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ARIZONA HOUSE OF REPRESENTATIVES57th Legislature, 2nd Regular Session |
House: IT DPA/SE 5-2-1-2 |
HB
2765: international trade commission
S/E: vapor product manufacturer; rules; violations
Sponsor: Representative Rivero, LD 27
Caucus & COW
Summary of Strike-Everything Amendment to HB 2765
Overview
Regulates vapor products. Mandates rules and requirements for vapor product manufacturers and for the Arizona Department of Revenue (DOR).
Current statute tasks DOR with regulating the licensure of tobacco retailers, the taxation of tobacco products and recordkeeping of importers, distributors and retailers of tobacco products. Every person acquiring or possessing for the purposes of making the initial sale or distribution in this state of any tobacco products on which a luxury privilege tax is imposed must obtain from DOR a license to sell tobacco products.
The application for the tobacco distributor has a fee of $25 for each place of business listed in the application. The applicant must include in the application form the identity of the applicant, the applicant's place of business, any location that maintains inventory of the tobacco products, and any other location requested by DOR. If the applicant is a firm, partnership, limited liability company or corporation, they must list the name and address of the members or officers (A.R.S. § 42-3401, 42-3404, 42-3405).
Provisions
Vapor Product Manufacturer Licensing Fund
1. Establishes the Vapor Product Manufacturer Licensing Fund (Fund), consisting of licensing fees and civil penalties which are subject to legislative appropriation. (Sec. 5)
2. Requires DOR to administer the Fund. (Sec. 5)
3. Mandates that Fund monies must be used for the enforcement of vapor product manufacturer license regulation. (Sec. 5)
Vapor Product Manufacturer License
4. Allows a vapor manufacturer whether directly or through an importer, distributor, retailer or a similar intermediary, after December 31, 2026, to offer for sale or sell vapor products only if they hold a valid vapor product manufacturer license. (Sec. 5)
5. Tasks DOR with establishing the rules, fees and renewal associated with the vapor product manufacturing license (license). (Sec. 5)
6. Mandates that DOR must deposit fees related to the license into the Fund. (Sec. 5)
7. Stipulates that a license is only valid for one year, unless DOR suspends or revokes the license and must be renewed annually. (Sec. 5)
8. Restricts renewal for a license if the manufacturer is liable for any outstanding civil penalties. (Sec. 5)
9. Allows DOR to receive and review license applications electronically. (Sec. 5)
10. Asserts the manufacturer's license is nontransferable. (Sec. 5)
Vapor Product Certification
11. Instructs each license applicant to file, as prescribed, a certification as a condition precedent to obtain a license. (Sec. 5)
12. Prohibits a vapor manufacturer, that has not filed the required certification, from being issued a license and prohibits the manufacturer to sell its vapor products. (Sec. 5)
13. Requires the certification to be made under penalty of perjury on a form and in a manner prescribed by DOR. (Sec. 5)
14. Lists the certification's requirements. (Sec. 5)
15. Restricts a vapor manufacturer from selling at retail or to a consumer any type or model of vapor products not included in the vapor product list found in the manufacturer's certification without first filing a DOR-approved amended certification. (Sec. 5)
16. Tasks each manufacturer that obtains a license to submit to DOR within 30 days a notice of any changes to the manufacturer's vapor product list submitted with the required certification and every six months, an attestation that confirms the information submitted in the manufacturer's license application remains accurate, as outlined. (Sec. 5)
17. Asserts that applications or certificates that contain false information violate consumer fraud regulation and are subject to remedies pertaining to consumer fraud. (Sec. 5)
18. Allows DOR to notify appropriate federal and state agencies regarding fraudulent information submitted on an application or certificate form. (Sec. 5)
Nonresident or Foreign Manufacturer
19. Requires any nonresident or foreign manufacturer not registered to do business relating to vapor products in this state as a foreign corporation or business entity to;
a. appoint and continually engage the services of an agent for the service of process relating to the sale of vapor products in this state, as prescribed;
b. provide the name, address, telephone number and proof of the appointment and availability of the agent to DOR;
c. notify DOR, as outlined:
i. at least 30 days before terminating the authority of the agent;
ii. at least 5 days before terminating the existing agent of the new agent's appointment; and
iii. within 5 days of an agent terminating an appointment and include satisfactory proof to DOR of the new agent's appointment. (Sec. 5)
20. Directs any nonresident or foreign manufacturer not registered in this state to submit to DOR a surety bond or other cash security payable to this state in the amount of $25,000. (Sec. 5)
21. Outlines requirements pertaining to surety bonds for nonresident or foreign manufacturers. (Sec. 5)
Vapor Product Manufacturer and DOR Rules
22. Requires a manufacturer that ceases business because of discontinuation, sale or transfer of the manufacturer's business to notify DOR in writing at the time that the discontinuance, sale or transfer takes effect. (Sec. 5)
23. Instructs a vapor manufacturer to have established sufficient contact with this state for the exercise of personal jurisdiction over the manufacturer in any matter or issue related to the sale of vapor products. (Sec. 5)
24. Tasks DOR with maintaining and making publicly available on DOR's website all licensed vapor product manufacturers and all vapor products included in the vapor product list submitted by the licensed manufacturer. (Sec. 5)
25. Restricts the sale of vapor products that are not included on the manufacturer's vapor products list to retail consumers in this state, either directly or through an importer, distributor, retailer or a similar intermediary. (Sec. 5)
26. Requires retailers to only purchase vapor products from a distributor or licensed manufacturer and for distributors to only purchase vapor products from licensed manufacturers. (Sec. 5)
Violations of Rules
27. Subjects any business operating as a vapor manufacturer without a license and a licensed manufacturer found in violation to:
a. a civil penalty of $2,500 for their first violation;
b. a civil penalty of $5,000 and a class 2 misdemeanor, for their second violation within 36 months; and
c. a civil penalty $10,000, a class 1 misdemeanor, for their third or subsequent violation within 36 months. An unlicensed manufacturer is ineligible to be licensed for 36 months and a manufacturer's license is to be revoked and is ineligible to receive or renew a license for 36 months. (Sec. 5)
28. Tasks DOR with depositing the civil penalties collected for any violation of vapor products rules into the Fund. (Sec. 5)
29. Subjects vapor products in violation of vapor regulation to seizure and destruction. (Sec. 5)
Delegation of Authority
30. Allows DOR to delegate the enforcement and compliance inspections to any county or law enforcement agency that accepts this delegation and to collaborate and use the findings of other state agencies to carry out the obligations as prescribed. (Sec. 5)
31. Requires the delegated licensing authority or any law enforcement agency, conducting compliance checks to assess retail tobacco vendor compliance with the legal age, to report the compliance check results to DOR. (Sec. 5)
Miscellaneous
32. Adds vapor products to the list of items exempted from tobacco taxes. (Sec. 3)
33. Conforms vapor products, vapor product manufacturer, importer and distributor to recordkeeping requirements on tobacco products. (Sec. 4)
34. Modifies the heading of title 42, chapter 3, article 10. (Sec. 2)
35. Contains an effective date of December 31, 2026. (Sec. 6)
36. Contains a severability clause. (Sec. 7)
37. Makes conforming and technical changes. (Sec. 1 and 4)
38. Defines pertinent terms. (Sec. 1)
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42. Initials LM/IC HB 2765
43. 2/12/2026 Page 0 Caucus & COW
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