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Senate Study Bill 1128 - IntroducedA Bill ForAn Act 1relating to the regulation of certain tobacco products,
2and providing penalties.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 453E.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
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
-1-1use.
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
19453A.42.
2010. “Manufacturer” means the same as defined in section
21453A.42.
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
34453A.42.
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
14453A.1.
15 Sec. 2. NEW SECTION. 453E.2 Administration — rules —
16intent.
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 —
5fees.
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 health
8and human services by the last day of each quarter of a state
9fiscal year.
105. Fees — expiration. All device retailer permits provided
11for in this section shall expire on June 30 of each year. A
12device retailer permit shall not be granted or issued until the
13applicant has paid the fees provided for in this section for
14the period ending June 30 next, to the city or county granting
15the device retailer permit. The fee for a device retailer
16permit is one thousand five hundred dollars.
176. Application. Device retailer permits shall be issued
18only upon application, accompanied by the one thousand five
19hundred dollar fee, made upon forms furnished by the department
20upon written request. The failure to furnish such forms
21shall be no excuse for the failure to file the form unless
22absolute refusal is shown. The forms shall specify all of the
23following:
24a. The manner under which the device retailer transacts or
25intends to transact business as a device retailer.
26b. The principal office, residence, and place of business,
27to which the device retailer permit is to apply.
28c. If the applicant is not an individual, the names of the
29partners if the applicant is a partnership or the names of
30the principal officers or members if the applicant is a legal
31entity, and their addresses.
32d. Such other information as the director shall by rule
33prescribe.
347. Records and reports of device retailers.
35a. The director shall prescribe the forms necessary for
-5-1the efficient administration of this section and may require
2uniform books and records to be used and kept by each device
3retailer or other person as deemed necessary.
4b. Every device retailer shall, when requested by the
5department, make additional reports as the department deems
6necessary and proper and shall at the request of the department
7furnish full and complete information pertaining to any
8transaction of the device retailer involving the purchase or
9sale of devices, including the number of devices sold.
108. Requirements for sale.
11a. A device retailer shall not sell, give, or otherwise
12supply a device to any person under twenty-one years of age and
13shall verify the age of all purchasers of devices. If a device
14is purchased at a retail outlet, valid proof of the purchaser’s
15identity and age shall be obtained at the time the device is
16supplied to the purchaser. If a device is purchased through a
17delivery sale, valid proof of the purchaser’s identity and age
18shall be obtained in accordance with section 453E.4.
19b. A device retailer shall only display and sell devices
20in a location of a retail outlet where the device retailer
21ensures that the devices are not visible to a person younger
22than twenty-one years of age and where no person younger than
23twenty-one years of age is present or permitted to enter at any
24time.
25 Sec. 4. NEW SECTION. 453E.4 Delivery sale of devices —
26permit — requirements.
271. a. A person shall not mail, ship, or otherwise cause
28to be delivered any device in connection with a delivery sale
29to any other person within this state unless the person has
30applied for and holds a device delivery sale permit as provided
31in this section.
32b. A person applying for a device delivery sale permit shall
33submit an application for the permit electronically, or in a
34manner prescribed by the director.
35c. An application submitted pursuant to paragraph “b” shall
-6-1be accompanied by a permit fee in the amount of one thousand
2five hundred dollars.
3d. The director may in accordance with this section issue a
4device delivery sale permit which shall be valid for one year
5from the date of issuance unless it is sooner suspended or
6revoked for a violation of this section.
7e. A permit issued pursuant to this section may be renewed
8annually by submitting a renewal application in a manner
9prescribed by the director, accompanied by the one thousand
10five hundred dollar permit fee.
112. The delivery sale of devices pursuant to this
12section shall be subject to the following requirements and
13restrictions:
14a. All devices delivered by delivery sale directly to a
15resident of this state shall be sold only by a device delivery
16sale permit holder.
17b. A device delivery sale permit holder shall only deliver
18devices by delivery sale to a resident of this state who is at
19least twenty-one years of age for the resident’s personal use
20and not for resale.
21c. All devices delivered by delivery sale directly to a
22resident of this state shall be conspicuously labeled with the
23words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER
24REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
25alternative wording preapproved by the director.
26d. A device delivery sale permit holder shall obtain
27valid proof of identity and age prior to delivery, and shall
28obtain the signature of a person age twenty-one or older as a
29condition of delivery.
30e. A device delivery sale permit holder shall maintain
31records of devices delivered which include the name of the
32device manufacturer, quantity of devices delivered, recipient’s
33name and address and verification of age on an electronic or
34paper form of signature from the recipient of the device, and
35sales and excise taxes paid. Records shall be submitted to
-7-1the director on a monthly basis in a form and manner to be
2determined by the director. Records shall be maintained for at
3least five years.
43. A device delivery sale permit holder shall remit to the
5director an amount equivalent to the applicable sales tax and
6excise tax on devices subject to delivery sale at the rates
7specified in section 423.2 and section 453E.5, as applicable.
8The amount shall be remitted at the time and in the manner
9provided in section 453E.5.
104. A device delivery sale permit holder shall be deemed to
11have consented to the jurisdiction of the director or any other
12agency or court in this state concerning enforcement of this
13section and any related laws, rules, or regulations. A device
14delivery sale permit holder shall allow the director to perform
15an audit of records of devices upon request.
16 Sec. 5. NEW SECTION. 453E.5 Sales and excise taxes on
17sales and delivery sales of devices — examination of records and
18premises — subpoena for witnesses and papers.
191. A sale or delivery sale of a device within this state
20shall be subject to the sales tax provided in chapter 423,
21subchapter II. All the provisions for the lien of the tax, its
22collection, and all actions as provided in the uniform sales
23and use tax administration Act, chapter 423, shall apply to the
24tax imposed in this chapter.
252. There is levied and imposed an excise tax on a device
26purchased in this state through a sale or purchased for use
27in this state through a delivery sale of forty percent of the
28purchase price of the device.
293. A device delivery sale permit holder shall be deemed to
30have waived all claims that such permit holder lacks physical
31presence within this state for purposes of collecting and
32remitting the sales and excise taxes.
334. A device delivery sale permit holder making taxable
34delivery sales of devices within this state and a device
35retailer shall remit to the department all sales and excise
-8-1taxes due on such sales at the times and in the manner as
2established by rule of the director.
35. The director may adopt rules pursuant to chapter 17A to
4administer this section.
56. Excise taxes collected under this section shall be
6deposited in the specialty courts program fund created in
7section 453E.6.
87. a. For the purpose of enabling the department to
9determine the tax liability of device delivery sale permit
10holders, device retailers, or any other person dealing in
11devices or to determine whether a tax liability has been
12incurred, the department shall have the right to inspect any
13premises of the device delivery sale permit holder, device
14retailer, or other person dealing in devices located within
15or without the state of Iowa where devices are manufactured,
16produced, made, stored, transported, sold, or offered for
17sale or exchange, and to examine all of the records required
18to be kept or any other records that may be kept incident
19to the conduct of the business of said device delivery sale
20permit holder, device retailer, or any other person dealing in
21devices.
22b. The department shall also have the right as an incident
23to determining the tax liability, or whether a tax liability
24has been incurred, to examine all stocks of devices and to
25remain upon the premises for such length of time as may be
26necessary to fully determine the tax liability, or whether a
27tax liability has been incurred.
28c. It shall be unlawful for a permit holder to fail to
29produce upon demand of the department any records required to
30be kept or to hinder or prevent in any manner the inspection of
31the records or the examination of the premises.
32d. In the case of any departmental inspection conducted
33under this section requiring department personnel to travel
34outside the state of Iowa, any additional costs incurred by
35the department for out-of-state travel expenses shall be borne
-9-1by the device delivery sale permit holder, device retailer, or
2other person dealing in devices. These additional costs shall
3be those costs in excess of the costs of a similar inspection
4conducted at the geographical point located within the state
5of Iowa nearest to the out-of-state inspection point. In
6lieu of conducting an on-premises out-of-state inspection,
7the department shall have the authority to direct the device
8delivery sale permit holder, device retailer, or other person
9dealing in devices to assemble and transport all records
10described in this subsection to the nearest practical and
11convenient geographical location in Iowa for inspection by the
12department.
13 Sec. 6. NEW SECTION. 453E.6 Specialty courts program fund.
141. A specialty courts program fund is created in the state
15treasury under the control of the governor’s office of drug
16control policy. Moneys from permit fees, with the exception
17of permit fees collected by cities or counties in the issuance
18of permits, and excise taxes imposed and collected pursuant
19to section 453E.5, shall be deposited in the fund. Permit
20fees collected by cities under this chapter shall be paid to
21the treasurer of the city where the permit is effective, or
22to another city officer as designated by the city council,
23and credited to the general fund of the city. Permit fees
24collected by counties under this chapter shall be paid to
25the county treasurer and credited to the general fund of the
26county.
272. Moneys in the fund are appropriated to the governor’s
28office of drug control policy to be used for the purpose of the
29support of specialty courts to address underlying substance
30use disorder-related and mental health-related issues that
31contribute to the contact of individuals with the justice
32system.
333. The drug policy coordinator of the governor’s office of
34drug control policy shall develop criteria for approval of a
35request for specialty courts program funding. Annually, by
-10-1May 1, the state court administrator shall submit a specialty
2courts funding request for the upcoming fiscal year to the drug
3policy coordinator of the governor’s office of drug control
4policy for approval, and the drug policy coordinator shall
5approve or reject any such request no later than June 1. The
6state court administrator may submit a subsequent request
7within fifteen days of notification of the rejection of an
8initial request. The state court administrator shall consult
9with the director of the department of corrections prior to
10submitting any funding request that involves the department of
11corrections.
124. The fund shall be separate from the general fund of the
13state and shall not be considered part of the general fund of
14the state. The moneys in the fund shall not be considered
15revenue of the state, but rather shall be moneys of the fund.
16The moneys in the fund are not subject to reversion to the
17general fund of the state under section 8.33 and shall not
18be transferred, used, obligated, appropriated, or otherwise
19encumbered, except to provide for the purposes of this section.
20Notwithstanding section 12C.7, subsection 2, interest or
21earnings on moneys deposited in the fund shall be credited to
22the fund.
235. The treasurer of state shall provide a quarterly report
24of fund activities and balances to the drug policy coordinator
25of the governor’s office of drug control policy.
26 Sec. 7. NEW SECTION. 453E.7 Permits — suspension —
27revocation — penalties.
281. The provisions of chapter 453A, including the permit
29suspension and revocation provisions and the civil penalties
30established in section 453A.22, shall apply to tobacco
31retailers who are also device retailer permit holders or
32device delivery sale permit holders under this chapter. The
33provisions of chapter 453A applicable to persons other than
34tobacco retailers who violate chapter 453A shall also apply to
35persons who violate this chapter.
-11- 12. A person holding a device retailer permit or a device
2delivery sale permit under this chapter who violates this
3chapter by marketing or selling a device to be used or
4attempted to be used or that is capable of use in combination
5with tobacco, hemp, other plant materials, or a controlled
6substance, to knowingly or intentionally and primarily inhale
7the material or substance through combustion commits a serious
8misdemeanor and is also subject to permit revocation.
93. a. If a person holding a device retailer permit or a
10device delivery sale permit under this chapter has willfully
11violated this chapter, the department shall revoke the permit
12upon notice and hearing. The hearing before the department may
13be held at a site in the state as the department may direct.
14The notice shall be given by mailing a copy to the permit
15holder’s place of business as it appears on the application
16for a permit. If, upon hearing, the department finds that the
17violation has occurred, the department may revoke the permit.
18b. If a device retailer permit or a device delivery
19sale permit is suspended or revoked under this section, the
20suspension or revocation shall only apply to the place of
21business at which the violation occurred and shall not apply to
22any other place of business to which the permit applies but at
23which the violation did not occur.
24c. The department or local authority shall report the
25suspension or revocation of a device retailer permit or a
26device delivery sale permit under this section to the alcoholic
27beverages division of the department of commerce within thirty
28days of the suspension or revocation of the permit.
294. In addition to any other applicable penalties, a device
30retailer permit holder or a device delivery sale permit holder
31who violates this chapter shall be subject to the following:
32a. For a first violation, a civil penalty of five hundred
33dollars.
34b. For a second violation, a civil penalty of one thousand
35dollars.
-12- 1c. A third violation constitutes grounds for suspension or
2revocation of the permit under this chapter.
35. A person other than a device retailer permit holder or a
4device delivery sale permit holder who violates this chapter,
5including a person who engages in the business of a device
6retailer at any place of business or through delivery sales
7without holding an applicable, valid permit under this chapter,
8commits a serious misdemeanor and shall also be subject to the
9following civil penalties:
10a. For a first violation, a civil penalty of one thousand
11dollars.
12b. For a second violation, a civil penalty of two thousand
13dollars.
14c. For a third or subsequent violation, a civil penalty of
15five thousand dollars.
16EXPLANATION
17The inclusion of this explanation does not constitute agreement with
18the explanation’s substance by the members of the general assembly.
19This bill relates to the regulation of certain tobacco
20products.
21The bill requires a person who engages in the business of
22a device retailer through a retail outlet or delivery sales
23to receive and hold a permit as a tobacco retailer, comply
24with provisions applicable to a tobacco retailer, sell tobacco
25products in addition to devices at the retail outlet or through
26delivery sales, and hold a permit as a device retailer. The
27bill provides for the application for and issuance of device
28retailer permits by cities and counties depending upon the
29location of the retailer; requires the payment of a fee for
30each permit; and provides for annual expiration of the permits.
31The bill also requires device retailer permit holders to
32keep certain records and submit reports to the department of
33revenue; establishes requirements for the sale of devices
34including that a device retailer shall not sell, give, or
35otherwise supply a device to any person under 21 years of age
-13-1and must verify the age of all purchasers of devices; and
2provides that a device retailer shall only display and sell
3devices in a location where the device retailer ensures that
4the devices are not visible to a person younger than 21 years
5of age and where no person younger than 21 years of age is
6present or permitted to enter at any time.
7The bill establishes requirements for the delivery sale
8of devices including permit requirements and restrictions
9including all devices delivered by delivery sale directly to
10a resident of this state shall be delivered by a holder of
11a device delivery sale permit; that a device delivery sale
12permit holder shall only deliver devices by delivery sale to
13a resident of this state who is at least 21 years of age, for
14the resident’s personal use and consumption and not for resale;
15all devices delivered by delivery sale directly to a resident
16of this state shall be conspicuously labeled with the words
17“CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED
18FOR DELIVERY” or with an alternative wording preapproved by
19the director of revenue; a device delivery sale permit holder
20shall obtain valid proof of identity and age prior to delivery,
21and shall obtain the signature of a person age 21 or older
22as a condition of delivery; and that a device delivery sale
23permit holder shall maintain records of devices delivered which
24include certain information that must be maintained for five
25years.
26The bill provides for the imposition, collection, and
27payment of sales and excise taxes on the retail sale, including
28delivery sales, of devices. Moneys from permit fees, with the
29exception of city and county permit fees, and excise taxes
30imposed and collected under the bill, are to be deposited in
31the specialty courts program fund created in the bill and are
32appropriated to the governor’s office of drug control policy
33to be used for the purpose of the support of specialty courts
34to address underlying substance use disorder-related and
35mental health-related issues that contribute to the contact of
-14-1individuals with the justice system.
2The bill provides penalties for violations of the bill.
3The applicable provisions of Code chapter 453A (cigarette and
4tobacco taxes and regulation of alternative nicotine products
5and vapor products) including penalties and license suspension
6and revocation provisions and penalties applicable to those
7other than permit holders apply to tobacco retailers who are
8also device retailer permit holders or device delivery sale
9permit holders as well as to those who are not permit holders.
10Additionally, a person holding a device retailer permit or a
11device delivery sale permit who violates the bill by marketing
12or selling a device to be used or attempted to be used or that
13is capable of use in combination with tobacco, hemp, other
14plant materials, or a controlled substance, to knowingly or
15intentionally and primarily inhale the material or controlled
16substance through combustion, commits a serious misdemeanor and
17is also subject to permit revocation. A serious misdemeanor is
18punishable by confinement for no more than one year and a fine
19of at least $430 but not more than $2,560.
20If a person holding a device retailer permit or a device
21delivery sale permit willfully violates the bill, the
22department shall revoke the permit upon notice and hearing.
23In addition to any other applicable penalties, a device
24retailer permit holder or a device delivery sale permit holder
25who violates the Code chapter is subject to a civil penalty
26of $500 for a first violation, a civil penalty of $1,000 for
27a second violation, and a third violation constitutes grounds
28for suspension or revocation of the permit. A person other
29than a device retailer permit holder or a device delivery
30sale permit holder, including a person who engages in the
31business of a device retailer at a place of business or
32through delivery sales without holding an applicable, valid
33permit under the bill, who violates the Code chapter commits
34a serious misdemeanor and is also subject to a civil penalty
35of $1,000 for a first violation, a civil penalty of $2,000 for
-15-1a second violation, and a civil penalty of $5,000 for a third
2or subsequent violation.
-16-pf/jh
2and providing penalties.
3BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 453E.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
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
-1-1use.
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
19453A.42.
2010. “Manufacturer” means the same as defined in section
21453A.42.
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
34453A.42.
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
14453A.1.
15 Sec. 2. NEW SECTION. 453E.2 Administration — rules —
16intent.
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 —
5fees.
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 health
8and human services by the last day of each quarter of a state
9fiscal year.
105. Fees — expiration. All device retailer permits provided
11for in this section shall expire on June 30 of each year. A
12device retailer permit shall not be granted or issued until the
13applicant has paid the fees provided for in this section for
14the period ending June 30 next, to the city or county granting
15the device retailer permit. The fee for a device retailer
16permit is one thousand five hundred dollars.
176. Application. Device retailer permits shall be issued
18only upon application, accompanied by the one thousand five
19hundred dollar fee, made upon forms furnished by the department
20upon written request. The failure to furnish such forms
21shall be no excuse for the failure to file the form unless
22absolute refusal is shown. The forms shall specify all of the
23following:
24a. The manner under which the device retailer transacts or
25intends to transact business as a device retailer.
26b. The principal office, residence, and place of business,
27to which the device retailer permit is to apply.
28c. If the applicant is not an individual, the names of the
29partners if the applicant is a partnership or the names of
30the principal officers or members if the applicant is a legal
31entity, and their addresses.
32d. Such other information as the director shall by rule
33prescribe.
347. Records and reports of device retailers.
35a. The director shall prescribe the forms necessary for
-5-1the efficient administration of this section and may require
2uniform books and records to be used and kept by each device
3retailer or other person as deemed necessary.
4b. Every device retailer shall, when requested by the
5department, make additional reports as the department deems
6necessary and proper and shall at the request of the department
7furnish full and complete information pertaining to any
8transaction of the device retailer involving the purchase or
9sale of devices, including the number of devices sold.
108. Requirements for sale.
11a. A device retailer shall not sell, give, or otherwise
12supply a device to any person under twenty-one years of age and
13shall verify the age of all purchasers of devices. If a device
14is purchased at a retail outlet, valid proof of the purchaser’s
15identity and age shall be obtained at the time the device is
16supplied to the purchaser. If a device is purchased through a
17delivery sale, valid proof of the purchaser’s identity and age
18shall be obtained in accordance with section 453E.4.
19b. A device retailer shall only display and sell devices
20in a location of a retail outlet where the device retailer
21ensures that the devices are not visible to a person younger
22than twenty-one years of age and where no person younger than
23twenty-one years of age is present or permitted to enter at any
24time.
25 Sec. 4. NEW SECTION. 453E.4 Delivery sale of devices —
26permit — requirements.
271. a. A person shall not mail, ship, or otherwise cause
28to be delivered any device in connection with a delivery sale
29to any other person within this state unless the person has
30applied for and holds a device delivery sale permit as provided
31in this section.
32b. A person applying for a device delivery sale permit shall
33submit an application for the permit electronically, or in a
34manner prescribed by the director.
35c. An application submitted pursuant to paragraph “b” shall
-6-1be accompanied by a permit fee in the amount of one thousand
2five hundred dollars.
3d. The director may in accordance with this section issue a
4device delivery sale permit which shall be valid for one year
5from the date of issuance unless it is sooner suspended or
6revoked for a violation of this section.
7e. A permit issued pursuant to this section may be renewed
8annually by submitting a renewal application in a manner
9prescribed by the director, accompanied by the one thousand
10five hundred dollar permit fee.
112. The delivery sale of devices pursuant to this
12section shall be subject to the following requirements and
13restrictions:
14a. All devices delivered by delivery sale directly to a
15resident of this state shall be sold only by a device delivery
16sale permit holder.
17b. A device delivery sale permit holder shall only deliver
18devices by delivery sale to a resident of this state who is at
19least twenty-one years of age for the resident’s personal use
20and not for resale.
21c. All devices delivered by delivery sale directly to a
22resident of this state shall be conspicuously labeled with the
23words “CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER
24REQUIRED FOR DELIVERY” or shall be conspicuously labeled with
25alternative wording preapproved by the director.
26d. A device delivery sale permit holder shall obtain
27valid proof of identity and age prior to delivery, and shall
28obtain the signature of a person age twenty-one or older as a
29condition of delivery.
30e. A device delivery sale permit holder shall maintain
31records of devices delivered which include the name of the
32device manufacturer, quantity of devices delivered, recipient’s
33name and address and verification of age on an electronic or
34paper form of signature from the recipient of the device, and
35sales and excise taxes paid. Records shall be submitted to
-7-1the director on a monthly basis in a form and manner to be
2determined by the director. Records shall be maintained for at
3least five years.
43. A device delivery sale permit holder shall remit to the
5director an amount equivalent to the applicable sales tax and
6excise tax on devices subject to delivery sale at the rates
7specified in section 423.2 and section 453E.5, as applicable.
8The amount shall be remitted at the time and in the manner
9provided in section 453E.5.
104. A device delivery sale permit holder shall be deemed to
11have consented to the jurisdiction of the director or any other
12agency or court in this state concerning enforcement of this
13section and any related laws, rules, or regulations. A device
14delivery sale permit holder shall allow the director to perform
15an audit of records of devices upon request.
16 Sec. 5. NEW SECTION. 453E.5 Sales and excise taxes on
17sales and delivery sales of devices — examination of records and
18premises — subpoena for witnesses and papers.
191. A sale or delivery sale of a device within this state
20shall be subject to the sales tax provided in chapter 423,
21subchapter II. All the provisions for the lien of the tax, its
22collection, and all actions as provided in the uniform sales
23and use tax administration Act, chapter 423, shall apply to the
24tax imposed in this chapter.
252. There is levied and imposed an excise tax on a device
26purchased in this state through a sale or purchased for use
27in this state through a delivery sale of forty percent of the
28purchase price of the device.
293. A device delivery sale permit holder shall be deemed to
30have waived all claims that such permit holder lacks physical
31presence within this state for purposes of collecting and
32remitting the sales and excise taxes.
334. A device delivery sale permit holder making taxable
34delivery sales of devices within this state and a device
35retailer shall remit to the department all sales and excise
-8-1taxes due on such sales at the times and in the manner as
2established by rule of the director.
35. The director may adopt rules pursuant to chapter 17A to
4administer this section.
56. Excise taxes collected under this section shall be
6deposited in the specialty courts program fund created in
7section 453E.6.
87. a. For the purpose of enabling the department to
9determine the tax liability of device delivery sale permit
10holders, device retailers, or any other person dealing in
11devices or to determine whether a tax liability has been
12incurred, the department shall have the right to inspect any
13premises of the device delivery sale permit holder, device
14retailer, or other person dealing in devices located within
15or without the state of Iowa where devices are manufactured,
16produced, made, stored, transported, sold, or offered for
17sale or exchange, and to examine all of the records required
18to be kept or any other records that may be kept incident
19to the conduct of the business of said device delivery sale
20permit holder, device retailer, or any other person dealing in
21devices.
22b. The department shall also have the right as an incident
23to determining the tax liability, or whether a tax liability
24has been incurred, to examine all stocks of devices and to
25remain upon the premises for such length of time as may be
26necessary to fully determine the tax liability, or whether a
27tax liability has been incurred.
28c. It shall be unlawful for a permit holder to fail to
29produce upon demand of the department any records required to
30be kept or to hinder or prevent in any manner the inspection of
31the records or the examination of the premises.
32d. In the case of any departmental inspection conducted
33under this section requiring department personnel to travel
34outside the state of Iowa, any additional costs incurred by
35the department for out-of-state travel expenses shall be borne
-9-1by the device delivery sale permit holder, device retailer, or
2other person dealing in devices. These additional costs shall
3be those costs in excess of the costs of a similar inspection
4conducted at the geographical point located within the state
5of Iowa nearest to the out-of-state inspection point. In
6lieu of conducting an on-premises out-of-state inspection,
7the department shall have the authority to direct the device
8delivery sale permit holder, device retailer, or other person
9dealing in devices to assemble and transport all records
10described in this subsection to the nearest practical and
11convenient geographical location in Iowa for inspection by the
12department.
13 Sec. 6. NEW SECTION. 453E.6 Specialty courts program fund.
141. A specialty courts program fund is created in the state
15treasury under the control of the governor’s office of drug
16control policy. Moneys from permit fees, with the exception
17of permit fees collected by cities or counties in the issuance
18of permits, and excise taxes imposed and collected pursuant
19to section 453E.5, shall be deposited in the fund. Permit
20fees collected by cities under this chapter shall be paid to
21the treasurer of the city where the permit is effective, or
22to another city officer as designated by the city council,
23and credited to the general fund of the city. Permit fees
24collected by counties under this chapter shall be paid to
25the county treasurer and credited to the general fund of the
26county.
272. Moneys in the fund are appropriated to the governor’s
28office of drug control policy to be used for the purpose of the
29support of specialty courts to address underlying substance
30use disorder-related and mental health-related issues that
31contribute to the contact of individuals with the justice
32system.
333. The drug policy coordinator of the governor’s office of
34drug control policy shall develop criteria for approval of a
35request for specialty courts program funding. Annually, by
-10-1May 1, the state court administrator shall submit a specialty
2courts funding request for the upcoming fiscal year to the drug
3policy coordinator of the governor’s office of drug control
4policy for approval, and the drug policy coordinator shall
5approve or reject any such request no later than June 1. The
6state court administrator may submit a subsequent request
7within fifteen days of notification of the rejection of an
8initial request. The state court administrator shall consult
9with the director of the department of corrections prior to
10submitting any funding request that involves the department of
11corrections.
124. The fund shall be separate from the general fund of the
13state and shall not be considered part of the general fund of
14the state. The moneys in the fund shall not be considered
15revenue of the state, but rather shall be moneys of the fund.
16The moneys in the fund are not subject to reversion to the
17general fund of the state under section 8.33 and shall not
18be transferred, used, obligated, appropriated, or otherwise
19encumbered, except to provide for the purposes of this section.
20Notwithstanding section 12C.7, subsection 2, interest or
21earnings on moneys deposited in the fund shall be credited to
22the fund.
235. The treasurer of state shall provide a quarterly report
24of fund activities and balances to the drug policy coordinator
25of the governor’s office of drug control policy.
26 Sec. 7. NEW SECTION. 453E.7 Permits — suspension —
27revocation — penalties.
281. The provisions of chapter 453A, including the permit
29suspension and revocation provisions and the civil penalties
30established in section 453A.22, shall apply to tobacco
31retailers who are also device retailer permit holders or
32device delivery sale permit holders under this chapter. The
33provisions of chapter 453A applicable to persons other than
34tobacco retailers who violate chapter 453A shall also apply to
35persons who violate this chapter.
-11- 12. A person holding a device retailer permit or a device
2delivery sale permit under this chapter who violates this
3chapter by marketing or selling a device to be used or
4attempted to be used or that is capable of use in combination
5with tobacco, hemp, other plant materials, or a controlled
6substance, to knowingly or intentionally and primarily inhale
7the material or substance through combustion commits a serious
8misdemeanor and is also subject to permit revocation.
93. a. If a person holding a device retailer permit or a
10device delivery sale permit under this chapter has willfully
11violated this chapter, the department shall revoke the permit
12upon notice and hearing. The hearing before the department may
13be held at a site in the state as the department may direct.
14The notice shall be given by mailing a copy to the permit
15holder’s place of business as it appears on the application
16for a permit. If, upon hearing, the department finds that the
17violation has occurred, the department may revoke the permit.
18b. If a device retailer permit or a device delivery
19sale permit is suspended or revoked under this section, the
20suspension or revocation shall only apply to the place of
21business at which the violation occurred and shall not apply to
22any other place of business to which the permit applies but at
23which the violation did not occur.
24c. The department or local authority shall report the
25suspension or revocation of a device retailer permit or a
26device delivery sale permit under this section to the alcoholic
27beverages division of the department of commerce within thirty
28days of the suspension or revocation of the permit.
294. In addition to any other applicable penalties, a device
30retailer permit holder or a device delivery sale permit holder
31who violates this chapter shall be subject to the following:
32a. For a first violation, a civil penalty of five hundred
33dollars.
34b. For a second violation, a civil penalty of one thousand
35dollars.
-12- 1c. A third violation constitutes grounds for suspension or
2revocation of the permit under this chapter.
35. A person other than a device retailer permit holder or a
4device delivery sale permit holder who violates this chapter,
5including a person who engages in the business of a device
6retailer at any place of business or through delivery sales
7without holding an applicable, valid permit under this chapter,
8commits a serious misdemeanor and shall also be subject to the
9following civil penalties:
10a. For a first violation, a civil penalty of one thousand
11dollars.
12b. For a second violation, a civil penalty of two thousand
13dollars.
14c. For a third or subsequent violation, a civil penalty of
15five thousand dollars.
16EXPLANATION
17The inclusion of this explanation does not constitute agreement with
18the explanation’s substance by the members of the general assembly.
19This bill relates to the regulation of certain tobacco
20products.
21The bill requires a person who engages in the business of
22a device retailer through a retail outlet or delivery sales
23to receive and hold a permit as a tobacco retailer, comply
24with provisions applicable to a tobacco retailer, sell tobacco
25products in addition to devices at the retail outlet or through
26delivery sales, and hold a permit as a device retailer. The
27bill provides for the application for and issuance of device
28retailer permits by cities and counties depending upon the
29location of the retailer; requires the payment of a fee for
30each permit; and provides for annual expiration of the permits.
31The bill also requires device retailer permit holders to
32keep certain records and submit reports to the department of
33revenue; establishes requirements for the sale of devices
34including that a device retailer shall not sell, give, or
35otherwise supply a device to any person under 21 years of age
-13-1and must verify the age of all purchasers of devices; and
2provides that a device retailer shall only display and sell
3devices in a location where the device retailer ensures that
4the devices are not visible to a person younger than 21 years
5of age and where no person younger than 21 years of age is
6present or permitted to enter at any time.
7The bill establishes requirements for the delivery sale
8of devices including permit requirements and restrictions
9including all devices delivered by delivery sale directly to
10a resident of this state shall be delivered by a holder of
11a device delivery sale permit; that a device delivery sale
12permit holder shall only deliver devices by delivery sale to
13a resident of this state who is at least 21 years of age, for
14the resident’s personal use and consumption and not for resale;
15all devices delivered by delivery sale directly to a resident
16of this state shall be conspicuously labeled with the words
17“CONTAINS DEVICE: SIGNATURE OF PERSON AGE 21 OR OLDER REQUIRED
18FOR DELIVERY” or with an alternative wording preapproved by
19the director of revenue; a device delivery sale permit holder
20shall obtain valid proof of identity and age prior to delivery,
21and shall obtain the signature of a person age 21 or older
22as a condition of delivery; and that a device delivery sale
23permit holder shall maintain records of devices delivered which
24include certain information that must be maintained for five
25years.
26The bill provides for the imposition, collection, and
27payment of sales and excise taxes on the retail sale, including
28delivery sales, of devices. Moneys from permit fees, with the
29exception of city and county permit fees, and excise taxes
30imposed and collected under the bill, are to be deposited in
31the specialty courts program fund created in the bill and are
32appropriated to the governor’s office of drug control policy
33to be used for the purpose of the support of specialty courts
34to address underlying substance use disorder-related and
35mental health-related issues that contribute to the contact of
-14-1individuals with the justice system.
2The bill provides penalties for violations of the bill.
3The applicable provisions of Code chapter 453A (cigarette and
4tobacco taxes and regulation of alternative nicotine products
5and vapor products) including penalties and license suspension
6and revocation provisions and penalties applicable to those
7other than permit holders apply to tobacco retailers who are
8also device retailer permit holders or device delivery sale
9permit holders as well as to those who are not permit holders.
10Additionally, a person holding a device retailer permit or a
11device delivery sale permit who violates the bill by marketing
12or selling a device to be used or attempted to be used or that
13is capable of use in combination with tobacco, hemp, other
14plant materials, or a controlled substance, to knowingly or
15intentionally and primarily inhale the material or controlled
16substance through combustion, commits a serious misdemeanor and
17is also subject to permit revocation. A serious misdemeanor is
18punishable by confinement for no more than one year and a fine
19of at least $430 but not more than $2,560.
20If a person holding a device retailer permit or a device
21delivery sale permit willfully violates the bill, the
22department shall revoke the permit upon notice and hearing.
23In addition to any other applicable penalties, a device
24retailer permit holder or a device delivery sale permit holder
25who violates the Code chapter is subject to a civil penalty
26of $500 for a first violation, a civil penalty of $1,000 for
27a second violation, and a third violation constitutes grounds
28for suspension or revocation of the permit. A person other
29than a device retailer permit holder or a device delivery
30sale permit holder, including a person who engages in the
31business of a device retailer at a place of business or
32through delivery sales without holding an applicable, valid
33permit under the bill, who violates the Code chapter commits
34a serious misdemeanor and is also subject to a civil penalty
35of $1,000 for a first violation, a civil penalty of $2,000 for
-15-1a second violation, and a civil penalty of $5,000 for a third
2or subsequent violation.
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