Bill Description: House Bill 884 would heavily regulate and tax alternative nicotine products and vapor products, impose permitting requirements on sellers and manufacturers, limit sales, and create penalties.
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Does it give government any new, additional, or expanded power to prohibit, restrict, or regulate activities in the free market? Conversely, does it eliminate or reduce government intervention in the market?
House Bill 884 is a lengthy, 24-page bill to define, regulate, tax, and restrict alternative nicotine products and vapor products.
The bill would define an "alternative nicotine product" as a “noncombustible product that contains nicotine or a nicotine analog, whether natural or synthetic, but does not contain tobacco and is intended for human consumption, whether chewed, absorbed, dissolved, ingested, or by other means.”
It would define a “vapor product" means any “liquid, substance, or mixture, whether or not containing nicotine, that is designed, manufactured, or marketed for use in an electronic smoking device to produce vapor, including any pre-filled cartridge, pod, vapor solution, vapor cartridge, or other container of liquid or other form that is intended to be used with or in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or device.”
Among other regulations, sellers would be prohibited from selling alternative nicotine products to adults under the age of 21.
It would be illegal to sell alternative nicotine products “by any means other than vendor-assisted sales where the customer has no access to the product except through the assistance of the seller,” including from “vending machines or self-service displays.”
There are many other regulations in the bill as well, including on packaging and labeling, signage, samples, delivery, recordkeeping, and other matters.
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Does it increase barriers to entry into the market? Examples include occupational licensure, the minimum wage, and restrictions on home businesses. Conversely, does it remove barriers to entry into the market?
The bill would create numerous barriers to market entry, including requiring any seller or distributor of alternative nicotine products to obtain a permit from the Idaho Department of Health and Welfare.
Permits could be denied or revoked for many reasons, including past convictions for unrelated criminal offenses.
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The bill would also add a new section of code (39-5704B) that would require “every manufacturer of alternative nicotine products, tobacco products, and electronic smoking devices that are sold in this state, whether directly or through a distributor, retailer, or similar intermediary” to obtain a “manufacturer permit” from the department. This is an unusual requirement, expecting an out-of-state manufacturer to obtain a permit from the Idaho government to ship products to retailers in the state.
The bill doubles down on this micromanagement, saying explicitly, “Distributors and retailers shall purchase alternative nicotine products, tobacco products, and electronic smoking devices only from a manufacturer or distributor who has obtained a permit under chapter 25, title 63, Idaho Code, and shall verify that such seller holds a valid permit before making a purchase.”
It further attempts to restrict out-of-state manufacturers by saying, “Any nonresident or foreign manufacturer of electronic smoking devices that has not registered to do business in this state as a foreign corporation or business entity shall, as a condition to receiving an electronic smoking device permit under this chapter, appoint and continually engage without interruption the services of an agent in this state to act as agent for the service of process on whom all process, and any action or proceeding against such manufacturer concerning or arising out of the enforcement of this chapter, may be served in any manner authorized by law. Such service shall constitute legal and valid service of process on the manufacturer. The manufacturer shall provide the name, address, telephone number, and proof of the appointment and availability of such agent to the department.”
The bill goes on to impose a bonding requirement, saying, “Any nonresident or foreign manufacturer of electronic smoking devices that has not registered to do business in the state as a foreign corporation or business entity shall, as a condition precedent to receiving an electronic smoking device permit, submit to the department a surety bond or other cash security payable to the state in the amount of twenty-five thousand dollars ($25,000). The bond shall be posted by a corporate surety located within the United States. Whenever it is the opinion of the department that the bond given by a permittee is inadequate in amount to fully protect the state, the department shall require an additional bond in such amount as the department deems sufficient.”
It seems like this bill may be intended to discourage manufacturers from doing business in Idaho at all, rather than simply trying to regulate them.
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Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?
In addition to the fees that accompany the bill’s permitting requirements, the bill would create a section (63-2552C) specifically to impose new taxes on vapor products and alternative nicotine products.
Vapor products would be taxed at five cents per fluid milliliter, and alternative nicotine products would be taxed at a rate of 25 cents per container that includes between one and 20 units of product.
The bill’s fiscal note estimates that the bill’s taxes and fees would transfer $7 million from individuals and businesses to the state.
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Does it directly or indirectly create or increase penalties for victimless crimes or non-restorative penalties for non-violent crimes? Conversely, does it eliminate or decrease penalties for victimless crimes or non-restorative penalties for non-violent crimes?
The bill includes extensive enforcement provisions, including escalating fines, permit suspensions and revocations, the seizure and destruction of goods deemed in violation, and criminal prosecution.
The bill also says “law enforcement agencies may conduct random, unannounced inspections at locations where alternative nicotine products” are sold.
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