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Excise on Vapor Products and E-cigarettes 8

SECTION 33.   Said chapter 64C of the General Laws, as so appearing, is hereby amended by striking out section 7B and inserting in place thereof the following section:-
Section 7B. (a) As used in this section the following words shall, unless the context clearly requires otherwise, have the following meanings:-
''Cigar'', any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco; provided, however, that cigar shall not include any roll of tobacco that is a cigarette as defined in section 1.
''Cigar or vapor product distributor'', (i) any person who imports, or causes to be imported, into the commonwealth cigars, smoking tobacco or vapor products for sale or who manufactures cigars, smoking tobacco or vapor products in the commonwealth, and (ii) any person within or without the commonwealth who is authorized by the commissioner to make returns and pay the excise on cigars, smoking tobacco or vapor products sold, shipped or delivered by him to any person in the commonwealth.
''Cigar or vapor product retailer'', any person who sells or furnishes cigars, smoking tobacco or vapor products to consumers for individual use; provided, however, said cigars, smoking tobacco or vapor products shall not be used for the purpose of resale.
"Electronic cigarette", any electronic device, whether for one-time use or reusable, that can be used to deliver nicotine or other substances to the person inhaling from the device, including electronic cigars, electronic cigarillos, electronic pipes, electronic nicotine delivery vaping pens, hookah pens or other similar devices that rely on vaporization or aerosolization; provided, however, that "electronic cigarette" includes any component, part or accessory of a device that is used during the operation of the device, even if sold separately; provided further, however, that "electronic cigarette" shall not include a product that has been approved by the United States Food and Drug Administration for the sale of or use as a tobacco cessation product and is marketed and sold exclusively for the approved purpose.
''Person'', a natural person, corporation, association, partnership or other legal entity.
''Smoking tobacco'', roll-your-own tobacco and pipe tobacco and other kinds and forms of tobacco suitable for smoking.
''Taxed cigars, smoking tobacco or vapor products'', cigars, smoking tobacco or vapor products upon which the excise has been paid in full by the date on which payment is due, and with respect to which the return has been completed, signed and filed with the commissioner by the date on which the return is due, in accordance with this section and with section 16 of chapter 62C.
''Untaxed cigars, smoking tobacco or vapor products'', cigars, smoking tobacco or vapor products upon which the excise has not been paid in full by the date on which payment is due, or with respect to which the return has not been completed, signed and filed with the commissioner by the date on which the return is due, in accordance with this section and with section 16 of chapter 62C.
"Vapor product", any noncombustible liquid or gel containing nicotine that is manufactured into a finished product for use in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, electronic nicotine delivery vaping pen, hookah pen or other similar device that relies on vaporization or aerosolization; provided, however, that "vapor product" shall not include a product that has been approved by the United States Food and Drug Administration for the sale of or use as a tobacco cessation product and is marketed and sold exclusively for the approved purpose.
''Wholesale price'', (i) in the case of a manufacturer of cigars, smoking tobacco or vapor products, the price set for such products or, if no price has been set, the wholesale value of these products; (ii) in the case of a cigar or vapor products distributor who is not a manufacturer of cigars, smoking tobacco or vapor products, the price at which the cigar or vapor product distributor purchased these products; or (iii) in the case of a cigar or vapor product retailer or a consumer, the price at which he purchased these products.
(b) An excise shall be imposed on all cigars, smoking tobacco and vapor products held in the commonwealth at the rate of 40 per cent of the wholesale price of such products. This excise shall be imposed on cigar or vapor product distributors at the time cigars, smoking tobacco or vapor products are manufactured, purchased, imported, received or acquired in the commonwealth. This excise shall not be imposed on any cigars, tobacco products or vapor products that (i) are exported from the commonwealth; or (ii) are not subject to taxation by the commonwealth pursuant to any law of the United States.
(c) Every cigar or vapor product retailer shall be liable for the collection of the excise on all cigars, smoking tobacco or vapor products in his possession at any time, upon which the excise has not been paid by a cigar or vapor product distributor, and the failure of any cigar or vapor product retailer to produce or exhibit to the commissioner or his authorized representative, upon demand, an invoice by a cigar or vapor product distributor for any cigars, smoking tobacco or vapor products in his possession, shall be presumptive evidence that the excise thereon has not been paid and that such cigar or vapor product retailer is liable for the collection of the excise thereon.
(d) The amount of the excise advanced and paid by a cigar or vapor product distributor or cigar or vapor product retailer, as provided in this section, shall be added to and collected as part of, the sales price of the cigars, smoking tobacco or vapor products.
(e)(1) A cigar or vapor product distributor shall be liable for the payment of the excise on cigars, smoking tobacco or vapor product that he imports or causes to be imported into the commonwealth or that he manufactures in the commonwealth, and every cigar or vapor product distributor authorized by the commissioner to make returns and pay the excise on cigars, smoking tobacco or vapor products sold, shipped or delivered by him to any person in the commonwealth shall be liable for the collection and payment of the excise on all cigars, smoking tobacco and vapor products sold, shipped or delivered.
(2) Every person who does not acquire untaxed cigars, smoking tobacco or vapor products, but acquires taxed cigars, smoking tobacco or vapor products for sale at retail, shall not be licensed as a cigar or vapor product distributor under this section, but shall be required, during the period that such person is a retailer of taxed cigars, smoking tobacco or vapor products, to be licensed as a cigar or vapor product retailer.
(f) A person outside the commonwealth who ships or transports cigars, smoking tobacco or vapor products to cigar or vapor product retailers in the commonwealth, to be sold by those cigar or vapor product retailers, shall apply for a license as a nonresident cigar or vapor product distributor and, if the commissioner issues such a license to him, he shall thereafter be subject to all the provisions of this section and be entitled to act as a cigar or vapor product distributor, provided he files proof with his application that he has appointed the state secretary as his agent for service of process relating to any matter or issue arising under this section. Such a nonresident person shall also agree to submit his books, accounts and records for examination in the commonwealth during reasonable business hours by the commissioner or his authorized representative.
(g) Every resident of the commonwealth shall be liable for the collection of the excise on all cigars, smoking tobacco or vapor products in his possession at any time, upon which the excise has not been paid by a cigar or vapor product distributor or cigar or vapor product retailer, and the failure of any such consumer to produce or exhibit to the commissioner or his authorized representative, upon demand, an invoice or sales receipt by a cigar or vapor product distributor or cigar or vapor product retailer for any cigars, smoking tobacco or vapor products in his possession, shall be presumptive evidence that the excise thereon has not been paid and that such consumer is liable for the collection of the excise thereon.
(h) No person shall act as a cigar or vapor product distributor or cigar or vapor product retailer in the commonwealth unless licensed to do so in accordance with section 67 of chapter 62C. If a cigar or vapor product distributor or cigar or vapor product retailer acts in more than 1 of said capacities at any 1 place of business, he shall procure a license for every capacity in which he acts, unless, upon application to the commissioner, the commissioner determines otherwise. Each license so issued or a duplicate copy thereof shall be prominently displayed on the premises covered by the license.
(i) Except as this section expressly provides to the contrary, the provisions of this chapter and of chapter 62C relative to the assessment, collection, payment, abatement, verification and administration of taxes, including penalties, shall so far as pertinent, apply to the excise tax imposed by this section.
(j) For the purposes of section 5, cigars, smoking tobacco and vapor products shall be tobacco products, cigar or vapor product distributors shall be wholesalers and cigar or vapor product retailers shall be retailers.
(k) For the purposes of section 8, untaxed cigars, smoking tobacco or vapor products found in the commonwealth shall be cigarettes, which have not been returned and are not returnable under section 16 of chapter 62C or section 6 as the context requires.
(l)(1) Any person who sells, offers for sale or possesses with intent to sell any cigars, smoking tobacco or vapor products or otherwise acts as a cigar or vapor product distributor or cigar or vapor product retailer without being licensed so to do, shall, in addition to any other penalty provided by this chapter or chapter 62C, be subject to a civil penalty of not more than $5,000 for the first offense and not more than $25,000 for each subsequent offense. Any person who knowingly purchases or possesses any cigars, smoking tobacco or vapor products not manufactured, purchased or imported by a licensed cigar or vapor product distributor or licensed cigar or vapor product retailer shall, in addition to any other penalty provided by this chapter or chapter 62C, be subject to a civil penalty of not more than $5,000 for the first offense and not more than $25,000 for each subsequent offense.
No person, either as principal or agent, shall sell or solicit orders for cigars, smoking tobacco or vapor products to be shipped, mailed or otherwise sent or brought into the commonwealth to any person not a licensed cigar or vapor product distributor or licensed cigar or vapor product retailer, unless the same is to be sold to or through a licensed cigar or vapor product distributor or licensed cigar or vapor product retailer. Any person who knowingly violates this provision shall, in addition to any other penalty provided by this chapter or chapter 62C, be subject to a civil penalty of not more than $5,000 for the first offense and not more than $25,000 for each subsequent offense.
It shall be presumed that the cigars, smoking tobacco or vapor products are subject to the excise until the contrary is established and the burden of proof that they are not shall be upon the person on whose premises the cigars, smoking tobacco or vapor products were found.
(2) Any person who knowingly has in his possession a shipping case or other container of cigars, smoking tobacco or vapor products not bearing the name and address of the person receiving the cigars, smoking tobacco or vapor products from a manufacturer or such other markings as the commissioner may prescribe and any person knowingly in possession of such a shipping case or other container of cigars, smoking tobacco or vapor products from which this name and address has been erased or defaced shall, in addition to any other penalty provided by this chapter or chapter 62C, be subject to a civil penalty of not more than $5,000 for the first offense or not more than $25,000 for each subsequent offense.
(3) Any person who files any false return, affidavit, or statement, or who violates any provision of this section for which no other penalty has been provided shall, in addition to any other penalty provided by this chapter or chapter 62C, be subject to a civil penalty of not more than $5,000 for the first offense and not more than $25,000 for each subsequent offense.
(4) Whenever the commissioner or a police officer discovers, in the possession of any person not being a licensed cigar or vapor product distributor or one authorized by the commissioner, any untaxed cigars, smoking tobacco or vapor products, he may seize and take possession of those cigars, smoking tobacco or vapor products, together with any vending machine or other receptacle, which shall include, without limitation, a motor vehicle, boat or airplane, in which they are contained or in which they are transported. Such cigars, smoking tobacco, vapor products, vending machine or other receptacle seized by a police officer shall be turned over to the commissioner and shall be forfeited to the commonwealth. The commissioner shall destroy such cigars, smoking tobacco or vapor products and shall destroy or otherwise dispose of such vending machine or other receptacle. The commissioner may, within a reasonable time after the seizure, by a public notice at least 5 days before the day of sale, sell the vending machine or other receptacle at public sale and deposit the proceeds in the General Fund.
(5) The state police and all local police authorities may, and at the request of the commissioner or his duly authorized agent shall, enforce this section. Each violation of this section shall be a separate offense.
(m)(1) Marijuana products, as defined in chapter 94G, shall not be subject to the excise under this section.
(2) Where a vapor product is packaged with an electronic cigarette or other product, the excise under this section shall apply to the total wholesale price.
(n)The commissioner may promulgate regulations to implement this section.
 
 

Summary:
This section extends the current 40% excise imposed on cigars and smoking tobacco to vapor products, and applies the current regulatory regime for other tobacco products to vapor products.