The Tennessee Senate is set to consider a bill that would establish a statewide database for vaping products and sales, potentially generating millions of dollars for the state's general fund. Senate Bill 763, sponsored by Sen. Ken Yager (R-Kingston), aims to regulate the vaping industry by requiring stores to register with the state and imposing taxes on various vapor products.
Under the proposed legislation, retailers would be prohibited from selling products that are not registered in the database. Civil penalties for non-compliance range from $500 to $1,500 for retailers and up to $10,000 for manufacturers selling noncompliant products.
The bill also introduces a tax structure for vapor products, with a 7 cents per milliliter tax on closed-system products and a 10% tax on the wholesale price of open-system products. Initially, the revenue generated from these taxes was to be directed to a special fund, but the Senate Finance, Ways and Means Committee amended the bill on Tuesday to allocate the funds to the state's general fund instead.
Sen. Yager estimates that the bill could generate approximately $16 million in revenue, although the costs associated with establishing and maintaining the database remain unknown.
The proposed legislation has faced criticism from retailers, who argue that it would devastate the industry. Danny Gillis, president of the Tennessee Smoke-Free Association and owner of three vape stores, warned that the bill would make 99% of vapor products unavailable and force the closure of around 700 stores across the state, resulting in the loss of over 2,200 jobs.
However, Sen. Yager clarified that the bill's intention is not to close vape stores but rather to establish guardrails to protect young people and ensure compliance with Tennessee laws.
The Senate Finance, Ways and Means Committee recommended approval of the bill with a 9-2 vote, sending it to the full Senate for consideration. The House companion bill is scheduled for a hearing before the House Finance, Ways and Means Committee on Wednesday.
As the debate surrounding the regulation and taxation of vaping products continues, the fate of Senate Bill 763 and its potential impact on the industry and state revenue remains to be seen.
News source: Tax on vaping products, new database headed to the Senate
