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S.F. No. 1052 - Modification of taxation of nicotine solution used in e-cigarettes
Author: Senator David H. Senjem
Prepared By: Nora Pollock, Senate Counsel (651/297-8066)
Date: March 7, 2017


This bill modifies the taxation structure for nicotine used in e-cigarettes. Under current law, this type of nicotine is taxed in the same way as “other tobacco products” (OTP). This bill establishes a tax rate on a per-millimeter of consumable material basis, effective July 1, 2017.             




Creates a definition of “consumable material” to mean any liquid nicotine solution or other material containing nicotine that is depleted as a vapor product (defined in section 3) is used.


Adds vapor products to the definition of “tobacco products” in current law.


Creates a definition of “vapor products” to mean any noncombustible product that employs a heating element, power source, electronic circuit, or other electronic, chemical, or mechanical means, regardless of shape or size, that can be used to produce vapor from nicotine in a solution or other form. “Vapor products” includes electronic cigarettes, electronic cigars, electronic cigarillos, electronic pipes, or similar product or device and any vapor cartridge or other container of nicotine in a solution or other form that is intended to be used with or in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or device. 

“Vapor products” does not include any product regulated as a drug or device by the FDA.


Adds language to the tax rates section of tobacco products to reference the new rates for vapor products in section 5


Provides a new tax rate for vapor products on tobacco products distributors of 30 cents/mL of consumable material. The tax is imposed at the time the distributor:

  • brings vapor products into the state for sale or causes them to be brought in to the state for sale
  • makes, manufactures, or fabricates vapor products in the state for sale in the state; or
  • ships or transports vapor products to retailers in the state to be sold by those retailers.  


Imposes use tax on vapor products at the same rate in section 5.


Provides that state taxes do not apply with respect to vapor products not taxed under federal law.


Provides that use tax does not apply to vapor products if the consumable material subject to tax is 50 mL or less in aggregate in a calendar month.


Exempts vapor products from the prohibition on distributing tobacco products.


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