87R2051 SRA-D     By: Johnson S.B. No. 248       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of cigarettes, tobacco products, and   e-cigarettes and the administration of taxes imposed on the sale or   use of certain of those products; requiring a permit; imposing a   fee; providing administrative penalties.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle G, Title 2, Health and Safety Code, is   amended by adding Chapter 147 to read as follows:   CHAPTER 147. E-CIGARETTE RETAILER PERMITS          Sec. 147.0001.  DEFINITIONS. In this chapter:                (1)  "E-cigarette" has the meaning assigned by Section   161.081.                (2)  "E-cigarette retailer" means a person who engages   in the business of selling e-cigarettes to consumers, including a   person who sells e-cigarettes to consumers through a marketplace.                (3)  "Marketplace" has the meaning assigned by Section   151.0242, Tax Code.                (4)  "Permit holder" means a person who obtains a   permit under Section 147.0005.          Sec. 147.0002.  INAPPLICABILITY TO CERTAIN PRODUCTS. This   chapter does not apply to a product described by Section 161.0815.          Sec. 147.0003.  RULES. The comptroller may adopt rules to   implement this chapter, including rules exempting a person who   sells e-cigarettes to consumers through a marketplace from the   requirements of this chapter.          Sec. 147.0004.  E-CIGARETTE RETAILER PERMIT REQUIRED. (a)   A person may not engage in business as an e-cigarette retailer in   this state unless the person has been issued a permit from the   comptroller. A person shall obtain a permit for each place of   business the person owns or operates at which sales of e-cigarettes   are made.          (b)  The comptroller shall prescribe the form and content of   an application for a permit and provide the form on request.          (c)  The applicant shall accurately complete all information   required by the application and provide the comptroller with   additional information the comptroller considers necessary.          (d)  The comptroller may require each corporation,   association, joint venture, syndicate, partnership, or   proprietorship to provide:                (1)  financial information regarding the applicant;   and                (2)  the identity of each officer, director,   stockholder owning 10 percent or more of the outstanding stock,   partner, member, owner, or managing employee.          (e)  Each applicant that applies for a permit to sell   e-cigarettes from a vehicle must provide the make, model, vehicle   identification number, registration number, and any other   information concerning the vehicle the comptroller requires.          (f)  All financial information provided under this section   is confidential and not subject to Chapter 552, Government Code.          (g)  Permits for engaging in business as an e-cigarette   retailer are governed exclusively by the provisions of this code.          Sec. 147.0005.  ISSUANCE OF PERMIT. (a) The comptroller   shall issue a permit to an applicant if the comptroller:                (1)  has received an application and fee;                (2)  does not reject the application and deny the   permit under Section 147.0006; and                (3)  determines that issuing the permit will not   jeopardize the administration and enforcement of this chapter.          (b)  The permit shall be issued for a designated place of   business, except as provided by Section 147.0009.          (c)  The permits are nonassignable.          (d)  The permit must indicate the type of permit and   authorize the sale of e-cigarettes in this state. The permit must   show that it is revocable and shall be forfeited or suspended if the   conditions of issuance, provisions of this chapter, or rules of the   comptroller are violated.          Sec. 147.0006.  DENIAL OF PERMIT. The comptroller may   reject an application and deny a permit if the comptroller finds,   after notice and opportunity for hearing, any of the following:                (1)  the premises where business will be conducted are   not adequate to protect the e-cigarettes; or                (2)  the applicant or managing employee, or if the   applicant is a corporation, an officer, director, manager, or any   stockholder who holds directly or through family or partner   relationship 10 percent or more of the corporation's stock, or, if   the applicant is a partnership, a partner or manager:                      (A)  has failed to disclose any information   required by Sections 147.0004(c), (d), and (e), including previous   business experience, financial condition of the applicant, present   or previous business affiliations, previous employment, and any   conviction of a felony, or has made a false statement in the   application; or                      (B)  has previously violated provisions of this   chapter.          Sec. 147.0007.  PERMIT PERIOD; FEES. (a) A permit required   by this chapter expires on the last day of May of each even-numbered   year.          (b)  An application for a permit required by this chapter   must be accompanied by a fee of:                (1)  one-half of the amount of the fee for a retailer's   permit required by Section 154.111(b), Tax Code, if the applicant   holds a valid retailer's permit under Section 154.101, 154.102, or   155.041, Tax Code; or                (2)  the amount of the fee for a retailer's permit   required by Section 154.111(b), Tax Code.          (c)  For a new or renewal permit required by Section   147.0004, the comptroller shall prorate the fee according to the   number of months remaining during the period that the permit is to   be in effect.          (d)  A person who does not obtain a renewal permit in a timely   manner must pay a late fee of $50 in addition to the application fee   for the permit.          (e)  If on the date of issuance a permit will expire within   three months, the comptroller may collect the prorated permit fee   or the fee for the current period and, with the consent of the   permit holder, may collect the fee for the next permit period and   issue a permit or permits for both periods, as applicable.          (f)  A person issued a permit for a place of business that   permanently closes before the permit expiration date is not   entitled to a refund of the permit fee.          Sec. 147.0008.  PAYMENT FOR PERMITS. (a) An applicant for a   permit required by Section 147.0004 shall send the required fee   with the application.          (b)  The payment must be made in cash or by money order,   check, or credit card.          (c)  The comptroller may not issue a permit in exchange for a   check until after the comptroller receives full payment on the   check.          Sec. 147.0009.  DISPLAY OF PERMIT. (a) A permit holder   shall keep the permit on public display at the place of business for   which the permit was issued.          (b)  A permit holder who has a permit assigned to a vehicle   shall post the permit in a conspicuous place on the vehicle.          Sec. 147.0010.  REVENUE. Revenue from the sale of   e-cigarette retailer's permits shall be deposited to the general   revenue fund and may be appropriated only as provided by this   section. The money may be appropriated first to the comptroller for   administering:                (1)  permitting of retailers under this chapter and   Chapters 154 and 155, Tax Code; and                (2)  disciplinary actions taken under Section   161.0901.          Sec. 147.0011.  FINAL SUSPENSION OR REVOCATION OF PERMIT.   (a) The comptroller may revoke or suspend a permit holder's permit   if the comptroller finds, after notice and hearing as provided by   this section, that the permit holder violated this chapter or a rule   adopted under this chapter.          (b)  If the comptroller intends to suspend or revoke a   permit, the comptroller shall provide the permit holder with   written notice that includes a statement:                (1)  of the reason for the intended revocation or   suspension;                (2)  that the permit holder is entitled to a hearing by   the comptroller on the proposed suspension or revocation; and                (3)  of the date, time, and place of the hearing.          (c)  The comptroller shall deliver the written notice by   personal service or by mail to the permit holder's mailing address   as it appears in the comptroller's records. Service by mail is   complete when the notice is deposited with the United States Postal   Service.          (d)  The comptroller shall give the permit holder notice   before the 10th day before the final hearing.          (e)  A permit holder may appeal the comptroller's decision to   a district court in Travis County not later than the 30th day after   the date the comptroller's decision becomes final.          (f)  A person whose permit is suspended or revoked may not   sell, offer for sale, or distribute e-cigarettes from the place of   business to which the permit applied until a new permit is granted   or the suspension is removed.          Sec. 147.0012.  SUMMARY SUSPENSION OF PERMIT. (a) The   comptroller may suspend a permit holder's permit without notice or   a hearing for the permit holder's failure to comply with this   chapter or a rule adopted under this chapter if the permit holder's   continued operation constitutes an immediate and substantial   threat.          (b)  If the comptroller summarily suspends a permit holder's   permit, proceedings for a preliminary hearing before the   comptroller or the comptroller's representative must be initiated   simultaneously with the summary suspension. The preliminary   hearing shall be set for a date not later than the 10th day after the   date of the summary suspension, unless the parties agree to a later   date.          (c)  At the preliminary hearing, the permit holder must show   cause why the permit should not remain suspended pending a final   hearing on suspension or revocation.          (d)  Chapter 2001, Government Code, does not apply to a   summary suspension under this section.          (e)  To initiate a proceeding to suspend summarily a permit   holder's permit, the comptroller shall serve notice on the permit   holder informing the permit holder of the right to a preliminary   hearing before the comptroller or the comptroller's representative   and of the time and place of the preliminary hearing. The notice   must be personally served on the permit holder or an officer,   employee, or agent of the permit holder or sent by certified or   registered mail, return receipt requested, to the permit holder's   mailing address as it appears in the comptroller's records. The   notice must state the alleged violations that constitute the   grounds for summary suspension. The suspension is effective at the   time the notice is served. If notice is served in person, the   permit holder shall immediately surrender the permit to the   comptroller.  If notice is served by mail, the permit holder shall   immediately return the permit to the comptroller.          (f)  Section 147.0011, governing hearings for final   suspension or revocation of a permit under this chapter, governs a   final administrative hearing.          Sec. 147.0013.  HEARINGS. Unless otherwise provided by this   chapter, the comptroller shall conduct all hearings required by   this chapter in accordance with Chapter 2001, Government Code. The   comptroller may designate one or more representatives to conduct   the hearings and may prescribe the rules of procedure governing the   hearings.          SECTION 2.  Sections 161.081(1-a), (2), and (4), Health and   Safety Code, are amended to read as follows:                (1-a)  "E-cigarette" means an electronic cigarette or   any other device that simulates smoking by using a mechanical   heating element, battery, or electronic circuit to deliver nicotine   or other substances to the individual inhaling from the device or a   consumable liquid solution or other material aerosolized or   vaporized during the use of an electronic cigarette or other device   described by this subdivision, regardless of whether the liquid or   other material contains nicotine. The term does not include a   prescription medical device unrelated to the cessation of smoking.     The term includes:                      (A)  a device described by this subdivision   regardless of whether the device is manufactured, distributed, or   sold as an e-cigarette, e-cigar, or e-pipe or under another product   name or description; and                      (B)  a component, part, or accessory for the   device, regardless of whether the component, part, or accessory is   sold separately from the device.                (2)  "Permit holder" has the meaning assigned by   Section 147.0001 of this code or Section 154.001 or 155.001, Tax   Code, as applicable.                (4)  "Retailer" means a person who engages in the   practice of selling cigarettes, e-cigarettes, or tobacco products   to consumers and includes the owner of a coin-operated cigarette,   e-cigarette, or tobacco product vending machine. The term includes   a retailer as [that term is] defined by Section 154.001 or 155.001,   Tax Code, and an e-cigarette retailer as defined by Section   147.0001 of this code, as applicable.          SECTION 3.  Section 161.083(d), Health and Safety Code, is   amended to read as follows:          (d)  Notwithstanding any other provision of law, a violation   of this section is not a violation of this subchapter for purposes   of Section 161.0901 [154.1142 or 155.0592, Tax Code].          SECTION 4.  Subchapter H, Chapter 161, Health and Safety   Code, is amended by adding Section 161.0901 to read as follows:          Sec. 161.0901.  DISCIPLINARY ACTION AGAINST CIGARETTE,   E-CIGARETTE, AND TOBACCO PRODUCT RETAILERS. (a) A retailer is   subject to disciplinary action as provided by this section if an   agent or employee of the retailer commits an offense under this   subchapter or Subchapter K.          (b)  If the comptroller finds, after notice and an   opportunity for a hearing as provided by Chapter 2001, Government   Code, that a permit holder has violated this subchapter or   Subchapter K at a place of business for which a permit is issued,   the comptroller may suspend the permit for that place of business   and administratively assess a fine as follows:                (1)  if the permit holder has not been found to have   violated this subchapter or Subchapter K at that place of business   during the 24-month period preceding the violation, the comptroller   may require the permit holder to pay a fine in an amount not to   exceed $1,000;                (2)  if the permit holder has been found to have   violated this subchapter or Subchapter K at that place of business   once during the 24-month period preceding the violation, the   comptroller may require the permit holder to pay a fine in an amount   not to exceed $2,000; and                (3)  if the permit holder has been found to have   violated this subchapter or Subchapter K at that place of business   at least twice during the 24-month period preceding the violation,   the comptroller may:                      (A)  require the permit holder to pay a fine in an   amount not to exceed $3,000; and                      (B)  suspend the permit for that place of business   for not more than five days.          (c)  Except as provided by Subsection (e), if the permit   holder has been found to have violated this subchapter or   Subchapter K on four or more previous and separate occasions at the   same place of business during the 24-month period preceding the   violation, the comptroller shall revoke the permit issued under   Chapter 147 of this code or Chapter 154 or 155, Tax Code, as   applicable. If the permit holder does not hold a permit under   Chapter 147 of this code or Chapter 154 or 155, Tax Code, the   comptroller shall revoke the permit issued under Section 151.201,   Tax Code.          (d)  A permit holder whose permit has been revoked under this   section may not apply for a permit for the same place of business   before the expiration of six months after the effective date of the   revocation.          (e)  For purposes of this section, the comptroller may   suspend a permit but may not revoke the permit under Subsection (c)   if the comptroller finds that:                (1)  the employer has not violated this subchapter or   Subchapter K more than seven times at the place of business for   which the permit is issued in the 48-month period preceding the   violation in question;                (2)  the employer requires its employees to attend a   comptroller-approved seller training program;                (3)  the employees have actually attended a   comptroller-approved seller training program; and                (4)  the employer has not directly or indirectly   encouraged the employees to violate the law.          (f)  The comptroller may adopt rules to implement this   section.          SECTION 5.  The heading to Subchapter K, Chapter 161, Health   and Safety Code, is amended to read as follows:   SUBCHAPTER K. PROHIBITION OF CERTAIN CIGARETTE, E-CIGARETTE, OR   TOBACCO PRODUCT ADVERTISING; FEE          SECTION 6.  Section 161.121, Health and Safety Code, is   amended by adding Subdivision (2-a) to read as follows:                (2-a)  "E-cigarette" has the meaning assigned by   Section 161.081.          SECTION 7.  Sections 161.122(a), (b), and (e), Health and   Safety Code, are amended to read as follows:          (a)  Except as provided by this section, a sign containing an   advertisement for cigarettes, e-cigarettes, or tobacco products   may not be located closer than 1,000 feet to a church or school.          (b)  The measurement of the distance between the sign   containing an advertisement for cigarettes, e-cigarettes, or   tobacco products and an institution listed in Subsection (a) is   from the nearest property line of the institution to a point on a   street or highway closest to the sign, along street lines and in   direct lines across intersections.          (e)  Subsection (a) does not apply to a sign containing an   advertisement for cigarettes, e-cigarettes, or tobacco products   that, before September 1, 1997, was located closer than 1,000 feet   to a church or school but that was not located closer than 500 feet   to the church or school.          SECTION 8.  Section 161.123(a), Health and Safety Code, is   amended to read as follows:          (a)  A purchaser of advertising is liable for and shall remit   to the comptroller a fee that is 10 percent of the gross sales price   of any outdoor advertising of cigarettes, e-cigarettes, and tobacco   products in this state.          SECTION 9.  Section 111.00455(b), Tax Code, is amended to   read as follows:          (b)  The following are not contested cases under Subsection   (a) and Section 2003.101, Government Code:                (1)  a show cause hearing or any hearing not related to   the collection, receipt, administration, or enforcement of the   amount of a tax or fee imposed, or the penalty or interest   associated with that amount, except for a hearing under Section   151.157(f), 151.1575(c), or 151.712(g) of this code or Section   161.0901, Health and Safety Code[, 154.1142, or 155.0592];                (2)  a property value study hearing under Subchapter M,   Chapter 403, Government Code;                (3)  a hearing in which the issue relates to:                      (A)  Chapters 72-75, Property Code;                      (B)  forfeiture of a right to do business;                      (C)  a certificate of authority;                      (D)  articles of incorporation;                      (E)  a penalty imposed under Section 151.703(d);                      (F)  the refusal or failure to settle under   Section 111.101; or                      (G)  a request for or revocation of an exemption   from taxation; and                (4)  any other hearing not related to the collection,   receipt, administration, or enforcement of the amount of a tax or   fee imposed, or the penalty or interest associated with that   amount.          SECTION 10.  Section 154.1135(b), Tax Code, is amended to   read as follows:          (b)  The payment must be made in cash or by money order, [or]   check, or credit card.          SECTION 11.  Section 154.121(b), Tax Code, is amended to   read as follows:          (b)  Revenue from the sale of retailer's permits shall be   deposited to the general revenue fund and may be appropriated only   as provided by this section. The money may be appropriated first to   the comptroller for administering:                (1)  permitting [administration of licensing] of   retailers under this chapter, Chapter [or Chapter] 155 of this   code, and Chapter 147, Health and Safety Code; and                (2)  disciplinary actions taken under Section   161.0901, Health and Safety Code.          SECTION 12.  Section 155.050(b), Tax Code, is amended to   read as follows:          (b)  The payment must be made in cash or by money order, [or]   check, or credit card.          SECTION 13.  Section 155.058(b), Tax Code, is amended to   read as follows:          (b)  Revenue from the sale of retailer's permits shall be   deposited to the general revenue fund and may be appropriated only   as provided by this section. The money may be appropriated first to   the comptroller for administering:                (1)  permitting [administration of licensing] of   retailers under this chapter, Chapter [or Chapter] 154 of this   code, and Chapter 147, Health and Safety Code; and                (2)  disciplinary actions taken under Section   161.0901, Health and Safety Code.          SECTION 14.  (a) Section 161.124, Health and Safety Code, is   repealed.          (b)  The following provisions of the Tax Code are repealed:                (1)  Section 154.1142;                (2)  Section 154.1143;                (3)  Section 155.0592; and                (4)  Section 155.0593.          SECTION 15.  Section 161.0901, Health and Safety Code, as   added by this Act, applies only to a violation that occurs on or   after the effective date of this Act.  A violation that occurs   before the effective date of this Act is governed by the law in   effect on the date the violation occurred, and the former law is   continued in effect for that purpose.          SECTION 16.  (a) Notwithstanding Section 147.0004, Health   and Safety Code, as added by this Act, a person is not required to   hold a permit under that section to engage in business as a retailer   of e-cigarettes in this state until January 1, 2022.          (b)  The comptroller of public accounts shall prescribe the   form and content of an application for a permit under Section   147.0004, Health and Safety Code, as added by this Act, and begin   accepting applications for the permit not later than October 1,   2021.          SECTION 17.  This Act takes effect September 1, 2021.