8 LONG TITLE
9 General Description:
10 This bill modifies provisions related to the regulation and taxation of electronic
11 cigarette products and nicotine inhalers and how related revenues are to be spent.
12 Highlighted Provisions:
13 This bill:
14 ▸ creates the Rural Health Care Access Restricted Account funded primarily from
15 revenues from the taxation of electronic cigarette products and nicotine inhalers;
16 ▸ creates a pilot project funded from the Rural Health Care Access Restricted
18 ▸ modifies definition provisions;
19 ▸ modifies invoice requirements;
20 ▸ addresses licensing issues;
21 ▸ imposes a tax on certain electronic cigarette products and nicotine inhalers;
22 ▸ creates the Electronic Cigarette Product and Nicotine Inhaler Restricted Account;
23 ▸ addresses deposit and use of revenues from the taxation of electronic cigarette
24 products and substances and nicotine inhalers;
25 ▸ includes electronic cigarette products as tobacco paraphernalia;
26 ▸ provides a repeal date for the Rural Health Care Access Restricted Account and
27 pilot project; and
28 ▸ makes technical changes.
29 Money Appropriated in this Bill:
31 Other Special Clauses:
32 This bill provides a special effective date.
33 Utah Code Sections Affected:
35 59-14-102, as last amended by Laws of Utah 2013, Chapter 148
36 59-14-403, as renumbered and amended by Laws of Utah 1987, Chapters 2 and 3
37 59-14-801, as enacted by Laws of Utah 2015, Chapter 132
38 59-14-802, as enacted by Laws of Utah 2015, Chapter 132
39 59-14-803, as enacted by Laws of Utah 2015, Chapter 132
40 63I-2-226, as last amended by Laws of Utah 2009, Chapter 334
41 76-10-104.1, as last amended by Laws of Utah 2013, Chapter 278
43 26-9-6, Utah Code Annotated 1953
44 59-14-804, Utah Code Annotated 1953
46 Be it enacted by the Legislature of the state of Utah:
47 Section 1. Section 26-9-6 is enacted to read:
48 26-9-6. Rural Health Care Access Restricted Account -- Pilot project.
49 (1) As used in this section:
50 (a) "Public school" means:
51 (i) a school, including a charter school, that:
52 (A) is directly funded at public expense; and
53 (B) provides education to qualifying children for any grade from grade 1 through grade
54 12; or
55 (ii) a school, including a charter school, that provides:
56 (A) preschool or kindergarten to qualifying children, regardless of whether the
57 preschool or kindergarten is funded at public expense; and
58 (B) education to qualifying children for any grade from grade 1 through grade 12, if
59 each grade, from grade 1 to grade 12, that is provided at the school, is directly funded at public
61 (b) "Restricted account" means the Rural Health Care Access Restricted Account
62 created in Subsection (2).
63 (2) There is created a restricted account within the General Fund known as the "Rural
64 Health Care Access Restricted Account."
65 (3) (a) The restricted account shall be funded by:
66 (i) deposits into the restricted account made under Section 59-14-804;
67 (ii) appropriations of the Legislature; and
68 (iii) other contributions to the restricted account.
69 (b) Interest earned on the restricted account shall be deposited into the General Fund.
70 (4) From money appropriated by the Legislature, the department shall administer the
71 restricted account to fund the pilot project created under Subsection (5).
72 (5) (a) The department shall administer a pilot project that shall begin July 1, 2016, and
73 end June 30, 2019.
74 (b) Under the pilot project, the department shall expend money from the restricted
75 account to fund the cost, at schools designated by the State Board of Education as being located
76 in rural areas where access to health care is limited, of at least three school nurses or athletic
77 trainers who:
78 (i) are licensed under:
79 (A) Title 58, Chapter 31b, Nurse Practice Act; or
80 (B) Title 58, Chapter 40a, Athletic Trainer Licensing Act;
81 (ii) are employed at a public school; or
82 (iii) provide physical and mental health services to students at the public school and to
83 the community, including veterans, through face-to-face contact or telehealth services provided
84 through the Utah Education and Telehealth Network, created in Section 53B-17-105.
85 Section 2. Section 59-14-102 is amended to read:
86 59-14-102. Definitions.
87 As used in this chapter:
88 (1) "Cigarette" means a roll for smoking made wholly or in part of tobacco:
89 (a) regardless of:
90 (i) the size of the roll;
91 (ii) the shape of the roll; or
92 (iii) whether the tobacco is:
93 (A) flavored;
94 (B) adulterated; or
95 (C) mixed with any other ingredient; and
96 (b) if the wrapper or cover of the roll is made of paper or any other substance or
97 material except tobacco.
98 (2) "Cigarette rolling machine" means a device or machine that has the capability to
99 produce at least 150 cigarettes in less than 30 minutes.
100 (3) "Cigarette rolling machine operator" means a person who:
101 (a) (i) controls, leases, owns, possesses, or otherwise has available for use a cigarette
102 rolling machine; and
103 (ii) makes the cigarette rolling machine available for use by another person to produce
104 a cigarette; or
105 (b) offers for sale, at retail, a cigarette produced from the cigarette rolling machine.
106 (4) "Consumer" means a person that is not required:
107 (a) under Section 59-14-201 to obtain a license under Section 59-14-202; or
108 (b) under Section 59-14-301 to obtain a license under Section 59-14-202.
109 (5) "Counterfeit cigarette" means:
110 (a) a cigarette that has a false manufacturing label; or
111 (b) a package of cigarettes bearing a counterfeit tax stamp.
112 (6) "Importer" means a person who imports into the United States, either directly or
113 indirectly, a finished cigarette for sale or distribution.
114 (7) "Indian tribal entity" means a federally recognized Indian tribe, tribal entity, or any
115 other person doing business as a distributor or retailer of cigarettes on tribal lands located in the
117 (8) "Little cigar" means a roll for smoking:
118 (a) made wholly or in part of tobacco;
119 (b) that uses an integrated cellulose acetate filter or other similar filter; and
120 (c) that is wrapped in a substance:
121 (i) containing tobacco; and
122 (ii) that is not exclusively natural leaf tobacco.
123 (9) (a) Except as provided in Subsection (9)(b), "manufacturer" means a person who
124 manufactures, fabricates, assembles, processes, or labels a finished cigarette.
125 (b) "Manufacturer" does not include a cigarette rolling machine operator.
126 (10) "Moist snuff" means tobacco that:
127 (a) is finely:
128 (i) cut;
129 (ii) ground; or
130 (iii) powdered;
131 (b) has at least 45% moisture content, as determined by the commission by rule made
132 in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act;
133 (c) is not intended to be:
134 (i) smoked; or
135 (ii) placed in the nasal cavity; and
136 (d) except for single-use pouches of loose tobacco, is not packaged, produced, sold, or
137 distributed in single-use units, including:
138 (i) tablets;
139 (ii) lozenges;
140 (iii) strips;
141 (iv) sticks; or
142 (v) packages containing multiple single-use units.
143 (11) "Nicotine" means a poisonous volatile alkaloid derived from tobacco.
144 (12) "Nontherapeutic nicotine inhaler" means a nicotine inhaler that is not approved for
145 nicotine replacement therapy by the United States Food and Drug Administration.
147 (a) sells or distributes a cigarette to a consumer in the state; or
148 (b) intends to sell or distribute a cigarette to a consumer in the state.
150 evidences payment of the tax on cigarettes required by Section 59-14-205.
152 (b) "Tobacco product" includes:
153 (i) a cigarette produced from a cigarette rolling machine;
154 (ii) a little cigar; or
155 (iii) moist snuff.
156 (c) "Tobacco product" does not include a cigarette.
158 recognized Indian tribe.
159 Section 3. Section 59-14-403 is amended to read:
160 59-14-403. Duplicate invoice requirements -- Failure to comply -- Penalties.
162 cigarette products as defined in Section 59-14-802, or nontherapeutic nicotine inhalers who
164 the product is delivered through a wholesaler or distributor in this state, or by drop shipment or
165 otherwise, shall mail or deliver a duplicate invoice of all those purchases or receipts to the
166 commission within 10 days after receipt of the commodities if requested by the commission.
167 Failure to furnish duplicate invoices or receipts as requested is subject to the penalties provided
168 under Section 59-1-401.
169 Section 4. Section 59-14-801 is amended to read:
171 59-14-801. Title.
172 This part is known as the "Electronic Cigarette Products and Nicotine Inhaler Licensing
173 and Taxation Act."
174 Section 5. Section 59-14-802 is amended to read:
175 59-14-802. Definitions.
176 As used in this part:
177 (1) "Cigarette" means the same as that term is defined in Section 59-14-102.
178 (2) (a) "Electronic cigarette" means:
179 (i) an electronic device used to deliver or capable of delivering vapor containing
180 nicotine to an individual's respiratory system;
181 (ii) a component of the device described in Subsection (2)(a)(i); or
182 (iii) an accessory sold in the same package as the device described in Subsection
184 (b) "Electronic cigarette" includes an e-cigarette as defined in Section 26-38-2.
185 (c) "Electronic cigarette" does not include a battery or battery charger that is sold
186 separately from the electronic cigarette.
187 (3) "Electronic cigarette product" means an electronic cigarette or an electronic
188 cigarette substance.
189 (4) "Electronic cigarette substance" means any substance, including liquid containing
190 nicotine, used or intended for use in an electronic cigarette.
191 (5) "Enforcing agency" means the Department of Health, a county health department,
192 or a local health department, when enforcing:
193 (a) Title 26, Chapter 42, Civil Penalties for Tobacco Sales to Underage Persons; or
194 (b) Title 26, Chapter 57, Electronic Cigarette Regulation Act.
195 (6) "Licensee" means a person that holds a valid license to sell electronic cigarette
197 (7) "License to sell an electronic cigarette product" means a license issued by the
198 commission under [
199 Section 6. Section 59-14-803 is amended to read:
200 59-14-803. License to sell an electronic cigarette product or nicotine inhaler.
223 (1) A manufacturer or distributor of an electronic cigarette product or nontherapeutic
224 inhaler, who is responsible for the collection of tax on an electronic cigarette product or
225 nontherapeutic inhaler under this chapter, and a retailer of an electronic cigarette product or
226 nontherapeutic inhaler:
227 (a) shall register with the commission;
228 (b) shall be licensed by the commission under Part 2, Cigarettes; and
229 (c) is subject to the requirements, procedures, and penalties described in Part 2,
231 (2) A fee may not be charged for registration and licensing of a manufacturer, jobber,
232 distributor, or retailer of an electronic cigarette product or nontherapeutic inhaler in addition to
233 the cigarette license if such a license is required.
234 (3) The commission shall require any manufacturer, wholesaler, retailer, or any other
235 person subject to this section, and who is responsible for the collection of tax on an electronic
236 cigarette product or nontherapeutic inhaler under this chapter, to post a bond as a prerequisite
237 to registering. The bond shall be in a form and an amount determined by the commission. If
238 the bond is required under Section 59-14-201, the bond may be a combination, the minimum
239 amount of which shall be $1,000.
241 Subsection [
242 (a) Title 26, Chapter 42, Civil Penalties for Tobacco Sales to Underage Persons; or
243 (b) Title 26, Chapter 57, Electronic Cigarette Regulation Act.
245 product or nontherapeutic nicotine inhaler under Subsection [
246 issue a license to sell an electronic cigarette product or nontherapeutic nicotine inhaler, a
247 license to sell cigarettes under Section 59-14-201, or a license to sell tobacco under Section
248 59-14-301 to the person until one year after:
249 (a) the day on which the time for filing an appeal of the revocation ends, as determined
250 by the enforcing agency; or
251 (b) if the person appeals the enforcing agency's decision to revoke the license to sell an
252 electronic cigarette product, the day on which the enforcing agency's decision to uphold the
253 revocation is final.
255 commission shall also revoke the person's license to sell cigarettes under Section 59-14-201, if
256 any, and the person's license to sell tobacco under Section 59-14-301, if any.
262 Section 7. Section 59-14-804 is enacted to read:
263 59-14-804. Taxation of electronic cigarette product and nicotine inhalers.
264 (1) As used in this section:
265 (a) "Manufacturer's sales price" means the amount the manufacturer of an electronic
266 cigarette product or nontherapeutic nicotine inhaler charges after subtracting a discount.
267 (b) "Manufacturer's sales price" includes an original Utah destination freight charge,
268 regardless of:
269 (i) whether the electronic cigarette product or nontherapeutic nicotine inhaler is
270 shipped f.o.b. origin or f.o.b. destination; or
271 (ii) who pays the original Utah destination freight charge.
272 (2) There is levied a tax upon the sale, use, or storage of an electronic cigarette product
273 or nontherapeutic nicotine inhaler in the state.
274 (3) The tax levied under Subsection (2) shall be paid by the manufacturer, jobber,
275 distributor, wholesaler, retailer, user, or consumer.
276 (4) For an electronic cigarette product or nontherapeutic nicotine inhaler, the rate of the
277 tax under this section is .86 multiplied by the manufacturer's sales price.
278 (5) (a) There is created within the General Fund a restricted account known as the
279 "Electronic Cigarette Product and Nicotine Inhaler Tax Restricted Account."
280 (b) The Electronic Cigarette Product and Nicotine Inhaler Tax Restricted Account
281 consists of:
282 (i) the revenues collected from a tax under this section; and
283 (ii) any other appropriation the Legislature makes to the Electronic Cigarette Product
284 and Nicotine Inhaler Tax Restricted Account.
285 (c) For each fiscal year beginning with fiscal year 2016-17 and subject to appropriation
286 by the Legislature, the Division of Finance shall distribute money from the Electronic Cigarette
287 Product and Nicotine Inhaler Tax Restricted Account as follows:
288 (i) $1,000,000 to the Department of Health to be distributed to local health departments
289 in accordance with Section 26A-1-116;
290 (ii) $1,000,000 to the Rural Health Care Access Restricted Account created in Section
291 26-9-6; and
292 (iii) the remainder of the money collected under this section to the Uniform School
294 Section 8. Section 63I-2-226 is amended to read:
295 63I-2-226. Repeal dates -- Title 26.
296 (1) Section 26-9-6 is repealed July 1, 2019.
297 (2) Title 26, Chapter 46, Utah Health Care Workforce Financial Assistance Program, is
298 repealed July 1, 2017.
299 Section 9. Section 76-10-104.1 is amended to read:
300 76-10-104.1. Providing tobacco paraphernalia to minors -- Penalties.
301 (1) For purposes of this section:
302 (a) "Provides":
303 (i) includes selling, giving, furnishing, sending, or causing to be sent; and
304 (ii) does not include the acts of the United States Postal Service or other common
305 carrier when engaged in the business of transporting and delivering packages for others or the
306 acts of a person, whether compensated or not, who transports or delivers a package for another
307 person without any reason to know of the package's content.
308 (b) "Tobacco paraphernalia":
309 (i) means any equipment, product, or material of any kind which is used, intended for
310 use, or designed for use to package, repackage, store, contain, conceal, ingest, inhale, or
311 otherwise introduce a cigar, cigarette, electronic cigarette product as defined in Section
312 59-14-802, or tobacco in any form into the human body, including:
313 (A) metal, wooden, acrylic, glass, stone, plastic, or ceramic pipes with or without
314 screens, permanent screens, hashish heads, or punctured metal bowls;
315 (B) water pipes;
316 (C) carburetion tubes and devices;
317 (D) smoking and carburetion masks;
318 (E) roach clips[
319 that has become too small or too short to be held in the hand;
320 (F) chamber pipes;
321 (G) carburetor pipes;
322 (H) electric pipes;
323 (I) air-driven pipes;
324 (J) chillums;
325 (K) bongs; and
326 (L) ice pipes or chillers; and
327 (ii) does not include matches or lighters.
328 (2) (a) It is unlawful for a person to knowingly, intentionally, recklessly, or with
329 criminal negligence provide any tobacco paraphernalia to any person under 19 years of age.
330 (b) A person who violates this section is guilty of a class C misdemeanor on the first
331 offense and a class B misdemeanor on subsequent offenses.
332 Section 10. Effective date.
333 This bill takes effect on July 1, 2016.
Legislative Review Note
Office of Legislative Research and General Counsel