87R21306 SRA-D     By: Johnson, et al. S.B. No. 248     (Thierry)     Substitute the following for S.B. No. 248:  No.       A BILL TO BE ENTITLED   AN ACT   relating to the sale of cigarettes, tobacco products, and   e-cigarettes; requiring occupational permits; imposing fees;   providing civil and administrative penalties; creating criminal   offenses.          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   SUBCHAPTER A.  GENERAL PROVISIONS          Sec. 147.0001.  DEFINITIONS. In this chapter:                (1)  "Commercial business location” means the entire   premises occupied by a permit applicant or a person required to hold   a permit under this chapter.                (2)  "E-cigarette" has the meaning assigned by Section   161.081.                (3)  "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.                (4)  "Marketplace" has the meaning assigned by Section   151.0242, Tax Code.                (5)  "Permit holder" means a person who obtains a   permit under Section 147.0052.                (6)  “Place of business” means:                      (A)  a commercial business location where   e-cigarettes are sold;                      (B)  a commercial business location where   e-cigarettes are kept for sale or consumption or otherwise stored;   or                      (C)  a vehicle from which e-cigarettes are sold.          Sec. 147.0002.  INAPPLICABILITY TO CERTAIN PRODUCTS. This   chapter does not apply to a product described by Section 161.0815.          Sec. 147.0003.  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.          Sec. 147.0004.  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.   SUBCHAPTER B.  PERMITS          Sec. 147.0051.  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.          (b)  An e-cigarette retailer shall obtain a permit for each   place of business owned or operated by the e-cigarette retailer.   The comptroller may not issue a permit for a place of business that   is a residence or a unit in a public storage facility.          (c)  The comptroller shall prescribe the form and content of   an application for a permit and provide the form on request.          (d)  The applicant shall accurately complete all information   required by the application and provide the comptroller with   additional information the comptroller considers necessary.          (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. 147.0052.  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 147.0053; 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 147.0056.          (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. 147.0053.  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 147.0051(d) and (e); or                      (B)  has previously violated provisions of this   chapter.          Sec. 147.0054.  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 at the time of   application the applicant holds a valid retailer's permit under   Section 154.101, 154.102, or 155.041, Tax Code, for the same place   of business; or                (2)  the amount of the fee for a retailer's permit   required by Section 154.111(b), Tax Code.          (c)  For a new permit required by Section 147.0051, 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. 147.0055.  PAYMENT FOR PERMITS. (a) An applicant for a   permit required by Section 147.0051 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. 147.0056.  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. 147.0057.  REVENUE. Revenue from the sale of   e-cigarette retailer's permits shall be deposited as provided by   Section 161.0903 and may be appropriated only as provided by that   section.   SUBCHAPTER C.  PERMIT SUSPENSION AND REVOCATION          Sec. 147.0101.  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. 147.0102.  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 147.0101, governing hearings for final   suspension or revocation of a permit under this chapter, governs a   final administrative hearing.   SUBCHAPTER D. PENALTIES          Sec. 147.0151.  PENALTIES.  (a)  A person violates this   chapter if the person:                (1)  engages in the business of an e-cigarette retailer   without a permit; or                (2)  is a person who is subject to a provision of this   chapter or a rule adopted by the comptroller under this chapter and   who violates the provision or rule.          (b)  A person who violates this section shall pay to the   state a penalty of not more than $2,000 for each violation.          (c)  Each day on which a violation occurs is a separate   violation.          (d)  The attorney general shall bring suit to recover   penalties under this section.          (e)  A suit under this section may be brought in Travis   County or another county having jurisdiction.          Sec. 147.0152.  FAILURE TO HAVE PERMIT; OFFENSE.  (a)  A   person commits an offense if the person acts as an e-cigarette   retailer and:                (1)  receives or possesses e-cigarettes without having   a permit;                (2)  receives or possesses e-cigarettes without having   a permit posted where it can be easily seen by the public; or                (3)  sells e-cigarettes without having a permit.          (b)  An offense under this section is a Class A misdemeanor.          SECTION 2.  Sections 161.081(1-a), (2), and (4), Health and   Safety Code, are amended to read as follows:                (1-a) (A)  "E-cigarette" means:                            (i)  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                            (ii)  a consumable liquid solution or other   material aerosolized or vaporized during the use of an electronic   cigarette or other device described by this subdivision.                      (B)  The term "e-cigarette" does not include a   prescription medical device unrelated to the cessation of smoking.                      (C)  The term "e-cigarette" includes:                            (i) [(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                            (ii) [(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 Sections 161.0901 and 161.0903 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.          (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 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)  for the first violation of this subchapter during   the 24-month period preceding the violation at that place of   business, the comptroller may require the permit holder to pay a   fine in an amount not to exceed $1,000;                (2)  for the second violation of this subchapter during   the 24-month period preceding the most recent violation at that   place of business, the comptroller may require the permit holder to   pay a fine in an amount not to exceed $2,000; and                (3)  for the third violation of this subchapter during   the 24-month period preceding the most recent violation at that   place of business, 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), for the fourth or   a subsequent violation of this subchapter during the 24-month   period preceding the most recent violation at that place of   business, 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 for a place of business but may not revoke the   permit under Subsection (c) if the comptroller finds that:                (1)  the permit holder has not violated this subchapter   more than seven times at the place of business in the 48-month   period preceding the violation in question;                (2)  the permit holder 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 permit holder has not directly or indirectly   encouraged the employees to violate the law.          (f)  The comptroller may adopt rules to implement this   section.          Sec. 161.0903.  USE OF CERTAIN REVENUE.  Revenue from fees   collected under Section 161.123 and from the sale of permits under   Chapter 147 of this code, retailer permits under Chapter 154, Tax   Code, and retailer permits under Chapter 155, Tax Code, shall be   deposited in the general revenue fund and may be appropriated only   as provided by this section. The revenue shall be appropriated, in   order of priority, to:                (1)  the comptroller for the purpose of administering   retailer permitting under Chapter 147 of this code and Chapters 154   and 155, Tax Code;                (2)  the comptroller for the purpose of administering   and enforcing this subchapter and Subchapters K and N;                (3)  the department for the purpose of administering   programs under Sections 161.253 and 161.301; and                (4)  the appropriate entity for the purpose of   administering that entity's responsibilities under Section   161.302.          SECTION 5.  Section 161.123(b), Health and Safety Code, is   amended to read as follows:          (b)  The comptroller shall collect the fee [and deposit the   money] as provided in this section.          SECTION 6.  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 7.  Section 154.001, Tax Code, is amended by   amending Subdivisions (9), (14), and (19) and adding Subdivisions   (11-a) and (11-b) to read as follows:                (9)  "First sale" means, except as otherwise provided   by this chapter:                      (A)  the first transfer of possession in   connection with a purchase, sale, or any exchange for value of   cigarettes in or into this state, which:                            (i)  includes the sale of cigarettes by:                                  (a)  a distributor in or outside this   state to a distributor, wholesaler, or retailer in this state; and                                  (b)  a manufacturer in this state who   transfers the cigarettes in this state; and                            (ii)  does not include:                                  (a)  the sale of cigarettes by a   manufacturer outside this state to a distributor in this state;   [or]                                  (b)  the transfer of cigarettes from a   manufacturer outside this state to a bonded agent in this state;                                  (c)  the sale of cigarettes by a   manufacturer, bonded agent, distributor, or importer to an   interstate warehouse in this state; or                                  (d)  the transfer of cigarettes by an   interstate warehouse in an interstate warehouse transaction;                      (B)  the first use or consumption of cigarettes in   this state; or                      (C)  the loss of cigarettes in this state whether   through negligence, theft, or other unaccountable loss.                (11-a) "Interstate warehouse" means a person in this   state who receives unstamped cigarettes from a manufacturer, bonded   agent, distributor, or importer and stores the cigarettes   exclusively for an interstate warehouse transaction.                (11-b) "Interstate warehouse transaction" means the   sale or delivery of cigarettes from an interstate warehouse to a   person located in another state who is licensed or permitted by the   other state to affix that state's cigarette stamps or otherwise pay   the state's excise tax on cigarettes as required.                (14)  "Permit holder" means a bonded agent, interstate   warehouse, distributor, wholesaler, manufacturer, importer, export   warehouse, or retailer who obtains a permit under Section 154.101.                (19)  "Wholesaler" means a person, including a   manufacturer's representative, who sells or distributes cigarettes   in this state for resale but who is not a distributor or interstate   warehouse.          SECTION 8.  Section 154.041, Tax Code, is amended by adding   Subsection (f) to read as follows:          (f)  No stamp is required on the transfer of possession of   cigarettes described by Section 154.001(9)(A)(ii)(d).          SECTION 9.  Section 154.101, Tax Code, is amended by   amending Subsections (a), (b), and (h) and adding Subsection (k) to   read as follows:          (a)  A person may not engage in business as a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   export warehouse, importer, or retailer unless the person has   applied for and received the applicable permit from the   comptroller.          (b)  Each distributor, wholesaler, bonded agent, interstate   warehouse, manufacturer, export warehouse, importer, or retailer   shall obtain a permit for each place of business owned or operated   by the distributor, wholesaler, bonded agent, interstate   warehouse, manufacturer, export warehouse, importer, or   retailer.  The comptroller may not issue a permit for a place of   business that is a residence or a unit in a public storage facility.          (h)  Permits for engaging in business as a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   export warehouse, importer, or retailer shall be governed   exclusively by the provisions of this code.          (k)  A person may not hold a distributor's permit issued by   this state and an interstate warehouse's permit for the same   location.          SECTION 10.  Section 154.1015, Tax Code, is amended by   amending Subsections (c), (d), and (e) and adding Subsection (j) to   read as follows:          (c)  A manufacturer outside this state who is not a permitted   distributor may sell cigarettes only to a permitted distributor or   permitted interstate warehouse.          (d)  A permitted distributor may sell cigarettes only to a   permitted distributor, wholesaler, or retailer. A permitted   distributor who manufactures or produces cigarettes in this state   may sell those cigarettes to a permitted interstate warehouse.          (e)  A permitted importer may sell cigarettes only to a   permitted interstate warehouse, distributor, wholesaler, or   retailer.          (j)  A permitted interstate warehouse may sell cigarettes   only in an interstate warehouse transaction. An interstate   warehouse may not make an intrastate sale of cigarettes without   written authorization by the comptroller.          SECTION 11.  Section 154.102(a), Tax Code, is amended to   read as follows:          (a)  The comptroller may issue a combination permit for   cigarettes and tobacco products to a person who is a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   importer, or retailer as defined by this chapter and Chapter 155 for   both cigarettes and tobacco products. An interstate warehouse may   not hold a combination permit as a retailer of cigarettes or tobacco   products.          SECTION 12.  Sections 154.110(a) and (d), Tax Code, are   amended to read as follows:          (a)  The comptroller shall issue a permit to a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   export warehouse, importer, or retailer if the comptroller:                (1)  has received an application and fee, if required;                (2)  believes that the applicant has complied with   Section 154.101; and                (3)  determines that issuing the permit will not   jeopardize the administration and enforcement of this chapter.          (d)  The permit must indicate the type of permit that it is   and authorize the sale of cigarettes in this state, except as   provided by Section 154.1015(j). 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.          SECTION 13.  Section 154.111(b), Tax Code, is amended to   read as follows:          (b)  An application for a permit required by this chapter   must be accompanied by a fee of:                (1)  $300 for a bonded agent's permit;                (1-a)  $300 for an interstate warehouse's permit;                (2)  $300 for a distributor's permit;                (3)  $200 for a wholesaler's permit;                (4)  $15 for each permit for a vehicle if the applicant   is also applying for a permit as a bonded agent, distributor, or   wholesaler or has received a current permit from the comptroller   under Sections 154.101 and 154.110; and                (5)  $180 for a retailer's permit.          SECTION 14.  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 15.  Sections 154.121(a) and (b), Tax Code, are   amended to read as follows:          (a)  Except as provided by Subsection (b), revenue from the   sale of permits to distributors, wholesalers, [and] bonded agents,   and interstate warehouses is allocated in the same manner as other   revenue allocated by Subchapter J.          (b)  Revenue from the sale of retailer's permits shall be   deposited as provided by Section 161.0903, Health and Safety Code,   [to the general revenue fund] and may be appropriated only as   provided by that [this] section. [The money may be appropriated   first to the comptroller for administration of licensing of   retailers under this chapter or Chapter 155.]          SECTION 16.  Section 154.152(c), Tax Code, is amended to   read as follows:          (c)  A person may not transport or cause to be transported   from this state cigarettes for sale in another state without first   affixing to the cigarettes the stamp required by the state in which   the cigarettes are to be sold or paying any other excise tax on the   cigarettes imposed by the state in which the cigarettes are to be   sold. This subsection does not apply to the distribution, sale, or   transportation of cigarettes sold by an interstate warehouse in an   interstate warehouse transaction.          SECTION 17.  Section 154.201, Tax Code, is amended to read as   follows:          Sec. 154.201.  RECORD OF PURCHASE OR RECEIPT. Each   distributor, wholesaler, bonded agent, interstate warehouse, and   export warehouse shall keep records at each place of business of all   cigarettes purchased or received, including records of those   cigarettes for which no tax is due under federal law.  Each   retailer shall keep records at a single commercial business   location, which the retailer shall designate as its principal place   of business in this state, of all cigarettes purchased and   received.  These records must include:                (1)  the name and address of the shipper or carrier and   the mode of transportation;                (2)  all shipping records or copies of records,   including invoices, bills of lading, waybills, freight bills, and   express receipts;                (3)  the date and the name of the place of origin of the   cigarette shipment;                (4)  the date and the name of the place of arrival of   the cigarette shipment;                (5)  a statement of the number, kind, and price paid for   cigarettes, including cigarettes in stamped and unstamped   packages;                (6)  the name, address, permit number, and tax   identification number of the seller;                (7)  in the case of a distributor, copies of the customs   certificates required by 19 U.S.C. Section 1681a(c), as amended,   for all cigarettes imported into the United States to which the   distributor has affixed a tax stamp; and                (8)  any other information required by rules of the   comptroller.          SECTION 18.  Section 154.203, Tax Code, is amended by   amending Subsection (a) and adding Subsection (c) to read as   follows:          (a)  Each interstate warehouse, distributor, and wholesaler   shall keep at each place of business in this state records of each   sale, distribution, exchange, or use of cigarettes whether taxed   under this chapter or not. Each interstate warehouse, distributor,   and wholesaler shall prepare and retain an original invoice for   each transaction involving cigarettes. Each interstate warehouse,   distributor, or wholesaler shall keep any supporting   documentation, including bills of lading, showing shipment and   receipt used in preparing the invoices at the place of business of   the interstate warehouse, distributor, or wholesaler. The   interstate warehouse, distributor, or wholesaler shall prepare and   deliver a duplicate invoice to the purchaser.          (c)  On request by the comptroller, an interstate warehouse   shall provide to the comptroller copies of periodic cigarette   reports filed with each state into which the interstate warehouse   sells cigarettes and copies of each report required under 15 U.S.C.   Section 376.          SECTION 19.  Section 154.501(a), Tax Code, is amended to   read as follows:          (a)  A person violates this chapter if the person:                (1)  is a distributor, wholesaler, manufacturer,   export warehouse, importer, bonded agent, interstate warehouse,   manufacturer's representative, or retailer and fails to keep   records required by this chapter;                (2)  engages in the business of a bonded agent,   interstate warehouse, distributor, wholesaler, manufacturer,   export warehouse, importer, or retailer without a valid permit;                (3)  is a distributor, wholesaler, manufacturer,   export warehouse, importer, bonded agent, interstate warehouse, or   retailer and fails to make a report or makes a false or incomplete   report or application required by this chapter to the comptroller;   or                (4)  is a person affected by this chapter and fails or   refuses to abide by or violates a provision of this chapter or a   rule adopted by the comptroller under this chapter.          SECTION 20.  Section 154.503(a), Tax Code, is amended to   read as follows:          (a)  Except as provided by Sections 154.026(b), 154.041(f),   and 154.042, a person commits an offense if the person possesses   unstamped cigarettes in quantities less than 10,000.          SECTION 21.  Section 154.509, Tax Code, is amended to read as   follows:          Sec. 154.509.  PERMITS. A person commits an offense if the   person acting:                (1)  as a distributor, interstate warehouse,   wholesaler, or retailer, receives or possesses cigarettes without   having a valid permit;                (2)  as a distributor, interstate warehouse,   wholesaler, or retailer, receives or possesses cigarettes without   having a permit posted where it can be easily seen by the public;                (3)  as a distributor, interstate warehouse, or   wholesaler, does not deliver an invoice to the purchaser as   required by Section 154.203;                (4)  as a distributor, interstate warehouse,   wholesaler, or retailer, sells cigarettes without having a valid   permit; or                (5)  as a bonded agent, interstate warehouse, or export   warehouse, stores, distributes, or delivers cigarettes in   unstamped packages without having a valid permit, except as   provided by Section 154.041(f).          SECTION 22.  Section 154.511, Tax Code, is amended to read as   follows:          Sec. 154.511.  TRANSPORTATION OF CIGARETTES. A person,   other than a common carrier, commits an offense if the person:                (1)  knowingly transports cigarettes without a stamp   affixed to each individual package, except as provided by Section   154.024(a) or 154.152(c);                (2)  wilfully refuses to stop a motor vehicle operated   to transport cigarettes after a request to stop from an authorized   person; or                (3)  while transporting cigarettes refuses to permit a   complete inspection of the cargo by an authorized person.          SECTION 23.  Section 154.515(a), Tax Code, is amended to   read as follows:          (a)  Except as provided by Sections 154.026(b), 154.041(f),   and 154.042, a person commits an offense if the person possesses   unstamped cigarettes in quantities of 10,000 or more.          SECTION 24.  Section 155.001, Tax Code, is amended by   amending Subdivisions (8), (12), and (16) and adding Subdivisions   (9-a) and (9-b) to read as follows:                (8)  "First sale" means, except as otherwise provided   by this chapter:                      (A)  the first transfer of possession in   connection with a purchase, sale, or any exchange for value of   tobacco products in or into this state, which:                            (i)  includes the sale of tobacco products   by:                                  (a)  a distributor in or outside this   state to a distributor, wholesaler, or retailer in this state; and                                  (b)  a manufacturer in this state who   transfers the tobacco products in this state; and                            (ii)  does not include:                                  (a)  the sale of tobacco products by a   manufacturer outside this state to a distributor in this state;   [or]                                  (b)  the transfer of tobacco products   from a manufacturer outside this state to a bonded agent in this   state; or                                  (c)  the sale of tobacco products by a   manufacturer, bonded agent, distributor, or importer to an   interstate warehouse in this state;                      (B)  the first use or consumption of tobacco   products in this state; or                      (C)  the loss of tobacco products in this state   whether through negligence, theft, or other unaccountable loss.                (9-a)  "Interstate warehouse" means a person in this   state who receives untaxed tobacco products from a manufacturer,   bonded agent, distributor, or importer and stores the tobacco   products exclusively for an interstate warehouse transaction.                (9-b)  "Interstate warehouse transaction" means the   sale or delivery of tobacco products from an interstate warehouse   to a person located in another state who is licensed or permitted by   the other state to pay the state's excise tax on tobacco products as   required.                (12)  "Permit holder" means a bonded agent, interstate   warehouse, distributor, wholesaler, manufacturer, importer, export   warehouse, or retailer who obtains a permit under Section 155.041.                (16)  "Wholesaler" means a person, including a   manufacturer's representative, who sells or distributes tobacco   products in this state for resale but who is not a distributor or   interstate warehouse.          SECTION 25.  Section 155.041, Tax Code, is amended by   amending Subsections (a), (b), and (h) and adding Subsection (i) to   read as follows:          (a)  A person may not engage in business as a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   export warehouse, importer, or retailer unless the person has   applied for and received the applicable permit from the   comptroller.          (b)  Each distributor, wholesaler, bonded agent, interstate   warehouse, manufacturer, export warehouse, importer, or retailer   shall obtain a permit for each place of business owned or operated   by the distributor, wholesaler, bonded agent, interstate   warehouse, manufacturer, export warehouse, importer, or retailer.          (h)  Permits for engaging in business as a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   export warehouse, importer, or retailer shall be governed   exclusively by the provisions of this code.          (i)  A person may not hold a distributor's permit issued by   this state and an interstate warehouse's permit for the same   location.          SECTION 26.  Section 155.0415, Tax Code, is amended by   amending Subsections (c), (d), (e), and (f) and adding Subsection   (j) to read as follows:          (c)  A manufacturer outside this state who is not a permitted   distributor may sell tobacco products only to a permitted   distributor or a permitted interstate warehouse.          (d)  A permitted distributor may sell tobacco products only   to a permitted distributor, wholesaler, or retailer. A permitted   distributor who manufactures or produces tobacco products in this   state may sell those tobacco products to a permitted interstate   warehouse.          (e)  A permitted importer may sell tobacco products only to a   permitted interstate warehouse, distributor, wholesaler, or   retailer.          (f)  A permitted wholesaler may sell tobacco products only to   a permitted interstate warehouse, distributor, wholesaler, or   retailer.          (j)  A permitted interstate warehouse may sell tobacco   products only in an interstate warehouse transaction. An   interstate warehouse may not make an intrastate sale of tobacco   products without written authorization by the comptroller.          SECTION 27.  Sections 155.048(a) and (d), Tax Code, are   amended to read as follows:          (a)  The comptroller shall issue a permit to a distributor,   wholesaler, bonded agent, interstate warehouse, manufacturer,   importer, or retailer if the comptroller:                (1)  has received an application and fee, if required;                (2)  does not reject the application and deny the   permit under Section 155.0481; and                (3)  determines that issuing the permit will not   jeopardize the administration and enforcement of this chapter.          (d)  The permit must indicate the type of permit that it is   and authorize the sale of tobacco products in this state, except as   provided by Section 155.0415(j). 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.          SECTION 28.  Section 155.049(b), Tax Code, is amended to   read as follows:          (b)  An application for a permit required by this chapter   must be accompanied by a fee of:                (1)  $300 for a bonded agent's permit;                (1-a)  $300 for an interstate warehouse's permit;                (2)  $300 for a distributor's permit;                (3)  $200 for a wholesaler's permit;                (4)  $15 for each permit for a vehicle if the applicant   is also applying for a permit as a bonded agent, distributor, or   wholesaler or has received a current permit from the comptroller   under Sections 155.041 and 155.048; and                (5)  $180 for a retailer's permit.          SECTION 29.  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 30.  Sections 155.058(a) and (b), Tax Code, are   amended to read as follows:          (a)  Except as provided by Subsection (b), revenue from the   sale of permits to distributors, wholesalers, [and] bonded agents,   and interstate warehouses is allocated in the same manner that   other revenue is allocated by Subchapter H.          (b)  Revenue from the sale of retailer's permits shall be   deposited as provided by Section 161.0903, Health and Safety Code,   [to the general revenue fund] and may be appropriated only as   provided by that [this] section. [The money may be appropriated   first to the comptroller for administration of licensing of   retailers under this chapter or Chapter 154.]          SECTION 31.  Section 155.101, Tax Code, is amended to read as   follows:          Sec. 155.101.  RECORD OF PURCHASE OR RECEIPT. Each   distributor, wholesaler, bonded agent, interstate warehouse, and   export warehouse shall keep records at each place of business of all   tobacco products purchased or received. Each retailer shall keep   records at a single commercial business location, which the   retailer shall designate as its principal place of business in the   state, of all tobacco products purchased and received. These   records must include [the following, except that Subdivision (7)   applies to distributors only and Subdivision (8) applies only to   the purchase or receipt of tobacco products other than cigars]:                (1)  the name and address of the shipper or carrier and   the mode of transportation;                (2)  all shipping records or copies of records,   including invoices, bills of lading, waybills, freight bills, and   express receipts;                (3)  the date and the name of the place of origin of the   tobacco product shipment;                (4)  the date and the name of the place of arrival of   the tobacco product shipment;                (5)  a statement of the number, kind, and price paid for   the tobacco products;                (6)  the name, address, permit number, and tax   identification number of the seller;                (7)  in the case of a distributor, the manufacturer's   list price for the tobacco products;                (8)  for tobacco products other than cigars, the net   weight as listed by the manufacturer for each unit; and                (9)  any other information required by rules of the   comptroller.          SECTION 32.  Section 155.102, Tax Code, is amended by   amending Subsections (a) and (b) and adding Subsection (d) to read   as follows:          (a)  Each interstate warehouse, distributor, and wholesaler   shall keep at each place of business in this state records of each   sale, distribution, exchange, or use of tobacco products whether   taxed under this chapter or not. Each interstate warehouse,   distributor, and wholesaler shall prepare and retain an original   invoice for each transaction involving tobacco products. Each   interstate warehouse, distributor, or wholesaler shall keep any   supporting documentation, including bills of lading, showing   shipment and receipt used in preparing the invoices at the place of   business of the interstate warehouse, distributor, or wholesaler.   The interstate warehouse, distributor, or wholesaler shall prepare   and deliver a duplicate invoice to the purchaser.          (b)  The records for each sale, distribution, exchange, or   use of tobacco products must show:                (1)  the purchaser's name and address, permit number,   or tax identification number;                (2)  the method of delivery and the name of the common   carrier or other person delivering the tobacco products;                (3)  the date, amount, and type of tobacco products   sold, distributed, exchanged, or used;                (4)  the price received for the tobacco products;                (5)  the number and kind of tobacco products on which   the tax has been paid; and                (6)  for sales from a manufacturer to a distributor or   interstate warehouse, the manufacturer's list price for the tobacco   products.          (d)  On request by the comptroller, an interstate warehouse   shall provide to the comptroller copies of periodic tobacco product   reports filed with each state into which the interstate warehouse   sells tobacco products and copies of each report required under 15   U.S.C. Section 376.          SECTION 33.  Section 155.201(a), Tax Code, is amended to   read as follows:          (a)  A person violates this chapter if the person:                (1)  is a distributor, wholesaler, manufacturer,   export warehouse, importer, bonded agent, interstate warehouse,   manufacturer's representative, or retailer and fails to keep   records required by this chapter;                (2)  engages in the business of a bonded agent,   interstate warehouse, distributor, wholesaler, manufacturer,   export warehouse, importer, or retailer without a valid permit;                (3)  is a distributor, wholesaler, manufacturer,   export warehouse, importer, bonded agent, interstate warehouse, or   retailer and fails to make a report required by this chapter to the   comptroller or makes a false or incomplete report or application   required by this chapter to the comptroller; or                (4)  is a person affected by this chapter and fails or   refuses to abide by or violates a provision of this chapter or a   rule adopted by the comptroller under this chapter.          SECTION 34.  Section 155.207, Tax Code, is amended to read as   follows:          Sec. 155.207.  PERMITS. A person commits an offense if the   person acting:                (1)  as a distributor, interstate warehouse,   wholesaler, or retailer, receives or possesses tobacco products   without having a valid permit;                (2)  as a distributor, interstate warehouse,   wholesaler, or retailer, receives or possesses tobacco products   without having a permit posted where it can be easily seen by the   public;                (3)  as a distributor, interstate warehouse, or   wholesaler, does not deliver an invoice to the purchaser as   required by Section 155.102;                (4)  as a distributor, interstate warehouse,   wholesaler, or retailer, sells tobacco products without having a   valid permit; or                (5)  as a bonded agent, interstate warehouse, or   export warehouse, stores, distributes, or delivers tobacco   products on which the tax has not been paid without having a valid   permit.          SECTION 35.  (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)  Sections 154.121(c), (d), and (e);                (4)  Sections 155.058(c), (d), and (e);                (5)  Section 155.0592; and                (6)  Section 155.0593.          SECTION 36.  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 37.  (a) Notwithstanding Sections 147.0051,   147.0151, and 147.0152, Health and Safety Code, as added by this   Act, a person is not required to hold a permit under Section   147.0051 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   147.0051, Health and Safety Code, as added by this Act, and begin   accepting applications for the permit not later than October 1,   2021.          SECTION 38.  This Act takes effect September 1, 2021.