribed by the director.
-6- 1c. An application submitted pursuant to paragraph “b” shall
2be accompanied by a permit fee in the amount of one thousand
3five hundred dollars.
4d. The director may in accordance with this section issue a
5device delivery sale permit which shall be valid for one year
6from the date of issuance unless it is sooner suspended or
7revoked for a violation of this section.
8e. A permit issued pursuant to this section may be renewed
9annually by submitting a renewal application in a manner
10prescribed by the director, accompanied by the one thousand
11five hundred dollar permit fee.
122. The delivery sale of devices pursuant to this
13section shall be subject to the following requirements and
14restrictions:
15a. All devices delivered by delivery sale directly to a
16resident of this state shall be sold only by a device delivery
17sale permit holder.
18b. A device delivery sale permit holder shall only deliver
19devices by delivery sale to a resident of this state who is at
20least twenty-one years of age for the resident’s personal use
21and not for resale.
22c. All devices delivered by delivery sale directly to a
23resident of this state shall be conspicuously labeled with the
24words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER
25REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
26alternative wording preapproved by the director.
27d. A device delivery sale permit holder shall obtain
28valid proof of identity and age prior to delivery, and shall
29obtain the signature of a person age twenty-one or older as a
30condition of delivery.
31e. A device delivery sale permit holder shall maintain
32records of devices delivered which include the name of the
33device manufacturer, quantity of devices delivered, recipient’s
34name and address and verification of age on an electronic or
35paper form of signature from the recipient of the device, and
-7-1sales and excise taxes paid. Records shall be submitted to
2the director on a monthly basis in a form and manner to be
3determined by the director. Records shall be maintained for at
4least five years.
53. A device delivery sale permit holder shall remit to the
6director an amount equivalent to the applicable sales tax and
7excise tax on devices subject to delivery sale at the rates
8specified in section 423.2 and section 453E.5, as applicable.
9The amount shall be remitted at the time and in the manner
10provided in section 453E.5.
114. A device delivery sale permit holder shall be deemed to
12have consented to the jurisdiction of the director or any other
13agency or court in this state concerning enforcement of this
14section and any related laws, rules, or regulations. A device
15delivery sale permit holder shall allow the director to perform
16an audit of records of devices upon request.
17 Sec. 5. NEW SECTION. 453E.5 Sales and use tax on sales and
18delivery sales of devices — examination of records and premises
19— subpoena for witnesses and papers.
201. A sale or delivery sale of a device within this state
21shall be subject to the sales tax provided in chapter 423,
22subchapter II. All the provisions for the lien of the tax, its
23collection, and all actions as provided in the uniform sales
24and use tax administration Act, chapter 423, shall apply to the
25tax imposed in this chapter.
262. There is levied and imposed an excise tax on a device
27purchased in this state through a sale or purchased for use
28in this state through a delivery sale of forty percent of the
29purchase price of the device.
303. A device delivery sale permit holder shall be deemed to
31have waived all claims that such permit holder lacks physical
32presence within this state for purposes of collecting and
33remitting the sales and excise taxes.
344. A device delivery sale permit holder making taxable
35delivery sales of devices within this state and a device
-8-1retailer shall remit to the department all sales and excise
2taxes due on such sales at the times and in the manner as
3established by rule of the director.
45. The director may adopt rules pursuant to chapter 17A to
5administer this section.
66. Excise taxes collected under this section shall be
7deposited in the specialty courts program fund created in
8section 453E.6.
97. a. For the purpose of enabling the department to
10determine the tax liability of device delivery sale permit
11holders, device retailers, or any other person dealing in
12devices or to determine whether a tax liability has been
13incurred, the department shall have the right to inspect any
14premises of the device delivery sale permit holder, device
15retailer, or other person dealing in devices located within
16or without the state of Iowa where devices are manufactured,
17produced, made, stored, transported, sold, or offered for
18sale or exchange, and to examine all of the records required
19to be kept or any other records that may be kept incident
20to the conduct of the business of said device delivery sale
21permit holder, device retailer, or any other person dealing in
22devices.
23b. The department shall also have the right as an incident
24to determining the tax liability, or whether a tax liability
25has been incurred, to examine all stocks of devices and to
26remain upon the premises for such length of time as may be
27necessary to fully determine the tax liability, or whether a
28tax liability has been incurred.
29c. It shall be unlawful for a permit holder to fail to
30produce upon demand of the department any records required to
31be kept or to hinder or prevent in any manner the inspection of
32the records or the examination of the premises.
33d. In the case of any departmental inspection conducted
34under this section requiring department personnel to travel
35outside the state of Iowa, any additional costs incurred by
-9-1the department for out-of-state travel expenses shall be borne
2by the device delivery sale permit holder, device retailer, or
3other person dealing in devices. These additional costs shall
4be those costs in excess of the costs of a similar inspection
5conducted at the geographical point located within the state
6of Iowa nearest to the out-of-state inspection point. In
7lieu of conducting an on-premises out-of-state inspection,
8the department shall have the authority to direct the device
9delivery sale permit holder, device retailer, or other person
10dealing in devices to assemble and transport all records
11described in this subsection to the nearest practical and
12convenient geographical location in Iowa for inspection by the
13department.
14 Sec. 6. NEW SECTION. 453E.6 Specialty courts program fund.
151. A specialty courts program fund is created in the state
16treasury under the control of the drug policy coordinator of
17the governor’s office of drug control policy. Moneys from
18permit fees, with the exception of permit fees collected by
19cities or counties in the issuance of permits, and excise taxes
20imposed and collected pursuant to section 453E.5, shall be
21deposited in the fund. Permit fees collected by cities or
22counties under this chapter shall be paid to the treasurer of
23the city where the permit is effective, or to another city
24officer as designated by the city council, and credited to the
25general fund of the city. Permit fees collected by counties
26under this chapter shall be paid to the county treasurer and
27credited to the general fund of the county.
282. Moneys in the fund shall be used only as provided
29in appropriations from the fund for the purpose of the
30support of specialty courts to address underlying substance
31use disorder-related and mental health-related issues that
32contribute to the contact of individuals with the justice
33system.
343. The fund shall be separate from the general fund of the
35state and shall not be considered part of the general fund of
-10-1the state. The moneys in the fund shall not be considered
2revenue of the state, but rather shall be moneys of the fund.
3The moneys in the fund are not subject to reversion to the
4general fund of the state under section 8.33 and shall not
5be transferred, used, obligated, appropriated, or otherwise
6encumbered, except to provide for the purposes of this section.
7Notwithstanding section 12C.7, subsection 2, interest or
8earnings on moneys deposited in the fund shall be credited to
9the fund.
104. The treasurer of state shall provide a quarterly report
11of fund activities and balances to the drug policy coordinator
12of the governor’s office of drug control policy.
13 Sec. 7. NEW SECTION. 453E.7 Permits — suspension —
14revocation — penalties.
151. The provisions of chapter 453A including the permit
16suspension and revocation provisions and the civil penalties
17established in section 453A.22 shall apply to tobacco retailers
18who are also device retailer permit holders or device delivery
19sale permit holders under this chapter. The provisions of
20chapter 453A applicable to persons other than tobacco retailers
21who violate chapter 453A shall also apply to persons who
22violate this chapter.
232. A person holding a device retailer permit or a device
24delivery sale permit under this chapter who violates this
25chapter by marketing or selling a device to be used or
26attempted to be used in combination with a controlled substance
27to knowingly or intentionally and primarily inject, ingest,
28inhale, or otherwise introduce into the human body a controlled
29substance commits a serious misdemeanor and is also subject to
30permit revocation.
313. a. If a person holding a device retailer permit or a
32device delivery sale permit under this chapter has willfully
33violated this chapter, the department shall revoke the permit
34upon notice and hearing. The hearing before the department may
35be held at a site in the state as the department may direct.
-11-1The notice shall be given by mailing a copy to the permit
2holder’s place of business as it appears on the application
3for a permit. If, upon hearing, the department finds that the
4violation has occurred, the department may revoke the permit.
5b. If a device retailer permit or a device delivery
6sale permit is suspended or revoked under this section, the
7suspension or revocation shall only apply to the place of
8business at which the violation occurred and shall not apply to
9any other place of business to which the permit applies but at
10which the violation did not occur.
11c. The department or local authority shall report the
12suspension or revocation of a device retailer permit or a
13device delivery sale permit under this section to the alcoholic
14beverages division of the department of commerce within thirty
15days of the suspension or revocation of the permit.
164. In addition to any other applicable penalties, a device
17retailer permit holder or a device delivery sale permit holder
18who violates this chapter shall be subject to the following:
19a. For a first violation, a civil penalty of five hundred
20dollars.
21b. For a second violation, a civil penalty of one thousand
22dollars.
23c. A third violation constitutes grounds for suspension or
24revocation of the permit under this chapter.
255. A person other than a device retailer permit holder or a
26device delivery sale permit holder who violates this chapter,
27including a person who engages in the business of a device
28retailer at any place of business or through delivery sales
29without holding an applicable, valid permit under this chapter,
30shall be subject to the following penalties:
31a. For a first violation, a civil penalty of one thousand
32dollars.
33b. For a second violation, a civil penalty of two thousand
34dollars.
35c. For a third or subsequent violation, a civil penalty of
-12-1five thousand dollars.
2DIVISION II
3HEMP PRODUCTS AND CONSUMABLE HEMP PRODUCTS — RETAIL SALES
4 Sec. 8. NEW SECTION. 126.24 Hemp products and consumable
5hemp products — retail sales — claims.
6Unless a state or federal agency has substantiated and
7approved the efficacy and safety claims of a product based
8on competent and reliable scientific evidence, a person
9engaging in the retail sale in this state of a hemp product
10or a consumable hemp product as defined in section 204.2
11that contains hemp-derived cannabidiol, shall include on
12the product’s principal display panel, a statement that the
13product may or may not contain the ingredients stated on the
14label, that the efficacy and safety of the product have not
15been substantiated or approved by a state or federal agency
16based on competent and reliable scientific evidence, and that
17the consumer should use the product at the consumer’s own
18risk. The statement required under this section shall be
19developed by the board of pharmacy and shall be consistent
20with the rules adopted by the department of inspections and
21appeals pursuant to chapter 204 and with applicable federal
22regulations promulgated by the United States food and drug
23administration. This section shall not apply to a medical
24cannabidiol manufacturer licensed pursuant to chapter 124E.
25EXPLANATION
26The inclusion of this explanation does not constitute agreement with
27the explanation’s substance by the members of the general assembly.
28This bill relates to the regulation of certain tobacco and
29hemp-related products.
30Division I of the bill requires a person who engages in
31the business of a device retailer through a retail outlet
32or delivery sales to receive and hold a permit as a tobacco
33retailer, comply with provisions applicable to a tobacco
34retailer, sell tobacco products in addition to devices at the
35retail outlet or through delivery sales, and hold a permit
-13-1as a device retailer. The bill provides for the application
2for and issuance of device retailer permits by cities and
3counties depending upon the location of the retailer; requires
4the payment of a fee for each permit; and provides for annual
5expiration of the permits. The bill also requires device
6retailer permit holders to keep certain records and submit
7reports to the department of revenue; establishes requirements
8for the sale of devices including that a device retailer shall
9not sell, give, or otherwise supply a device to any person
10under 21 years of age and must verify the age of all purchasers
11of devices; and provides that a device retailer shall only
12display and sell devices in a location where the device
13retailer ensures that the devices are not visible to a person
14younger than 21 years of age and where no person younger than
1521 years of age is present or permitted to enter at any time.
16The bill establishes requirements for the delivery sale
17of devices including permit requirements and restrictions
18including all devices delivered by delivery sale directly to
19a resident of this state shall be delivered by a holder of
20a device delivery sale permit; that a device delivery sale
21permit holder shall only deliver devices by delivery sale to
22a resident of this state who is at least 21 years of age, for
23the resident’s personal use and consumption and not for resale;
24all devices delivered by delivery sale directly to a resident
25of this state shall be conspicuously labeled with the words
26“CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED
27FOR DELIVERY” or with an alternative wording preapproved by
28the director of revenue; a device delivery sale permit holder
29shall obtain valid proof of identity and age prior to delivery,
30and shall obtain the signature of a person age 21 or older
31as a condition of delivery; and that a device delivery sale
32permit holder shall maintain records of devices delivered which
33include certain information that must be maintained for five
34years.
35The bill provides for the imposition, collection, and
-14-1payment of sales and excise taxes on the retail sale, including
2delivery sales, of devices. Moneys from permit fees, with the
3exception of city and county permit fees, and excise taxes
4imposed and collected under the bill, are to be deposited in
5the specialty courts program fund created in the bill to be
6used for the purpose of the support of specialty courts to
7address underlying substance use disorder-related and mental
8health-related issues that contribute to the contact of
9individuals with the justice system.
10The bill provides penalties for violations of the bill.
11The applicable provisions of Code chapter 453A (cigarette and
12tobacco taxes and regulation of alternative nicotine products
13and vapor products) including penalties and license suspension
14and revocation provisions and penalties applicable to those
15other than permit holders apply to tobacco retailers who are
16also device retailer permit holders or device delivery sale
17permit holders as well as to those who are not permit holders.
18Additionally, a person holding a device retailer permit
19or a device delivery sale permit who violates the bill by
20marketing or selling a device to be used or attempted to be
21used in combination with a controlled substance to knowingly
22or intentionally and primarily inject, ingest, inhale, or
23otherwise introduce into the human body a controlled substance,
24commits a serious misdemeanor and is also subject to permit
25revocation. A serious misdemeanor is punishable by confinement
26for no more than one year and a fine of at least $430 but not
27more than $2,560.
28If a person holding a device retailer permit or a device
29delivery sale permit willfully violates the bill, the
30department shall revoke the permit upon notice and hearing.
31In addition to any other applicable penalties, a device
32retailer permit holder or a device delivery sale permit holder
33who violates the Code chapter is subject to a civil penalty
34of $500 for a first violation, a civil penalty of $1,000 for
35a second violation, and a third violation constitutes grounds
-15-1for suspension or revocation of the permit. A person other
2than a device retailer permit holder or a device delivery sale
3permit holder, including a person who engages in the business
4of a device retailer at a place of business or through delivery
5sales without holding an applicable, valid permit under the
6bill, who violates the Code chapter is subject to a civil
7penalty of $1,000 for a first violation, a civil penalty of
8$2,000 for a second violation, and a civil penalty of $5,000
9for a third or subsequent violation.
10Division II of the bill relates to claims made regarding
11hemp products and consumable hemp products sold at retail.
12The bill provides that unless a state or federal agency has
13substantiated and approved the efficacy and safety claims of a
14product based on competent and reliable scientific evidence,
15a person engaging in the retail sale in this state of a hemp
16product or a consumable hemp product that contains hemp-derived
17cannabidiol, shall include on the product’s principal display
18panel, a statement that the product may or may not contain
19the ingredients stated on the label, that the efficacy and
20safety of the product have not been substantiated or approved
21by a state or federal agency based on competent and reliable
22scientific evidence, and that the consumer should use the
23product at the consumer’s own risk. The statement required
24under the bill shall be developed by the board of pharmacy and
25shall be consistent with the rules adopted by the department
26of inspections and appeals pursuant to Code chapter 204 (Iowa
27hemp Act) and with applicable United States food and drug
28administration regulations. This provision of the bill does
29not apply to a medical cannabidiol manufacturer licensed
30pursuant to Code chapter 124E (medical cannabidiol Act). By
31operation of law, the violation of this provision is a serious
32misdemeanor as well as an unfair practice under Code section
33714.16.
-16-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.
24a. “Device” means any equipment or product, made in whole
25or in part of glass or metal, that is intended or designed for
26use in manufacturing, compounding, converting, concealing,
27producing, processing, preparing, injecting, ingesting,
28inhaling, or otherwise introducing into the human body a
29controlled substance. “Device” does not include a vapor
30product.
31b. In determining whether any particular item constitutes a
32“device”, the following factors may be considered:
33(1) The instructions, oral or written, provided with the
34item concerning its use.
35(2) Any descriptive materials accompanying the item which
-1-1explain or depict its use.
2(3) National and local advertising concerning the item’s
3use.
4(4) The manner in which the item is displayed for sale.
5(5) Whether the owner of the place of business, or anyone in
6control of the item at the place of business, is a legitimate
7supplier of like or related items to the community, such as a
8licensed distributor, manufacturer, or subjobber.
9(6) Direct or circumstantial evidence of the ratio of sales
10of the item to the total sales of the place of business.
11(7) The existence and scope of legitimate uses of the item
12in the community.
13(8) Expert testimony concerning the item’s use.
14c. A particular item may constitute a device notwithstanding
15any lawful use of the item.
167. “Device retailer” means a person engaged in the retail
17sale of tangible personal property who is also engaged in
18selling devices to the ultimate consumer.
198. “Director” means the director of revenue.
209. “Distributor” means the same as defined in section
21453A.42.
2210. “Manufacturer” means the same as defined in section
23453A.42.
2411. “Place of business” means any place where tobacco
25products and devices are sold, stored, or kept for the purpose
26of sale or consumption; or for a business within or without the
27state that conducts delivery sales, any place where tobacco
28products and devices are sold or are kept for the purpose of
29sale, including delivery sales.
3012. “Retail outlet” means each place of business from which
31tobacco products and devices are sold to consumers.
3213. “Sale” means any transfer, exchange, or barter, in
33any manner or by any means whatsoever, for consideration, and
34includes and means all sales made by any person.
3514. “Subjobber” means the same as defined in section
-2-1453A.42.
215. “Tobacco products” means cigars; little cigars;
3cheroots; stogies; periques; granulated, plug cut, crimp cut,
4ready rubbed, and other smoking tobacco; snuff; cavendish;
5plug and twist tobacco; fine-cut and other chewing tobaccos;
6shorts; refuse scraps, clippings, cuttings and sweepings of
7tobacco, and other kinds and forms of tobacco, prepared in
8such manner as to be suitable for chewing or smoking in a pipe
9or otherwise, or both for chewing and smoking; but shall not
10include cigarettes as defined in section 453A.1.
1116. “Tobacco retailer” means a retailer as defined in
12section 453A.42.
1317. “Use” means the exercise of any right or power
14incidental to the ownership of tobacco products or devices.
1518. “Vapor product” means the same as defined in section
16453A.1.
17 Sec. 2. NEW SECTION. 453E.2 Administration — rules —
18intent.
191. The director shall administer this chapter. The director
20shall collect, supervise, and enforce the collection of all
21fees, taxes, and civil penalties imposed under this chapter.
222. The director may adopt rules pursuant to chapter 17A that
23are necessary to enforce this chapter.
243. The director may designate employees to administer
25and enforce the provisions of this chapter, including the
26collection of all taxes provided for in this chapter. In the
27enforcement, the director may request aid from the attorney
28general, the special agents of the state, any county attorney,
29or any peace officer. The director may appoint clerks and
30additional help as may be needed to administer this chapter.
314. This chapter or the holding of a device retailer permit
32or a device delivery sale permit under this chapter shall not
33be construed to provide for any of the following:
34a. Immunity from prosecution or the limitation of the
35application of other state law and regulations governing
-3-1tobacco products, drug paraphernalia, or controlled substances.
2b. Authorization for the possession, marketing, offering
3for sale, or selling of a device, the possession, marketing,
4offering for sale, or selling of which is otherwise prohibited
5by state or federal law.
6 Sec. 3. NEW SECTION. 453E.3 Device retailers — permits —
7fees.
81. Permits required. A person shall not engage in the
9business of a device retailer at any place of business or
10through delivery sales, unless the person complies with all of
11the following:
12a. The person has received and holds a permit as a tobacco
13retailer pursuant to section 453A.47A that has not been
14suspended or revoked and is not expired; complies with the
15provisions of chapter 453A applicable to a tobacco retailer;
16and sells tobacco products in addition to devices at the retail
17outlet or through delivery sales.
18b. The person has received and holds a permit as a device
19retailer pursuant to this section that has not been suspended
20or revoked and is not expired, and complies with the provisions
21of this chapter.
222. No sales without device retailer permit. A device
23retailer shall not sell devices until an application has been
24filed and the fee prescribed paid for a permit and until such
25permit is obtained and only while such permit is not suspended,
26revoked, or expired.
273. Number of device retailer permits. An application shall
28be filed and a permit obtained for each place of business
29owned or operated by a device retailer located in the state.
30If an out-of-state device retailer makes delivery sales of
31devices, an application shall be filed with the department and
32a permit shall be issued for the out-of-state device retailer’s
33principal place of business.
344. Issuance. Cities may issue device retailer permits
35to device retailers located within their respective limits.
-4-1County boards of supervisors may issue device retailer permits
2to device retailers located in their respective counties,
3outside of the corporate limits of cities. The city or county
4shall submit a duplicate of any application for a device
5retailer permit to the alcoholic beverages division of the
6department of commerce within thirty days of issuance of a
7device retailer permit. The alcoholic beverages division of
8the department of commerce shall submit the current list of
9all device retailer permits issued to the department of public
10health by the last day of each quarter of a state fiscal year.
115. Fees — expiration. All device retailer permits provided
12for in this section shall expire on June 30 of each year. A
13device retailer permit shall not be granted or issued until the
14applicant has paid the fees provided for in this section for
15the period ending June 30 next, to the city or county granting
16the device retailer permit. The fee for a device retailer
17permit is one thousand five hundred dollars.
186. Application. Device retailer permits shall be issued
19only upon application, accompanied by the one thousand five
20hundred dollar fee, made upon forms furnished by the department
21upon written request. The failure to furnish such forms
22shall be no excuse for the failure to file the form unless
23absolute refusal is shown. The forms shall specify all of the
24following:
25a. The manner under which the device retailer transacts or
26intends to transact business as a device retailer.
27b. The principal office, residence, and place of business,
28to which the device retailer permit is to apply.
29c. If the applicant is not an individual, the names of the
30partners if the applicant is a partnership or the names of
31the principal officers or members if the applicant is a legal
32entity, and their addresses.
33d. Such other information as the director shall by rule
34prescribe.
357. Records and reports of device retailers.
-5- 1a. The director shall prescribe the forms necessary for
2the efficient administration of this section and may require
3uniform books and records to be used and kept by each device
4retailer or other person as deemed necessary.
5b. Every device retailer shall, when requested by the
6department, make additional reports as the department deems
7necessary and proper and shall at the request of the department
8furnish full and complete information pertaining to any
9transaction of the device retailer involving the purchase or
10sale of devices, including the number of devices sold.
118. Requirements for sale.
12a. A device retailer shall not sell, give, or otherwise
13supply a device to any person under twenty-one years of age and
14must verify the age of all purchasers of devices. If a device
15is purchased at a retail outlet, valid proof of the purchaser’s
16identity and age shall be obtained at the time the device is
17supplied to the purchaser. If a device is purchased through a
18delivery sale, valid proof of the purchaser’s identity and age
19shall be obtained in accordance with section 453E.4.
20b. A device retailer shall only display and sell devices
21in a location of a retail outlet where the device retailer
22ensures that the devices are not visible to a person younger
23than twenty-one years of age and where no person younger than
24twenty-one years of age is present or permitted to enter at any
25time.
26 Sec. 4. NEW SECTION. 453E.4 Delivery sale of devices —
27permit — requirements.
281. a. A person shall not mail, ship, or otherwise cause
29to be delivered any device in connection with a delivery sale
30to any other person within this state unless the person has
31applied for and holds a device delivery sale permit as provided
32in this section.
33b. A person applying for a device delivery sale permit shall
34submit an application for the permit electronically, or in a
35manner prescribed by the director.
-6- 1c. An application submitted pursuant to paragraph “b” shall
2be accompanied by a permit fee in the amount of one thousand
3five hundred dollars.
4d. The director may in accordance with this section issue a
5device delivery sale permit which shall be valid for one year
6from the date of issuance unless it is sooner suspended or
7revoked for a violation of this section.
8e. A permit issued pursuant to this section may be renewed
9annually by submitting a renewal application in a manner
10prescribed by the director, accompanied by the one thousand
11five hundred dollar permit fee.
122. The delivery sale of devices pursuant to this
13section shall be subject to the following requirements and
14restrictions:
15a. All devices delivered by delivery sale directly to a
16resident of this state shall be sold only by a device delivery
17sale permit holder.
18b. A device delivery sale permit holder shall only deliver
19devices by delivery sale to a resident of this state who is at
20least twenty-one years of age for the resident’s personal use
21and not for resale.
22c. All devices delivered by delivery sale directly to a
23resident of this state shall be conspicuously labeled with the
24words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER
25REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
26alternative wording preapproved by the director.
27d. A device delivery sale permit holder shall obtain
28valid proof of identity and age prior to delivery, and shall
29obtain the signature of a person age twenty-one or older as a
30condition of delivery.
31e. A device delivery sale permit holder shall maintain
32records of devices delivered which include the name of the
33device manufacturer, quantity of devices delivered, recipient’s
34name and address and verification of age on an electronic or
35paper form of signature from the recipient of the device, and
-7-1sales and excise taxes paid. Records shall be submitted to
2the director on a monthly basis in a form and manner to be
3determined by the director. Records shall be maintained for at
4least five years.
53. A device delivery sale permit holder shall remit to the
6director an amount equivalent to the applicable sales tax and
7excise tax on devices subject to delivery sale at the rates
8specified in section 423.2 and section 453E.5, as applicable.
9The amount shall be remitted at the time and in the manner
10provided in section 453E.5.
114. A device delivery sale permit holder shall be deemed to
12have consented to the jurisdiction of the director or any other
13agency or court in this state concerning enforcement of this
14section and any related laws, rules, or regulations. A device
15delivery sale permit holder shall allow the director to perform
16an audit of records of devices upon request.
17 Sec. 5. NEW SECTION. 453E.5 Sales and use tax on sales and
18delivery sales of devices — examination of records and premises
19— subpoena for witnesses and papers.
201. A sale or delivery sale of a device within this state
21shall be subject to the sales tax provided in chapter 423,
22subchapter II. All the provisions for the lien of the tax, its
23collection, and all actions as provided in the uniform sales
24and use tax administration Act, chapter 423, shall apply to the
25tax imposed in this chapter.
262. There is levied and imposed an excise tax on a device
27purchased in this state through a sale or purchased for use
28in this state through a delivery sale of forty percent of the
29purchase price of the device.
303. A device delivery sale permit holder shall be deemed to
31have waived all claims that such permit holder lacks physical
32presence within this state for purposes of collecting and
33remitting the sales and excise taxes.
344. A device delivery sale permit holder making taxable
35delivery sales of devices within this state and a device
-8-1retailer shall remit to the department all sales and excise
2taxes due on such sales at the times and in the manner as
3established by rule of the director.
45. The director may adopt rules pursuant to chapter 17A to
5administer this section.
66. Excise taxes collected under this section shall be
7deposited in the specialty courts program fund created in
8section 453E.6.
97. a. For the purpose of enabling the department to
10determine the tax liability of device delivery sale permit
11holders, device retailers, or any other person dealing in
12devices or to determine whether a tax liability has been
13incurred, the department shall have the right to inspect any
14premises of the device delivery sale permit holder, device
15retailer, or other person dealing in devices located within
16or without the state of Iowa where devices are manufactured,
17produced, made, stored, transported, sold, or offered for
18sale or exchange, and to examine all of the records required
19to be kept or any other records that may be kept incident
20to the conduct of the business of said device delivery sale
21permit holder, device retailer, or any other person dealing in
22devices.
23b. The department shall also have the right as an incident
24to determining the tax liability, or whether a tax liability
25has been incurred, to examine all stocks of devices and to
26remain upon the premises for such length of time as may be
27necessary to fully determine the tax liability, or whether a
28tax liability has been incurred.
29c. It shall be unlawful for a permit holder to fail to
30produce upon demand of the department any records required to
31be kept or to hinder or prevent in any manner the inspection of
32the records or the examination of the premises.
33d. In the case of any departmental inspection conducted
34under this section requiring department personnel to travel
35outside the state of Iowa, any additional costs incurred by
-9-1the department for out-of-state travel expenses shall be borne
2by the device delivery sale permit holder, device retailer, or
3other person dealing in devices. These additional costs shall
4be those costs in excess of the costs of a similar inspection
5conducted at the geographical point located within the state
6of Iowa nearest to the out-of-state inspection point. In
7lieu of conducting an on-premises out-of-state inspection,
8the department shall have the authority to direct the device
9delivery sale permit holder, device retailer, or other person
10dealing in devices to assemble and transport all records
11described in this subsection to the nearest practical and
12convenient geographical location in Iowa for inspection by the
13department.
14 Sec. 6. NEW SECTION. 453E.6 Specialty courts program fund.
151. A specialty courts program fund is created in the state
16treasury under the control of the drug policy coordinator of
17the governor’s office of drug control policy. Moneys from
18permit fees, with the exception of permit fees collected by
19cities or counties in the issuance of permits, and excise taxes
20imposed and collected pursuant to section 453E.5, shall be
21deposited in the fund. Permit fees collected by cities or
22counties under this chapter shall be paid to the treasurer of
23the city where the permit is effective, or to another city
24officer as designated by the city council, and credited to the
25general fund of the city. Permit fees collected by counties
26under this chapter shall be paid to the county treasurer and
27credited to the general fund of the county.
282. Moneys in the fund shall be used only as provided
29in appropriations from the fund for the purpose of the
30support of specialty courts to address underlying substance
31use disorder-related and mental health-related issues that
32contribute to the contact of individuals with the justice
33system.
343. The fund shall be separate from the general fund of the
35state and shall not be considered part of the general fund of
-10-1the state. The moneys in the fund shall not be considered
2revenue of the state, but rather shall be moneys of the fund.
3The moneys in the fund are not subject to reversion to the
4general fund of the state under section 8.33 and shall not
5be transferred, used, obligated, appropriated, or otherwise
6encumbered, except to provide for the purposes of this section.
7Notwithstanding section 12C.7, subsection 2, interest or
8earnings on moneys deposited in the fund shall be credited to
9the fund.
104. The treasurer of state shall provide a quarterly report
11of fund activities and balances to the drug policy coordinator
12of the governor’s office of drug control policy.
13 Sec. 7. NEW SECTION. 453E.7 Permits — suspension —
14revocation — penalties.
151. The provisions of chapter 453A including the permit
16suspension and revocation provisions and the civil penalties
17established in section 453A.22 shall apply to tobacco retailers
18who are also device retailer permit holders or device delivery
19sale permit holders under this chapter. The provisions of
20chapter 453A applicable to persons other than tobacco retailers
21who violate chapter 453A shall also apply to persons who
22violate this chapter.
232. A person holding a device retailer permit or a device
24delivery sale permit under this chapter who violates this
25chapter by marketing or selling a device to be used or
26attempted to be used in combination with a controlled substance
27to knowingly or intentionally and primarily inject, ingest,
28inhale, or otherwise introduce into the human body a controlled
29substance commits a serious misdemeanor and is also subject to
30permit revocation.
313. a. If a person holding a device retailer permit or a
32device delivery sale permit under this chapter has willfully
33violated this chapter, the department shall revoke the permit
34upon notice and hearing. The hearing before the department may
35be held at a site in the state as the department may direct.
-11-1The notice shall be given by mailing a copy to the permit
2holder’s place of business as it appears on the application
3for a permit. If, upon hearing, the department finds that the
4violation has occurred, the department may revoke the permit.
5b. If a device retailer permit or a device delivery
6sale permit is suspended or revoked under this section, the
7suspension or revocation shall only apply to the place of
8business at which the violation occurred and shall not apply to
9any other place of business to which the permit applies but at
10which the violation did not occur.
11c. The department or local authority shall report the
12suspension or revocation of a device retailer permit or a
13device delivery sale permit under this section to the alcoholic
14beverages division of the department of commerce within thirty
15days of the suspension or revocation of the permit.
164. In addition to any other applicable penalties, a device
17retailer permit holder or a device delivery sale permit holder
18who violates this chapter shall be subject to the following:
19a. For a first violation, a civil penalty of five hundred
20dollars.
21b. For a second violation, a civil penalty of one thousand
22dollars.
23c. A third violation constitutes grounds for suspension or
24revocation of the permit under this chapter.
255. A person other than a device retailer permit holder or a
26device delivery sale permit holder who violates this chapter,
27including a person who engages in the business of a device
28retailer at any place of business or through delivery sales
29without holding an applicable, valid permit under this chapter,
30shall be subject to the following penalties:
31a. For a first violation, a civil penalty of one thousand
32dollars.
33b. For a second violation, a civil penalty of two thousand
34dollars.
35c. For a third or subsequent violation, a civil penalty of
-12-1five thousand dollars.
2DIVISION II
3HEMP PRODUCTS AND CONSUMABLE HEMP PRODUCTS — RETAIL SALES
4 Sec. 8. NEW SECTION. 126.24 Hemp products and consumable
5hemp products — retail sales — claims.
6Unless a state or federal agency has substantiated and
7approved the efficacy and safety claims of a product based
8on competent and reliable scientific evidence, a person
9engaging in the retail sale in this state of a hemp product
10or a consumable hemp product as defined in section 204.2
11that contains hemp-derived cannabidiol, shall include on
12the product’s principal display panel, a statement that the
13product may or may not contain the ingredients stated on the
14label, that the efficacy and safety of the product have not
15been substantiated or approved by a state or federal agency
16based on competent and reliable scientific evidence, and that
17the consumer should use the product at the consumer’s own
18risk. The statement required under this section shall be
19developed by the board of pharmacy and shall be consistent
20with the rules adopted by the department of inspections and
21appeals pursuant to chapter 204 and with applicable federal
22regulations promulgated by the United States food and drug
23administration. This section shall not apply to a medical
24cannabidiol manufacturer licensed pursuant to chapter 124E.
25EXPLANATION
26The inclusion of this explanation does not constitute agreement with
27the explanation’s substance by the members of the general assembly.
28This bill relates to the regulation of certain tobacco and
29hemp-related products.
30Division I of the bill requires a person who engages in
31the business of a device retailer through a retail outlet
32or delivery sales to receive and hold a permit as a tobacco
33retailer, comply with provisions applicable to a tobacco
34retailer, sell tobacco products in addition to devices at the
35retail outlet or through delivery sales, and hold a permit
-13-1as a device retailer. The bill provides for the application
2for and issuance of device retailer permits by cities and
3counties depending upon the location of the retailer; requires
4the payment of a fee for each permit; and provides for annual
5expiration of the permits. The bill also requires device
6retailer permit holders to keep certain records and submit
7reports to the department of revenue; establishes requirements
8for the sale of devices including that a device retailer shall
9not sell, give, or otherwise supply a device to any person
10under 21 years of age and must verify the age of all purchasers
11of devices; and provides that a device retailer shall only
12display and sell devices in a location where the device
13retailer ensures that the devices are not visible to a person
14younger than 21 years of age and where no person younger than
1521 years of age is present or permitted to enter at any time.
16The bill establishes requirements for the delivery sale
17of devices including permit requirements and restrictions
18including all devices delivered by delivery sale directly to
19a resident of this state shall be delivered by a holder of
20a device delivery sale permit; that a device delivery sale
21permit holder shall only deliver devices by delivery sale to
22a resident of this state who is at least 21 years of age, for
23the resident’s personal use and consumption and not for resale;
24all devices delivered by delivery sale directly to a resident
25of this state shall be conspicuously labeled with the words
26“CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED
27FOR DELIVERY” or with an alternative wording preapproved by
28the director of revenue; a device delivery sale permit holder
29shall obtain valid proof of identity and age prior to delivery,
30and shall obtain the signature of a person age 21 or older
31as a condition of delivery; and that a device delivery sale
32permit holder shall maintain records of devices delivered which
33include certain information that must be maintained for five
34years.
35The bill provides for the imposition, collection, and
-14-1payment of sales and excise taxes on the retail sale, including
2delivery sales, of devices. Moneys from permit fees, with the
3exception of city and county permit fees, and excise taxes
4imposed and collected under the bill, are to be deposited in
5the specialty courts program fund created in the bill to be
6used for the purpose of the support of specialty courts to
7address underlying substance use disorder-related and mental
8health-related issues that contribute to the contact of
9individuals with the justice system.
10The bill provides penalties for violations of the bill.
11The applicable provisions of Code chapter 453A (cigarette and
12tobacco taxes and regulation of alternative nicotine products
13and vapor products) including penalties and license suspension
14and revocation provisions and penalties applicable to those
15other than permit holders apply to tobacco retailers who are
16also device retailer permit holders or device delivery sale
17permit holders as well as to those who are not permit holders.
18Additionally, a person holding a device retailer permit
19or a device delivery sale permit who violates the bill by
20marketing or selling a device to be used or attempted to be
21used in combination with a controlled substance to knowingly
22or intentionally and primarily inject, ingest, inhale, or
23otherwise introduce into the human body a controlled substance,
24commits a serious misdemeanor and is also subject to permit
25revocation. A serious misdemeanor is punishable by confinement
26for no more than one year and a fine of at least $430 but not
27more than $2,560.
28If a person holding a device retailer permit or a device
29delivery sale permit willfully violates the bill, the
30department shall revoke the permit upon notice and hearing.
31In addition to any other applicable penalties, a device
32retailer permit holder or a device delivery sale permit holder
33who violates the Code chapter is subject to a civil penalty
34of $500 for a first violation, a civil penalty of $1,000 for
35a second violation, and a third violation constitutes grounds
-15-1for suspension or revocation of the permit. A person other
2than a device retailer permit holder or a device delivery sale
3permit holder, including a person who engages in the business
4of a device retailer at a place of business or through delivery
5sales without holding an applicable, valid permit under the
6bill, who violates the Code chapter is subject to a civil
7penalty of $1,000 for a first violation, a civil penalty of
8$2,000 for a second violation, and a civil penalty of $5,000
9for a third or subsequent violation.
10Division II of the bill relates to claims made regarding
11hemp products and consumable hemp products sold at retail.
12The bill provides that unless a state or federal agency has
13substantiated and approved the efficacy and safety claims of a
14product based on competent and reliable scientific evidence,
15a person engaging in the retail sale in this state of a hemp
16product or a consumable hemp product that contains hemp-derived
17cannabidiol, shall include on the product’s principal display
18panel, a statement that the product may or may not contain
19the ingredients stated on the label, that the efficacy and
20safety of the product have not been substantiated or approved
21by a state or federal agency based on competent and reliable
22scientific evidence, and that the consumer should use the
23product at the consumer’s own risk. The statement required
24under the bill shall be developed by the board of pharmacy and
25shall be consistent with the rules adopted by the department
26of inspections and appeals pursuant to Code chapter 204 (Iowa
27hemp Act) and with applicable United States food and drug
28administration regulations. This provision of the bill does
29not apply to a medical cannabidiol manufacturer licensed
30pursuant to Code chapter 124E (medical cannabidiol Act). By
31operation of law, the violation of this provision is a serious
32misdemeanor as well as an unfair practice under Code section
33714.16.
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