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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of cigarettes, tobacco products, and |
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e-cigarettes and the administration of taxes imposed on the sale or |
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use of certain of those products; requiring a permit; imposing a |
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fee; providing administrative penalties. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle G, Title 2, Health and Safety Code, is |
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amended by adding Chapter 147 to read as follows: |
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CHAPTER 147. E-CIGARETTE RETAILER PERMITS |
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Sec. 147.0001. DEFINITIONS. In this chapter: |
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(1) "E-cigarette" has the meaning assigned by Section |
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161.081. |
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(2) "E-cigarette retailer" means a person who engages |
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in the business of selling e-cigarettes to consumers, including a |
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person who sells e-cigarettes to consumers through a marketplace. |
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(3) "Marketplace" has the meaning assigned by Section |
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151.0242, Tax Code. |
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(4) "Permit holder" means a person who obtains a |
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permit under Section 147.0005. |
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Sec. 147.0002. INAPPLICABILITY TO CERTAIN PRODUCTS. This |
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chapter does not apply to a product described by Section 161.0815. |
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Sec. 147.0003. RULES. The comptroller may adopt rules to |
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implement this chapter, including rules exempting a person who |
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sells e-cigarettes to consumers through a marketplace from the |
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requirements of this chapter. |
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Sec. 147.0004. E-CIGARETTE RETAILER PERMIT REQUIRED. (a) |
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A person may not engage in business as an e-cigarette retailer in |
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this state unless the person has been issued a permit from the |
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comptroller. A person shall obtain a permit for each place of |
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business the person owns or operates at which sales of e-cigarettes |
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are made. |
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(b) The comptroller shall prescribe the form and content of |
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an application for a permit and provide the form on request. |
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(c) The applicant shall accurately complete all information |
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required by the application and provide the comptroller with |
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additional information the comptroller considers necessary. |
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(d) The comptroller may require each corporation, |
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association, joint venture, syndicate, partnership, or |
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proprietorship to provide: |
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(1) financial information regarding the applicant; |
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and |
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(2) the identity of each officer, director, |
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stockholder owning 10 percent or more of the outstanding stock, |
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partner, member, owner, or managing employee. |
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(e) Each applicant that applies for a permit to sell |
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e-cigarettes from a vehicle must provide the make, model, vehicle |
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identification number, registration number, and any other |
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information concerning the vehicle the comptroller requires. |
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(f) All financial information provided under this section |
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is confidential and not subject to Chapter 552, Government Code. |
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(g) Permits for engaging in business as an e-cigarette |
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retailer are governed exclusively by the provisions of this code. |
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Sec. 147.0005. ISSUANCE OF PERMIT. (a) The comptroller |
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shall issue a permit to an applicant if the comptroller: |
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(1) has received an application and fee; |
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(2) does not reject the application and deny the |
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permit under Section 147.0006; and |
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(3) determines that issuing the permit will not |
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jeopardize the administration and enforcement of this chapter. |
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(b) The permit shall be issued for a designated place of |
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business, except as provided by Section 147.0009. |
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(c) The permits are nonassignable. |
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(d) The permit must indicate the type of permit and |
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authorize the sale of e-cigarettes in this state. The permit must |
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show that it is revocable and shall be forfeited or suspended if the |
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conditions of issuance, provisions of this chapter, or rules of the |
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comptroller are violated. |
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Sec. 147.0006. DENIAL OF PERMIT. The comptroller may |
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reject an application and deny a permit if the comptroller finds, |
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after notice and opportunity for hearing, any of the following: |
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(1) the premises where business will be conducted are |
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not adequate to protect the e-cigarettes; or |
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(2) the applicant or managing employee, or if the |
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applicant is a corporation, an officer, director, manager, or any |
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stockholder who holds directly or through family or partner |
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relationship 10 percent or more of the corporation's stock, or, if |
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the applicant is a partnership, a partner or manager: |
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(A) has failed to disclose any information |
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required by Sections 147.0004(c), (d), and (e), including previous |
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business experience, financial condition of the applicant, present |
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or previous business affiliations, previous employment, and any |
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conviction of a felony, or has made a false statement in the |
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application; or |
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(B) has previously violated provisions of this |
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chapter. |
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Sec. 147.0007. PERMIT PERIOD; FEES. (a) A permit required |
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by this chapter expires on the last day of May of each even-numbered |
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year. |
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(b) An application for a permit required by this chapter |
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must be accompanied by a fee of: |
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(1) one-half of the amount of the fee for a retailer's |
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permit required by Section 154.111(b), Tax Code, if the applicant |
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holds a valid retailer's permit under Section 154.101, 154.102, or |
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155.041, Tax Code; or |
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(2) the amount of the fee for a retailer's permit |
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required by Section 154.111(b), Tax Code. |
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(c) For a new or renewal permit required by Section |
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147.0004, the comptroller shall prorate the fee according to the |
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number of months remaining during the period that the permit is to |
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be in effect. |
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(d) A person who does not obtain a renewal permit in a timely |
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manner must pay a late fee of $50 in addition to the application fee |
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for the permit. |
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(e) If on the date of issuance a permit will expire within |
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three months, the comptroller may collect the prorated permit fee |
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or the fee for the current period and, with the consent of the |
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permit holder, may collect the fee for the next permit period and |
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issue a permit or permits for both periods, as applicable. |
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(f) A person issued a permit for a place of business that |
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permanently closes before the permit expiration date is not |
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entitled to a refund of the permit fee. |
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Sec. 147.0008. PAYMENT FOR PERMITS. (a) An applicant for a |
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permit required by Section 147.0004 shall send the required fee |
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with the application. |
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(b) The payment must be made in cash or by money order, |
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check, or credit card. |
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(c) The comptroller may not issue a permit in exchange for a |
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check until after the comptroller receives full payment on the |
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check. |
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Sec. 147.0009. DISPLAY OF PERMIT. (a) A permit holder |
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shall keep the permit on public display at the place of business for |
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which the permit was issued. |
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(b) A permit holder who has a permit assigned to a vehicle |
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shall post the permit in a conspicuous place on the vehicle. |
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Sec. 147.0010. REVENUE. Revenue from the sale of |
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e-cigarette retailer's permits shall be deposited to the general |
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revenue fund and may be appropriated only as provided by this |
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section. The money may be appropriated first to the comptroller for |
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administering: |
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(1) permitting of retailers under this chapter and |
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Chapters 154 and 155, Tax Code; and |
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(2) disciplinary actions taken under Section |
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161.0901. |
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Sec. 147.0011. FINAL SUSPENSION OR REVOCATION OF PERMIT. |
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(a) The comptroller may revoke or suspend a permit holder's permit |
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if the comptroller finds, after notice and hearing as provided by |
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this section, that the permit holder violated this chapter or a rule |
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adopted under this chapter. |
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(b) If the comptroller intends to suspend or revoke a |
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permit, the comptroller shall provide the permit holder with |
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written notice that includes a statement: |
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(1) of the reason for the intended revocation or |
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suspension; |
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(2) that the permit holder is entitled to a hearing by |
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the comptroller on the proposed suspension or revocation; and |
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(3) of the date, time, and place of the hearing. |
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(c) The comptroller shall deliver the written notice by |
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personal service or by mail to the permit holder's mailing address |
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as it appears in the comptroller's records. Service by mail is |
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complete when the notice is deposited with the United States Postal |
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Service. |
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(d) The comptroller shall give the permit holder notice |
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before the 10th day before the final hearing. |
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(e) A permit holder may appeal the comptroller's decision to |
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a district court in Travis County not later than the 30th day after |
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the date the comptroller's decision becomes final. |
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(f) A person whose permit is suspended or revoked may not |
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sell, offer for sale, or distribute e-cigarettes from the place of |
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business to which the permit applied until a new permit is granted |
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or the suspension is removed. |
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Sec. 147.0012. SUMMARY SUSPENSION OF PERMIT. (a) The |
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comptroller may suspend a permit holder's permit without notice or |
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a hearing for the permit holder's failure to comply with this |
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chapter or a rule adopted under this chapter if the permit holder's |
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continued operation constitutes an immediate and substantial |
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threat. |
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(b) If the comptroller summarily suspends a permit holder's |
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permit, proceedings for a preliminary hearing before the |
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comptroller or the comptroller's representative must be initiated |
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simultaneously with the summary suspension. The preliminary |
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hearing shall be set for a date not later than the 10th day after the |
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date of the summary suspension, unless the parties agree to a later |
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date. |
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(c) At the preliminary hearing, the permit holder must show |
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cause why the permit should not remain suspended pending a final |
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hearing on suspension or revocation. |
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(d) Chapter 2001, Government Code, does not apply to a |
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summary suspension under this section. |
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(e) To initiate a proceeding to suspend summarily a permit |
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holder's permit, the comptroller shall serve notice on the permit |
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holder informing the permit holder of the right to a preliminary |
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hearing before the comptroller or the comptroller's representative |
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and of the time and place of the preliminary hearing. The notice |
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must be personally served on the permit holder or an officer, |
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employee, or agent of the permit holder or sent by certified or |
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registered mail, return receipt requested, to the permit holder's |
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mailing address as it appears in the comptroller's records. The |
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notice must state the alleged violations that constitute the |
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grounds for summary suspension. The suspension is effective at the |
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time the notice is served. If notice is served in person, the |
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permit holder shall immediately surrender the permit to the |
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comptroller. If notice is served by mail, the permit holder shall |
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immediately return the permit to the comptroller. |
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(f) Section 147.0011, governing hearings for final |
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suspension or revocation of a permit under this chapter, governs a |
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final administrative hearing. |
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Sec. 147.0013. HEARINGS. Unless otherwise provided by this |
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chapter, the comptroller shall conduct all hearings required by |
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this chapter in accordance with Chapter 2001, Government Code. The |
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comptroller may designate one or more representatives to conduct |
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the hearings and may prescribe the rules of procedure governing the |
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hearings. |
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SECTION 2. Sections 161.081(1-a), (2), and (4), Health and |
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Safety Code, are amended to read as follows: |
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(1-a) "E-cigarette" means an electronic cigarette or |
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any other device that simulates smoking by using a mechanical |
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heating element, battery, or electronic circuit to deliver nicotine |
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or other substances to the individual inhaling from the device or a |
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consumable liquid solution or other material aerosolized or |
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vaporized during the use of an electronic cigarette or other device |
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described by this subdivision, regardless of whether the liquid or |
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other material contains nicotine. The term does not include a |
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prescription medical device unrelated to the cessation of smoking. |
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The term includes: |
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(A) a device described by this subdivision |
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regardless of whether the device is manufactured, distributed, or |
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sold as an e-cigarette, e-cigar, or e-pipe or under another product |
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name or description; and |
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(B) a component, part, or accessory for the |
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device, regardless of whether the component, part, or accessory is |
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sold separately from the device. |
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(2) "Permit holder" has the meaning assigned by |
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Section 147.0001 of this code or Section 154.001 or 155.001, Tax |
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Code, as applicable. |
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(4) "Retailer" means a person who engages in the |
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practice of selling cigarettes, e-cigarettes, or tobacco products |
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to consumers and includes the owner of a coin-operated cigarette, |
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e-cigarette, or tobacco product vending machine. The term includes |
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a retailer as [that term is] defined by Section 154.001 or 155.001, |
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Tax Code, and an e-cigarette retailer as defined by Section |
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147.0001 of this code, as applicable. |
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SECTION 3. Section 161.083(d), Health and Safety Code, is |
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amended to read as follows: |
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(d) Notwithstanding any other provision of law, a violation |
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of this section is not a violation of this subchapter for purposes |
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of Section 161.0901 [154.1142 or 155.0592, Tax Code]. |
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SECTION 4. Subchapter H, Chapter 161, Health and Safety |
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Code, is amended by adding Section 161.0901 to read as follows: |
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Sec. 161.0901. DISCIPLINARY ACTION AGAINST CIGARETTE, |
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E-CIGARETTE, AND TOBACCO PRODUCT RETAILERS. (a) A retailer is |
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subject to disciplinary action as provided by this section if an |
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agent or employee of the retailer commits an offense under this |
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subchapter or Subchapter K. |
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(b) If the comptroller finds, after notice and an |
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opportunity for a hearing as provided by Chapter 2001, Government |
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Code, that a permit holder has violated this subchapter or |
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Subchapter K at a place of business for which a permit is issued, |
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the comptroller may suspend the permit for that place of business |
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and administratively assess a fine as follows: |
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(1) if the permit holder has not been found to have |
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violated this subchapter or Subchapter K at that place of business |
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during the 24-month period preceding the violation, the comptroller |
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may require the permit holder to pay a fine in an amount not to |
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exceed $1,000; |
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(2) if the permit holder has been found to have |
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violated this subchapter or Subchapter K at that place of business |
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once during the 24-month period preceding the violation, the |
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comptroller may require the permit holder to pay a fine in an amount |
|
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not to exceed $2,000; and |
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(3) if the permit holder has been found to have |
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violated this subchapter or Subchapter K at that place of business |
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at least twice during the 24-month period preceding the violation, |
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the comptroller may: |
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(A) require the permit holder to pay a fine in an |
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amount not to exceed $3,000; and |
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(B) suspend the permit for that place of business |
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for not more than five days. |
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(c) Except as provided by Subsection (e), if the permit |
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holder has been found to have violated this subchapter or |
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Subchapter K on four or more previous and separate occasions at the |
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same place of business during the 24-month period preceding the |
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violation, the comptroller shall revoke the permit issued under |
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Chapter 147 of this code or Chapter 154 or 155, Tax Code, as |
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applicable. If the permit holder does not hold a permit under |
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Chapter 147 of this code or Chapter 154 or 155, Tax Code, the |
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comptroller shall revoke the permit issued under Section 151.201, |
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Tax Code. |
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(d) A permit holder whose permit has been revoked under this |
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section may not apply for a permit for the same place of business |
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before the expiration of six months after the effective date of the |
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revocation. |
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(e) For purposes of this section, the comptroller may |
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suspend a permit but may not revoke the permit under Subsection (c) |
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if the comptroller finds that: |
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(1) the employer has not violated this subchapter or |
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Subchapter K more than seven times at the place of business for |
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which the permit is issued in the 48-month period preceding the |
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violation in question; |
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(2) the employer requires its employees to attend a |
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comptroller-approved seller training program; |
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(3) the employees have actually attended a |
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comptroller-approved seller training program; and |
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(4) the employer has not directly or indirectly |
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encouraged the employees to violate the law. |
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(f) The comptroller may adopt rules to implement this |
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section. |
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SECTION 5. The heading to Subchapter K, Chapter 161, Health |
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and Safety Code, is amended to read as follows: |
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SUBCHAPTER K. PROHIBITION OF CERTAIN CIGARETTE, E-CIGARETTE, OR |
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TOBACCO PRODUCT ADVERTISING; FEE |
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SECTION 6. Section 161.121, Health and Safety Code, is |
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amended by adding Subdivision (2-a) to read as follows: |
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(2-a) "E-cigarette" has the meaning assigned by |
|
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Section 161.081. |
|
|
SECTION 7. Sections 161.122(a), (b), and (e), Health and |
|
|
Safety Code, are amended to read as follows: |
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(a) Except as provided by this section, a sign containing an |
|
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advertisement for cigarettes, e-cigarettes, or tobacco products |
|
|
may not be located closer than 1,000 feet to a church or school. |
|
|
(b) The measurement of the distance between the sign |
|
|
containing an advertisement for cigarettes, e-cigarettes, or |
|
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tobacco products and an institution listed in Subsection (a) is |
|
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from the nearest property line of the institution to a point on a |
|
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street or highway closest to the sign, along street lines and in |
|
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direct lines across intersections. |
|
|
(e) Subsection (a) does not apply to a sign containing an |
|
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advertisement for cigarettes, e-cigarettes, or tobacco products |
|
|
that, before September 1, 1997, was located closer than 1,000 feet |
|
|
to a church or school but that was not located closer than 500 feet |
|
|
to the church or school. |
|
|
SECTION 8. Section 161.123(a), Health and Safety Code, is |
|
|
amended to read as follows: |
|
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(a) A purchaser of advertising is liable for and shall remit |
|
|
to the comptroller a fee that is 10 percent of the gross sales price |
|
|
of any outdoor advertising of cigarettes, e-cigarettes, and tobacco |
|
|
products in this state. |
|
|
SECTION 9. Section 111.00455(b), Tax Code, is amended to |
|
|
read as follows: |
|
|
(b) The following are not contested cases under Subsection |
|
|
(a) and Section 2003.101, Government Code: |
|
|
(1) a show cause hearing or any hearing not related to |
|
|
the collection, receipt, administration, or enforcement of the |
|
|
amount of a tax or fee imposed, or the penalty or interest |
|
|
associated with that amount, except for a hearing under Section |
|
|
151.157(f), 151.1575(c), or 151.712(g) of this code or Section |
|
|
161.0901, Health and Safety Code[, 154.1142, or 155.0592]; |
|
|
(2) a property value study hearing under Subchapter M, |
|
|
Chapter 403, Government Code; |
|
|
(3) a hearing in which the issue relates to: |
|
|
(A) Chapters 72-75, Property Code; |
|
|
(B) forfeiture of a right to do business; |
|
|
(C) a certificate of authority; |
|
|
(D) articles of incorporation; |
|
|
(E) a penalty imposed under Section 151.703(d); |
|
|
(F) the refusal or failure to settle under |
|
|
Section 111.101; or |
|
|
(G) a request for or revocation of an exemption |
|
|
from taxation; and |
|
|
(4) any other hearing not related to the collection, |
|
|
receipt, administration, or enforcement of the amount of a tax or |
|
|
fee imposed, or the penalty or interest associated with that |
|
|
amount. |
|
|
SECTION 10. Section 154.1135(b), Tax Code, is amended to |
|
|
read as follows: |
|
|
(b) The payment must be made in cash or by money order, [or] |
|
|
check, or credit card. |
|
|
SECTION 11. Section 154.121(b), Tax Code, is amended to |
|
|
read as follows: |
|
|
(b) Revenue from the sale of retailer's permits shall be |
|
|
deposited to the general revenue fund and may be appropriated only |
|
|
as provided by this section. The money may be appropriated first to |
|
|
the comptroller for administering: |
|
|
(1) permitting [administration of licensing] of |
|
|
retailers under this chapter, Chapter [or Chapter] 155 of this |
|
|
code, and Chapter 147, Health and Safety Code; and |
|
|
(2) disciplinary actions taken under Section |
|
|
161.0901, Health and Safety Code. |
|
|
SECTION 12. Section 155.050(b), Tax Code, is amended to |
|
|
read as follows: |
|
|
(b) The payment must be made in cash or by money order, [or] |
|
|
check, or credit card. |
|
|
SECTION 13. Section 155.058(b), Tax Code, is amended to |
|
|
read as follows: |
|
|
(b) Revenue from the sale of retailer's permits shall be |
|
|
deposited to the general revenue fund and may be appropriated only |
|
|
as provided by this section. The money may be appropriated first to |
|
|
the comptroller for administering: |
|
|
(1) permitting [administration of licensing] of |
|
|
retailers under this chapter, Chapter [or Chapter] 154 of this |
|
|
code, and Chapter 147, Health and Safety Code; and |
|
|
(2) disciplinary actions taken under Section |
|
|
161.0901, Health and Safety Code. |
|
|
SECTION 14. (a) Section 161.124, Health and Safety Code, is |
|
|
repealed. |
|
|
(b) The following provisions of the Tax Code are repealed: |
|
|
(1) Section 154.1142; |
|
|
(2) Section 154.1143; |
|
|
(3) Section 155.0592; and |
|
|
(4) Section 155.0593. |
|
|
SECTION 15. Section 161.0901, Health and Safety Code, as |
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added by this Act, applies only to a violation that occurs on or |
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after the effective date of this Act. A violation that occurs |
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before the effective date of this Act is governed by the law in |
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effect on the date the violation occurred, and the former law is |
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continued in effect for that purpose. |
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SECTION 16. (a) Notwithstanding Section 147.0004, Health |
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and Safety Code, as added by this Act, a person is not required to |
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hold a permit under that section to engage in business as a retailer |
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of e-cigarettes in this state until January 1, 2022. |
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(b) The comptroller of public accounts shall prescribe the |
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form and content of an application for a permit under Section |
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147.0004, Health and Safety Code, as added by this Act, and begin |
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accepting applications for the permit not later than October 1, |
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2021. |
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SECTION 17. This Act takes effect September 1, 2021. |