 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, Second Regular Session
alternative nicotine products; regulations.
Purpose
Requires, beginning January 1, 2028, a license with the Department of Liquor Licenses and Control (DLLC) for the manufacture or distribution of alternative nicotine products (ANPs) in Arizona. Prescribes sale and marketing restrictions for ANPs, including associated penalties and enforcement responsibilities of the DLLC for violations.
Background
In 2019, the federal Food, Drug and Cosmetic Act was amended to raise the federal minimum age for the sale of tobacco products from 18 years of age to 21 years of age (Further Consolidated Appropriations Act, 2020). In 2025, the Legislature conformed the state minimum age for the sale of tobacco products to the federal minimum age of 21 years of age, except for active military personnel who are at least 18 years of age, under certain conditions (Laws 2025, Ch. 228).
A person is guilty of a petty offense if the person: 1) knowingly sells, gives or furnishes a tobacco product, vapor product or any instrument or paraphernalia designed for smoking or ingesting tobacco to a person who is under 21 years of age; or 2) is an underage person who buys, possesses, knowingly receives or misrepresents their age by written identification to induce a person to sell, give or furnish a tobacco product, vapor product or any instrument or paraphernalia designed for smoking or ingesting tobacco. An underage person who misrepresents their age by written identification must pay a fine up to $500 (A.R.S. § 13-3622).
The DLLC, which consists of the State Liquor Board (Board) and the Office
of the Director, regulates the manufacture, distribution and sale of liquor in
Arizona through the issuance of a series of licenses. A separate license is
required for each specific type of business (A.R.S.
§§ 4-111
and 4-203).
The DLLC must also investigate compliance with liquor statutes in cooperation
with law enforcement (A.R.S.
§ 4-112).
The Joint Legislative Budget Committee fiscal note estimates that H.B. 4001 will have a potential fiscal impact on: 1) transaction privilege tax (TPT) collections and receipt of the federal Substance Use Prevention, Treatment and Recovery Services Block Grant tied to Arizona's enforcement of the federal 21 year old minimum age limit on tobacco sales; 2) the state General Fund based on new ANP distributor and manufacturer licensing fees that would increase deposits into the Liquor Licenses Fund; and 3) the DLLC enforcement costs. There is a lack of sufficient information to determine the magnitude of these impacts (JLBC Fiscal Note).
Provisions
Powers and Duties of the Board and DLLC
1. Requires the Board to take necessary steps to maintain effective liaison with the Department of Public Safety and all local law enforcement agencies to enforce laws against the sale or possession of ANPs by persons under 21 years of age.
2. Requires the DLLC Investigations Unit to investigate licensees alleged to have sold or distributed ANPs to a person who is under 21 years of age.
3. Allows the DLLC Director to:
a) remove ANPs from the marketplace that may be contaminated; and
b) accept and expend private grants of monies, gifts and devices for conducting educational programs for parents and students on the repercussions of the sale or possession of ANPs by a person who is under 21 years of age.
4. Allows the DLLC Director, the DLLC Director's agent and any peace officer, in enforcing statute, to visit during hours in which the premises are occupied and inspect the premises of an ANPs licensee.
ANPs Distributor License
5. Prohibits a person, beginning January 1, 2028, from distributing ANPs for sale in Arizona without an ANPs distributor license issued by the DLLC.
6. Requires ANPs offered for sale in Arizona to only be provided by a manufacturer that is licensed by the DLLC and all of the following requirements apply:
a) a distributor of ANPs may purchase ANPs only from a licensed distributor or manufacturer and must verify and obtain proof that the distributor or manufacturer has a valid license issued by the DLLC before purchasing ANPs from the distributor or manufacturer;
b) a distributor of ANPs must maintain documentation at the distributor's facility for each transaction that involves the sale, purchase, transfer or receipt of ANPs;
c) all ANPs that are held or stored for sale or distribution in Arizona by or on behalf of a retailer must be accessible to the DLLC and other law enforcement officers during normal business hours without a judicial warrant or prior written consent of the distributor; and
d) ANPs that are sold or offered for sale in violation of statutory requirements are deemed contraband and subject to seizure and destruction or disposal.
7. Requires a person desiring a license to distribute ANPs for sale in Arizona to apply to the DLLC Director on a form prescribed by the DLLC Director.
8. Requires the application for an ANPs distributor license to require all of the following information:
a) the applicant's distribution business address, telephone number, email address and, if the applicant is an entity, the name of the senior officer;
b) proof of liability insurance coverage; and
c) a copy of the registration form provided by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives as proof of the applicant's compliance with the federal Prevent All Cigarette Trafficking Act of 2009.
9. Allows the DLLC Director to establish a fee for a ANPs distributor license.
10. States that an ANPs distributor license that is issued by the DLLC is valid for two years and not transferable.
11. Requires an ANPs distributor licensee to report any change in ownership of the business of the licensee, directly or indirectly, as defined by rule, to the DLLC Director within 30 days after the change in ownership.
12. Prohibits an ANPs distributor license from being leased or subleased.
13. States a person that distributes ANPs for sale in Arizona without a license issued by the DLLC is guilty of a class 5 felony and:
a) must pay a fine of at least $10,000;
b) may not sell, give or furnish ANPs for a period of one year; and
c) is subject to any other punishment deemed appropriate by the DLLC Director.
14. Specifies that the requirement to obtain an ANPs distributor license becomes effective on the earlier of the following:
a) January 1, 2028; or
b) July 1, 2027, if the DLLC adopts rules for implementation purposes and the Board determines that the compliance timeframes are achievable.
ANPs Manufacturer License
15. Prohibits a person, beginning January 1, 2028, from manufacturing ANPs that are for sale in Arizona without a license issued by the DLLC and all of the following requirements apply:
a) a manufacturer may sell ANPs only to a licensed distributor and must verify and obtain proof that the distributor holds a valid license issued by the DLLC before selling ANPs to the distributor;
b) a manufacturer that is licensed by the DLLC may sell ANPs to a retailer in Arizona that holds a valid TPT license;
c) a manufacturer of ANPs must maintain documentation at the manufacturer's facility for each transaction that involves the sale, purchase, transfer or receipt of ANPs;
d) all ANPs that are held or stored for sale or distribution in Arizona by or on behalf of a distributor or retailer must be accessible to the DLLC and other law enforcement officers during normal business hours without a judicial warrant or prior written consent of the manufacturer; and
e) ANPs that are sold or offered for sale in violation of statutory requirements are deemed contraband and subject to seizure and destruction or disposal.
16. Requires a person desiring a license to manufacture ANPs that are for sale in Arizona to apply to the DLLC Director on a form furnished by the DLLC Director.
17. Requires an ANPs manufacturer license applicant to provide all of the following:
a) the applicant's manufacturing business address, telephone number, email address and, if the applicant is an entity, the name of the senior officer;
b) proof of manufacturing liability insurance coverage;
c) proof of the applicant's compliance with the federal Prevent All Cigarette Trafficking Act of 2009; and
d) the applicant's product catalog of ANPs that the applicant intends to manufacture and that will be for sale in Arizona, including all of the following:
i. the ANP name, category, nicotine strength and flavors;
ii. a copy or image of the ANP's packaging and warning label; and
iii. a toxicology report for the ANP, if requested by the DLLC.
18. Allows the DLLC Director to establish a fee for an ANPs manufacturer license.
19. States that an ANPs manufacturer license is valid for two years and is not transferable.
20. Requires an ANPs manufacturer licensee to pay, to the DLLC, an annual fee for each stockkeeping unit of each ANP that the licensee will manufacture and that are for sale in Arizona.
21. Allows the DLLC Director to determine the annual stockkeeping unit fee.
22. Requires an ANPs manufacturer licensee to report any change in ownership of the business of the licensee, directly or indirectly, as defined by rule, to the DLLC Director within 30 days after the change in ownership.
23. Prohibits an ANPs manufacturer license from being leased or subleased.
24. Allows the DLLC to conduct an audit to ensure an ANPs manufacturer licensee is in compliance with statutory requirements.
25. Allows the DLLC to request a notarized attestation that the ANPs manufacturer licensee's products that are sold in Arizona were imported in conformity with all U.S. customs and border requirements, whether the notarized attestation was provided by the manufacturer or another entity.
26. Allows the DLLC to request that the ANPs manufacturer licensee provide any additional documentation the DLLC deems relevant.
27. States that a person that manufactures ANPs for sale in Arizona without an ANPs manufacturer license issued by the DLLC is guilty of a class 5 felony and:
a) must pay a fine of at least $10,000;
b) is prohibited from selling, giving or furnishing ANPs for a period of one year;
c) is subject to any other punishment deemed appropriate by the DLLC Director.
28. Specifies that the requirement to obtain an ANPs manufacturer license becomes effective on the earlier of the following:
a) January 1, 2028; or
b) July 1, 2027, if the DLLC adopts rules for implementation purposes and the Board determines that the compliance timeframes are achievable.
Sale of ANPs to Underage Persons
29. Prohibits a retailer or a retailer's employee from selling ANPs to a person who is under 21 years of age.
30. Requires the DLLC Director, on the receipt of notice of a violation of the prohibition on selling ANPs to an underage person, to provide notice of the alleged violation to the retailer who is alleged to have committed the violation.
31. States that, if a retailer is found to have committed a violation of the prohibition to sell ANPs to an underage person after a hearing, the following penalties apply:
a) for an initial violation, the DLLC Director must order a retailer to attend a DLLC Director-approved ANPs retailer educational course and pay a civil penalty of between $500 and $750;
b) for a second violation at the same licensed location within 24 months, a retailer is guilty of a class 3 misdemeanor and:
i. must pay a fine of between $2,000 and $3,000;
ii. must attend a DLLC Director-approved ANPs retailer educational course; and
iii. is subject to any other punishment deemed appropriate by the DLLC Director;
c) for a third violation at the same licensed location within 24 months, a retailer is guilty of a class 1 misdemeanor and:
i. must pay a civil penalty of at least $10,000;
ii. must attend a DLLC Director-approved ANPs retailer educational course;
iii. is prohibited from selling, giving or furnishing ANPs for a period of 120 days; and
iv. is subject to any other punishment deemed appropriate by the DLLC Director;
d) for a fourth or subsequent violation at the same licensed location within 24 months, a retailer is guilty of a class 6 felony and:
i. must pay a fine of at least $10,000;
ii. must attend a DLLC Director-approved ANPs educational course;
iii. is prohibited from selling, giving or furnishing ANPs for a period of one year; and
iv. is subject to any other punishment deemed appropriate by the DLLC Director;
e) for a fourth or subsequent violation at the same licensed location within 12-months, a retailer is guilty of a class 5 felony and:
i. must pay a fine of at least $10,000;
ii. must attend a DLLC Director-approved ANPs retailer educational course;
iii. is prohibited from selling, giving or furnishing ANPs for a period of one year; and
iv. is subject to any other punishment deemed appropriate by the DLLC Director.
32. Requires each owner and person who serves in a managerial position and at least one person who serves in a nonmanagerial position to attend the ANPs retailer educational course if the DLLC Director orders attendance.
33. Allows the DLLC to coordinate with appropriate law enforcement agencies to enforce the prohibition on selling ANPs to minors.
34. States that a person who sells ANPs to an underage person is guilty of a class 5 felony and:
a) must pay a fine of at least $10,000;
b) is prohibited from selling, giving or furnishing ANPs for a period of one year; and
c) is subject to any other punishment deemed appropriate by the DLLC Director.
ANPs Marketing
35. Prohibits an ANPs licensee from marketing, advertising, selling or causing to be sold ANPs in a container that does any of the following:
a) depicts a cartoon-like fictional character that mimics a character primarily aimed at entertaining;
b) imitates or mimics a trademark or trade dress of a product that is or has been primarily marketed to minors;
c) includes a symbol that is primarily used to market products to minors;
d) includes an image or the name of a celebrity; or
e) is in a product shape or design that is meant to disguise the appearance of the ANP, including the shape or design or any of the following:
i. a school or office supply;
ii. a smart phone, smart watch or smart phone or smart watch case;
iii. headphones or ear buds;
iv. any item of clothing;
v. a backpack;
vi. a cosmetic or cosmetic container;
vii. a toy or video game device; or
viii. a food or beverage product.
36. Deems ANPs sold or offered for sale in violation of the marketing restrictions as contraband and subject to seizure and destruction or disposal.
Sale of ANPs and Identification
37. Requires a retailer or other person, if the retailer or person questions or has reason to question that the person purchasing, attempting to purchase or otherwise procuring or attempting to procure an ANP is under 21 years of age, to do all of the following:
a) demand identification from the person;
b) examine the identification to determine that the identification reasonably appears to be a valid, unaltered identification that has not been defaced;
c) examine the photograph in the identification and determine that the person reasonably appears to be the same person in the identification;
d) determine that the date of birth in the identification indicates the person is not under 21 years of age; and
e) scan the person's identification using an electronic scanning device.
38. States that the following written instruments constitute the only acceptable identification for verifying the age of a person procuring or attempting to procure ANPs:
a) an unexpired driver license issued by Arizona, except that a driver license that is issued to a person who is under 21 years of age does not constitute acceptable identification 30 days after the person reaches 21 years of age;
b) an unexpired driver license issued by any other state, the District of Columbia, any territory of the United States or Canada if the license includes a picture of the person and the person's date of birth;
c) an unexpired nonoperating identification license issued by Arizona, except that a nonoperating identification license that is issued to a person who is under 21 years of age does not constitute acceptable identification 30 days after the person reaches 21 years of age;
d) a form of identification license issued by any other state, the District of Columbia, any territory of the United States or Canada if the license is substantially equivalent to a nonoperating identification license issued by Arizona and includes a picture of the person and the person's date of birth;
e) an unexpired armed forces identification card that includes the person's picture and date of birth; or
f) a valid unexpired passport or a valid unexpired resident alien card that contains a photograph of the person and the person's date of birth.
Sale of Tobacco Products to Underage Persons
39. Removes vapor products from the prohibition on selling tobacco products to underage persons.
40. Requires the court to order a person who commits a violation of the prohibition on selling tobacco products to an underage person or an enterprise that commits a first violation of the prohibition on selling tobacco products to an underage person to attend a court-approved tobacco retailer educational course and pay a fine of between $500 and $750.
41. States that an enterprise that commits a second violation of the prohibition on selling tobacco products to an underage person at the same location within 24 months is guilty of a class 3 misdemeanor and:
a) must pay a fine of between $2,000 and $3,000;
b) must attend a court-approved tobacco retailer educational course; and
c) is subject to any other punishment deemed appropriate by the court.
42. States that an enterprise that commits a third violation of the prohibition on selling tobacco products to an underage person at the same location within 24 months is guilty of a class 1 misdemeanor and:
a) must pay a fine of at least $10,000;
b) must attend a court-approved tobacco retailer educational course;
c) is subject to any other punishment deemed appropriate by the court; and
d) is prohibited from selling, giving or furnishing tobacco products for a period of 120 days.
43. States that an enterprise that commits a fourth or subsequent violation of the prohibition on selling tobacco products to an underage person at the same location within 24 months is guilty of a class 6 felony and:
a) must pay a fine of at least $10,000;
b) must attend a court-approved tobacco retailer educational course;
c) is subject to any other punishment deemed appropriate by the court; and
d) is prohibited from selling, giving or furnishing tobacco products for a period of one year.
44. States that an enterprise that commits a fourth or subsequent violation of the prohibition on selling tobacco products to an underage person at the same location within 12 months is guilty of a class 5 felony and:
a) must pay a fine of at least $10,000;
b) must attend a court-approved tobacco retailer educational course;
c) is subject to any other punishment deemed appropriate by the court;
d) is prohibited from selling, giving or furnishing tobacco products for a period of one year.
45. Requires each owner and person who serves in a managerial position and at least one person who serves in a nonmanagerial position to attend the tobacco retailer educational course if the court orders attendance.
Active Military Personnel
46. Allows a person who is at least 18 years of age to possess, accept, receive or use an ANP only if all of the following apply:
a) the person is currently serving as a member of the National Guard, the U.S. Armed Forces reserves or the active component of the U.S. Armed Forces;
b) the use or possession of the ANP or any instrument or paraphernalia is allowed by the regulations and policies of the U.S. Department of Defense or the branch of the U.S. Armed Forces in which the person is serving; and
c) the person holds a valid military identification card that is issued by the U.S. Department of Defense or the branch of the U.S. Armed Forces in which the person is serving.
Miscellaneous
47. Deems it unlawful, beginning January 1, 2028, for a retailer of ANPs to purchase ANPs from unlicensed distributors or manufacturers of ANPs.
48. Defines ANP as any noncombustible product that contains nicotine and that is intended for human consumption, whether chewed, absorbed, dissolved, ingested, inhaled or consumed by any other means.
49. Excludes, from the definition of ANP, tobacco products or any product regulated as a drug or device by the U.S. Food and Drug Administration under Chapter V of the federal Food, Drug, and Cosmetic Act.
50. Defines nicotine as the chemical substance named 3-(1-Methyl-2-pyrrolidinyl) pyridine or C(10)H(14)N(2), including any salt or complex of nicotine derived from any source.
51. Makes technical and conforming changes.
52. Becomes effective on the general effective date, with delayed effective dates as noted.
House Action
COM 2/17/26 DPA 9-1-0-1
3rd Read 3/16/26 32-19-8-0-1
Prepared by Senate Research
March 20, 2026
JT/ci