Present law requires that a person engaged in the sale or distribution of tobacco, smoking hemp, vapor product, or smokeless nicotine product demand proof of age from a prospective purchaser or recipient if an ordinary person would conclude on the basis of appearance that the prospective purchaser or recipient may be under 30 years of age. This bill makes the requirement for demanding proof of age applicable to all prospective purchasers regardless of their apparent ages. This bill levies a tax on vapor products, which this bill generally defines to mean a noncombustible product containing nicotine, whether natural or synthetic, that employs a mechanical heating element, battery, electronic circuit, or other mechanism, regardless of shape or size, that can be used to produce or emit a visible or non-visible vapor. The rate of the tax is as follows: (1) On closed-system vapor products is $0.07 per milliliter of consumable material contained in the vapor product, and a like rate on all fractional parts of a milliliter of consumable material. This bill defines "closed-system vapor product" to mean: (A) A disposable container or cartridge prefilled with consumable material and sealed by the manufacturer, not easily refillable or intended or designed to be refillable, and intended or used to dispense consumable material when connected to a device that is designed to be reused; and (B) Any single unit vapor product which is prefilled with consumable material and sealed by the manufacturer, not intended to be refillable, and intended to be disposed of once the consumable material has been depleted; and (2) On open-system vapor products is 10% of the wholesale cost price. This bill defines "open-system vapor product" to mean: (A) A vapor product that can be filled and refilled with consumable material by a consumer; and (B) Any consumable material that is intended to be used with the vapor product described in (2)(A). This bill creates a vapor product directory and requires that all of the revenue from taxes on vapor products collected under the Tobacco Tax Law must be deposited in a special account in the state general fund to be used exclusively for administration and enforcement of this bill's provisions concerning the directory. By August 1, 2025, and annually thereafter, each manufacturer of a vapor product that is sold for retail sale in this state will be required to execute and deliver to the department of revenue a certification that the manufacturer is compliant with this bill's requirements concerning the vapor product directory and that for each vapor product sold for retail sale in this state: (1) The manufacturer has received a marketing granted order for the vapor product from the U.S. food and drug administration (FDA); (2) The manufacturer submitted a timely filed premarket tobacco product application for the vapor product to the FDA, and the application either: (A) Remains under review by the FDA; or (B) Has received a denial order that has been and remains stayed by the FDA or court order, rescinded by the FDA, or vacated by a court; or (3) The manufacturer is not required to submit an additional marketing granted order or premarket tobacco product application for the vapor product because the vapor product merely reflects changes to the name, brand style, or packaging of a vapor product that is covered under (1) or (2). The full text of this bill specifies information that must be indicated on the certification for each vapor product that is sold in this state and documentation that must accompany each annual certification form. This bill establishes a $25.00 fee for each vapor product each time a manufacturer submits an annual certification form for that vapor product. The documentation submitted by a manufacturer in support of an annual certification form is confidential. Additionally, this bill authorizes a manufacturer to redact proprietary information provided is such documentation. Starting January 1, 2026, this bill requires the department of revenue to maintain and make publicly available on its website a directory that lists all vapor product manufacturers, brand names, categories, product names, and flavors for which certification forms have been submitted and approved by the department. The department must update the directory at least monthly to ensure accuracy. The full text of this bill specifies five circumstances under which a manufacturer or the manufacturer's vapor products must not be included or retained in the directory. Beginning January 1, 2026, or on the date that the department first makes the directory available for public inspection on its website, whichever is later, this bill generally prohibits the retail sale of vapor products not included in the directory in Tennessee. Notwithstanding the general prohibition against selling at retail a vapor product that is not on the directory: (1) A retailer has 60 calendar days from the date that the department first makes the directory available for inspection on its website to sell off products that were in its inventory and not included in the directory or remove those products from inventory; and (2) A distributor or wholesaler has 60 calendar days from the date that the department first makes the directory available for inspection on its website to remove those products intended for sale in this state that were not included in the directory from its inventory. The full text of this bill specifies a procedure for providing notice and giving a manufacturer an opportunity to cure deficiencies that prevent a vapor product from being listed on, or that require a vapor product's removal from, the directory. If a product is removed from the directory, retailers will have 30 days to sell off existing inventory before further sale of the removed vapor product is prohibited and such product is subject to seizure, forfeiture, and destruction. Any appeal of the department's decision not to include a vapor product in the directory, or to remove a vapor product from the directory, must be undertaken pursuant to the Uniform Administrative Procedures Act. Under this bill, retailers are authorized to purchase vapor products only from licensed distributors or wholesalers of tobacco products. This bill establishes the following penalties for violations related to the vapor product directory: (1) A retailer, distributor, wholesaler, or importer who sells or offers for sale a vapor product for retail sale in this state that is not included in the directory is subject to a civil penalty of up to $500 for each individual vapor product offered for sale in violation of this section. The civil penalty for a second violation within a 12-month period is at least $750 but not more than $1,000 per product, and the suspension of the license of the retailer, distributor, wholesaler, or importer for 30 calendar days. The civil penalty for a third violation within a 12-month period is at least $1,000 but not more than $1,500 per product, and the revocation of the license of the retailer, distributor, wholesaler, or importer; and (2) A manufacturer whose vapor products are not listed in the directory and who causes the products that are not listed to be sold for retail sale in Tennessee is subject to a civil penalty of $10,000 for each individual vapor product offered for sale in violation of this bill. In addition, a manufacturer that knowingly and falsely represents any information required by a certification form commits a Class A misdemeanor. Each false representation is a separate offense. This bill requires a manufacturer not registered to do business in Tennessee to designate a registered agent for service of process in Tennessee as a condition precedent to having the manufacturer's name or products listed and retained in the directory. Additionally, a manufacturer located outside of the U.S. is required to have each of the importers of any of the manufacturer's products to be sold in Tennessee to appoint, and continually engage without interruption, the services of an agent in Tennessee, as a condition precedent to having the manufacturer's products listed or retained in the directory. This bill requires that a retailer, distributor, or wholesaler that sells or distributes vapor products in Tennessee be subject to at least two unannounced compliance checks by the department of revenue or its designee, including any state or local law enforcement official, annually for purposes of enforcing this bill's requirements related to the directory. This bill authorizes the department of revenue to promulgate rules necessary to effectuate the provisions of this bill concerning the vapor products directory. This bill requires the department of revenue to submit an annual report on the vapor products directory to the chief clerks of the senate and the house of representatives, the office of legislative budget analysis, and the legislative librarian. ON MARCH 31, 2025, THE SENATE ADOPTED AMENDMENTS #1 AND #2 AND PASSED SENATE BILL 763, AS AMENDED. AMENDMENT #1 makes the following revisions:  Revises the provision making the requirement for demanding proof of age applicable to all prospective purchasers regardless of their apparent ages to, instead, prohibit a person engaged in such sales or distribution, or an employee thereof, from making or permitting to be made any sales of tobacco, smoking hemp, vapor product, or smokeless nicotine product to a person under 21. Prior to making a sale of tobacco, smoking hemp, vapor product, or smokeless nicotine product, a consumer whose physical appearance does not reasonably demonstrate an age of 50 must present to the person or an employee of the person a valid, government-issued document, such as a driver license or other form of identification deemed acceptable to the person or employee that includes the photograph and birth date of the consumer attempting to make a purchase. Consumers exempt under state law from the requirement of having a photo identification must present identification that is acceptable to the person or the person's employee. The person or person's employee must make a determination from the information presented whether the consumer is at least 21.  Revises the definition of "vapor product" to mean a noncombustible product containing consumable material, instead of only nicotine, whether natural or synthetic, that employs a mechanical heating element, battery, electronic circuit, or other mechanism, regardless of shape or size, that can be used to produce or emit a visible or non-visible vapor. AMENDMENT #2 revises the provision requiring all revenue from the taxes on vapor products collected under the bill to be deposited in a special account in the state general fund to be used exclusively for administration and enforcement of the vapor product directory to, instead, be allocated to the general fund, less any costs for the administration and enforcement of those taxes.

Statutes affected:
Introduced: 39-17-1504(d), 39-17-1504, 67-4-1001(24)(A), 67-4-1001, 67-4-1005, 67-4-1025(a), 67-4-1025