Committee debates S.198 changes to tobacco‑substitute rules, penalties and online‑sales reporting

A legislative committee spent its session reviewing a strike‑all draft of S.198 that would expand how Vermont law treats tobacco substitutes, revise licensing for wholesalers, tighten rules on products that imitate items aimed at minors, and add new reporting and enforcement tools.

Jennifer Carbrey of the Office of Legislative Council, who presented the draft, told the committee she had “framed it as a strike‑all amendment” and walked legislators through changes that bring tobacco substitutes into the Title 7 definition for tobacco products and relocate some wholesaler licensure language so the Division of Liquor and Lottery (DLL) issues licenses after local approval.

Why it matters: the bill would change who can sell certain products, how sellers are licensed and penalized, and how state agencies monitor online sales, all of which officials said could affect youth access to flavored or deceptive products and workload for enforcement agencies.

What the draft does: Carbrey said the draft adds tobacco substitutes (including many electronic or battery‑powered nicotine delivery devices) to the state’s definition of regulated tobacco products and updates wholesale definitions to match Title 7. The draft also requires the municipal clerk to forward license applications to the division; local control commissions retain their approval authority, and the division would issue the license and any tobacco‑substitute endorsement when local approval exists.

On possession and confiscation, the draft restores a prohibition on possession or purchase by people under 21, clarifies penalties for misrepresenting age, and includes language allowing immediate confiscation of items possessed in violation of that prohibition. Committee members discussed whether confiscation belongs alongside contraband statutes and which actors—school staff, law enforcement, or DLL compliance officers—should be authorized to seize items.

Penalty alternatives and diversion: several legislators said they preferred removing small monetary fines for youth and instead using nonfinancial sanctions. The chair summarized the committee’s working approach: no dollar fine for under‑21 possession, but up to 10 hours of community service and an option to participate in a cessation program. Todd Davis (Community Justice Division) told the committee that diversion funding flows through community justice and that cessation programming could be run through diversion, but members pressed staff to clarify who would enforce participation and whether the judicial/diversion infrastructure is set up for that role.

Compliance testing and enforcement mechanics: the draft calls for compliance testing (mystery‑shopper buys) using buyers aged roughly 17–20 and seeks at least 90% compliance for retail sellers in those checks. Members confirmed with staff and law‑enforcement counsel that the Judicial Bureau would handle ticketing for misrepresentation of age and that prior violations would be accessible to the bureau when determining subsequent administrative penalties.

Escalating administrative penalties: for licensees the draft eliminates a narrow time limit for repeat violations and adds escalating minimum administrative penalties and suspensions: a not‑less‑than $1,000 administrative penalty and consecutive‑day suspension for a second classification of multiple violation, $2,000 and 15‑day suspension for a third, $3,500 and 90‑day suspension for a fourth, and revocation with a minimum $5,000 administrative penalty for a fifth violation. The committee flagged operational questions about how those penalties would be applied over time.

Contraband, disposal and Internet sales reporting: the amendment expands contraband and seizure language to include tobacco substitutes, makes seized items subject to hazardous‑waste disposal rules, and adds a per‑item civil fine range ($500–$1,000). It also creates an annual reporting obligation: on or before Jan. 15 each year DLL and the Attorney General’s Office would report to committees on online compliance checks, referrals, complaints received, case outcomes and monetary penalties related to illegal online sales.

Prohibition on deceptive and child‑appealing products: the draft creates a new prohibition on marketing, labeling or selling deceptive tobacco products or tobacco substitutes that imitate foods, school supplies, portable devices, or characters appealing to minors. The Attorney General would be authorized to impose civil penalties up to $5,000 per violation, recover investigative and attorney‑fee costs, and pursue remedies under the Consumer Protection Act.

Tax, wholesale definitions and a directed report: staff noted inconsistent terminology between Title 7 and the tax chapter. Section 11 directs the Department of Taxes, in consultation with DLL and the Attorney General, to report by Jan. 15, 2027, on options to tax tobacco substitutes by nicotine concentration, evaluate continued use of tax stamps and propose legislative next steps. The bill mostly takes effect July 1, 2026, with wholesaler provisions moving to DLL on July 1, 2027.

Funding enforcement: committee members debated reinserting a DLL investigator position and whether to fund it immediately from projected increases in license and fee revenue tied to the bill. Some members warned that fee revenue often reverts to the general fund; others supported using projected licensing revenue to staff enforcement sooner rather than waiting for penalty revenue to materialize. Staff will draft language and circulate fiscal notes.

What’s next: staff said the draft will be updated and the committee will take further action when S.198 returns to the agenda tomorrow. The committee did not take a final vote on S.198 during this meeting.

Representative or role attributions in this report are based only on statements recorded in the transcript. Quotations are attributed to speakers identified in the record: Jennifer Carbrey (Office of Legislative Council) and Todd Davis (Community Justice Division).