HB 215

                SPONSOR:
                Rep. Minor-Brown & Rep. Harris & Rep. Osienski & Sen. Sokola & Sen. Townsend & Sen. Lockman
        HOUSE OF REPRESENTATIVES
        153rd GENERAL ASSEMBLY
        HOUSE SUBSTITUTE NO. 1
        FOR
        HOUSE BILL NO. 215
        AN ACT TO AMEND TITLE 30 OF THE DELAWARE CODE RELATING TO TOBACCO PRODUCT TAXATION AND LICENSING.
        BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE (Three-fifths of all members elected to each house thereof concurring therein):
        Section 1. Amend § 5301, Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows and redesignating accordingly:
        § 5301. Definitions.
        As used in this chapter:
        (8) “Marijuana” means as defined in § 4701 of Title 16.
        (10) “Nicotine pouch” means a tobacco-free pouch intended for oral use that contains nicotine.
        (13) “Premium cigar” means a cigar that meets the following:
        a. Contains only tobacco, water, and vegetable gum and no other ingredients or additives.
        b. Is wrapped in whole tobacco leaf.
        c. Contains a 100% leaf tobacco binder.
        d. Weighs more than 6 pounds per 1,000 units.
        e. The filler contains 50% or more, by weight, long filler tobacco. Long filler tobacco is whole tobacco leaves that run the length of the cigar.
        f. Contains no filter, nontobacco tip, or nontobacco mouthpiece.
        g. Contains no characterizing flavor other than tobacco.
        h. Is handmade or hand rolled, which means that no machinery was used apart from simple tools, such as scissors to cut the tobacco before rolling.
        (15)
        (18) a.
        “Tobacco products” means all products
        made primarily
        containing, made of, or derived from
         tobacco
         or nicotine
         for individual consumption, including
        cigarettes, cigars, pipe tobacco, and vapor products.
        all of the following:
        1. Cigarettes.
        2. Cigars.
        3. Pipe tobacco.
        4. Vapor products.
        5. Nicotine pouches.
        b. “Tobacco products” does not include any of the following:
        1. A product or substance that contains marijuana, whether or not the substance also contains nicotine.
        2. A product regulated as a drug or therapeutic device by the United States Food and Drug Administration under Chapter V of the Federal Food, Drug, and Cosmetic Act.
        Section 2. Amend § 5305, Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
        § 5305. Levy of tax, limitation; exemption [For application of this section, see 81 Del. Laws, c. 55, § 28(a)]
        (a) An excise tax is imposed and assessed upon the sale or use of cigarettes within this State at the rate of
        105 mills
        180 mills
        per cigarette. This tax applies only once to the same pack of cigarettes. In the event the tax computed according to this subsection results in a tax per pack or other unit of sale to which this tax applies involving a fraction of a cent, the tax applicable to that pack or other unit must be computed by rounding the tax to the next higher whole cent.
        (b) A tax is imposed and assessed upon the sale or use of all tobacco products, except those tobacco products taxed under subsection (a) or (c) of this section, within this State at the rate of
        30%
        40%
        of the wholesale price on such products.
        (c) (1) A tax is imposed and assessed upon the sale or use of moist snuff within this State at the rate of
        92 cents
        $1.23
         per ounce and a proportionate tax at the like rate on any fractional parts of an ounce. The per ounce tax imposed under this subsection must be computed based on the net weight as listed by the manufacturer.
        (2) An excise tax is imposed and assessed upon the sale or use of vapor products within this State at the rate of
        5 cents
        10 cents
         per fluid milliliter of vapor product. The tax imposed by this paragraph (c)(2) of this section must be computed based on the amount of vapor product in milliliters as listed by the manufacturer. All invoices for vapor products issued by a manufacturer must state the amount of vapor product in milliliters.
        (3) A tax is imposed and assessed upon the sale or use of premium cigars within this State at a rate of 30% of the wholesale price of the premium cigar.
        Section 3. Amend § 5308, Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
        § 5308. License charges.
        (a) 
        Wholesale license. —
        For each wholesale license issued there must be paid to the Department of Finance a fee of
        $200.
        $400.
        If a holder of a wholesale license sells or intends to sell tobacco products at 2 or more places of business, whether established or temporary, a separate license is required for each place of business.
        (b) 
        Retail license. —
        For each retail license there must be paid to the Department of Finance a fee of
        $50.
        $100.
        If a holder of a retail license sells or intends to sell tobacco products at 2 or more places of business, whether established or temporary, or whether in the same building or not, a separate license is required for each place of business.
        (c) 
        Vending machine license. —
        Every vending machine from which tobacco products are offered for sale must have affixed to it an identification stamp issued by the Department of Finance for which a fee of
        $15
        $30
        must be paid to the Department. If 2 or more vending machines are fastened together, each set of mechanisms must have a separate vending machine license.
        (d) 
        Affixing agent license. —
        For each affixing agent’s license issued there must be paid to the Department of Finance a fee of
        $200,
        $400,
        but only 1 license fee of
        $200
        $400
         is required of any person who is both a wholesale dealer and an affixing agent.
        Section 4. Amend § 5312, Title 30 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
        § 5312. Replacement of licenses.
        Whenever any license issued under this chapter is defaced, destroyed, or lost, the Department of Finance may issue a duplicate to the holder of the defaced, destroyed, or lost license upon the payment of a fee of
        $10
        $20
        by the holder.
        Section 5. Effective Dates.
        (a)(1) Sections 1 and 2 of this Act take effect on September 1, 2026, and establish the rate of tax payable on tobacco products.
        (2)a. The tax imposed under subsection (a)(1) of this Section must be imposed on all of the following:
        1. Stocks or inventories of cigarettes or tobacco products in possession of any person liable for the tax as of midnight August 31, 2026, which as of that date have been affixed with any tobacco product tax stamp or other indicia of payment of the tax.
        2. Any tobacco product stamps purchased, but not yet affixed before midnight August 31, 2026.
        b. The amount of tax due under this subsection is equal to the tax determined at the rates specified in Section 2 of this Act, less the tax previously paid with respect to such tobacco products. The amount of tax due under this subsection must be paid by December 31, 2026.
        (b) Sections 3 and 4 of this Act take effect on January 1, 2027.
        SYNOPSIS
        House Substitute No. 1 for House Bill No. 215 differs from House Bill No. 215 as follows: this substitute provides a definition of a premium cigar and modifies the tax rate changes in House Bill 215 by setting the tax rate for other tobacco products at 40% of the wholesale price, maintaining the tax for premium cigars at 30% of the wholesale price, and setting the tax rate for vapor products at 10 cents per fluid milliliter. A definition of “nicotine pouch” is added. As with House Bill 215, House Substitute No.1 increases the cigarette tax rate to $3.60 per pack, increases some license fees, and changes the definition of “tobacco products” to include more items. This substitute bill sets the effective date of the tax rate increases as September 1, 2026, and the effective date of the increased license fees as January 1, 2027.
        This Act requires a greater than majority vote for passage because § 10 of Article VIII of the Delaware Constitution requires the affirmative vote of three-fifths of the members elected to each house of the General Assembly to increase the effective rate of a tax or fee levied by the State.