Relating to the taxation and regulation of alternative nicotine products and vapor products, making appropriations, and including effective date provisions

This bill regulates alternative nicotine products and vapor products and imposes taxes upon the wholesale sales price of such products, and makes numerous conforming changes to Code chapter 453A (cigarettes and tobacco-related products). The bill defines “nicotine analog” to mean a substance that has a chemical structure that is substantially similar to nicotine, or that has an effect on the central nervous system that is substantially similar to, or greater than, the effects of nicotine on the central nervous system. The bill adds “nicotine analog” to the definitions of “alternative nicotine product” and “vapor product”. The bill imposes an additional tax on alternative nicotine products upon any person engaged as a distributor of alternative nicotine products, at the rate of cents per container containing up to units, and a proportionate tax at the same rate on each unit in excess of units. The bill imposes an additional tax on vapor products upon any person engaged as a distributor of vapor products, at the rate of cents per milliliter of nicotine in a solution and a proportionate tax at the same rate on any fractions of a milliliter. The tax imposed upon the vapor products shall be imposed based on the net volume of the solution as listed by the manufacturer. In the alternative, the bill imposes the additional alternative nicotine products tax or vapor products tax, as applicable, upon the use or storage of the alternative nicotine products or vapor products, at the same rates as the tax on the distributor, if the tax on the distributor has not been paid by the distributor.35A. Beginning with FY 2027-2028, and for each fiscal year thereafter, the bill appropriates not more than $3 million of the taxes that are attributable to the additional taxes on alternative nicotine products or vapor products from the health care trust fund to the state board of regents. The bill specifies the purpose of the appropriation is for conducting pediatric cancer research, clinical therapy access, and for providing physician-scientist leadership at the university of Iowa Stead family children’s hospital. The bill requires the state board of regents to file an annual report with the general assembly about the programs funded by the appropriation beginning December 2028. The bill takes effect January 1, 2027.