SB1212 - 562R

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 44, Arizona Revised Statutes, is amended by adding chapter 41, to read:

CHAPTER 41

VAPOR PRODUCT DIRECTORY

ARTICLE 1. GENERAL PROVISIONS

START_STATUTE44-8041. Vapor product directory; fees; vapor product; fund; directory posting; violation; civil penalties; unfair practices; classification; enforcement; examinations; agent; annual report; rules; definition

A. On or before August 1, 2024 and annually thereafter, each manufacturer of vapor products that are sold in this state, whether directly or through a distributor, retailer or similar intermediary or intermediaries, shall certify under penalty of perjury to the attorney general on a form and in the manner prescribed by the attorney general, that either:

1. The manufacturer has received a marketing authorization or similar order for the vapor product from the United States food and drug administration pursuant to 21 United States Code section 387j.

2. The vapor product was marketed in the United States on or before August 8, 2016, the manufacturer submitted a premarket tobacco product application for the vapor product to the United States food and drug administration pursuant to 21 United States Code section 387j on or before September 9, 2020 and the application either remains under review by the United States food and drug administration or a final decision on the application has not taken effect.

B. The certification form prescribed in subsection A of this section shall require A manufacturer to separately list each vapor product that the manufacturer sells in this state.

C. Each annual certification form required by subsection A of this section shall be accompanied by both of the following:

1. A copy of the marketing authorization or other order for the vapor product issued by the United States food and drug administration pursuant to 21 United States code section 387j or a copy of the acceptance letter that is issued by the United States food and drug administration pursuant to 21 United States Code section 387j for the filed premarket tobacco product application and a final authorization or order has not taken effect.

2. A fee for each vapor product in an amount to be determined by the attorney general. The fee may be revised periodically.

D. The attorney general shall deposit, pursuant to sections 35-146 and 35-147, all fees collected pursuant to this section in the vapor product fund established by this section.

E. The vapor product fund is established consisting of monies deposited pursuant to this section. The attorney general shall administer the fund. Monies in the fund are continuously appropriated and are exempt from the provisions of section 35-190 relating to lapsing of appropriations. The attorney general shall use the monies exclusively for administrating and enforcing this section.

F. A manufacturer that is required to submit a certification form pursuant to subsection A of this section shall notify the attorney general within thirty days after any material change to the certification form, including the issuance or denial of a marketing authorization or other order by the United States food and drug administration pursuant to 21 United States code section 387j, or any other order or action by the United States food and drug administration that affects the ability of the vapor product to be introduced or delivered into interstate commerce for commercial distribution in the United States.

G. Beginning October 1, 2024, the attorney general shall maintain and make publicly available on its website a directory that lists all manufacturers and vapor products for which certification forms have been submitted and shall update the directory at least monthly.

H. The attorney general shall provide manufacturers notice and an opportunity to cure deficiencies before removing manufacturers or vapor products from the directory. The attorney general may not remove the manufacturer or its vapor products from the directory until at least fifteen days after the manufacturer has been given notice of an intended action. Notice is sufficient and is deemed immediately received by a manufacturer if the notice is sent either electronically to an email address or by fax to a fax number that is provided by the manufacturer in its most recent certification form filed under subsection A of this section. After the date of service of the notice of the attorney general's intended action, the manufacturer has not more than fifteen business days to establish that the manufacturer or its vapor products should be included in the directory. A determination by the attorney general to not include in or to remove from the directory a manufacturer or a vapor product is subject to review by the filing of an appeal pursuant to title 41, chapter 6, articles 6 and 10.

I. If a vapor product is removed from the directory, each retailer and distributor has not more than twenty-one days after the day the vapor product is removed from the directory to remove the vapor product from its inventory and return the vapor product to the manufacturer for disposal. After twenty-one days after removal from the directory, a manufacturer's vapor products that are identified in the notice of removal are contraband and are subject to seizure, forfeiture and destruction and may not be purchased or sold in this state. The person from whom the vapor products are confiscated shall pay for the cost of the seizure, forfeiture and destruction.

J. Beginning October 1, 2024, or on the date that the attorney general first makes the directory available for public inspection on its website, whichever is later, a person may not sell or offer for sale a vapor product in this state that is not included in the directory and a manufacturer may not sell, either directly or through a distributor, retailer or similar intermediary, a vapor product in this state that is not included in the directory.

K. A distributor, retailer or any other person that sells or offers for sale in this state a vapor product that is not included in the directory is subject to a civil penalty for each vapor product that is offered for sale in violation of this section for each day of the violation until the vapor product is removed from the market or properly listed in the directory. The penalties are as follows:

1. For a first violation, a civil penalty of not more than $500.

2. For a second violation within thirty-six months, a civil penalty of at least $750 but not more than $1,000.

3. For a third violation within thirty-six months, a civil penalty of at least $1,000 but not more than $1,500.

4. For a fourth or any subsequent violation within thirty-six months, a civil penalty of at least $1,500 but not more than $3,000.

L. A manufacturer whose vapor products are not listed in the directory and are sold in this state, whether directly or through a distributor, retailer or similar intermediary, is subject to a civil penalty of $500 for each vapor product offered for sale in violation of this section for each day of the violation until the vapor product is removed from the market or properly listed in the directory.

M. In addition to any other prescribed penalties:

1. A manufacturer that falsely represents any of the information that is required pursuant to subsection A of this section is guilty of a class 3 misdemeanor for each false representation.

2. A violation of this section is an unlawful practice pursuant to section 44-1522. The attorney general may investigate and take appropriate action pursuant to chapter 10, article 7 of this title.

N. The attorney general may enforce this section and may designate agents to enforce this section, including local law enforcement, the department of liquor licenses and control or the department of revenue. The attorney general or the attorney general's designees may examine the stock of vapor products on the premises and the books, papers, invoices and other records of a person that possesses, controls or occupies a premises where vapor products are placed, stored, sold or offered for sale. Each person that possesses, controls or occupies a premises where vapor products are placed, sold or offered for sale must allow the attorney general and the attorney general's designees the means, facilities and opportunity for the examinations authorized by this section.

O. A vapor product offered for sale in violation of this section is contraband and may be seized without a warrant by the attorney general or the attorney general's designees or employees or by any law enforcement officer of this state if directed by the attorney general.

P. The attorney general shall investigate each complaint that it receives relating to this chapter. In an action brought under this section, the attorney general may recover attorney fees and reasonable expenses incurred in investigating and preparing the case.

Q. Each distributor and retailer is subject to unannounced compliance checks for the purposes of enforcing this section. The compliance checks may be conducted during normal business hours and shall include the review of records retained by distributors and retailers. Unannounced follow-up compliance checks of a noncompliant distributor and retailer are required within thirty days after a violation of this section. The attorney general shall publish the results of all compliance checks at least annually and shall make the results available to the public on request.

R. Notwithstanding any other law, a nonresident or foreign manufacturer that has not registered as a foreign corporation under title 10 or a foreign limited partnership, a foreign limited liability company or a foreign series under title 29 shall appoint and continually engage without interruption the services of an agent in the United States to act as an agent for the service of process on whom all process and any action or proceeding against it concerning or arising out of the enforcement of this section may be served in any manner authorized by law. Service under this section constitutes legal and valid service of process on the nonresident or foreign manufacturer. The nonresident or foreign manufacturer shall provide the name, address, telephone number and proof of the appointment and availability of the agent to the attorney general in a manner approved by the attorney general. A nonresident or foreign manufacturer that does not comply with appointing an agent pursuant to this subsection may not have its vapor products listed or retained in the directory. The appointment of the secretary of state as the agent pursuant to subsection S of this section does not allow the nonresident or foreign manufacturer to have its vapor products included or retained in the directory. The nonresident or foreign manufacturer shall:

1. Provide notice to the attorney general at least thirty calendar days before the termination of the agent's authority.

2. Provide proof to the attorney general in a manner approved by the attorney general of the appointment of a new agent at least five calendar days before the termination of an existing agent appointment.

3. If an agent terminates an agency appointment, notify the attorney general of the termination within five calendar days and shall include proof of the appointment of a new agent to the attorney general in a manner approved by the attorney general.

S. A nonresident or foreign manufacturer whose vapor products are sold in this state and that has not appointed and engaged an agent as prescribed by subsection R of this section is determined to have appointed the secretary of state as the agent and may be proceeded against in courts of this state by service of process on the secretary of state.

T. Beginning January 31, 2025 and annually thereafter, the attorney general shall provide a report to the president of the senate and the speaker of the house of representatives regarding the status of the directory, manufacturers and vapor products included in the directory, revenue and expenditures related to the administration of this section and enforcement activities pursuant to this section.

U. The attorney general may adopt rules necessary to administer this section.

V. For the purposes of this section, "vapor product":

1. Means a noncombustible product containing nicotine from any source that employs a mechanical heating element, battery or circuit, regardless of shape or size, that can be used to heat a liquid nicotine solution to produce an aerosol or vapor.

2. Includes a consumable nicotine solution suitable for use in a vapor product whether sold with the vapor product or separately.

3. Does not include any product that is regulated by the United States food and drug administration under subchapter V of the federal food, drug, and cosmetic act. END_STATUTE