Senate Study Bill 3101 - Introduced
SENATE FILE _____
BY (PROPOSED COMMITTEE ON
WAYS AND MEANS BILL BY
CHAIRPERSON DAWSON)
A BILL FOR
1 An Act relating to the regulation of vapor products, and
2 providing penalties.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. Section 453A.19, Code 2024, is amended by adding
2 the following new subsection:
3 NEW SUBSECTION. 5. For the purpose of enabling the
4 department to determine compliance with subchapter III, the
5 department shall have the right to inspect any premises of the
6 holder of an Iowa permit located within the state of Iowa where
7 vapor products are stored, transported, sold, or offered for
8 sale or exchanged, to examine all stocks of vapor products of
9 the permit holder, and to examine all of the records required
10 to be kept or any other records that may be kept incident to
11 the conduct of the vapor products business of the permit holder
12 or any other person dealing in vapor products. It shall be
13 unlawful for any such permit holder to fail to produce upon
14 demand of the department any records required to be kept, or to
15 hinder or prevent in any manner the inspection of the records
16 or the examination of the premises or stock as specified in
17 this subsection.
18 Sec. 2. Section 453A.35, subsection 1, paragraph b, Code
19 2024, is amended to read as follows:
20 b. The revenues generated from the tax on cigarettes
21 pursuant to section 453A.6, subsection 1, and from the tax on
22 tobacco products as specified in section 453A.43, subsections
23 1, 2, 3, and 4, and from the fees and penalties specified in
24 subchapter III shall be credited to the health care trust fund
25 created in section 453A.35A.
26 Sec. 3. Section 453A.35A, Code 2024, is amended to read as
27 follows:
28 453A.35A Health care trust fund.
29 1. A health care trust fund is created in the office of
30 the treasurer of state. The fund consists of the revenues
31 generated from the tax on cigarettes pursuant to section
32 453A.6, subsection 1, and from the tax on tobacco products
33 as specified in section 453A.43, subsections 1, 2, 3, and 4,
34 and from the fees and penalties specified in subchapter III,
35 that are credited to the health care trust fund, annually,
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1 pursuant to section 453A.35. Moneys in the fund shall be
2 separate from the general fund of the state and shall not be
3 considered part of the general fund of the state. However, the
4 fund shall be considered a special account for the purposes
5 of section 8.53 relating to generally accepted accounting
6 principles. Moneys in the fund shall be used only as specified
7 in this section and shall be appropriated only for the uses
8 specified. Moneys in the fund are not subject to section 8.33
9 and shall not be transferred, used, obligated, appropriated,
10 or otherwise encumbered, except as provided in this section.
11 Notwithstanding section 12C.7, subsection 2, interest or
12 earnings on moneys deposited in the fund shall be credited to
13 the fund.
14 2. Moneys in the fund shall be used only for purposes
15 related to health care, substance use disorder treatment and
16 prevention, and tobacco use prevention, cessation, and control,
17 including but not limited to the administration and enforcement
18 of subchapter III.
19 Sec. 4. NEW SECTION. 453A.52 Vapor products directory ——
20 established —— requirements.
21 1. By August 1, annually, following the date the director
22 first makes the vapor products directory available as specified
23 in section 453A.52A, every vapor products manufacturer where
24 vapor products are sold in the state, whether directly or
25 through a distributor, wholesaler, retailer, or similar
26 intermediary or intermediaries, shall certify under penalty of
27 perjury on a form and in the manner prescribed by the director,
28 that the vapor products manufacturer agrees to comply with this
29 subchapter and to one of the following:
30 a. That the vapor products manufacturer has received a
31 marketing authorization or similar order for the vapor product
32 from the United States food and drug administration pursuant
33 to 21 U.S.C. §387j.
34 b. That the vapor product was marketed in the United
35 States as of August 8, 2016, the vapor products manufacturer
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1 submitted a premarket tobacco product application for the vapor
2 product to the United States food and drug administration
3 pursuant to 21 U.S.C. §387j on or before September 9, 2020,
4 and the application either remains under review by the United
5 States food and drug administration or a final decision on the
6 application has not otherwise taken effect.
7 2. A vapor products manufacturer shall submit a
8 certification form that separately lists each of the vapor
9 products manufacturer’s vapor products sold in this state.
10 3. Each initial and annual certification form required to
11 be submitted under this section shall be accompanied by both
12 of the following:
13 a. A copy of the marketing authorization or other order
14 for each vapor product issued by the United States food and
15 drug administration pursuant to 21 U.S.C. §387j, or evidence
16 that the premarket tobacco product application for each vapor
17 product was submitted to the United States food and drug
18 administration and a final authorization or order has not yet
19 taken effect.
20 b. A payment of one hundred dollars for each vapor product
21 listed in the certification.
22 4. A vapor products manufacturer required to submit a
23 certification form under this section shall notify the director
24 within thirty business days of any material change to the
25 certification form, including the issuance or denial of a
26 marketing authorization or other order by the United States
27 food and drug administration pursuant to 21 U.S.C. §387j, or
28 any other order or action by the United States food and drug
29 administration that affects the authorization of the vapor
30 product to be introduced or delivered into interstate commerce
31 for commercial distribution in the United States.
32 5. a. The director shall maintain and make publicly
33 available a vapor products directory that lists all
34 vapor products manufacturers and vapor products for which
35 certification forms have been submitted.
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1 b. The director shall make the directory available on the
2 department’s internet site.
3 c. The director shall update the directory as necessary in
4 order to correct mistakes, ensure accuracy, and add or remove
5 vapor products on at least a monthly basis.
6 6. a. The director shall provide a vapor products
7 manufacturer with notice and an opportunity to cure
8 deficiencies before removing the vapor products manufacturer or
9 a vapor product from the directory.
10 b. The director shall not remove a vapor products
11 manufacturer or the vapor products manufacturer’s vapor product
12 from the directory until at least fifteen business days after
13 the vapor products manufacturer has been given notice of an
14 intended action. Notice shall be sufficient and be deemed
15 immediately received by a vapor products manufacturer if the
16 notice is sent either electronically or by facsimile to an
17 electronic mail address or facsimile number, as applicable,
18 provided by the vapor products manufacturer in the vapor
19 products manufacturer’s most recent certification filed under
20 this section.
21 c. The vapor products manufacturer shall have fifteen
22 business days from the date of service of the notice of
23 intended action to establish that the vapor products
24 manufacturer or the vapor product should be included in the
25 directory.
26 d. A determination by the director to not include or to
27 remove a vapor products manufacturer or a vapor product from
28 the directory shall be subject to review by the filing of a
29 civil action for prospective declaratory or injunctive relief.
30 7. If a vapor product is removed from the directory, each
31 retailer, distributor, and wholesaler shall have twenty-one
32 business days from the day such vapor product is removed from
33 the directory to remove the vapor product from its inventory
34 and return the vapor product to the vapor products manufacturer
35 for disposal. After twenty-one business days following removal
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1 from the directory, the vapor products of a vapor products
2 manufacturer identified in the notice of removal are contraband
3 and are subject to seizure, forfeiture, and destruction, and
4 shall not be purchased or sold in the state. The cost of such
5 seizure, forfeiture, and destruction shall be borne by the
6 person from whom the vapor products are confiscated.
7 Sec. 5. NEW SECTION. 453.52A Vapor products ——
8 requirements.
9 Beginning October 1, 2024, or on the date the director
10 first makes the vapor products directory available for public
11 inspection on the department’s internet site, whichever is
12 later, all of the following shall apply to vapor products in
13 this state:
14 1. A person shall not sell or offer for sale a vapor product
15 in this state that is not included in the vapor products
16 directory, and a vapor products manufacturer shall not sell,
17 either directly or through a distributor, wholesaler, retailer,
18 or similar intermediary or intermediaries, a vapor product
19 in this state that is not included in the vapor products
20 directory.
21 2. A retailer shall purchase vapor products for resale to
22 consumers only from a distributor or subjobber with a valid
23 license issued pursuant to this chapter.
24 Sec. 6. NEW SECTION. 453.52B Penalties.
25 1. A retailer, distributor, or wholesaler who sells or
26 offers for sale a vapor product in this state that is not
27 included in the vapor products directory established in
28 this subchapter shall be subject to all of the following, as
29 applicable:
30 a. A civil penalty of three hundred dollars per day for each
31 vapor product offered for sale in violation of this subsection
32 until the offending vapor product is removed from the market
33 or until the offending vapor product is properly listed on the
34 directory.
35 b. For a second violation within a period of two years, a
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1 retailer shall be assessed a civil penalty of one thousand five
2 hundred dollars or the retailer’s permit shall be suspended for
3 a period of thirty days.
4 c. For a third violation within a period of three years, a
5 retailer shall be assessed a civil penalty of one thousand five
6 hundred dollars and the retailer’s permit shall be suspended
7 for a period of thirty days.
8 d. For a fourth violation within a period of three years, a
9 retailer shall be assessed a civil penalty of one thousand five
10 hundred dollars and the retailer’s permit shall be suspended
11 for a period of sixty days.
12 e. For a fifth violation within a period of four years, the
13 retailer’s permit shall be revoked.
14 2. A vapor products manufacturer whose vapor products are
15 not listed in the vapor products directory and are sold in this
16 state, whether directly or through a distributor, wholesaler,
17 retailer, or similar intermediary or intermediaries, is subject
18 to a civil penalty of one thousand dollars per day for each
19 vapor product offered for sale in violation of this subsection
20 until the offending vapor product is removed from the market
21 or until the offending vapor product is properly listed on the
22 directory.
23 3. Any vapor products manufacturer that knowingly makes a
24 false representation in any of the information required by this
25 subchapter is guilty of a serious misdemeanor for each false
26 representation.
27 4. Knowingly shipping or receiving vapor products in
28 violation of this subchapter is an unfair practice and a
29 violation of section 714.16.
30 5. In any action brought by the state to enforce this
31 subchapter, the state shall be entitled to recover the costs
32 of investigation and prosecution, expert witness fees, court
33 costs, and reasonable attorney fees.
34 Sec. 7. NEW SECTION. 453A.52C Compliance checks.
35 1. Each distributor or retailer that distributes or sells
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1 vapor products in this state shall be subject to at least
2 two unannounced compliance checks annually for purposes of
3 enforcing this subchapter.
4 2. Any unannounced follow-up compliance checks of a
5 noncompliant retailer or distributor shall be conducted within
6 thirty business days after any violation of this subchapter.
7 3. The director shall publish the results of all compliance
8 checks performed under this section at least annually and shall
9 make the results available to the public upon request.
10 Sec. 8. NEW SECTION. 453A.52D Agent for service of process.
11 1. A nonresident vapor products manufacturer that has not
12 registered to do business in the state as a foreign corporation
13 or business entity shall, as a condition precedent to being
14 included or retained in the vapor products directory, appoint
15 and continually engage without interruption the services of
16 an agent in this state to act as agent for service of process
17 on whom all process, and any action or proceeding against the
18 vapor products manufacturer concerning or arising out of the
19 enforcement of this subchapter, may be served in any manner
20 authorized by law. Such service shall constitute legal and
21 valid service of process on the vapor products manufacturer.
22 The vapor products manufacturer shall provide the name,
23 address, telephone number, and proof of the appointment and
24 availability of such agent to the director.
25 2. The vapor products manufacturer shall provide notice
26 to the director thirty calendar days prior to termination of
27 the authority of an agent and shall further provide proof to
28 the satisfaction of the director of the appointment of a new
29 agent no less than five calendar days prior to the termination
30 of an existing agent appointment. In the event an agent
31 terminates an agency appointment, the manufacturer shall notify
32 the director of the termination within five calendar days and
33 shall include proof to the satisfaction of the director of the
34 appointment of a new agent.
35 3. A vapor products manufacturer whose vapor products
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1 are sold in this state, who has not appointed and engaged
2 the services of an agent as required by this section, shall
3 be deemed to have appointed the secretary of state as its
4 agent for service of process. However, the appointment of the
5 secretary of state as agent shall not satisfy the condition
6 precedent for the vapor products manufacturer to be included or
7 retained in the vapor products directory.
8 Sec. 9. NEW SECTION. 453A.52E Proceeds paid to health care
9 trust fund.
10 The revenues generated from the payment of fees and
11 penalties provided for under this subchapter shall be credited
12 to the health care trust fund created in section 453A.35A and
13 used for the administration and enforcement of this subchapter.
14 Sec. 10. NEW SECTION. 453A.52F Annual reports.
15 By January 15, annually, following the date the director
16 first makes the vapor products directory available as specified
17 in section 453A.52A, the director shall submit a report to the
18 general assembly regarding the status of the vapor products
19 directory, vapor products manufacturers, the vapor products
20 included in the directory, revenue and expenditures related to
21 administration of this subchapter, and enforcement activities
22 undertaken pursuant to this subchapter.
23 Sec. 11. NEW SECTION. 453A.52G Adoption of rules.
24 The director may adopt rules pursuant to chapter 17A to
25 administer this subchapter.
26 Sec. 12. CODE EDITOR DIRECTIVES.
27 1. The Code editor is directed to create a new subchapter IV
28 in chapter 453A as follows: Subchapter IV shall b