Senator St. Augustine, author of Bill 3-38 COR, told the Committee on Finance and Government Operation on Oct. 6 that his measure would create a licensing and excise framework for electronic nicotine delivery systems (ENDS), commonly called vapes, and set aside most of the tax revenue for Guam Memorial Hospital Authority (GMHA) and for enforcement and prevention.

The bill, introduced as the ENDS Excise Act of 2025, would create wholesale and retail licenses, require retailers who obtain a license to charge a flat excise tax on ENDS products and show that amount on customer receipts, and establish revolving funds for the Department of Revenue and Taxation (DRT) and GMHA. The bill text presented to the committee sets a 20% excise surcharge on ENDS product sales and allocates revenue as follows: 60% to Guam Memorial Hospital Authority, 30% to DRT for compliance and enforcement, and 10% for public-health prevention, education and the Youth Tobacco Education and Prevention Fund, including proceeds from fees and fines.

"This is not about penalizing adults who make personal choices. It is about protecting our young, promoting public health, and ensuring that a profitable enterprise in Guam contributes equitably to the island's well-being," Senator St. Augustine said in opening remarks.

Marie Lazama, director of the Department of Revenue and Taxation, told the committee DRT provided input on earlier draft legislation and supports separate classification and reporting of ENDS sales but warned implementation will require new internal processes and staffing. "For the period 10/01/2024 to 10/03/2025, there have been a total of 356 licenses" for tobacco retail, she said, and DRT has "about 9 wholesale licenses." Lazama added the department's current reporting lumps ENDS with general retail and does not separate ENDS sales on tax returns.

Lazama said DRT has not finalized internal policy on whether to focus inspections at the wholesale or retail level and that reprogramming of electronic returns and additional enforcement staff would likely be needed should the law pass. She told senators the bill contains language allowing DRT to retain a percentage of fines and fees to assist compliance and enforcement work.

Committee members pressed DRT on practical implementation details. Senator Talahi asked whether the bill addressed the governor's prior veto concerns that retailers would become importers and that requiring retail inspections would be a new burden; Lazama said internal discussions continue and the department "will definitely have to ramp up our compliance efforts" if retailers are inspected in addition to wholesalers. She also explained logistical reasons tobacco tax stamps used on cigarette packets would not easily apply to many ENDS products because of varied packaging and refillable devices.

Retailers and industry stakeholders were discussed by multiple senators in committee remarks: some senators said most Guam retailers obtain small, frequent shipments by mail rather than large wholesale containers, and that restricting imports to a single wholesaler could create a monopoly and harm small shops. Senator Taitigui and others urged the committee to schedule markups and roundtable meetings to collect testimony from vape shops and wholesalers before finalizing language.

The committee did not take a vote on Bill 3-38 COR during the Oct. 6 hearing. Members signaled they will hold markups and invited DRT to work with the committee on regulatory language, enforcement logistics, licensing fees and reporting requirements. Senator St. Augustine said he is open to amendments before the bill advances.

Why this matters: the bill seeks to create a new, visible revenue stream while setting licensing and age-enforcement standards for a product category that DRT currently does not separate in its returns. Implementation choices — whether to tax and inspect at wholesale or retail, how receipts and point-of-sale systems will display the tax, and the staffing and IT changes DRT will need — were the central operational issues the committee focused on during testimony.

Next steps: the committee scheduled further work (markups/roundtables) to refine implementation details and to collect testimony from industry stakeholders and DRT technical staff before a possible floor vote at a later date.