 |
ARIZONA STATE SENATE
Fifty-Seventh Legislature, First Regular Session
vapor products; regulation; directory
Purpose
Requires manufacturers of vapor products sold in Arizona to be certified by the Director of the Department of Liquor Licenses and Control (DLLC) for approval or review by the U.S. Food and Drug Administration (U.S. FDA). Requires the Director of DLLC (Director) to establish a directory of approved vapor products and penalties for violations of vapor product certification and sale requirements.
Background
The manufacture, import, packaging, labeling, promotion, sale and distribution of vapor products in the United States are regulated by the FDA. These products may be referred to or include vapes, vaporizers, vape pens, hookah pens, electronic cigarettes, e-cigars and e-pipes, all of which are electronic nicotine delivery systems. These products use an e-liquid that usually contains nicotine, and flavorings, propylene glycol, vegetable glycerin and other ingredients that are heated to create an aerosol that is inhaled (U.S. FDA). These products are subject to most of the same federal requirements as cigarettes, cigarette tobacco, roll-your own tobacco and smokeless tobacco, including premarket review requirements and the adulteration and misbranding regulations.
Under the federal Food, Drug and Cosmetic Act, persons who seek to market a new tobacco product must first obtain an order to do so unless deemed by the U.S. FDA to be substantially equivalent to a tobacco product currently commercially marketed on or before February 15, 2007, or the new tobacco product is exempt from substantial equivalence requirements. When a new product is found to not be substantially equivalent to an appropriate predicate product, a new premarket tobacco product application is required and the applicant must receive a marketing order prior to marketing the product (U.S. FDA).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Vapor Product Certification
1. Requires, by October 1, 2025, and annually thereafter, each manufacturer of a vapor product that is sold for retail sale or to a consumer, whether directly or through an importer, wholesaler, distributor, retailer or similar intermediary or intermediaries, to execute and submit to the Director a certification under penalty of perjury that:
a) the manufacturer is compliant with regulations; and
b) for each vapor product sold for retail sale or to a consumer, the manufacturer:
i. received a marketing granted order for the vapor product from the FDA; or
ii. submitted a timely filed premarket tobacco product application for the vapor product to the FDA and the application remains under review by the FDA or the application has received a denial order that has been and remains stayed by the FDA or court order, rescinded by the FDA or vacated by a court.
2. Specifies that the certification must be on a form and in a manner prescribed by the Director.
3. Stipulates that a manufacturer is not required to submit an additional marketing granted order or premarket tobacco product application for a vapor product solely because of changes to the name, brand style or packaging of the vapor product.
4. Requires the annual certification to:
a) separately list each brand name, product name, category and flavor for each vapor product that is sold in Arizona; and
b) be accompanied by:
i. a copy of both the marketing granted order issued by the FDA or the acceptance letter issued by the FDA for a timely filed premarket tobacco product application; or
ii. a document issued by the FDA or by a court confirming that the timely filed premarket tobacco product application has received a denial order that has been and remains stayed by the FDA or court order, rescinded by the FDA or vacated by a court.
5. Requires the annual certification filed to be accompanied by:
a) a first-time fee for each vapor product that a manufacturer submits a certification for the first time; and
b) an annual fee for each vapor product each time a manufacturer submits an annual certification for that vapor product.
6. Requires the Director to assess and charge the certification fee.
7. Deems information submitted to the DLLC by a manufacturer as confidential commercial or financial information and to be exempt from statutory requirements for searches and copies.
8. Allows a manufacturer to redact certain confidential commercial or financial information provided in the annual certification.
9. Requires a manufacturer to notify the Director within 30 days after any material change to the certification form, including:
a) the issuance or denial of a marketing authorization or other order by the FDA; or
b) any other order or action by the FDA or any court that affects the ability of the vapor product to be introduced or delivered into interstate commerce for commercial distribution in the United States.
Vapor Product Directory
10. Requires the Director to establish and maintain a directory of vapor products and manufacturers of vapor products, conduct prescribed inspections and take enforcement action as outlined.
11. Requires, beginning December 1, 2025, the Director to establish, maintain and make publicly available on DLLC's official website a directory that lists all vapor product manufacturers and all vapor products that have been approved by the Director.
12. Prohibits, beginning December 1, 2025, or on the date the Director makes the directory available, whichever is later, vapor products not included in the directory from being sold, either directly or through an importer, distributor, wholesaler, retailer or similar intermediary or intermediaries.
13. Stipulates that, 60 days after the Director makes the directory available, vapor products that are not listed in the directory and intended for retail sale are subject to seizure, forfeiture, destruction or disposal and may not be purchased or sold for retail sale or to a consumer.
14. Requires the directory to include brand names, product names, vapor product categories and flavors.
15. Requires the Director to update the directory at least monthly and establish a process to provide retailers, distributors, wholesalers and other relevant parties notice of the initial publication of the directory and any changes made to the directory from the prior month.
16. Prohibits a manufacturer or vapor product from being included or retained in the directory if the Director determines that the manufacturer:
a) failed to submit a complete and accurate certification;
b) submitted a certification that does not comply with outlined requirements;
c) failed to submit the certification fee;
d) sold vapor products in Arizona that are required to be certified during a period when either the manufacturer or the vapor product had not been certified and listed on the directory; or
e) provided information that is determined by the Director to contain false information or to contain material misrepresentations or omissions.
17. Requires the Director to provide a manufacturer notice of deficiencies in a certification and at least 30 days after the manufacturer has been given notice to cure the deficiencies before removing the manufacturer or vapor product from the directory.
18. Requires the notice of an intended action to remove a manufacturer or vapor product from the directory to clearly describe the reasons for the intended action.
19. Requires the notice to be provided either electronically to an email address or by fax to a number provided by a manufacturer in the manufacturer's most recent certification to be considered sufficient and be deemed received by the manufacturer.
20. Requires a manufacturer, 15 days after the date of service of the notice of an intended action, to cure the deficiencies in the certification or otherwise establish that the manufacturer or vapor product should be included in the directory.
21. Grants retailers, distributors and wholesalers 30 days to sell a manufacturer's vapor products that were in the retailer's, distributor's or wholesaler's inventory as of the date of removal of the manufacturer or vapor product from the directory.
22. Requires, 60 days after the date that the Director makes the directory available, each:
a) retailer to sell or remove from inventory vapor products that were in the retailer's inventory and not included in the directory; and
b) distributor and wholesaler to remove those vapor products intended for retail sale from the distributor's or wholesaler's inventory.
Violations
23. Prohibits any removed vapor products from being purchased or sold 30 days after being removed from the directory.
24. Subjects any vapor products of a manufacturer that have been removed from the directory to seizure, forfeiture and destruction or disposal 30 days after the removal.
25. Requires the cost of seizure, forfeiture and destruction or disposal to be paid by the person or entity from whom the vapor products are confiscated.
26. Subjects distributors, retailers, wholesalers and importers that sell or offer for sale a vapor product that is not included in the directory to a civil penalty imposed by the Director or Attorney General (AG) for each vapor product in violation for each day of violation of:
a) up to $500 for a first violation;
b) between $750 and $1,000 for a second violation within 12 months; and
c) between $1,000 and $1,500 for a third or subsequent violation within 12 months.
27. Subjects a manufacturer that causes the vapor products that are not listed on the directory (unlisted vapor products) to be sold for retail sale or to a consumer, whether directly or through an importer, distributor, wholesaler, retailer or similar intermediary or intermediaries, to a civil penalty imposed by the Director or AG of $10,000 for each unlisted vapor product until the product is removed from the market or is listed on the directory.
28. Requires a second or subsequent violation of a manufacturer that causes unlisted vapor products to be sold to constitute an unfair or deceptive act or practice.
29. Entitles the DLLC to recover costs, including the costs of investigation, expert witness fees and reasonable attorney fees.
30. Classifies, as a class 3 misdemeanor, each false representation, material misrepresentation or omission of a manufacturer that knowingly falsely represents, materially misrepresents or omits any information required by a certification and, on notice from the Director, does not correct the false representation, material misrepresented or omitted information.
Nonresident or Foreign Manufacturers
31. Requires, as a condition to having a name or vapor product listed and retained in the directory, a manufacturer that is not registered to do business in Arizona to appoint and continually engage without interruption, a registered agent in Arizona for service of process on whom all process and any action arising out of necessary enforcement may be served.
32. Requires a manufacturer to provide to the Director the name, address and telephone number of the manufacturer's agent and any other information relating to the manufacturer's agent as requested.
33. Requires a manufacturer located outside of the United States to cause each of the manufacturer's importers of any of the manufacturer's vapor products to be sold in Arizona to appoint and continually engage without interruption the services of a registered agent in Arizona.
34. Requires a nonresident or foreign manufacturer to:
a) provide written notice to the Director 30 calendar days before the termination of the agent's authority;
b) provide the name, address, telephone number and any other information relating to the new appointment, as requested, of the manufacturer's newly appointed agent to the Director at least five calendar days before the termination of an existing agent appointment; and
c) notify the Director of the termination of an agency appointment within five calendar days, including proof of the appointment of a new agent.
35. Requires any nonresident or foreign manufacturer that has not registered to do business in Arizona as a foreign corporation or business entity to submit to the Director a surety bond or other cash security payable to the State of Arizona in the amount of $25,000.
36. Requires the bond to be conditioned on the performance by the manufacturer of all requirements and imposed obligations.
37. Requires a surety on a manufacturer's bond to be liable up to the amount of the bond.
38. Allows the State of Arizona to execute on a surety bond for the payment of fines and civil penalties imposed on a manufacturer and for the costs of seizure and destruction of vapor products sold in violation.
39. Allow the State of Arizona, in the condition of executing on a surety bond, to require the manufacturer to provide an additional bond as a condition for retaining the manufacturer or its vapor products in the directory.
40. Requires a surety on a bond furnished by a manufacturer to be released and discharged from liability to the state accruing on the bond 60 days after the date on which the surety has lodged with the Director a written request to be released and discharged.
41. Stipulates that a release and discharge does not relieve, release or discharge the surety from liability already accrued or that accrues before the 60-day period expires.
42. Requires the Director, on receiving a written request from a surety to be released and discharged, to notify the manufacturer who furnished the bond.
43. Requires the Director to remove the manufacturer and its vapor products from the directory, unless the manufacturer, on or before the expiration of the 60-day period, files with the Director a new bond and the Director approves and accepts the surety.
Investigations and Enforcement
44. Subjects each retailer, distributor and wholesaler that sells or distributes vapor products in Arizona to unannounced compliance checks for purposes of enforcing vapor product certification requirements.
45. Requires any unannounced follow-up compliance checks of all noncompliant retailers, distributors and wholesalers to be conducted within 30 days after any violation.
46. Requires the Director to publish the results of all compliance checks at least annually and make the results available to the public on request.
47. Allows the Director and AG to enforce vapor product certification requirements and designate agents to aid in enforcement.
48. Allows the Director, AG, the Director's designee or the AG's designee to 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.
49. Requires each person that possesses, controls or occupies a premises where vapor products are placed, sold or offered for sale to allow the Director, AG, the Director's designee or the AG's designee the means, facilities and opportunity for any examination.
50. Stipulates that a vapor product offered for sale in violation of regulations is contraband and may be seized without a warrant by the Director, AG, the Director's designee or the AG's designee or employees or by any law enforcement officer of Arizona if directed by the Director or AG.
51. Allows the Director and AG to establish rules necessary to affect the purposes of vapor product certification requirements.
52. Requires the State Liquor Board to coordinate and share information with the AG regarding investigations and violations of vapor product regulations.
53. Requires the Director to take the necessary steps to maintain effective liaison with the AG in enforcement of alcoholic beverages and vapor products.
54. Requires prescribed rules to ensure that the Director and AG share information regarding inspection and enforcement activities.
Miscellaneous
55. Requires the Director, beginning January 1, 2026, to annually provide a report to the President of the Senate and Speaker of the House of Representatives regarding:
a) the status of the directory, including a discussion of the date of initial publication, dates of updated versions and issues the director has encountered relating to making updates to the directory;
b) revenue and expenditures related to administration;
c) enforcement activities; and
d) a copy of the most recent version of the directory.
56. Defines a timely filed premarket tobacco product application as an application that:
a) was filed pursuant to federal requirements for premarket review of a vapor product that contains nicotine derived from tobacco and marketed in the United States as of August 8, 2016; and
b) was submitted to the FDA on or before September 9, 2020, and accepted for filing.
57. Defines a vapor product as any noncombustible product that contains nicotine and that employs a heating element, power source, electronic circuit or other electronic, chemical or mechanical means, regardless of shape or size, to produce vapor from nicotine in a solution, including a consumable nicotine liquid solution suitable for use in a vapor product whether sold with the product or separately.
58. Excludes, from the definition of vapor product, any product that is regulated by the FDA as adulterated drugs and devices under the federal Food, Drug and Cosmetic Act.
59. Makes technical and conforming changes.
60. Becomes effective on the general effective date.
Prepared by Senate Research
February 10, 2025
KJA/AG/slp