SB 3205

THE SENATE
S.B. NO.
3205
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII
A BILL FOR AN ACT
RELATING
TO TAXATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
���� SECTION 1.� The legislature finds that electronic smoking
devices are battery-operated devices that emit doses of nicotine and
non-nicotine vaporized solutions to users, a practice popularly called
"vaping."� Since electronic
smoking devices were introduced to consumers, their usage has rapidly grown, especially
among young people.� Since 2014,
electronic cigarette devices have been the most widely used tobacco product
among youth in the United States.
���� In 2018, the United States Surgeon General
classified the danger of youth use of electronic smoking devices as an
epidemic.� This epidemic was
disproportionately felt in Hawaii, with studies finding that the youth vaping
rate in the State was among the highest in the country.� Given the dangerous health impacts of
electronic smoking devices, the potential consequences of this statistic were alarming.
���� In response to the high rates of electronic
smoking device usage among the State's youth, the legislature enacted Act 62,
Session Laws of Hawaii 2023 (Act 62), which took several steps to address this
epidemic.� In particular, Act 62
established a seventy per cent excise tax on each electronic smoking device or
e-liquid sold, used, or possessed by a wholesaler or dealer.
���� Despite the passage of Act 62, the use of electronic
smoking devices among the State's youth continues to grow at a concerning rate,
and addiction to these products remains an epidemic.� Therefore, the legislature finds that the tax
rate on these products must be increased to discourage vaping and decrease
addiction rates.� The legislature further
finds that the additional tax revenue generated by the tax increase should be
allocated to cancer research to help address the long-term health impacts
caused by electronic smoking devices.
���� Accordingly, the purpose of this Act is to:
���� (1)� Increase
from seventy per cent to ninety per cent the taxation rate on electronic
smoking devices and e‑liquid sold, used, or possessed by a wholesaler or
dealer after December 31, 2026; and
���� (2)� Provide
for the deposit of the additional tax revenue into the Hawaii cancer research
special fund for use by the cancer center of Hawaii at the university of Hawaii.
���� SECTION
2.� Section 245-3,
Hawaii Revised Statutes, is amended by amending subsection (a) to read as
follows:
���� "(a)� Every wholesaler or dealer, in addition to
any other taxes provided by law, shall pay, for the privilege of conducting
business and other activities in the State, an excise tax equal to:
���� (1)� 5.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer after June 30, 1998, whether or
not sold at wholesale, or if not sold, then at the same rate upon the use by
the wholesaler or dealer;
���� (2)� 6.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer after September 30, 2002, whether
or not sold at wholesale, or if not sold, then at the same rate upon the use by
the wholesaler or dealer;
���� (3)� 6.50 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer after June 30, 2003, whether or
not sold at wholesale, or if not sold, then at the same rate upon the use by
the wholesaler or dealer;
���� (4)� 7.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer after June 30, 2004, whether or
not sold at wholesale, or if not sold, then at the same rate upon the use by
the wholesaler or dealer;
���� (5)� 8.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer on and after September 30, 2006,
whether or not sold at wholesale, or if not sold, then at the same rate upon
the use by the wholesaler or dealer;
���� (6)� 9.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer on and after September 30, 2007,
whether or not sold at wholesale, or if not sold, then at the same rate upon
the use by the wholesaler or dealer;
���� (7)� 10.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer on and after September 30, 2008,
whether or not sold at wholesale, or if not sold, then at the same rate upon
the use by the wholesaler or dealer;
���� (8)� 13.00 cents for each cigarette sold,
used, or possessed by a wholesaler or dealer on and after July 1, 2009,
whether or not sold at wholesale, or if not sold, then at the same rate upon
the use by the wholesaler or dealer;
���� (9)� 11.00 cents for each little cigar sold, used,
or possessed by a wholesaler or dealer on and after October 1, 2009, whether or
not sold at wholesale, or if not sold, then at the same rate upon the use by
the wholesaler or dealer;
��� (10)� 15.00 cents for each cigarette or
little cigar sold, used, or possessed by a wholesaler or dealer on and
after July 1, 2010, whether or not sold at wholesale, or if not sold, then at
the same rate upon the use by the wholesaler or dealer;
��� (11)� 16.00 cents for each cigarette or
little cigar sold, used, or possessed by a wholesaler or dealer on and
after July 1, 2011, whether or not sold at wholesale, or if not sold, then at
the same rate upon the use by the wholesaler or dealer;
��� (12)� 18.00 cents for each cigarette or
little cigar sold, used, or possessed by a wholesaler or dealer on and after
January 1, 2026, whether or not sold at wholesale, or if not sold, then at the
same rate upon the use by the wholesaler or dealer;
��� (13)� Seventy per cent of the wholesale price of each
article or item of tobacco products, other than large cigars, electronic
smoking devices, and e-liquids, sold by the wholesaler or dealer on and after
September 30, 2009, whether or not sold at wholesale, or if not sold, then at
the same rate upon the use by the wholesaler or dealer;
��� (14)� Fifty per cent of the wholesale price of each
large cigar of any length sold, used, or possessed by a wholesaler or dealer on
and after September 30, 2009, whether or not sold at wholesale, or if not sold,
then at the same rate upon the use by the wholesaler or dealer; [[and]]
��� (15)� Seventy per cent of the wholesale price of
each electronic smoking device or e-liquid sold, used, or possessed by a
wholesaler or dealer on and after January 1, 2024, whether or not sold at
wholesale, or if not sold, then at the same rate upon the use by the wholesaler
or dealer[[.]]; and
��� (16)� Ninety per cent of the wholesale price of
each electronic smoking device or e-liquid sold, used, or possessed by a
wholesaler or dealer on and after January 1, 2027, whether or not sold at
wholesale, or if not sold, then at the same rate upon the use by the wholesaler
or dealer.
Where the
tax imposed has been paid on cigarettes, little cigars, or tobacco
products that thereafter become the subject of a casualty loss deduction
allowable under chapter 235, the tax paid shall be refunded or credited to the
account of the wholesaler or dealer.� The
tax shall be applied to cigarettes through the use of stamps."
���� SECTION
3.� Section 245-15,
Hawaii Revised Statutes, is amended to read as follows:
���� "�245-15� Disposition of revenues.� All moneys collected pursuant to this chapter
shall be paid into the state treasury as state realizations to be kept and
accounted for as provided by law; provided that, of the moneys collected under
the tax imposed pursuant to:
���� (1)� Section 245-3(a)(5), after September 30, 2006,
and prior to October 1, 2007, 1.0 cent per cigarette shall be deposited to the
credit of the Hawaii cancer research special fund, established pursuant to
section 304A-2168, for research and operating expenses and for capital
expenditures;
���� (2)� Section 245-3(a)(6), after September 30, 2007,
and before October 1, 2008:
��������� (A)� 1.5 cents per cigarette shall be deposited to
the credit of the Hawaii cancer research special fund, established pursuant to
section 304A-2168, for research and operating expenses and for capital
expenditures;
��������� (B)� 0.25 cents per cigarette shall be deposited to
the credit of the trauma system special fund established pursuant to section
321-22.5; and
��������� (C)� 0.25 cents per cigarette shall be deposited to
the credit of the emergency medical services special fund established pursuant
to section 321‑234;
���� (3)� Section 245-3(a)(7), after September 30, 2008,
and before July 1, 2009:
��������� (A)� 2.0 cents per cigarette shall be deposited to
the credit of the Hawaii cancer research special fund, established pursuant to
section 304A-2168, for research and operating expenses and for capital
expenditures;
��������� (B)� 0.5 cents per cigarette shall be deposited to
the credit of the trauma system special fund established pursuant to section
321-22.5;
��������� (C)� 0.25 cents per cigarette shall be deposited to
the credit of the community health centers special fund established pursuant to
section 321‑1.65; and
��������� (D)� 0.25 cents per cigarette shall be deposited to
the credit of the emergency medical services special fund established pursuant
to section 321‑234;
���� (4)� Section 245-3(a)(8), after June 30, 2009, and
before July 1, 2013:
��������� (A)� 2.0 cents per cigarette shall be deposited to
the credit of the Hawaii cancer research special fund, established pursuant to
section 304A-2168, for research and operating expenses and for capital
expenditures;
��������� (B)� 0.75 cents per cigarette shall be deposited to
the credit of the trauma system special fund established pursuant to section
321-22.5;
��������� (C)� 0.75 cents per cigarette shall be deposited to
the credit of the community health centers special fund established pursuant to
section 321‑1.65; and
��������� (D)� 0.5 cents per cigarette shall be deposited to
the credit of the emergency medical services special fund established pursuant
to section 321-234;[]
���� (5)� Section 245-3(a)(11), after June 30, 2013, and
before July 1, 2015:[]
��������� (A)� 2.0 cents per cigarette shall be deposited to
the credit of the Hawaii cancer research special fund, established pursuant to
section 304A-2168, for research and operating expenses and for capital
expenditures;
��������� (B)� 1.5 cents per cigarette shall be deposited to
the credit of the trauma system special fund established pursuant to section
321-22.5;
��������� (C)� 1.25 cents per cigarette shall be deposited to
the credit of the community health centers special fund established pursuant to
section 321‑1.65; and
��������� (D)� 1.25 cents per cigarette shall be deposited to
the credit of the emergency medical services special fund established pursuant
to section 321‑234;
���� (6)� Section 245-3(a)(11), after June 30,
2015, and before January 1, 2026:
��������� (A)� 2.0 cents per cigarette shall be deposited to
the credit of the Hawaii cancer research special fund, established pursuant to
section 304A-2168, for research and operating expenses and for capital
expenditures;
��������� (B)� 1.125 cents per cigarette, but not more than
$7,400,000 in a fiscal year, shall be deposited to the credit of the trauma
system special fund established pursuant to section 321-22.5;
��������� (C)� 1.25 cents per cigarette, but not more than
$8,800,000 in a fiscal year, shall be deposited to the credit of the community
health centers special fund established pursuant to section 321‑1.65;
and
��������� (D)� 1.25 cents per cigarette, but not more than
$8,800,000 in a fiscal year, shall be deposited to the credit of the emergency
medical services special fund established pursuant to section 321‑234;
[[and]]
���� (7)� Section 245-3(a)(12), after December
31, 2025, and thereafter:
��������� (A)� 4.0 cents per cigarette shall be
deposited to the credit of the Hawaii cancer research special fund, established
pursuant to section 304A-2168, for research and operating expenses and for
capital expenditures; provided that, until June 30, 2030, of each amount
deposited under this paragraph to the credit of the Hawaii cancer research
special fund, 4.0 cents per cigarette shall be used exclusively for debt
service of capital expenditures and building maintenance; provided further that
beginning July 1, 2030, of each amount deposited under this paragraph to the
credit of the Hawaii cancer research special fund, 2.0 cents per cigarette
shall be used exclusively for debt service of capital expenditures and building
maintenance;
��������� (B)� 1.125 cents per cigarette, but no more
than $7,400,000 in a fiscal year, shall be deposited to the credit of the
trauma system special fund established pursuant to section 321-22.5;
��������� (C)� 1.25 cents per cigarette, but no more
than $8,800,000 in a fiscal year, shall be deposited to the credit of the
community health centers special fund established pursuant to section 321‑1.65;
and
��������� (D)� 1.25 cents per cigarette, but no more
than $8,800,000 in a fiscal year, shall be deposited to the credit of the
emergency medical services special fund established pursuant to section 321‑234[[.]];
and
���� (8)� Section 245-3(a)(16), after December
31, 2026, and thereafter, twenty-two per cent of the taxes collected shall be
deposited to the credit of the Hawaii cancer research special fund, established
pursuant to section 304A-2168, for research and operating expenses and for
capital expenditures.
The department shall provide an
annual accounting of these dispositions to the legislature."
���� SECTION 4.�
Statutory material to be repealed is bracketed and stricken.� New statutory material is underscored.
���� SECTION 5.�
This Act shall take effect upon its approval.
INTRODUCED BY:
_____________________________
Report Title:
Taxation;
Electronic Smoking Devices; E-Liquid; Vaping; University of Hawaii; Hawaii
Cancer Research Special Fund
Description:
Increases
from 70% to 90% the taxation rate on electronic smoking devices and e-liquid
sold, used, or possessed by a wholesaler or dealer after 12/31/2026.� Provides for the deposit of the additional
tax revenue into the Hawaii cancer research special fund.
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.