Senate File 363 - ReprintedA Bill ForAn Act 1relating to the regulation of certain tobacco products,
2and providing penalties.
1   Section 1.  NEW SECTION.  453E.1  Definitions.
   2As used in this chapter, unless the context otherwise
   41.  “Business” means any trade, occupation, activity,
5or enterprise engaged in for the purpose of selling or
6distributing tobacco products and devices in this state.
   72.  “Consumer” means any person who has title to or
8possession of devices in storage, for use or other consumption
9in this state.
   103.  “Controlled substance” means controlled substance as
11defined in section 124.101.
   124.  “Delivery sale” means any sale of a device to a purchaser
13in this state where the purchaser submits the order for
14such sale by means of a telephonic or other method of voice
15transmission, mail or any other delivery service, or the
16internet or other online service and the device is delivered by
17use of mail or a delivery service. The sale of a device shall
18constitute a delivery sale regardless of whether the seller is
19located in this state. “Delivery sale” does not include a sale
20to a distributor or retailer of a device not for personal use.
   215.  “Department” means the department of revenue.
   226.  a.  “Device” means any equipment or product, made in
23whole or in part of glass or metal, that is designed for use
24in inhaling through combustion tobacco, hemp, other plant
25materials, or a controlled substance. “Device” does not
26include a vapor product or a tobacco smoking product made of
27briar, meerschaum, clay, or corn cob and not having a surface,
28aperture, or other feature consisting of metal or glass.
   29b.  In determining whether any particular item constitutes a
30“device”, the following factors may be considered:
   31(1)  The instructions, oral or written, provided with the
32item concerning its use.
   33(2)  Any descriptive materials accompanying the item which
34explain or depict its use.
   35(3)  National and local advertising concerning the item’s
   2(4)  The manner in which the item is displayed for sale.
   3(5)  Whether the owner of the place of business, or anyone in
4control of the item at the place of business, is a legitimate
5supplier of like or related items to the community, such as a
6licensed distributor, manufacturer, or subjobber.
   7(6)  Direct or circumstantial evidence of the ratio of sales
8of the item to the total sales of the place of business.
   9(7)  The existence and scope of legitimate uses of the item
10in the community.
   11(8)  Expert testimony concerning the item’s use.
   12c.  A particular item may constitute a device notwithstanding
13any lawful use of the item.
   147.  “Device retailer” means a person engaged in the retail
15sale of tangible personal property who is also engaged in
16selling devices to the ultimate consumer.
   178.  “Director” means the director of revenue.
   189.  “Distributor” means the same as defined in section
   2010.  “Manufacturer” means the same as defined in section
   2211.  “Place of business” means any place where tobacco
23products and devices are sold, stored, or kept for the purpose
24of sale or consumption; or for a business within or without the
25state that conducts delivery sales, any place where tobacco
26products and devices are sold or are kept for the purpose of
27sale, including delivery sales.
   2812.  “Retail outlet” means each place of business from which
29tobacco products and devices are sold to consumers.
   3013.  “Sale” means any transfer, exchange, or barter, in
31any manner or by any means whatsoever, for consideration, and
32includes and means all sales made by any person.
   3314.  “Subjobber” means the same as defined in section
   3515.  “Tobacco products” means cigars; little cigars;
-2-1cheroots; stogies; periques; granulated, plug cut, crimp cut,
2ready rubbed, and other smoking tobacco; snuff; cavendish;
3plug and twist tobacco; fine-cut and other chewing tobaccos;
4shorts; refuse scraps, clippings, cuttings and sweepings of
5tobacco, and other kinds and forms of tobacco, prepared in
6such manner as to be suitable for chewing or smoking in a pipe
7or otherwise, or both for chewing and smoking; but shall not
8include cigarettes as defined in section 453A.1.
   916.  “Tobacco retailer” means a retailer as defined in
10section 453A.42.
   1117.  “Use” means the exercise of any right or power
12incidental to the ownership of tobacco products or devices.
   1318.  “Vapor product” means the same as defined in section
15   Sec. 2.  NEW SECTION.  453E.2  Administration — rules —
   171.  The director shall administer this chapter. The director
18shall collect, supervise, and enforce the collection of all
19fees, taxes, and civil penalties imposed under this chapter.
   202.  The director may adopt rules pursuant to chapter 17A that
21are necessary to enforce this chapter.
   223.  The director may designate employees to administer
23and enforce the provisions of this chapter, including the
24collection of all taxes provided for in this chapter. In the
25enforcement, the director may request aid from the attorney
26general, the special agents of the state, any county attorney,
27or any peace officer. The director may appoint clerks and
28additional help as may be needed to administer this chapter.
   294.  This chapter or the holding of a device retailer permit
30or a device delivery sale permit under this chapter shall not
31be construed to provide for any of the following:
   32a.  Immunity from prosecution or the limitation of the
33application of other state law and regulations governing
34tobacco products, drug paraphernalia, or controlled substances.
   35b.  Authorization for the possession, marketing, offering
-3-1for sale, or selling of a device, the possession, marketing,
2offering for sale, or selling of which is otherwise prohibited
3by state or federal law.
4   Sec. 3.  NEW SECTION.  453E.3  Device retailers — permits —
   61.  Permits required.  A person shall not engage in the
7business of a device retailer at any place of business or
8through delivery sales, unless the person complies with all of
9the following:
   10a.  The person has received and holds a permit as a tobacco
11retailer pursuant to section 453A.47A that has not been
12suspended or revoked and is not expired; complies with the
13provisions of chapter 453A applicable to a tobacco retailer;
14and sells tobacco products in addition to devices at the retail
15outlet or through delivery sales.
   16b.  The person has received and holds a permit as a device
17retailer pursuant to this section that has not been suspended
18or revoked and is not expired, and complies with the provisions
19of this chapter.
   202.  No sales without device retailer permit.  A device
21retailer shall not sell devices until an application has been
22filed and the fee prescribed paid for a permit and until such
23permit is obtained and only while such permit is not suspended,
24revoked, or expired.
   253.  Number of device retailer permits.  An application shall
26be filed and a permit obtained for each place of business
27owned or operated by a device retailer located in the state.
28If an out-of-state device retailer makes delivery sales of
29devices, an application shall be filed with the department and
30a permit shall be issued for the out-of-state device retailer’s
31principal place of business.
   324.  Issuance.  Cities may issue device retailer permits
33to device retailers located within their respective limits.
34County boards of supervisors may issue device retailer permits
35to device retailers located in their respective counties,
-4-1outside of the corporate limits of cities. The city or county
2shall submit a duplicate of any application for a device
3retailer permit to the alcoholic beverages division of the
4department of commerce within thirty days of issuance of a
5device retailer permit. The alcoholic beverages division of
6the department of commerce shall submit the current list of
7all device retailer permits issued to the department of public
8health by the last day of each quarter of a state fiscal year.
   95.  Fees — expiration.  All device retailer permits provided
10for in this section shall expire on June 30 of each year. A
11device retailer permit shall not be granted or issued until the
12applicant has paid the fees provided for in this section for
13the period ending June 30 next, to the city or county granting
14the device retailer permit. The fee for a device retailer
15permit is one thousand five hundred dollars.
   166.  Application.  Device retailer permits shall be issued
17only upon application, accompanied by the one thousand five
18hundred dollar fee, made upon forms furnished by the department
19upon written request. The failure to furnish such forms
20shall be no excuse for the failure to file the form unless
21absolute refusal is shown. The forms shall specify all of the
   23a.  The manner under which the device retailer transacts or
24intends to transact business as a device retailer.
   25b.  The principal office, residence, and place of business,
26to which the device retailer permit is to apply.
   27c.  If the applicant is not an individual, the names of the
28partners if the applicant is a partnership or the names of
29the principal officers or members if the applicant is a legal
30entity, and their addresses.
   31d.  Such other information as the director shall by rule
   337.  Records and reports of device retailers.
   34a.  The director shall prescribe the forms necessary for
35the efficient administration of this section and may require
-5-1uniform books and records to be used and kept by each device
2retailer or other person as deemed necessary.
   3b.  Every device retailer shall, when requested by the
4department, make additional reports as the department deems
5necessary and proper and shall at the request of the department
6furnish full and complete information pertaining to any
7transaction of the device retailer involving the purchase or
8sale of devices, including the number of devices sold.
   98.  Requirements for sale.
   10a.  A device retailer shall not sell, give, or otherwise
11supply a device to any person under twenty-one years of age and
12must verify the age of all purchasers of devices. If a device
13is purchased at a retail outlet, valid proof of the purchaser’s
14identity and age shall be obtained at the time the device is
15supplied to the purchaser. If a device is purchased through a
16delivery sale, valid proof of the purchaser’s identity and age
17shall be obtained in accordance with section 453E.4.
   18b.  A device retailer shall only display and sell devices
19in a location of a retail outlet where the device retailer
20ensures that the devices are not visible to a person younger
21than twenty-one years of age and where no person younger than
22twenty-one years of age is present or permitted to enter at any
24   Sec. 4.  NEW SECTION.  453E.4  Delivery sale of devices —
25permit — requirements.
   261.  a.  A person shall not mail, ship, or otherwise cause
27to be delivered any device in connection with a delivery sale
28to any other person within this state unless the person has
29applied for and holds a device delivery sale permit as provided
30in this section.
   31b.  A person applying for a device delivery sale permit shall
32submit an application for the permit electronically, or in a
33manner prescribed by the director.
   34c.  An application submitted pursuant to paragraph “b” shall
35be accompanied by a permit fee in the amount of one thousand
-6-1five hundred dollars.
   2d.  The director may in accordance with this section issue a
3device delivery sale permit which shall be valid for one year
4from the date of issuance unless it is sooner suspended or
5revoked for a violation of this section.
   6e.  A permit issued pursuant to this section may be renewed
7annually by submitting a renewal application in a manner
8prescribed by the director, accompanied by the one thousand
9five hundred dollar permit fee.
   102.  The delivery sale of devices pursuant to this
11section shall be subject to the following requirements and
   13a.  All devices delivered by delivery sale directly to a
14resident of this state shall be sold only by a device delivery
15sale permit holder.
   16b.  A device delivery sale permit holder shall only deliver
17devices by delivery sale to a resident of this state who is at
18least twenty-one years of age for the resident’s personal use
19and not for resale.
   20c.  All devices delivered by delivery sale directly to a
21resident of this state shall be conspicuously labeled with the
23REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
24alternative wording preapproved by the director.
   25d.  A device delivery sale permit holder shall obtain
26valid proof of identity and age prior to delivery, and shall
27obtain the signature of a person age twenty-one or older as a
28condition of delivery.
   29e.  A device delivery sale permit holder shall maintain
30records of devices delivered which include the name of the
31device manufacturer, quantity of devices delivered, recipient’s
32name and address and verification of age on an electronic or
33paper form of signature from the recipient of the device, and
34sales and excise taxes paid. Records shall be submitted to
35the director on a monthly basis in a form and manner to be
-7-1determined by the director. Records shall be maintained for at
2least five years.
   33.  A device delivery sale permit holder shall remit to the
4director an amount equivalent to the applicable sales tax and
5excise tax on devices subject to delivery sale at the rates
6specified in section 423.2 and section 453E.5, as applicable.
7The amount shall be remitted at the time and in the manner
8provided in section 453E.5.
   94.  A device delivery sale permit holder shall be deemed to
10have consented to the jurisdiction of the director or any other
11agency or court in this state concerning enforcement of this
12section and any related laws, rules, or regulations. A device
13delivery sale permit holder shall allow the director to perform
14an audit of records of devices upon request.
15   Sec. 5.  NEW SECTION.  453E.5  Sales and use tax on sales and
16delivery sales of devices — examination of records and premises
17— subpoena for witnesses and papers.
   181.  A sale or delivery sale of a device within this state
19shall be subject to the sales tax provided in chapter 423,
20subchapter II. All the provisions for the lien of the tax, its
21collection, and all actions as provided in the uniform sales
22and use tax administration Act, chapter 423, shall apply to the
23tax imposed in this chapter.
   242.  There is levied and imposed an excise tax on a device
25purchased in this state through a sale or purchased for use
26in this state through a delivery sale of forty percent of the
27purchase price of the device.
   283.  A device delivery sale permit holder shall be deemed to
29have waived all claims that such permit holder lacks physical
30presence within this state for purposes of collecting and
31remitting the sales and excise taxes.
   324.  A device delivery sale permit holder making taxable
33delivery sales of devices within this state and a device
34retailer shall remit to the department all sales and excise
35taxes due on such sales at the times and in the manner as
-8-1established by rule of the director.
   25.  The director may adopt rules pursuant to chapter 17A to
3administer this section.
   46.  Excise taxes collected under this section shall be
5deposited in the specialty courts program fund created in
6section 453E.6.
   77.  a.  For the purpose of enabling the department to
8determine the tax liability of device delivery sale permit
9holders, device retailers, or any other person dealing in
10devices or to determine whether a tax liability has been
11incurred, the department shall have the right to inspect any
12premises of the device delivery sale permit holder, device
13retailer, or other person dealing in devices located within
14or without the state of Iowa where devices are manufactured,
15produced, made, stored, transported, sold, or offered for
16sale or exchange, and to examine all of the records required
17to be kept or any other records that may be kept incident
18to the conduct of the business of said device delivery sale
19permit holder, device retailer, or any other person dealing in
   21b.  The department shall also have the right as an incident
22to determining the tax liability, or whether a tax liability
23has been incurred, to examine all stocks of devices and to
24remain upon the premises for such length of time as may be
25necessary to fully determine the tax liability, or whether a
26tax liability has been incurred.
   27c.  It shall be unlawful for a permit holder to fail to
28produce upon demand of the department any records required to
29be kept or to hinder or prevent in any manner the inspection of
30the records or the examination of the premises.
   31d.  In the case of any departmental inspection conducted
32under this section requiring department personnel to travel
33outside the state of Iowa, any additional costs incurred by
34the department for out-of-state travel expenses shall be borne
35by the device delivery sale permit holder, device retailer, or
-9-1other person dealing in devices. These additional costs shall
2be those costs in excess of the costs of a similar inspection
3conducted at the geographical point located within the state
4of Iowa nearest to the out-of-state inspection point. In
5lieu of conducting an on-premises out-of-state inspection,
6the department shall have the authority to direct the device
7delivery sale permit holder, device retailer, or other person
8dealing in devices to assemble and transport all records
9described in this subsection to the nearest practical and
10convenient geographical location in Iowa for inspection by the
12   Sec. 6.  NEW SECTION.  453E.6  Specialty courts program fund.
   131.  A specialty courts program fund is created in the state
14treasury under the control of the governor’s office of drug
15control policy. Moneys from permit fees, with the exception
16of permit fees collected by cities or counties in the issuance
17of permits, and excise taxes imposed and collected pursuant
18to section 453E.5, shall be deposited in the fund. Permit
19fees collected by cities or counties under this chapter shall
20be paid to the treasurer of the city where the permit is
21effective, or to another city officer as designated by the city
22council, and credited to the general fund of the city. Permit
23fees collected by counties under this chapter shall be paid to
24the county treasurer and credited to the general fund of the
   262.  Moneys in the fund are appropriated to the governor’s
27office of drug control policy to be used for the purpose of the
28support of specialty courts to address underlying substance
29use disorder-related and mental health-related issues that
30contribute to the contact of individuals with the justice
   323.  The drug policy coordinator of the governor's office of
33drug control policy shall develop criteria for approval of a
34request for specialty courts program funding. Annually, by
35May 1, the state court administrator shall submit a specialty
-10-1courts funding request for the upcoming fiscal year to the drug
2policy coordinator of the governor’s office of drug control
3policy for approval, and the drug policy coordinator shall
4approve or reject any such request no later than June 1. The
5state court administrator may submit a subsequent request
6within fifteen days of notification of the rejection of an
7initial request. The state court administrator shall consult
8with the director of the department of corrections prior to
9submitting any funding request that involves the department of
   114.  The fund shall be separate from the general fund of the
12state and shall not be considered part of the general fund of
13the state. The moneys in the fund shall not be considered
14revenue of the state, but rather shall be moneys of the fund.
15The moneys in the fund are not subject to reversion to the
16general fund of the state under section 8.33 and shall not
17be transferred, used, obligated, appropriated, or otherwise
18encumbered, except to provide for the purposes of this section.
19Notwithstanding section 12C.7, subsection 2, interest or
20earnings on moneys deposited in the fund shall be credited to
21the fund.
   225.  The treasurer of state shall provide a quarterly report
23of fund activities and balances to the drug policy coordinator
24of the governor’s office of drug control policy.
25   Sec. 7.  NEW SECTION.  453E.7  Permits — suspension —
26revocation — penalties.
   271.  The provisions of chapter 453A including the permit
28suspension and revocation provisions and the civil penalties
29established in section 453A.22 shall apply to tobacco retailers
30who are also device retailer permit holders or device delivery
31sale permit holders under this chapter. The provisions of
32chapter 453A applicable to persons other than tobacco retailers
33who violate chapter 453A shall also apply to persons who
34violate this chapter.
   352.  A person holding a device retailer permit or a device
-11-1delivery sale permit under this chapter who violates this
2chapter by marketing or selling a device to be used or
3attempted to be used or that is capable of use in combination
4with tobacco, hemp, other plant materials, or a controlled
5substance, to knowingly or intentionally and primarily inhale
6the material or substance through combustion commits a serious
7misdemeanor and is also subject to permit revocation.
   83.  a.  If a person holding a device retailer permit or a
9device delivery sale permit under this chapter has willfully
10violated this chapter, the department shall revoke the permit
11upon notice and hearing. The hearing before the department may
12be held at a site in the state as the department may direct.
13The notice shall be given by mailing a copy to the permit
14holder’s place of business as it appears on the application
15for a permit. If, upon hearing, the department finds that the
16violation has occurred, the department may revoke the permit.
   17b.  If a device retailer permit or a device delivery
18sale permit is suspended or revoked under this section, the
19suspension or revocation shall only apply to the place of
20business at which the violation occurred and shall not apply to
21any other place of business to which the permit applies but at
22which the violation did not occur.
   23c.  The department or local authority shall report the
24suspension or revocation of a device retailer permit or a
25device delivery sale permit under this section to the alcoholic
26beverages division of the department of commerce within thirty
27days of the suspension or revocation of the permit.
   284.  In addition to any other applicable penalties, a device
29retailer permit holder or a device delivery sale permit holder
30who violates this chapter shall be subject to the following:
   31a.  For a first violation, a civil penalty of five hundred
   33b.  For a second violation, a civil penalty of one thousand
   35c.  A third violation constitutes grounds for suspension or
-12-1revocation of the permit under this chapter.
   25.  A person other than a device retailer permit holder or a
3device delivery sale permit holder who violates this chapter,
4including a person who engages in the business of a device
5retailer at any place of business or through delivery sales
6without holding an applicable, valid permit under this chapter,
7commits a serious misdemeanor and shall also be subject to the
8following civil penalties:
   9a.  For a first violation, a civil penalty of one thousand
   11b.  For a second violation, a civil penalty of two thousand
   13c.  For a third or subsequent violation, a civil penalty of
14five thousand dollars.