By: Hinojosa S.B. No. 1390     A BILL TO BE ENTITLED   AN ACT   relating to taxes and fees imposed on cigarettes and other tobacco   products, including an exemption to the cigarette tax, related   administrative matters, and the elements of certain related   offenses.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 161.604, Health and Safety Code, is   amended by amending Subsection (b) and adding Subsection (b-1) to   read as follows:          (b)  Beginning in January 2014, and in January of each   subsequent year, the comptroller shall adjust [compute] the rate of   the fee [applicable during that calendar year] by increasing the   rate in effect on the date the adjustment is made [for the preceding   calendar year] by the greater of:                (1)  three percent; or                (2)  the actual total percentage change in the Consumer   Price Index for All Urban Consumers (CPI-U), as published by the   Bureau of Labor Statistics of the United States Department of   Labor, during the preceding calendar year, calculated by comparing   the CPI-U for December of the preceding calendar year with the CPI-U   for December a year earlier.          (b-1)  The adjusted rate of the fee determined under   Subsection (b) takes effect on February 1 of the year in which the   adjusted rate is determined and remains in effect until January 31   of the following year.          SECTION 2.  Section 161.605(e), Health and Safety Code, is   amended to read as follows:          (e)  Notwithstanding any other law, a distributor that   remits a monthly fee under this section is[, subject to Section   154.051, Tax Code,] entitled to a stamping allowance of three   percent of the face value of all stamps purchased under Section   154.041, Tax Code, for providing the service of affixing stamps to   cigarette packages.          SECTION 3.  Subchapter B, Chapter 154, Tax Code, is amended   by adding Section 154.026 to read as follows:          Sec. 154.026.  CIGARETTES USED EXCLUSIVELY FOR RESEARCH   PURPOSES. (a)  Cigarettes are exempt from the tax imposed by   Section 154.021 if the cigarettes are:                (1)  contained in a package labeled with "Experimental   Use Only," "Reference Cigarettes," or other similar wording   indicating that the manufacturer intends for the product to be used   exclusively for experimental purposes in compliance with 27 C.F.R.   Section 40.232;                (2)  sold directly by a manufacturer to a research   facility in this state, including:                      (A)  a laboratory, hospital, medical center,   college, or university; or                      (B)  a facility designated as a Tobacco Center of   Regulatory Science by the National Institutes of Health;                (3)  used by the research facility exclusively for   experimental purposes; and                (4)  not resold by the research facility.          (b)  Sections 154.041, 154.302, 154.502, 154.503, and   154.515 do not apply to cigarettes exempted by Subsection (a).          SECTION 4.  Section 154.210(a), Tax Code, is amended to read   as follows:          (a)  A distributor shall deliver to the comptroller, on or   before the 25th [last] day of each month, a report for the preceding   month.          SECTION 5.  Section 154.502, Tax Code, is amended to read as   follows:          Sec. 154.502.  UNSTAMPED CIGARETTES. Except as provided by   Section 154.026(b), a [A] person commits an offense if the person:                (1)  makes a first sale of unstamped cigarettes;                (2)  sells, offers for sale, or presents as a prize or   gift unstamped cigarettes; or                (3)  knowingly consumes, uses, or smokes cigarettes   taxed under this chapter without a stamp affixed to each individual   package.          SECTION 6.  Section 154.503(a), Tax Code, is amended to read   as follows:          (a)  Except as provided by Sections 154.026(b) and [Section]   154.042 [of this code], a person commits an offense if the person   possesses unstamped cigarettes in quantities less than 10,000.          SECTION 7.  Section 154.515(a), Tax Code, is amended to read   as follows:          (a)  Except as provided by Sections 154.026(b) and [Section]   154.042 [of this code], a person commits an offense if the person   possesses unstamped cigarettes in quantities of 10,000 or more.          SECTION 8.  Section 155.111(a), Tax Code, is amended to read   as follows:          (a)  A distributor shall file with the comptroller on or   before the 25th [last] day of each month[,] a report for the   preceding month.          SECTION 9.  (a)  The changes in law made by this Act do not   affect taxes and fees imposed before the effective date of this Act,   and the law in effect before the effective date of this Act is   continued in effect for purposes of the liability for and   collection of those taxes and fees.          (b)  The changes in law made by this Act to Sections 154.210   and 155.111, Tax Code, apply only to a distributor's report   originally due on or after the effective date of this Act.  A   distributor's report originally due before that date is governed by   the law in effect on the date the report was due, and the former law   is continued in effect for that purpose.          (c)  The changes in law made by this Act to Sections 154.502,   154.503, and 154.515, Tax Code, apply only to an offense committed   on or after the effective date of this Act. An offense committed   before the effective date of this Act is governed by the law in   effect when the offense was committed, and the former law is   continued in effect for that purpose. For purposes of this   subsection, an offense was committed before the effective date of   this Act if any element of the offense occurred before that date.          SECTION 10.  This Act takes effect September 1, 2017.