S 198

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No. 148. An act relating to the regulation of tobacco products and tobacco
substitutes.
                                      (S.198)
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 7 V.S.A. chapter 40 is amended to read:
                    CHAPTER 40. TOBACCO PRODUCTS
§ 1001. DEFINITIONS
   As used in this chapter:
                                        ***
      (8)(A) “Tobacco substitute” means products, including any product that
meets all of the following conditions:
              (i) The product is manufactured from, is derived from, or contains
tobacco or nicotine, whether natural or synthetic, including nicotine alkaloids
and nicotine analogs.
              (ii) The product is intended for human consumption by smoking,
chewing, inhaling, sucking, absorbing, or consuming in any other manner.
              (iii) The product is not a tobacco product, as defined in this
section.
           (B) The term “tobacco substitute” includes electronic cigarettes or
and other electronic or battery-powered devices, that contain or are designed to
deliver nicotine or other substances into the body through the inhalation of
vapor and that have not been approved by the U.S. Food and Drug
Administration for tobacco cessation or other medical purposes. The term also
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includes nicotine pouches and any liquids, whether nicotine based or not, and
delivery devices sold separately for use with a tobacco substitute.
          (C) Cannabis products as defined in section 831 of this title or
products that have been approved by the U.S. Food and Drug Administration
for tobacco cessation or other medical purposes shall not be considered to be
tobacco substitutes.
      (9) “Licensed wholesale dealer” means a wholesale dealer licensed
under the provisions of this chapter.
      (10) “Wholesale dealer” means a person who imports or causes to be
imported into the State any tobacco products or tobacco substitutes for sale or
who sells or furnishes any of these products to other wholesale dealers or retail
dealers for the purpose of resale, but not by small quantity or parcel to
consumers of these products.
      (11) “Wholesale dealer’s license” means the license granted under the
provisions of this chapter to a wholesale dealer for a wholesale outlet.
      (12) “Wholesale outlet” means any premises where tobacco products or
tobacco substitutes are sold, transferred, displayed, or held for sale by a
wholesale dealer.
      (13) “Wholesale price” means the price at which a licensed wholesale
dealer sells or furnishes tobacco products or tobacco substitutes to any retail
dealer.
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§ 1002. LICENSE REQUIRED FOR RETAIL SALE; APPLICATION;
           FEE; ISSUANCE
   (a)(1) Except as provided in subsection (h) of this section, no person shall
engage in the retail sale of tobacco products, tobacco substitutes, or tobacco
paraphernalia in the person’s place of business without a tobacco license
obtained from the Division of Liquor Control.
         (2) No person shall engage in the retail sale of tobacco substitutes
without also obtaining a tobacco substitute endorsement from the Division of
Liquor Control.
         (3) Tobacco licenses and tobacco substitute endorsements shall expire at
midnight, April 30, of each year be valid for one year from the date of issue.
   (b)(1) The Board shall prepare and issue tobacco license and tobacco
substitute endorsement forms and applications. These shall be incorporated
into the liquor license forms and applications prepared and issued under this
title.
         (2) The licenses issued under this section shall be entitled “LIQUOR
LICENSE,” “LIQUOR-TOBACCO LICENSE,” or “TOBACCO LICENSE,”
as applicable. The and the endorsements issued under this section shall be
entitled “TOBACCO SUBSTITUTE ENDORSEMENT.”
         (3) The Board shall also provide simple instructions for licensees,
designed to assist them in complying with the provisions of this chapter.
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   (c) Each tobacco license and tobacco substitute endorsement shall be
prominently displayed on the premises identified in the license.
   (d)(1) For a license or endorsement required under this section, a person
shall apply to the legislative body of the municipality using the application
provided by the Board in accordance with subdivision (b)(1) of this section and
shall pay the following fees:
           (A) to the Division of Liquor Control, the applicable liquor license
fee provided in section 204 of this title for a liquor license and a tobacco
license;
           (B) to the legislative body of the municipality, a fee of $110.00:
           (A) $150.00 for a tobacco license or renewal; and
           (C) to the legislative body of the municipality, a fee of $50.00
           (B) $75.00 for a tobacco substitute endorsement as provided in
subdivision (a)(2) of this section.
      (2) The municipal clerk shall forward the application to the Division,
and, if the municipality’s local control commissioners have approved the
application for a tobacco license and, if applicable, a tobacco substitute
endorsement, the Division shall issue the tobacco license and the tobacco
substitute endorsement, as applicable, and shall forward all fees to the
Commissioner for deposit. Fees collected pursuant to this subsection shall be
deposited in the Liquor Control Enterprise Fund.
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   (e) A person who sells tobacco products, tobacco substitutes, or tobacco
paraphernalia without obtaining a tobacco license and a tobacco substitute
endorsement, as applicable, in violation of this section shall be guilty of a
misdemeanor and fined subject to a civil penalty of not more than $200.00
$2,000.00 for the first offense and not more than $500.00 $5,000.00 for each
subsequent offense.
   (f) No individual under 16 years of age may sell tobacco products, tobacco
substitutes, or tobacco paraphernalia.
   (g) No person shall engage in the importation, distribution, wholesale sale,
or retail sale, or a combination of these, of tobacco products, tobacco
substitutes, substances containing nicotine or otherwise intended for use with a
tobacco substitute, or tobacco paraphernalia in the State unless the person is a
licensed wholesale dealer as defined in 32 V.S.A. § 7702 or has purchased the
tobacco products, tobacco substitutes, substances containing nicotine or
otherwise intended for use with a tobacco substitute, or tobacco paraphernalia
from a licensed wholesale dealer.
   (h) This section shall not apply to a cannabis establishment licensed
pursuant to chapter 33 of this title to engage in the retail sale of cannabis
products as defined in section 831 of this title but not engaged in the sale of
tobacco products or tobacco substitutes.
                                         ***
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§ 1002b. WHOLESALE DEALERS; LICENSE REQUIRED
   (a) License required. Each wholesale dealer shall secure a license from the
Division of Liquor Control before engaging in the business of selling tobacco
products or tobacco substitutes in this State. Licensed wholesale dealers shall
sell these products only to other Vermont licensed wholesale dealers or to
retailers licensed pursuant to section 1002 of this chapter.
   (b) Application for and issuance of license.
      (1) A separate application and license shall be required for each
wholesale outlet when a wholesale dealer owns or controls more than one such
outlet. The license fee shall be $1,245.00 annually for each outlet.
      (2) A wholesale license may be issued by the Division upon application
on forms prescribed by the Division, stating the name and address of the
applicant, the address of the place of business at which the applicant proposes
to engage in the wholesale business, the type of business, and such other
information as the Division may require for the proper administration of this
chapter. Each license issued pursuant to this section shall be prominently
displayed on the premises covered by the license.
   (c) Penalties for sales without license. Any wholesale dealer who sells,
offers for sale, or possesses with intent to sell tobacco products or tobacco
substitutes without having first obtained a license as provided in this section
shall be subject to a civil penalty of not more than $2,000.00 for the first
offense and not more than $5,000.00 for each subsequent offense.
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   (d) Term of license. Each license issued under the provisions of this
section shall be valid for one year from the date of issue. If the business with
respect to which the license was issued is sold or transferred or if the licensee
ceases to do business at the place named, the license shall immediately be
returned to the Division for cancellation.
   (e) Revocation or suspension of license. The Division may revoke or
suspend the license of any licensed wholesale dealer for failure to comply with
any provision of this chapter, 11 V.S.A. chapter 15, 32 V.S.A. chapter 205, or
33 V.S.A. chapter 19, subchapter 1B.
                                      ***
§ 1005. PERSONS INDIVIDUALS UNDER 21 YEARS OF AGE;
          POSSESSION OR PURCHASE OF TOBACCO PRODUCTS
          PROHIBITED; PENALTY FOR MISREPRESENTING AGE OR
          PURCHASING TOBACCO PRODUCTS; PENALTY
   (a)(1) A person An individual under 21 years of age shall not possess,
purchase, or attempt to purchase tobacco products, tobacco substitutes, or
tobacco paraphernalia unless:
          (A) the person individual is an employee of a holder of a tobacco
license and is in possession of tobacco products, tobacco substitutes, or
tobacco paraphernalia to effect a sale in the course of employment; or
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          (B) the person individual is in possession of tobacco products or
tobacco paraphernalia in connection with Indigenous cultural tobacco
practices.
      (2) A person An individual under 21 years of age shall not misrepresent
his or her the individual’s age to purchase or attempt to purchase tobacco
products, tobacco substitutes, or tobacco paraphernalia.
   (b) A person An individual who possesses tobacco products, tobacco
substitutes, or tobacco paraphernalia in violation of subsection (a) of this
section shall be subject to having the tobacco products, tobacco substitutes, or
tobacco paraphernalia immediately confiscated and shall be further subject to a
civil penalty of $25.00. An action under this subsection shall be brought in the
same manner as a traffic violation pursuant to 23 V.S.A. chapter 24.
   (c) A person An individual under 21 years of age who misrepresents the
person’s individual’s age by presenting false identification to purchase tobacco
products, tobacco substitutes, or tobacco paraphernalia shall be subject to a
civil penalty of not more than $50.00 or provide offered the choice of
providing up to 10 hours of community service, or both participating in a
nationally recognized youth tobacco cessation program to be determined by the
Department of Health. An action under this section shall be brought in the
same manner as a traffic violation pursuant to 23 V.S.A. chapter 24.
                                      ***
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§ 1007. FURNISHING TOBACCO TO PERSONS INDIVIDUALS UNDER
          21 YEARS OF AGE; PENALTIES; REPORT
   (a)(1) A person that An individual who sells or furnishes tobacco products,
tobacco substitutes, or tobacco paraphernalia to a person an individual under
21 years of age shall be subject to a civil penalty of not more than $100.00
$150.00 for the first offense and not more than $500.00 for any subsequent
offense. An action under this section shall be brought in the same manner as
for a traffic violation pursuant to 23 V.S.A. chapter 24 and shall be brought
within 24 hours of following the occurrence of the alleged violation.
      (2) In addition to the civil penalty imposed against an individual for a
violation pursuant to subdivision (1) of this subsection, for any subsequent
violation, the licensee may be subject to an administrative penalty and license
suspension or revocation as set forth in subdivision (b)(2) of this section.
   (b)(1) The Division of Liquor Control shall conduct or contract for
compliance tests of tobacco licensees as frequently and as comprehensively as
necessary to ensure consistent statewide compliance with the prohibition on
sales to persons individuals under 21 years of age of at least 90 percent for
buyers who are between 17 and 20 years of age. An individual under 21 years
of age participating in a compliance test shall not be in violation of section
1005 of this title.
      (2) Any violation by a tobacco licensee of subsection 1003(a) of this
title and or this section after a sale violation or during a compliance test
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conducted within six months of after a previous violation shall be considered a
multiple violation and shall result in the following administrative penalties and
minimum license suspension suspensions or license revocation, in addition to
any other penalties available under this title. Minimum license suspensions for
multiple violations shall be assessed as follows:
          (A) two violations second violation: suspension for two consecutive
weekdays and an administrative penalty of not less than $1,000.00;
          (B) three violations 15-day third violation: suspension for 15
consecutive days and an administrative penalty of not less than $2,000.00;
          (C) four violations 90-day fourth violation: suspension for 90
consecutive days and an administrative penalty of not less than $3,500.00; and
          (D) five violations one-year suspension fifth violation: revocation of
license and an administrative penalty of not less than $5,000.00.
                                      ***
§ 1009. CONTRABAND AND SEIZURE
   (a) Any cigarettes or other tobacco products or tobacco substitutes that
have been sold, offered for sale, or possessed for sale in violation of section
1003, 1010, or 1013 of this title,; 20 V.S.A. § 2757,; 32 V.S.A. § 7786,; or 33
V.S.A. § 1919, and any commercial cigarette rolling machines possessed or
utilized in violation of section 1011 of this title, shall be deemed contraband
and shall be subject to seizure by the Commissioner, the Commissioner’s
agents or employees, the Commissioner of Taxes, or any agent or employee of
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the Commissioner of Taxes, or by any law enforcement officer of this State
when directed to do so by the either Commissioner or by the Department of
Liquor and Lottery. All cigarettes or other tobacco products items seized
under this subsection shall be destroyed at the expense of the violator, and
disposition shall be in compliance with the Agency of Natural Resources,
Hazardous Waste Management Regulations (CVR 12-032-001).
   (b)(1) Any person in possession of property considered contraband under
this section shall be fined not more than $1,000.00 nor less than $500.00 per
item.
        (2) Any vehicle, aircraft or watercraft, or other conveyance in which
property considered contraband under this section is found may be seized and
subject to forfeiture and condemnation pursuant to sections 570 and 572–574
of this title.
§ 1010. INTERNET SALES
                                       ***
   (b)(1) No Except as provided in subdivision (2) of this subsection, no
person shall cause cigarettes, roll-your-own tobacco, little cigars, snuff,
tobacco substitutes, substances containing nicotine or otherwise intended for
use with a tobacco substitute, or tobacco paraphernalia, ordered or purchased
by mail or through a computer network, telephonic network, or other electronic
network, to be shipped to anyone other than a licensed wholesale dealer or
retail dealer in this State.
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      (2) The prohibition set forth in subdivision (1) of this subsection shall
not apply to a licensed wholesale dealer shipping directly to a licensed retail
dealer in this State.
   (c) No person shall, with knowledge or reason to know of the violation,
provide substantial assistance to a person in violation of this section.
   (d) A violation of this section is punishable as follows:
      (1) A knowing or intentional violation of this section shall be punishable
by imprisonment for not more than five years or a fine of not more than
$5,000.00, or both.
      (2) In addition to or in lieu of any other civil or criminal remedy
provided by law, upon a determination that a person has violated this section,
the Attorney General may impose a civil penalty in an amount not to exceed
$5,000.00 for each violation. For purposes of this subsection, each shipment
or transport of cigarettes, roll-your-own tobacco, little cigars, or snuff, tobacco
substitutes, substances containing nicotine or otherwise intended for use with a
tobacco substitute, or tobacco paraphernalia shall constitute a separate
violation.
   (e)(1) On or before January 15 of each year, the Department of Liquor and
Lottery and the Office of the Attorney General shall each report to the House
Committees on Commerce and Economic Development and on Human
Services and the Senate Committees on Economic Development, Housing and
General Affairs and on Health and Welfare regarding enforcement of Vermont
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laws relating to online sales of tobacco products, tobacco substitutes, and
tobacco paraphernalia as set forth in this subsection.
      (2) The Department of Liquor and Lottery shall report at least the
following information for the previous 12-month period:
          (A) the number of online compliance checks that the Department
conducted;
          (B) the number of cases relating to online sales activity that the
Department referred to the Office of the Attorney General for further action;
and
          (C) the number of reports of unlawful online sales activity that the
Department received from the public and the outcomes of those reports.
      (3) The Office of the Attorney General shall report at least the following
information for the previous 12-month period:
          (A) the outcomes of cases related to online sales activity that were
referred by the Department of Liquor and Lottery or any other governmental
source;
          (B) the number of reports of unlawful online sales activity that the
Office received from the public and the outcomes of those reports; and
          (C) the number and amounts of any monetary penalties imposed and
other legal remedies executed by the Office related to online sales activity.
                                       ***
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§ 1013. DECEPTIVE TOBACCO PRODUCTS AND TOBACCO
          SUBSTITUTES PROHIBITED
   (a) No person shall market, promote, label, brand, advertise, distribute,
possess for sale, offer for sale, or sell a tobacco product or tobacco substitute
by:
      (1) imitating a product that is not a tobacco product or tobacco
substitute, including:
          (A) a food or brand of food commonly marketed to minors, including
candy, desserts, cereal, and beverages;
          (B) school supplies commonly used by minors, including erasers,
highlighters, pens, and pencils;
          (C) portable devices, including smartphones, smartwatches, video
games or video game consoles, and inhalers; and
          (D) a product based on or depicting a character, personality, or
symbol known to appeal to minors, including a celebrity; a character in a
comic book, movie, television show, or video game; or a mythical creature;
      (2) concealing the nature of the tobacco product or tobacco substitute; or
      (3) using terms for, describing, or depicting a product described in
subdivision (1) of this subsection.
   (b)(1) In addition to or in lieu of any other civil or criminal remedy
provided by law, upon a determination that a person has violated this section,
the Attorney General may impose a civil penalty in an amount not to exceed
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$5,000.00 for each violation. For purposes of this subsection, each instance of
marketing, promoting, labeling, branding, advertising, distributing, possessing
for sale, offering for sale, or selling a deceptive tobacco product or tobacco
substitute shall constitute a separate violation.
      (2) In any action brought pursuant to this section, the State shall be
entitled to recover the costs of investigation, of expert witness fees, and of the
action, and reasonable attorney’s fees.
      (3) A person who violates this section commits an unfair and deceptive
trade practice in commerce in violation of 9 V.S.A. § 2453.
      (4) In addition to the penalties and remedies described in subdivisions
(1)–(3) of this subsection, the Attorney General has the same authority as
provided under 9 V.S.A. chapter 63, subchapter 1.
Sec. 2. 4 V.S.A. § 1102(b) is amended to read:
   (b) The Judicial Bureau shall have jurisdiction of the following matters:
                                       ***
      (4) Violations of 7 V.S.A. § 1005, relating to possession and
procurement of tobacco products misrepresentation of age by a person under
21 years of age to purchase tobacco products.
                                       ***
Sec. 3. 7 V.S.A. § 210 is amended to read:
§ 210. SUSPENSION OR REVOCATION OF LICENSE OR PERMIT;
       ADMINISTRATIVE PENALTY
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   (a)(1) The control commissioners, as applicable, or the Board of Liquor
and Lottery shall have power to suspend or revoke any permit or license
granted pursuant to this title in the event the person holding the permit or
license shall at any time during the term of the permit or license conduct its
business in violation of this title, the conditions pursuant to which the permit or
license was granted, or any rule prescribed by the Board of Liquor and Lottery.
      (2) No revocation shall be made until the permittee or licensee has been
notified and given a hearing before the Board of Liquor and Lottery, unless the
permittee or licensee has been convicted by a court of competent jurisdiction
of violating the provisions of this title.
      (3) In the case of a suspension, the permittee or licensee shall be notified
and given a hearing before the Board of Liquor and Lottery or the local control
commissioners, whichever applies.
      (4) Any decision to suspend or revoke a license shall be issued in
writing and set forth the reasons for the suspension or revocation and, if
applicable, the duration of the suspension.
      (5) A tobacco license may not be suspended or revoked for a first-time
violation. Suspension or revocation of a tobacco license shall not affect any
liquor license held by the licensee.
   (b)(1) In addition to the authority to suspend or revoke any permit or
license, the Board of Liquor and Lottery may impose an administrative penalty
of up to $7,500.00 per violation against a holder of a wholesale dealer’s license
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or; a holder of a first-, second-, or third-class license; or a holder of any
tobacco license for a violation of the conditions of the license or of this title or
of any rule adopted by the Board.
      (2) The administrative penalty may be imposed after a hearing before
the Board or after the licensee has been convicted by a court of competent
jurisdiction of violating the provisions of this title.
      (3) The Board may also impose an administrative penalty under this
subsection against a holder of a tobacco license of up to $250.00 for a first
violation and up to $2,500.00 for subsequent violations. [Repealed.]
      (4) For the first violation during a tobacco or alcohol compliance check
during any three-year period, a licensee or permittee shall receive a warning
and be required to attend a Division server training class. [Repealed.]
                                        ***
Sec. 4. 32 V.S.A. § 3102 is amended to read:
§ 3102. CONFIDENTIALITY OF TAX RECORDS
                                        ***
   (e) The Commissioner may, in the Commissioner’s discretion and subject
to such conditions and requirements as the Commissioner may provide,
including any confidentiality requirements of the Internal Revenue Service,
disclose a return or return information:
                                        ***
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      (25) To the Department of Liquor and Lottery, if such return or
information is for purposes of investigating potential violations of and
enforcing 7 V.S.A. chapter 40.
                                       ***
Sec. 5. 32 V.S.A. § 7702 is amended to read:
§ 7702. DEFINITIONS
   As used in this chapter unless the context otherwise requires:
      (1) “Cigarette” means any product that contains nicotine, is intended to
be burned or heated under ordinary conditions of use, and consists of or
contains:
          (A) any roll of tobacco wrapped in paper or in any substance not
containing tobacco; and
          (B) tobacco, in any form, that is functional in the product, which,
because of its appearance, the type of tobacco used in the filler, or its
packaging and labeling, is likely to be offered to, or purchased by, consumers
as a cigarette; or
          (C) any roll of tobacco wrapped in substance containing tobacco that,
because of its appearance, the type of tobacco used in the filler, or its
packaging and labeling, is likely to be offered to, or purchased by, consumers
as a cigarette described in subdivision (A) of this subdivision (1).
                                       ***
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      (5) “Licensed wholesale dealer” shall mean means a wholesale dealer
licensed under the provisions of this chapter 7 V.S.A. § 1002b.
                                       ***
      (15)(A) “Other tobacco products” means any product manufactured
from, derived from, or containing tobacco or nicotine, whether natural or
synthetic, including nicotine alkaloids and nicotine analogs, that is intended for
human consumption by smoking, chewing, or in any other manner, including
except as otherwise specified in subdivision (B) of this subdivision (15).
          (B)(i) The term includes products sold as a tobacco substitute, as
defined in 7 V.S.A. § 1001(8), and including any liquids, whether nicotine
based or not, or and delivery devices sold separately for use with a tobacco
substitute, but shall not including nicotine pouches.
             (ii) The term does not include cigarettes, little cigars, roll-your-
own tobacco, snuff, new smokeless tobacco as defined in this section, or
cannabis products as defined in 7 V.S.A. § 831.
      (16) “Wholesale dealer” means a person who imports or causes to be
imported into the State any cigarettes, little cigars, roll-your-own tobacco,
snuff, new smokeless tobacco, or other tobacco product for sale or who sells or
furnishes any of these products to other wholesale dealers or retail dealers for
the purpose of resale, but not by small quantity or parcel to consumers thereof
of these products.
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      (17) “Wholesale dealer’s license” shall mean means the license granted
under the provisions of this chapter 7 V.S.A. § 1002b to a wholesale dealer for
a wholesale outlet.
                                      ***
      (20) “New smokeless tobacco” means any tobacco product
manufactured from, derived from, or containing tobacco or nicotine, whether
natural or synthetic, including nicotine alkaloids and nicotine analogs, that is
not intended to be smoked, has a moisture content of less than 45 percent, or is
offered in individual single-dose tablets or other discrete single-use units, and
includes nicotine pouches.
                                      ***
Sec. 6. 32 V.S.A. § 7776 is amended to read:
§ 7776. COLLECTION OF CIGARETTE TAX THROUGH
          NONRESIDENT LICENSED WHOLESALE DEALERS
                                      ***
   (d) Any person complying with the provisions of this section shall
thereupon become a licensed wholesale dealer within the meaning of 7 V.S.A.
chapter 40 and this chapter and shall be subject to all provisions of the chapter
both chapters applicable to wholesale dealers, including the furnishing of a
bond specified in subchapter 2 section 7703 of this chapter.
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Sec. 7. 32 V.S.A. § 7821 is amended to read:
§ 7821. CRIMINAL PENALTIES
   Any person who shall fail, neglect, or refuse to comply with or shall violate
the provisions of this chapter relating to the tax on tobacco products or the
rules adopted by the Commissioner under this chapter relating to such tax shall
be guilty of a misdemeanor and upon conviction for a first offense shall be
sentenced to pay a fine of not more than $250.00 or to be imprisoned for not
more than 60 days, or both, such fine and imprisonment in the discretion of the
court, and for a second or subsequent offense shall be sentenced to pay a fine
of not less than $250.00 nor more than $500.00 or be imprisoned for not more
than six months, or both, such fine and imprisonment in the discretion of the
court. This section shall not apply to violations of sections 7731–7734 and
section 7776 of this title.
Sec. 8. REDESIGNATION
   32 V.S.A. § 7737 (licensed wholesale dealers; bonding) is redesignated as
32 V.S.A. § 7703.
Sec. 9. REPEALS
   32 V.S.A. §§ 7731–7736 (licensure of wholesale dealers) are repealed.
Sec. 10. TOBACCO ENFORCEMENT CAPACITY; REPORT
   (a) The General Assembly finds that the regulation of tobacco products,
tobacco substitutes, and the deceptive devices prohibited by 7 V.S.A. § 1013,
as added by this act, is a significant public health priority, especially with
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respect to protecting individuals under 21 years of age from being targeted or
supplied with these products.
   (b) On or before January 15, 2027, the Department of Liquor and Lottery,
in consultation with the Office of the Attorney General, shall evaluate and
report to the House Committees on Human Services and on Commerce and
Economic Development and the Senate Committees on Health and Welfare
and on Economic Development, Housing and General Affairs regarding the
following:
      (1) the number of compliance checks that the Department conducted in
fiscal years 2025 and 2026 with respect to tobacco products and tobacco
substitutes;
      (2) whether the Department’s current enforcement staffing levels are
sufficient to meet the compliance targets established in 7 V.S.A. § 1007(b)(1)
and to adequately enforce 7 V.S.A. chapter 40 as amended by this act,
including the prohibition on deceptive devices in 7 V.S.A. § 1013, the
restrictions on internet sales in 7 V.S.A. § 1010, and the expanded wholesale
licensure requirements;
      (3) any unmet enforcement needs identified as a result of the expanded
scope of regulation under this act; and
      (4) whether additional staffing resources at the Department of Liquor
and Lottery or the Office of the Attorney General, or both, would materially
improve compliance with and enforcement of Vermont’s tobacco laws.
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No. 148  Page 23 of 24
2026
Sec. 11. TAXATION OF TOBACCO SUBSTITUTES; TAX STAMPS;
          REPORT
   (a) The Office of the Attorney General, in collaboration with the
Departments of Taxes and of Liquor and Lottery and in consultation with
wholesale dealers and other interested stakeholders, shall:
      (1) identify efficient and effective processes by which to impose taxes
on tobacco products and tobacco substitutes, as defined in 7 V.S.A. § 1001, as
amended by this act, including opportunities to base taxation on a product’s
nicotine concentration or on the volume of a product’s nicotine tank, or both;
and
      (2) evaluate the continued use of tax stamps in this State as evidence of
payment of the excise tax on tobacco products and tobacco substitutes, as
defined in 7 V.S.A. § 1001, as amended by this act; explore the potential to
transition to a more modern process, such as quick-response (QR) codes or
other digitized systems; and consider the advantages and disadvantages of
using alternative approaches for certifying tax compliance.
   (b) On or before January 15, 2027, the Office of the Attorney General shall
provide its findings and recommendations for the items set forth in subsection
(a) of this section, including proposed next steps and legislative needs, to the
House Committees on Commerce and Economic Development, on Human
Services, and on Ways and Means and the Senate Committees on Economic
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No. 148  Page 24 of 24
2026
Development, Housing and General Affairs; on Finance; and on Health and
Welfare.
   Sec. 12. EFFECTIVE DATES
   This act shall take effect on July 1, 2026, except that:
      (1) in Sec. 1 (7 V.S.A. chapter 40), section 1002b (wholesale dealers;
license required) shall take effect on July 1, 2027;
      (2) in Sec. 5 (32 V.S.A. § 7702), the amendments to subdivisions (5)
(definition of “licensed wholesale dealer”) and (17) (definition of “wholesale
dealer’s license”) shall take effect on July 1, 2027; and
      (3) Secs. 6 (32 V.S.A. § 7776), 7 (32 V.S.A. § 7821), 8 (redesignation),
and 9 (repeals) shall take effect on July 1, 2027.
Date Governor signed bill: June 16, 2026
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