(b) "Artificially derived cannabinoid" does not include:

- 2 - Enrolled Copy H.B.

265 (i) a naturally occurring chemical substance that is separated from the cannabis plant by a chemical or mechanical extraction process;

or (ii) cannabinoids that are produced by decarboxylation from a naturally occurring cannabinoid acid without the use of a chemical catalyst.

(3) "Cannabidiol" or "CBD" means the cannabinoid identified as CAS# 13956-29-1.

(4) "Cannabidiolic acid" or "CBDA" means the cannabinoid identified as CAS# 1244-58-2.

(5) "Cannabinoid processor license" means a license that the department issues to a person for the purpose of processing a cannabinoid product.

(6) "Cannabinoid product" means a product that:

(a) contains or is represented to contain one or more naturally occurring cannabinoids;

(b) contains less than the cannabinoid product THC level, by dry weight;

(c) contains a combined amount of total THC and any THC analog that does not exceed 10% of the total cannabinoid content;

(d) does not exceed a total of THC and any THC analog that is greater than:

(i) 5 milligrams per serving;

and (ii) 150 milligrams per package;[ and] (e) unless the product is in an oil based suspension, has a serving size that:

(i) is an integer;

and (ii) is a discrete unit of the cannabinoid product[.] ;

(f) is not an electronic cigarette as that term is defined in Section 76-9-1101;

and (g) is not a cannabinoid substance that is intended for use in an electronic cigarette.

(7) "Cannabinoid product class" means a group of cannabinoid products that:

(a) have all ingredients in common;

and (b) are produced by or for the same company.

(8) "Cannabinoid product THC level" means a combined concentration of total THC and any THC analog of less than 0.3% on a dry weight basis if laboratory testing confirms a result within a measurement of uncertainty that includes the combined concentration of 0.3%.

(9) "Cannabis" means the same as that term is defined in Section 26B-4-201.

(10) "Delta-9-tetrahydrocannabinol" or "delta-9-THC" means the cannabinoid identified as CAS# 1972-08-3, the primary psychotropic cannabinoid in cannabis.

(11) "Industrial hemp" means any part of a cannabis plant, whether growing or not, with a concentration of less than 0.3% tetrahydrocannabinol by dry weight.

(12) "Industrial hemp producer registration" means a registration that the department issues - 3 - H.B.

265 Enrolled Copy to a person for the purpose of processing industrial hemp or an industrial hemp product.

(13)(a) "Industrial hemp product" means a product made by processing industrial hemp plants or industrial hemp parts.

(b) "Industrial hemp product" does not include cannabinoid material or a cannabinoid product.

(14) "Industrial hemp retailer permit" means a permit that the department issues to a retailer who sells any viable industrial hemp seed or cannabinoid product.

(15) "Key participant" means any of the following:

(a) a licensee;

(b) an operation manager;

(c) a site manager;

or (d) an employee who has access to any industrial hemp material with a THC concentration above 0.3%.

(16) "Licensee" means a person possessing a cannabinoid processor license that the department issues under this chapter.

(17) "Newly identified cannabinoid" means a cannabinoid that:

(a) is not expressly identified by chemical name or CAS number in this chapter;

and (b) is identified by the department under Section 4-41-405.

(18) "Non-compliant material" means:

(a) a hemp plant that does not comply with this chapter, including a cannabis plant with a concentration of 0.3% tetrahydrocannabinol or greater by dry weight;

(b) a cannabinoid product, chemical, or compound with a concentration that exceeds the cannabinoid product THC level;

and (c) a cannabinoid product containing any of the following:

(i) delta-9-tetrahydrocannabiphorol (THCP), the cannabinoid identified as CAS# 54763-99-4;

(ii) delta-8-tetrahydrocannabiphorol (THCP), the cannabinoid identified as CAS# 51768-60-6;

(iii) delta-9-tetrahyrdocannabinol (THC) acetate, the cannabinoid identified as CAS# 23132-17-4;

(iv) delta-8-tetrahydrocannabinol (THC) acetate, the cannabinoid identified as CAS# 23050-54-6;

(v) 9(s)-hexahydrocannabinol (HHC), the cannabinoid identified as CAS# 36403-91-5;

or - 4 - Enrolled Copy H.B.

265 (vi) 9(r)-hexahyrdocannabinol (HHC), the cannabinoid identified as CAS# 36403-90-4.

(19) "Permittee" means a person possessing a permit that the department issues under this chapter.

(20) "Person" means:

(a) an individual, partnership, association, firm, trust, limited liability company, or corporation;

and (b) an agent or employee of an individual, partnership, association, firm, trust, limited liability company, or corporation.

(21) "Retailer permittee" means a person possessing an industrial hemp retailer permit that the department issues under this chapter.

(22) "Tetrahydrocannabinol" or "THC" means a delta-9-tetrahydrocannabinol, the cannabinoid identified as CAS# 1972-08-3.

(23)(a) "THC analog" means a substance that is structurally or pharmacologically substantially similar to, or is represented as being similar to, delta-9-THC.

(b) "THC analog" does not include the following substances or the naturally occurring acid forms of the following substances:

(i) cannabichromene (CBC), the cannabinoid identified as CAS# 20675-51-8;

(ii) cannabicyclol (CBL), the cannabinoid identified as CAS# 21366-63-2;

(iii) cannabidiol (CBD), the cannabinoid identified as CAS# 13956-29-1;

(iv) cannabidivarol (CBDV), the cannabinoid identified as CAS# 24274-48-4;

(v) cannabielsoin (CBE), the cannabinoid identified as CAS# 52025-76-0;

(vi) cannabigerol (CBG), the cannabinoid identified as CAS# 25654-31-3;

(vii) cannabigerovarin (CBGV), the cannabinoid identified as CAS# 55824-11-8;

(viii) cannabinol (CBN), the cannabinoid identified as CAS# 521-35-7;

(ix) cannabivarin (CBV), the cannabinoid identified as CAS# 33745-21-0;

or (x) delta-9-tetrahydrocannabivarin (THCV), the cannabinoid identified as CAS# 31262-37-0.

(24) "Total cannabidiol" or "total CBD" means the combined amounts of cannabidiol and cannabidiolic acid, calculated as "total CBD = CBD + (CBDA x 0.877)".

(25) "Total tetrahydrocannabinol" or "total THC" means the sum of the determined amounts of delta-9-THC, tertrahydrocannabinolic acid, calculated as "total THC = delta-9-THC + (THCA x 0.877)".

(26) "Transportable industrial hemp concentrate" means any amount of a natural - 5 - H.B.

265 Enrolled Copy cannabinoid in a purified state that:

(a) is the product of any chemical or physical process applied to naturally occurring biomass that concentrates or isolates the cannabinoids contained in the biomass;

(b) is derived from a cannabis plant that, based on sampling that was collected no more than 30 days before the day on which the cannabis plant was harvested, contains a combined concentration of total THC and any THC analog of less than 0.3% on a dry weight basis;

(c) has a THC and THC analog concentration total that is less than 20% when concentrated from the cannabis plant to the purified state;

and (d) is intended to be processed into a cannabinoid product.

Section 2.

Section 4-41-402 is amended to read:

4-41-402 .

Cannabinoid sales and use authorized.

(1) The sale or use of a cannabinoid product is prohibited:

(a) except as provided in this chapter;

or (b) unless the United States Food and Drug Administration approves the product.

(2) The department shall keep a list of registered cannabinoid products that the department has determined, in accordance with Section 4-41-403, are safe for human consumption.

(3)(a) A person may sell or use a cannabinoid product that is in the list of registered cannabinoid products described in Subsection (2).

(b) An individual may use cannabidiol or a cannabidiol product that is not in the list of registered cannabinoid products described in Subsection (2) if:

(i) the individual purchased the product outside the state;

and (ii) the product's contents do not violate Title 58, Chapter 37, Utah Controlled Substances Act.

(4) Any marketing for a cannabinoid product shall include a notice to consumers that the product is hemp or CBD and is not cannabis or medical cannabis, as those terms are defined in Section 26B-4-201.

[(5) A cannabinoid product that is designed to be inhaled shall include a warning on the label regarding the possible health effects of inhaling cannabinoid products.] Section 3.

Section 26B-7-501 is amended to read:

26B-7-501 .

Definitions.

As used in this part:

(1) "Community location" means the same as that term is defined:

(a) as it relates to a municipality, in Section 10-8-41.6;

and - 6 - Enrolled Copy H.B.

265 (b) as it relates to a county, in Section 17-50-333.

(2) "Electronic cigarette" means the same as that term is defined in Section 76-9-1101.

(3) "Electronic cigarette product" means the same as that term is defined in Section 76-9-1101.

(4) "Electronic cigarette substance" means the same as that term is defined in Section 76-9-1101.

(5) "Employee" means an employee of a tobacco retailer.

(6) "Enforcing agency" means the department, or any local health department enforcing the provisions of this part.

(7) "General tobacco retailer" means a tobacco retailer that is not a retail tobacco specialty business.

(8) "Local health department" means the same as that term is defined in Section 26A-1-102.

(9) "Manufacture" includes:

(a) to cast, construct, or make electronic cigarettes;

or (b) to blend, make, process, or prepare an electronic cigarette substance.

(10) "Manufacturer sealed electronic cigarette product" means:

(a) an electronic cigarette substance or container that the electronic cigarette manufacturer does not intend for a consumer to open or refill;

or (b) a prefilled electronic cigarette as that term is defined in Section 76-9-1101.

[(10)] (11) "Manufacturer sealed electronic cigarette substance" means an electronic cigarette substance that is sold in a container that:

(a) is prefilled by the electronic cigarette substance manufacturer;

and (b) the electronic cigarette manufacturer does not intend for a consumer to open.

[(11) "Manufacturer sealed electronic cigarette product" means:] [(a) an electronic cigarette substance or container that the electronic cigarette manufacturer does not intend for a consumer to open or refill;

or] [(b) a prefilled electronic cigarette as that term is defined in Section 76-9-1101.] (12) "Nicotine" means the same as that term is defined in Section 76-9-1101.

(13) "Nicotine product" means the same as that term is defined in Section 76-9-1101.

(14) "Non-nicotine inhalation product" means the same as that term is defined in Section 76-9-1101.

(15) "Non-nicotine inhalation substance" means the same as that term is defined in Section 76-9-1101.

[(14)] (16) "Non-tobacco shisha" means any product that:

- 7 - H.B.

265 Enrolled Copy (a) does not contain tobacco or nicotine;

and (b) is smoked or intended to be smoked in a hookah or water pipe.

[(15)] (17) "Owner" means a person holding a 20% ownership interest in the business that is required to obtain a permit under this part.

[(16)] (18) "Permit" means a tobacco retail permit issued under Section 26B-7-507.

[(17)] (19) "Place of public access" means any enclosed indoor place of business, commerce, banking, financial service, or other service-related activity, whether publicly or privately owned and whether operated for profit or not, to which persons not employed at the place of public access have general and regular access or which the public uses, including:

(a) buildings, offices, shops, elevators, or restrooms;

(b) means of transportation or common carrier waiting rooms;

(c) restaurants, cafes, or cafeterias;

(d) taverns as defined in Section 32B-1-102, or cabarets;

(e) shopping malls, retail stores, grocery stores, or arcades;

(f) libraries, theaters, concert halls, museums, art galleries, planetariums, historical sites, auditoriums, or arenas;

(g) barber shops, hair salons, or laundromats;

(h) sports or fitness facilities;

(i) common areas of nursing homes, hospitals, resorts, hotels, motels, "bed and breakfast" lodging facilities, and other similar lodging facilities, including the lobbies, hallways, elevators, restaurants, cafeterias, other designated dining areas, and restrooms of any of these;

(j)(i) any child care facility or program subject to licensure or certification under this title, including those operated in private homes, when any child cared for under that license is present;

and (ii) any child care, other than child care as defined in Section 26B-2-401, that is not subject to licensure or certification under this title, when any child cared for by the provider, other than the child of the provider, is present;

(k) public or private elementary or secondary school buildings and educational facilities or the property on which those facilities are located;

(l) any building owned, rented, leased, or otherwise operated by a social, fraternal, or religious organization when used solely by the organization members or the members' guests or families;

- 8 - Enrolled Copy H.B.

265 (m) any facility rented or leased for private functions from which the general public is excluded and arrangements for the function are under the control of the function sponsor;

(n) any workplace that is not a place of public access or a publicly owned building or office but has one or more employees who are not owner-operators of the business;

(o) any area where the proprietor or manager of the area has posted a conspicuous sign stating "no smoking", "thank you for not smoking", or similar statement;

and (p) a holder of a bar establishment license, as defined in Section 32B-1-102.

[(18)] (20)(a) "Proof of age" means:

(i) a valid identification card issued under Title 53, Chapter 3, Part 8, Identification Card Act;

(ii) a valid identification that:

(A) is substantially similar to an identification card issued under Title 53, Chapter 3, Part 8, Identification Card Act;

(B) is issued in accordance with the laws of a state other than Utah in which the identification is issued;

(C) includes date of birth;

and (D) has a picture affixed;

(iii) a valid driver license certificate that is issued under Title 53, Chapter 3, Uniform Driver License Act, or in accordance with the laws of the state in which the valid driver license is issued;

(iv) a valid United States military identification card that:

(A) includes date of birth;

and (B) has a picture affixed;

or (v) a valid passport.

(b) "Proof of age" does not include a valid driving privilege card issued in accordance with Section 53-3-207.

[(19)] (21) "Publicly owned building or office" means any enclosed indoor place or portion of a place owned, leased, or rented by any state, county, or municipal government, or by any agency supported by appropriation of, or by contracts or grants from, funds derived from the collection of federal, state, county, or municipal taxes.

[(20)] (22) "Retail tobacco specialty business" means the same as that term is defined:

(a) as it relates to a municipality, in Section 10-8-41.6;

and (b) as it relates to a county, in Section 17-50-333.

- 9 - H.B.

265 Enrolled Copy [(21)] (23) "Shisha" means any product that:

(a) contains tobacco or nicotine;

and (b) is smoked or intended to be smoked in a hookah or water pipe.

[(22)] (24) "Smoking" means:

(a) the possession of any lighted or heated tobacco product in any form;

(b) inhaling, exhaling, burning, or carrying any lighted or heated cigar, cigarette, pipe, or hookah that contains:

(i) tobacco or any plant product intended for inhalation;

(ii) shisha or non-tobacco shisha;

(iii) nicotine;

(iv) a natural or synthetic tobacco substitute;

or (v) a natural or synthetic flavored tobacco product;

(c) using an electronic cigarette;

or (d) using an oral smoking device intended to circumvent the prohibition of smoking in this part.

[(23)] (25) "Tax commission license" means a license issued by the State Tax Commission under:

(a) Section 59-14-201 to sell a cigarette at retail;

(b) Section 59-14-301 to sell a tobacco product at retail;

or (c) Section 59-14-803 to sell an electronic cigarette product or a nicotine product.

[(24)] (26) "Tobacco product" means:

(a) a tobacco product as defined in Section 76-9-1101;

or (b) tobacco paraphernalia as defined in Section 76-9-1101.

[(25)] (27) "Tobacco retailer" means a person that is required to obtain a tax commission license.

Section 4.

Section 26B-7-505 is amended to read:

26B-7-505 .

Electronic cigarette products -- Labeling -- Requirements to sell -- Advertising -- Labeling of nicotine products containing nicotine.

(1) The department shall, in consultation with a local health department and with input from members of the public, establish by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the requirements to sell an electronic cigarette substance that is not a manufacturer sealed electronic cigarette substance regarding:

(a) labeling;

(b) nicotine content;

- 10 - Enrolled Copy H.B.

265 (c) packaging;

and (d) product quality.

(2) On or before January 1, 2021, the department shall, in consultation with a local health department and with input from members of the public, establish by rule made in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the requirements to sell a manufacturer sealed electronic cigarette product regarding:

(a) labeling;

(b) nicotine content;

(c) packaging;

and (d) product quality.

(3)(a) A person may not sell an electronic cigarette substance unless the electronic cigarette substance complies with the requirements established by the department under Subsection (1).

(b) Beginning on July 1, 2021, a person may not sell a manufacturer sealed electronic cigarette product unless the manufacturer sealed electronic cigarette product complies with the requirements established by the department under Subsection (2).

(c) Notwithstanding Subsections (3)(a) and (3)(b), beginning on January 1, 2025, a person may not sell an electronic cigarette product that is not [a premarket authorized or pending electronic cigarette product as that term is defined in Section 76-9-1101.] on the electronic cigarette product registry created in Section 59-14-810.

(4)(a) A local health department may not enact a rule or regulation regarding electronic cigarette substance labeling, nicotine content, packaging, or product quality that is not identical to the requirements established by the department under Subsections (1) and (2).

(b) Except as provided in Subsection (4)(c), a local health department may enact a rule or regulation regarding electronic cigarette substance manufacturing.

(c) A local health department may not enact a rule or regulation regarding a manufacturer sealed electronic cigarette product.

(5) A person may not advertise an electronic cigarette product as a tobacco cessation device.

(6)(a) Any nicotine product shall contain the statement described in Subsection (6)(b) if the nicotine product:

(i)(A) is not a tobacco product as defined in 21 U.S.C.

Sec.

321 and related federal regulations;

or (B) is not otherwise required under federal or state law to contain a nicotine - 11 - H.B.

265 Enrolled Copy warning;

and (ii) contains nicotine.

(b) A statement shall appear on the exterior packaging of a nicotine product described in Subsection (6)(a) as follows:

"This product contains nicotine." Section 5.

Section 26B-7-523 is enacted to read:

26B-7-523 .

Non-nicotine inhalation product -- Penalty.

(1) A person may not sell a non-nicotine inhalation product or a non-nicotine inhalation substance unless the product is contained in the registry described in Section 59-14-810.

(2) The department, a local health department, and the Department of Agriculture and Food shall enforce this section under the procedures of Title 63G, Chapter 4, Administrative Procedures Act, as an informal adjudicative proceeding, including:

(a) notifying a retailer of alleged violations;

(b) conducting hearings;

(c) determining violations;

and (d) imposing civil administrative penalties.

(3) If a violation is found in an investigation by an enforcing agency or law enforcement, the enforcing agency shall:

(a) on a first violation, impose a penalty of $1,500;

(b) on a second violation, impose a penalty of $5,000;

and (c)(i) on a third violation, impose a penalty of $6,000;

and (ii) revoke the permit of the retailer.

(4)(a) Except when a transfer described in Subsection (5) occurs, a local health department may not issue a permit to:

(i) a retailer for whom a permit is revoked under Subsection (3);

or (ii) a retailer that has the same proprietor, director, corporate officer, partner, or other holder of significant interest as another retailer for whom a permit is revoked under Subsection (3).

(b) A person whose permit is revoked under this section may not apply for a new permit for a period of 24 months after the day on which an enforcing agency revokes the permit.

(5) Violations of this section shall stay on the record for the retailer unless:

(a) the retailer is transferred to a new proprietor;

and (b) the new proprietor provides documentation to the local health department that the - 12 - Enrolled Copy H.B.

265 new proprietor is acquiring the tobacco retailer in an arm's length transaction from the previous proprietor.

(6) At a civil hearing for enforcement under Subsection (2) or (3), evidence of the final criminal conviction of a person for violating Section 76-9-1115 is prima facie evidence of a violation of this section.

Section 6.

Section 59-14-802 is amended to read:

59-14-802 .

Definitions.

As used in this part:

(1) "Licensee" means a person that holds a valid license to sell an electronic cigarette product or a nicotine product.

(2)(a) "Manufacturer's sales price" means the amount that the manufacturer of an electronic cigarette substance, a prefilled electronic cigarette, an alternative nicotine product, a nontherapeutic nicotine device substance, or a prefilled nontherapeutic nicotine device charges after subtracting a discount.

(b) "Manufacturer's sales price" includes an original Utah destination freight charge, regardless of:

(i) whether the electronic cigarette substance, prefilled electronic cigarette, alternative nicotine product, nontherapeutic nicotine device substance, or prefilled nontherapeutic nicotine device is shipped f.o.b.

origin or f.o.b.

destination;

or (ii) who pays the original Utah destination freight charge.

(3) "Non-nicotine inhalation product" means the same as that term is defined in Section 76-9-1101.

(4) "Non-nicotine inhalation substance" means the same as that term is defined in Section 76-9-1101.

(5) "Premarket authorized or pending electronic cigarette product" means the same as that term is defined in Section 76-9-1101.

Section 7.

Section 59-14-803 is amended to read:

59-14-803 .

License to sell electronic cigarette product or nicotine product.

(1) A person may not sell, offer to sell, or distribute an electronic cigarette product or a nicotine product in this state without first:

(a) except as provided in Subsection (2), obtaining a license from the commission under this section to sell an electronic cigarette product or a nicotine product;

and (b) complying with any bonding requirement described in Subsection (5).

(2) A person that holds a valid license to sell cigarettes under Section 59-14-201 or a person - 13 - H.B.

265 Enrolled Copy that holds a valid license to sell tobacco products under Section 59-14-301 may, without obtaining a separate license in accordance with this section, sell, offer to sell, or distribute an electronic cigarette product or a nicotine product in this state.

(3) The commission shall issue a license to sell an electronic cigarette product or a nicotine product to a person that submits an application, on a form created by the commission, that includes:

(a) the person's name;

(b) the address of the facility where the person will sell an electronic cigarette product or a nicotine product;

and (c) any other information the commission requires to implement this chapter.

(4) A license described in Subsection (3) is:

(a) valid only at one fixed business address;

(b) valid for three years;

(c) valid only for a physical location;

and (d) renewable if a licensee meets the criteria for licensing described in Subsection (3).

(5)(a) The commission shall require a manufacturer, jobber, distributor, wholesaler, or retailer that is responsible under this part for the collection of tax on an electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product to post a bond.

(b) The manufacturer, jobber, distributor, wholesaler, or retailer may post the bond required by Subsection (5)(a) in combination with any bond required by Section 59-14-201 or 59-14-301.

(c) Subject to Subsection (5)(d), the commission shall determine the form and amount of the bond.

(d) The minimum amount of the bond shall be:

(i) except as provided in Subsection (5)(d)(ii) or (iii), $500;

(ii) if the manufacturer, jobber, distributor, wholesaler, or retailer posts the bond required by Subsection (5)(a) in combination with a bond required by either Section 59-14-201 or 59-14-301, $1,000;

or (iii) if the manufacturer, jobber, distributor, wholesaler, or retailer posts the bond required by Subsection (5)(a) in combination with a bond required by both Sections 59-14-201 and 59-14-301, $1,500.

(6) The commission may make rules in accordance with Title 63G, Chapter 3, Utah - 14 - Enrolled Copy H.B.

265 Administrative Rulemaking Act, to establish the additional information described in Subsection (3)(c) that a person shall provide in the application described in Subsection (3).

(7) It is a class B misdemeanor for a person to violate Subsection (1).

(8) The commission may not charge a fee for a license under this section.

Section 8.

Section 59-14-804 is amended to read:

59-14-804 .

Taxation of electronic cigarette product, alternative nicotine product, nontherapeutic nicotine product.

(1) A tax is imposed upon:

(a) an electronic cigarette product;

(b) a nontherapeutic nicotine product;

and (c) an alternative nicotine product.

[(a) Beginning on July 1, 2020, a tax is imposed upon the following:] [(i) an electronic cigarette substance;

and] [(ii) a prefilled electronic cigarette.] [(b) Beginning on July 1, 2021, a tax is imposed upon the following:] [(i) a nontherapeutic nicotine device substance;

and] [(ii) a prefilled nontherapeutic nicotine device.] [(c) Beginning on July 1, 2021, a tax is imposed upon an alternative nicotine product.] (2)(a) The amount of tax imposed under Subsections (1)(a) and (b) is .56 multiplied by the manufacturer's sales price.

(b)(i) The tax under Subsection (1)(c) on an alternative nicotine product is imposed:

(A) at a rate of $1.83 per ounce;

and (B) on the basis of the net weight of the alternative nicotine product as listed by the manufacturer.

(ii) If the net weight of the alternative nicotine product is in a quantity that is a fractional part of one ounce, a proportionate amount of the tax described in Subsection (2)(b)(i)(A) is imposed:

(A) on that fractional part of one ounce;

and (B) in accordance with rules made by the commission in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.

(3) If a product is sold in the same package as a product that is taxed under Subsection (1), the tax described in Subsection (2) shall apply to the wholesale manufacturer's sale price of the entire packaged product.

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265 Enrolled Copy (4)(a) A manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user shall pay the tax levied under Subsection (1) at the time that an electronic cigarette [ substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product is first received in the state.

(b) A manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user may not resell an electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product to another distributor, another retailer, or a consumer before paying the tax levied under Subsection (1).

(5)(a) The manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user shall remit the taxes collected in accordance with this section to the commission.

(b) The commission shall deposit revenues generated by the tax imposed by this section into the Electronic Cigarette Substance and Nicotine Product Proceeds Restricted Account created in Section 59-14-807.

Section 9.

Section 59-14-805 is amended to read:

59-14-805 .

Remittance of tax -- Returns -- Invoice required -- Filing requirement-- Exception -- Penalty -- Overpayment.

(1)(a) The manufacturer, jobber, distributor, wholesaler, retailer, consumer, or user that collects the tax imposed on an electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [ device substance, or a prefilled nontherapeutic nicotine device] product shall remit to the commission, in an electronic format approved by the commission:

(i) the tax collected in the previous calendar quarter;

and (ii) the quarterly tax return.

(b) The tax collected and the return are due on or before the last day of April, July, October, and January.

(2)(a) A manufacturer, jobber, distributor, wholesaler, retailer, or any other person selling an electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product to a person other than the ultimate consumer shall furnish the purchaser with an itemized invoice showing:

(i) the seller's name and address;

(ii) the name and address of the purchaser;

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265 (iii) the date of sale;

(iv) the name and price of the product;

and (v) the discount, if any.

(b) The invoice shall show whether the price includes the tax.

(c) The seller and the purchaser shall retain copies of the invoice and make the invoice available for inspection at the request of the commission or the commission's agent for a period of three years following the sale.

(3)(a) A consumer that purchases an untaxed electronic cigarette [substance, prefilled electronic cigarette] product, alternative nicotine product, or a nontherapeutic nicotine [ device substance, or prefilled nontherapeutic nicotine device] product for use or other consumption shall:

(i) file with the commission, on forms prescribed by the commission, a statement showing the quantity and description of the item subject to tax under this part;

and (ii) pay the tax imposed by this part on that item.

(b) The consumer shall file the statement described in Subsection (3)(a)(i) and pay the tax due on or before the last day of the month immediately following the month during which the consumer purchased an untaxed electronic cigarette [substance, prefilled electronic cigarette] product, alternative nicotine [device substance] product, or a nontherapeutic nicotine product[, or prefilled nontherapeutic nicotine device].

(c) A consumer shall maintain records necessary to determine the amount of tax the consumer is liable to pay under this part for a period of three years following the date on which the statement required by this section was filed.

(4) A tourist who imports an untaxed electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product into the state does not need to file the statement described in Subsection (3) or pay the tax if the item is for the tourist's own use or consumption while in this state.

(5) In addition to the tax required by this part, a person shall pay a penalty as provided in Section 59-1-401, plus interest at the rate and in the manner prescribed in Section 59-1-402, if a person subject to this section fails to:

(a) pay the tax prescribed by this part;

(b) pay the tax on time;

or (c) file a return required by this part.

(6) An overpayment of a tax imposed by this part shall accrue interest at the rate and in the - 17 - H.B.

265 Enrolled Copy manner prescribed in Section 59-1-402.

Section 10.

Section 59-14-806 is amended to read:

59-14-806 .

Refund of taxes paid -- Exemption for exported electronic cigarettes and nicotine products.

(1) When an electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product taxed under this chapter is sold and shipped to a regular dealer in those articles in another state, the seller in this state shall be entitled to a refund of the actual amount of the taxes paid, upon condition that the seller in this state:

(a) is a licensed dealer;

(b) signs an affidavit that the electronic cigarette [substance, the prefilled electronic cigarette] product, the alternative nicotine product, or the nontherapeutic nicotine [ device substance, or the prefilled nontherapeutic nicotine device] product was sold and shipped to a regular dealer in those articles in another state;

(c) furnishes, from the purchaser, a written acknowledgment that the purchaser has received the electronic cigarette [substance, the prefilled electronic cigarette] product, the alternative nicotine product, or the nontherapeutic nicotine [device substance, or the prefilled nontherapeutic nicotine device] product;

and (d) reports the name and address of the purchaser.

(2) A wholesaler or distributor in this state that exports an electronic cigarette [substance, a prefilled electronic cigarette] product, an alternative nicotine product, or a nontherapeutic nicotine [device substance, or a prefilled nontherapeutic nicotine device] product to a regular dealer in those articles in another state shall be exempt from the payment of any tax under this chapter upon furnishing proof of the sale and exportation as the commission may require.

Section 11.

Section 59-14-809 is amended to read:

59-14-809 .

Commission study on enforcement and collection of tax.

(1) The commission shall:

(a) implement increased enforcement of the tax imposed by this part;

and (b) study issues related to increased enforcement and compliance with the requirements of this part.

(2) The study shall include a review of:

(a) the impact of increased enforcement on collections of the tax imposed by this part;

- 18 - Enrolled Copy H.B.

265 (b) options for long-term funding of increased enforcement of the tax imposed by this part;

(c) the sufficiency of collections of the tax imposed by this part to fund distributions from the Electronic Cigarette Substance and Nicotine Product Proceeds Restricted Account under Section 59-14-807;

(d) impacts of a lack of federal regulation of electronic cigarettes on enforcement and compliance efforts;

and (e) potential impacts on compliance of changing the incidence of taxation to a tax imposed on the retail sale of an electronic cigarette [substance or prefilled electronic cigarette] product.

(3) The commission shall annually report the commission's findings and recommendations on the study items described in Subsections (2)(a) through [(d)] (e) to the Revenue and Taxation Interim Committee on or before the September interim meeting.

[(4) The commission shall report the commission's findings and recommendations on the study item described in Subsection (2)(e) to the Revenue and Taxation Interim Committee on or before the September 2023 interim meeting.] Section 12.

Section 59-14-810 is amended to read:

59-14-810 .

Electronic cigarette product registry.

(1) Beginning on August 1, 2024, every manufacturer of an electronic cigarette product that is sold in this state, whether directly or through a distributor, wholesaler, retailer, or similar intermediary or intermediaries, shall certify under penalty of perjury on a form and in the manner prescribed by the commission, that[:] the manufacturer agrees to comply with this section and:

[(a) the manufacturer agrees to comply with this section;

and] [(b) the electronic cigarette product is a premarket authorized or pending electronic cigarette product as defined in Section 76-9-1101 and will not be illegal to be sold in the state as of January 1, 2025.] (a) for an electronic cigarette product that contains nicotine, that the product is a premarket authorized or pending electronic cigarette product;

(b) for an electronic cigarette product that is a non-nicotine inhalation product, that the product is approved for sale in interstate commerce by the United States Food and Drug Administration;

or (c) for an electronic cigarette product that is a non-nicotine inhalation substance, that the product is a premarket authorized or pending electronic cigarette product.

- 19 - H.B.

265 Enrolled Copy (2) When submitting the certification a manufacturer shall submit a form that separately lists each electronic cigarette product that is sold in this state.

(3)(a) Each certification form shall include:

(i) the name of the electronic cigarette product, nicotine content level by percentage, and any flavors contained in the product;

(ii) for an electronic cigarette product that contains nicotine:

(A) a copy of the order granting a premarket tobacco product application of the electronic cigarette product by the United States Food and Drug Administration under 21 U.S.C.

Sec.

387j(c)(1)(A)(i);

or (B) evidence that the premarket tobacco product application for the electronic cigarette product or nicotine product was submitted to the United States Food and Drug Administration before September 9, 2020, and a final authorization or order has not yet taken effect;

(iii) for an electronic cigarette product that is a non-nicotine inhalation product, evidence that the product is approved for sale in interstate commerce by the United States Food and Drug Administration;

(iv) for an electronic cigarette product that is a non-nicotine inhalation substance:

(A) a copy of the order granting a premarket tobacco product application of the electronic cigarette product by the United States Food and Drug Administration under 21 U.S.C.

Sec.

387j(c)(1)(A)(i);

or (B) evidence that the premarket tobacco product application for the electronic cigarette product was submitted to the United States Food and Drug Administration before September 9, 2020, and a final authorization or order has not yet taken effect;

[(iii)] (v) a nonrefundable $1,000 fee for an electronic cigarette product that is being added to the registry in the first instance;

and [(iv)] (vi) information described in Subsection (10) if applicable.

(b) The commission shall make the materials submitted under Subsection (3)(a) available to the Department of Health and Human Services for review and approval.

(c) A manufacturer required to submit a certification form under this section shall notify the commission and the Department of Health and Human Services in a manner prescribed by the commission within 30 days of any material change making the certification form no longer accurate, including:

(i) the issuance or denial of a marketing authorization or other order by the United - 20 - Enrolled Copy H.B.

265 States Food and Drug Administration under 21 U.S.C.

Sec.

387j;

or (ii) any other order or action by the United States Food and Drug Administration or any court that affects the ability of the electronic cigarette product to be introduced or delivered into interstate commerce for commercial distribution in the United States.

(d) On or before January 31 of each year and in a manner prescribed by the commission, a manufacturer shall:

(i) recertify that the information contained in the certification is correct and accurate;

(ii) correct or amend information if necessary;

and (iii) pay a $250 nonrefundable fee for each electronic cigarette product on the registry that is manufactured by the manufacturer.

(e) A manufacturer may amend a certification, including to add additional electronic cigarette products to the registry, if all requirements of this section are met.

(f) The commission shall:

(i) provide an electronic notification to a manufacturer that has not submitted a recertification under Subsection (3)(d);

and (ii) remove a manufacturer or an electronic cigarette product that is not recertified from the registry by March 15.

(4)(a) The Department of Health and Human Services shall review materials described in Subsection (3)(a) and notify the commission regarding whether an electronic cigarette product should be included in the registry.

(b) On or before October 1, 2024, the commission shall make publicly available on the commission's website a registry that lists each electronic cigarette product manufacturer and each electronic cigarette product for which certification forms have been approved by the Department of Health and Human Services.

(c) An electronic cigarette product may not be listed on the registry unless the Department of Health and Human Services determines the requirements of Subsection (3)(a) are met.

(d) An electronic cigarette product that contains a cannabinoid may not be listed on the registry.

(5)(a) If the Department of Health and Human Services obtains information that an electronic cigarette product should not be listed in the registry, the Department of Health and Human Services shall provide the manufacturer notice and an opportunity to cure deficiencies before notifying the commission to remove the manufacturer or - 21 - H.B.

265 Enrolled Copy products from the registry.

(b) Except as provided in Subsection (5)(c), the Department of Health and Human Services shall comply with Title 63G, Chapter 4, Administrative Procedures Act, before notifying the commission to remove an electronic cigarette product or manufacturer from the registry.

(c) Subsection (5)(b) does not apply to a manufacturer failing:

(i) to decertify an electronic cigarette product;

(ii) to provide fees and documentation described in Subsection (3)(a) or (3)(d);

or (iii) to comply with Subsection (10).

(6)(a) If a product is removed from the registry, each retailer, distributor, and wholesaler shall have 30 days from the day on which the product is removed from the registry to remove the product from any inventory and return the product to the manufacturer for disposal.

(b) After the period described in Subsection (6)(a), any electronic cigarette product of a manufacturer identified in the notice of removal are contraband and are subject to penalties under Subsection (8) and seizure, forfeiture, and destruction under Section 26A-1-131.

(7)(a) Beginning on January 1, 2025, a person may not sell or offer for retail sale an electronic cigarette product in this state that is not included in the registry.

(b) A manufacturer may not sell, either directly or through a distributor, wholesaler, retailer, or similar intermediary or intermediaries, an electronic cigarette product in this state that is not included in the registry.

(8)(a) A wholesaler, distributor, or retailer who sells or offers for retail sale an electronic cigarette product in this state that is not included in the registry shall be subject to a civil penalty of:

(i) $1,000 for each product offered for sale in violation of this section;

and (ii) $100 per day until the offending product is removed from the market or until the offending product is properly listed on the registry.

(b) The commission shall suspend the person's license issued under Section 59-14-803 for a violation of Subsection (8)(a) as follows:

(i) for a second violation within a 12-month period, at least 14 days;

(ii) for a third violation within a 12-month period, at least 60 days;

or (iii) for a fourth violation within a 12-month period, at least one year.

(c) A manufacturer whose electronic cigarette products are not listed in the registry and - 22 - Enrolled Copy H.B.

265 are sold in this state, whether directly or through a distributor, wholesaler, retailer, or similar intermediary or intermediaries, is subject to a civil penalty of:

(i) $1,000 for each product offered for retail sale in violation of this section;

and (ii) $100 per day until the offending product is removed from the market or until the offending product is properly listed on the registry.

(d) A manufacturer that falsely represents any information required by a certification form described in this section shall be guilty of a class C misdemeanor for each false representation.

(e) A repeated violation of this section shall constitute a deceptive act or practice as provided in Sections 13-11-4 and 13-11a-3 and shall be subject to any remedies or penalties available for a violation of those sections.

(9)(a) To assist in ensuring compliance and enforcement of this section and Section 26A-1-131, the commission shall disclose to the following entities, upon request, any information obtained under this section:

(i) the Department of Health and Human Services;

(ii) a local health department;

or (iii) the attorney general.

(b) The commission and attorney general shall share with each other information received under this section, or corresponding laws of other states.

(10)(a)[(i)] The commission may not list a nonresident manufacturer of an electronic cigarette product in the registry unless:

[(A)] (i) the nonresident manufacturer has registered to do business in the state as a foreign corporation or business entity;

or [(B)] (ii) the nonresident manufacturer appoints and maintains without interruption the services of an agent in this state to receive any service of process on behalf of the manufacturer.

(b) The nonresident manufacturer shall provide the name, address, and telephone number of the agent to the commission.

(c)(i) A nonresident manufacturer shall provide notice to the commission 30 days before the termination of the authority of an agent and shall further provide proof to the satisfaction of the commission of the appointment of a new agent no less than five calendar days prior to the termination of an existing agent appointment.

(ii) In the event an agent terminates an agency appointment, the manufacturer shall notify the commission of the termination within five calendar days and shall - 23 - H.B.

265 Enrolled Copy include proof to the satisfaction of the commission of the appointment of a new agent.

(11) Before May 31 of each year, the commission and the Department of Health and Human Services shall provide a report to the Revenue and Taxation Interim Committee and the Health and Human Services Interim Committee regarding:

(a) the status of the registry;

(b) manufacturers and products included in the registry;

(c) revenue and expenditures related to administration of this section;

and (d) enforcement activities undertaken under this section and Section 26A-1-131.

(12) All fees and penalties collected under this section shall be used for administration and enforcement of this section and Section 26A-1-131.

(13) The commission, in consultation with the Department of Health and Human Services, may make rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to implement this section.

Section 13.

Section 76-9-1101 is amended to read:

76-9-1101 .

Definitions.

As used in this part:

(1)(a) "Alternative nicotine product" means a product, other than a cigarette, a counterfeit cigarette, an electronic cigarette product, a nontherapeutic nicotine product, or a tobacco product, that:

(i) contains nicotine;

(ii) is intended for human consumption;

(iii) is not purchased with a prescription from a licensed physician;

and (iv) is not approved by the United States Food and Drug Administration as nicotine replacement therapy.

(b) "Alternative nicotine product" includes:

(i) pure nicotine;

(ii) snortable nicotine;

(iii) dissolvable salts, orbs, pellets, sticks, or strips;