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7 LONG TITLE
8 General Description:
9 This bill addresses the state's proceeds from certain settlement agreements related to
10 electronic cigarette products.
11 Highlighted Provisions:
12 This bill:
13 ▸ renames the Electronic Cigarette Substance and Nicotine Product Tax Restricted
14 Account to the Electronic Cigarette Substance and Nicotine Product Proceeds
15 Restricted Account;
16 ▸ specifies that proceeds from certain settlements regarding the manufacture,
17 marketing, distribution, or sale of electronic cigarette products be deposited into the
18 restricted account amended in this bill; and
19 ▸ makes technical and corresponding changes.
20 Money Appropriated in this Bill:
21 None
22 Other Special Clauses:
23 None
24 Utah Code Sections Affected:
25 AMENDS:
26 26-7-10, as last amended by Laws of Utah 2022, Chapter 255
27 59-14-804, as enacted by Laws of Utah 2020, Chapter 347
28 59-14-807, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 20
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30 Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 26-7-10 is amended to read:
32 26-7-10. Youth Electronic Cigarette, Marijuana, and Other Drug Prevention
33 Program.
34 (1) As used in this section:
35 (a) "Committee" means the Youth Electronic Cigarette, Marijuana, and Other Drug
36 Prevention Committee created in Section 26B-1-204.
37 (b) "Program" means the Youth Electronic Cigarette, Marijuana, and Other Drug
38 Prevention Program created in this section.
39 (2) (a) There is created within the department the Youth Electronic Cigarette,
40 Marijuana, and Other Drug Prevention Program.
41 (b) In consultation with the committee, the department shall:
42 (i) establish guidelines for the use of funds appropriated to the program;
43 (ii) ensure that guidelines developed under Subsection (2)(b)(i) are evidence-based and
44 appropriate for the population targeted by the program; and
45 (iii) subject to appropriations from the Legislature, fund statewide initiatives to prevent
46 use of electronic cigarettes, nicotine products, marijuana, and other drugs by youth.
47 (3) (a) The committee shall advise the department on:
48 (i) preventing use of electronic cigarettes, marijuana, and other drugs by youth in the
49 state;
50 (ii) developing the guidelines described in Subsection (2)(b)(i); and
51 (iii) implementing the provisions of the program.
52 (b) The executive director shall:
53 (i) appoint members of the committee; and
54 (ii) consult with the Utah Substance Use and Mental Health Advisory Council created
55 in Section 63M-7-301 when making the appointments under Subsection (3)(b)(i).
56 (c) The committee shall include, at a minimum:
57 (i) the executive director of a local health department as defined in Section 26A-1-102,
58 or the local health department executive director's designee;
59 (ii) one designee from the department;
60 (iii) one representative from the Department of Public Safety;
61 (iv) one representative from the behavioral health community; and
62 (v) one representative from the education community.
63 (d) A member of the committee may not receive compensation or benefits for the
64 member's service on the committee, but may receive per diem and travel expenses in
65 accordance with:
66 (i) Section 63A-3-106;
67 (ii) Section 63A-3-107; and
68 (iii) rules made by the Division of Finance under Sections 63A-3-106 and 63A-3-107.
69 (e) The department shall provide staff support to the committee.
70 (4) On or before October 31 of each year, the department shall report to:
71 (a) the Health and Human Services Interim Committee regarding:
72 (i) the use of funds appropriated to the program;
73 (ii) the impact and results of the program, including the effectiveness of each program
74 funded under Subsection (2)(b)(iii), during the previous fiscal year;
75 (iii) a summary of the impacts and results on reducing youth use of electronic cigarettes
76 and nicotine products by entities represented by members of the committee, including those
77 entities who receive funding through the Electronic Cigarette Substance and Nicotine Product
78 [
79 (iv) any recommendations for legislation; and
80 (b) the Utah Substance Use and Mental Health Advisory Council created in Section
81 63M-7-301, regarding:
82 (i) the effectiveness of each program funded under Subsection (2)(b)(iii) in preventing
83 youth use of electronic cigarettes, nicotine products, marijuana, and other drugs; and
84 (ii) any collaborative efforts and partnerships established by the program with public
85 and private entities to prevent youth use of electronic cigarettes, marijuana, and other drugs.
86 Section 2. Section 59-14-804 is amended to read:
87 59-14-804. Taxation of electronic cigarette substance, prefilled electronic
88 cigarette, alternative nicotine product, nontherapeutic nicotine device substance, and
89 prefilled nontherapeutic nicotine device.
90 (1) (a) Beginning on July 1, 2020, a tax is imposed upon the following:
91 (i) an electronic cigarette substance; and
92 (ii) a prefilled electronic cigarette.
93 (b) Beginning on July 1, 2021, a tax is imposed upon the following:
94 (i) a nontherapeutic nicotine device substance; and
95 (ii) a prefilled nontherapeutic nicotine device.
96 (c) Beginning on July 1, 2021, a tax is imposed upon an alternative nicotine product.
97 (2) (a) The amount of tax imposed under Subsections (1)(a) and (b) is .56 multiplied by
98 the manufacturer's sales price.
99 (b) (i) The tax under Subsection (1)(c) on an alternative nicotine product is imposed:
100 (A) at a rate of $1.83 per ounce; and
101 (B) on the basis of the net weight of the alternative nicotine product as listed by the
102 manufacturer.
103 (ii) If the net weight of the alternative nicotine product is in a quantity that is a
104 fractional part of one ounce, a proportionate amount of the tax described in Subsection
105 (2)(b)(i)(A) is imposed:
106 (A) on that fractional part of one ounce; and
107 (B) in accordance with rules made by the commission in accordance with Title 63G,
108 Chapter 3, Utah Administrative Rulemaking Act.
109 (3) If a product is sold in the same package as a product that is taxed under Subsection
110 (1), the tax described in Subsection (2) shall apply to the wholesale manufacturer's sale price of
111 the entire packaged product.
112 (4) (a) A manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user shall
113 pay the tax levied under Subsection (1) at the time that an electronic cigarette substance, a
114 prefilled electronic cigarette, an alternative nicotine product, a nontherapeutic nicotine device
115 substance, or a prefilled nontherapeutic nicotine device is first received in the state.
116 (b) A manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user may not
117 resell an electronic cigarette substance, a prefilled electronic cigarette, an alternative nicotine
118 product, a nontherapeutic nicotine device substance, or a prefilled nontherapeutic nicotine
119 device to another distributor, another retailer, or a consumer before paying the tax levied under
120 Subsection (1).
121 (5) (a) The manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user
122 shall remit the taxes collected in accordance with this section to the commission.
123 (b) The commission shall deposit revenues generated by the tax imposed by this
124 section into the Electronic Cigarette Substance and Nicotine Product [
125 Account created in Section 59-14-807.
126 Section 3. Section 59-14-807 is amended to read:
127 59-14-807. Electronic Cigarette Substance and Nicotine Product Proceeds
128 Restricted Account.
129 (1) There is created within the General Fund a restricted account known as the
130 "Electronic Cigarette Substance and Nicotine Product [
131 (2) The Electronic Cigarette Substance and Nicotine Product [
132 Account consists of:
133 (a) revenues collected from the tax imposed by Section 59-14-804; [
134 (b) all money received by the attorney general or the Department of Commerce as a
135 result of any judgment, settlement, or compromise of claims pertaining to alleged violations of
136 law related to the manufacture, marketing, distribution, or sale of electronic cigarette products,
137 as defined in Section 76-10-101:
138 (i) if the total amount of the judgment, settlement, or compromise received by the state
139 exceeds $1,000,000; and
140 (ii) after reimbursement to the attorney general and the Department of Commerce for
141 expenses related to the matters described in Subsection (2)(b); and
142 [
143 (3) For each fiscal year, beginning with fiscal year 2021, and subject to appropriation
144 by the Legislature, the Division of Finance shall distribute from the Electronic Cigarette
145 Substance and Nicotine Product [
146 (a) $2,000,000 which shall be allocated to the local health departments by the
147 Department of Health and Human Services using the formula created in accordance with
148 Section 26A-1-116;
149 (b) $2,000,000 to the Department of Health and Human Services for statewide
150 cessation programs and prevention education;
151 (c) $1,180,000 to the Department of Public Safety for law enforcement officers aimed
152 at disrupting organizations and networks that provide tobacco products, electronic cigarette
153 products, nicotine products, and other illegal controlled substances to minors;
154 (d) $3,000,000 which shall be allocated to the local health departments by the
155 Department of Health and Human Services using the formula created in accordance with
156 Section 26A-1-116;
157 (e) $5,084,200 to the State Board of Education for school-based prevention programs;
158 and
159 (f) $2,000,000 to the Department of Health and Human Services for alcohol, tobacco,
160 and other drug prevention, reduction, cessation, and control programs that promote unified
161 messages and make use of media outlets, including radio, newspaper, billboards, and
162 television.
163 (4) (a) The local health departments shall use the money received in accordance with
164 Subsection (3)(a) for enforcing:
165 (i) the regulation provisions described in Section 26-57-103;
166 (ii) the labeling requirement described in Section 26-57-104; and
167 (iii) the penalty provisions described in Section 26-62-305.
168 (b) The Department of Health and Human Services shall use the money received in
169 accordance with Subsection (3)(b) for the Youth Electronic Cigarette, Marijuana, and Other
170 Drug Prevention Program created in Section 26-7-10.
171 (c) The local health departments shall use the money received in accordance with
172 Subsection (3)(d) to issue grants under the Electronic Cigarette, Marijuana, and Other Drug
173 Prevention Grant Program created in Section 26A-1-129.
174 (d) The State Board of Education shall use the money received in accordance with
175 Subsection (3)(e) to distribute to local education agencies to pay for:
176 (i) stipends for positive behaviors specialists as described in Subsection
177 53G-10-407(4)(a)(i);
178 (ii) the cost of administering the positive behaviors plan as described in Subsection
179 53G-10-407(4)(a)(ii); and
180 (iii) the cost of implementing an Underage Drinking and Substance Abuse Prevention
181 Program in grade 4 or 5, as described in Subsection 53G-10-406(3)(b).
182 (5) (a) The fund shall earn interest.
183 (b) All interest earned on fund money shall be deposited into the fund.
184 (6) Subject to legislative appropriations, funds remaining in the Electronic Cigarette
185 Substance and Nicotine Product [
186 described in Subsection (3) may only be used for programs and activities related to the
187 prevention and cessation of electronic cigarette, nicotine products, marijuana, and other drug
188 use.