Committee reviews S.198 to tax and regulate high‑nicotine tobacco substitutes; proposes investigator, higher fines and nicotine‑tiered stamp
Loading...
Summary
The Economic Development, Housing & General Affairs Committee heard a detailed walk‑through of S.198, which would expand definitions, treat tobacco substitutes like cigarettes for tax purposes with nicotine‑tiered rates and stamps, move enforcement to Liquor & Lottery, create an investigator position and convert some criminal penalties to civil fines.
The Economic Development, Housing & General Affairs Committee on Wednesday examined S.198, a bill that would expand state regulation and taxation of tobacco substitutes — defined to include e‑cigarettes, nicotine pouches and related delivery devices — and increase enforcement authority and penalties.
Sponsor and allies framed the measure as a public‑health and consumer‑protection response to rising youth use. An unnamed sponsoring senator described the health rationale: “the amount of nicotine that is consumed by adolescents and preadolescents can have a significant effect on brain development,” and said the bill is aimed at limiting access and targeting sellers rather than penalizing youth.
Supporters described several core changes. The bill would: - Add an explicit definition of “tobacco substitute” that captures emerging products such as electronic devices, nicotine pouches and related liquids and delivery devices; FDA‑approved tobacco‑cessation products and cannabis products would remain outside the definition. - Decouple tobacco licensing from liquor licenses so retailers would need separate tobacco and liquor licenses. Municipal license fees cited in committee would rise in the bill’s text (examples discussed included increases from $110 to $1,000 for a tobacco license and from $50 to $1,000 for a tobacco‑substitute endorsement). - Tax tobacco substitutes like cigarettes with nicotine‑tiered rates: presenters said products under 5 mg/g nicotine would be taxed at 92% of wholesale price and products with 5 mg/g or higher would be taxed at 100% of wholesale price. The bill would also require a nicotine‑level tax stamp, with fees tied to nicotine content. - Move certain penalties from criminal to civil law and increase fines for unlicensed sales (presenter examples included first‑offense civil penalties up to $2,000 and higher amounts for subsequent violations); prohibitions on selling or furnishing to minors would remain enforceable. - Expand contraband and seizure language (including online sales), require violators to pay destruction costs, and add a new prohibition on products that imitate foods, school supplies, devices or characters known to appeal to minors. - Create a permanent investigator position at the Department of Liquor & Lottery to enforce direct‑to‑consumer sales and delivery laws (alcohol and tobacco) and appropriate $160,000 from the tobacco litigation settlement fund for FY27, with reporting and a requirement to reassess funding if activity‑generated revenue does not sustain the role.
Jill Setoff Garrett, representing the Coalition for Tobacco‑Free Vermont, testified in support and offered data intended to justify the measure. She described youth and young‑adult prevalence figures and enforcement findings: “we are have been in a game of whack‑a‑mole with the tobacco manufacturers… nicotine levels are exploding,” she said, citing a confiscation study of school‑seized devices and stating that most confiscated items were flavored. Garrett presented survey figures for youth use (high‑school e‑cigarette use cited at about 16% on one slide) and said nicotine‑pouch use in Vermont had tripled in two years.
Committee members pressed for details on implementation and enforcement: what counts as a single “item” for per‑item fines (pack, carton, pallet), how online direct‑to‑consumer sales persist despite existing prohibitions, and whether the Department of Health and Department of Liquor & Lottery can provide compliance statistics. The bill’s presenter said the language aims to modernize statutory references (for example replacing outdated “mills” terminology with dollar equivalents) and align tax definitions with the state’s master settlement agreement.
The committee also discussed fund flows: S.198 would direct license fees, penalties and settlement monies in excess of administration costs into the tobacco trust/settlement fund for cessation and prevention, and require reporting on potential transfer of wholesale licensure responsibilities from the Tax Department to Liquor & Lottery.
No vote was taken. Committee members asked for the printed bill, fiscal notes and additional testimony from the Department of Health, the Attorney General’s office and witnesses named in the hearing packet; staff indicated they would return with more materials and a fuller presentation later in the session.
