HB3877ham001 100TH GENERAL ASSEMBLY

Rep. Kathleen Willis

Filed: 3/24/2017

10000HB3877ham001 LRB100 06224 HLH 24177 a

AMENDMENT TO HOUSE BILL 3877

AMENDMENT NO. ______. Amend House Bill 3877 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Vapor Products Regulatory Act.

Section 5. Definitions. For purposes of this Act:

"Adult-only facility" means a facility or restricted area (whether open-air or enclosed) where the operator ensures or has a reasonable basis to believe (such as by checking identification as required under State law, or by checking the identification of any person appearing to be under the age of 27) that no person under legal age is present. A facility or restricted area need not be permanently restricted to persons under legal age to constitute an adult-only facility, provided that the operator ensures or has a reasonable basis to believe that no person under legal age is present during the event or time period in question.

"Age restricted area" means a signed designated area in a retail establishment to which minors under 18 years of age are not permitted access unless accompanied by a parent or legal guardian.

"Department" means the Department of Revenue.

"E-liquid" means a substance that contains nicotine and flavoring, substances, or other additives and is intended for use in a vapor product.

"Person" means any natural individual, firm, partnership, association, joint stock company, joint adventure, or public or private corporation, however formed, limited liability company, or a receiver, executor, administrator, trustee, conservator, or other representative appointed by order of any court.

"Records" means all data maintained by the retailer of vapor products, including data on paper, microfilm, microfiche, or any type of machine sensible data compilation.

"Retailer of vapor products" means any person in this State engaged in the business of selling e-liquids or vapor products to consumers in this State for use or consumption and not for resale in any form, for valuable consideration, regardless of amount, quantity, or number of sales. "Retailer of vapor products" does not include any person or business subject to the Cigarette Tax Act, the Tobacco Products Tax Act of 1995, the Prevention of Tobacco Use By Minors and Sale and Distribution of Tobacco Products Act, the Display of Tobacco Products Act, or the Compassionate Use of Medical Cannabis Pilot Program Act.

"Sale" means any transfer, exchange, or barter in any manner or by any means whatsoever for a consideration and includes all sales made by persons.

"Vapor pen" means a powered vaporizer, and any component parts thereof intended to be used in the powered vaporizer, that converts e-liquid into vapor which is intended for inhalation.

"Vapor product" means an e-liquid or vapor pen as defined under this Act.

Section 10. Retailer's license; fee.

(a) On or after January 1, 2018, no person may engage in business as a retailer of vapor products in this State without first having obtained a vapor products retail license from the Department. Applications for a license shall be made to the Department, by electronic means, in a form prescribed by the Department. Each applicant for a license under this Section shall furnish to the Department, in an electronic format established by the Department, the following information:

(1) the name and address of the applicant;

(2) the address of the location at which the applicant proposes to engage in business as a retailer of vapor products in this State;

(3) whether the applicant will engage in the sale of e-liquids, vapor pens, or both; and

(4) such other additional information as the Department may lawfully require by its rules.

(b) The annual license fee payable to the Department for each retailer's license shall be $75. The fee shall be deposited into the Tax Compliance and Administration Fund and shall be used for the cost of enforcement of this Act.

An applicant for a license shall pay such fee to the Department at the time of submitting its application for license to the Department. The Department shall require an applicant for a license under this Section to electronically file and pay the fee.

(c) The following are ineligible to receive a retailer's license under this Act:

(1) a person who has been convicted of a felony related to the illegal transportation, sale, or distribution of any age-restricted product or item, under any federal or State law, if the Department, after investigation and a hearing if requested by the applicant, determines that the person has not been sufficiently rehabilitated to warrant the public trust; or

(2) a corporation, if any officer, manager, or director thereof, or any stockholder or stockholders owning in the aggregate more than 5% of the stock of such corporation, would not be eligible to receive a license under this Act for any reason.

(d) The Department, upon receipt of an application and license fee, in proper form, from a person who is eligible to receive a retailer's license under this Act, shall issue to the applicant a license in form as prescribed by the Department, which license shall permit the applicant to which it is issued to engage in business as a retailer of vapor products under this Act at the place shown in his application. All licenses issued by the Department under this Section shall be valid for a period not to exceed one year after issuance unless sooner revoked, canceled, or suspended as provided in this Act. No license issued under this Section is transferable or assignable. The license shall be conspicuously displayed in the place of business conducted by the licensee in Illinois under the license. A person who obtains a license as a retailer of vapor products who ceases to do business as specified in the license, or who never commenced business, or whose license is suspended or revoked, shall immediately surrender the license to the Department. The Department shall not issue a license to a retailer of vapor products unless the retailer of vapor products is also validly registered under the Retailers' Occupation Tax Act. A person who obtains a license as a retailer of vapor products who ceases to do business as specified in the license, or who never commenced business, or whose license is suspended or revoked, shall immediately surrender the license to the Department.

(e) Any person aggrieved by any decision of the Department under this Section may, within 30 days after notice of the decision, protest and request a hearing. Upon receiving a request for hearing, the Department shall give written notice to the person requesting the hearing of the time and place fixed for the hearing and shall hold a hearing in conformity with the provisions of this Act and then issue its final administrative decision in the matter to that person. In absence of protest and request for a hearing within 30 days, the Department's decision shall become final without any further determination being made or notice given.

Section 20. Acting as a retailer of vapor products without a license; penalty. A person who knowingly acts as a retailer of vapor products in this State without first having obtained a license to do so in compliance with this Act is guilty of a Class A misdemeanor for the first offense and a Class 4 felony for a second or subsequent offense. Each day such person operates as a retailer of vapor products without a license constitutes a separate offense. The Department may, by application to any circuit court, obtain an injunction restraining any person who engages in business as a retailer of vapor products without a license (either because his or her license has been revoked, canceled, or suspended or because of a failure to obtain a license in the first instance) from engaging in that business until that person, as if that person were a new applicant for a license, complies with all of the conditions, restrictions, and requirements of this Act and qualifies for and obtains a license.

Section 25. Revocation, cancellation, or suspension of a retail license.

(a) The Department may, after notice and hearing, revoke, cancel, or suspend the license of any retailer of vapor products for the violation of any provision of this Act, or for noncompliance with any provision herein contained, or for any noncompliance with any lawful rule adopted by the Department pursuant to this Act, or because the licensee is determined to be ineligible for a license for any one or more of the reasons provided in this Section.

(b) A person aggrieved by any decision of the Department under this Section may, within 30 days after notice of the decision, protest and request a hearing. Upon receiving a request for a hearing, the Department shall give notice to the person requesting the hearing of the time and place fixed for the hearing and shall hold a hearing in conformity with the provisions of this Act and then issue its final administrative decision in the matter to that person. In the absence of a protest and request for a hearing within 30 days, the Department's decision shall become final without any further determination being made or notice given. The final decisions of the Department shall be subject to judicial review according to the provisions of the Administrative Review Law.

(c) If the retailer of vapor products has a training program that facilitates compliance with minimum-age vapor products laws, the Department shall suspend for 3 days the license of that retailer of vapor products for a fourth or subsequent violation of subsection (a) or (b) of Section 50. For the purposes of this Section, any violation of Section 50 occurring at the licensed location for the retailer of vapor products during a 24-month period shall be counted as a violation against the retailer of vapor products.

If the retailer of vapor products does not have a training program that facilitates compliance with minimum-age vapor products laws, the Department shall suspend for 3 days the license of that retailer of vapor products for a second violation subsection (a) or (b) of Section 50.

If the retailer of vapor products does not have a training program that facilitates compliance with minimum-age vapor products laws, the Department shall suspend for 7 days the license of that retailer of vapor products for a third violation of subsection (a) or (b) of Section 50.

If the retailer of vapor products does not have a training program that facilitates compliance with minimum-age vapor products laws, the Department shall suspend for 30 days the license of a retailer of vapor products for a fourth or subsequent violation of subsection (a) or (b) of Section 50.

Section 30. Arrest; search and seizure without warrant.

(a) Any duly authorized employee of the Department may:

(1) arrest without warrant any person committing in his or her presence a violation of any of the provisions of this Act; and

(2) may seize any vapor products in accordance with the provisions of this Act.

The vapor products so seized are subject to confiscation and forfeiture.

(b) After seizing any vapor products or vending devices, the Department must hold a hearing and determine whether the retailer of vapor products was properly licensed to sell the vapor products at the time of their seizure by the Department. The Department shall give not less than 20 days' notice of the time and place of the hearing to the owner of the property, if the owner is known, and also to the person in whose possession the property was found, if that person is known and if the person in possession is not the owner of the property. If neither the owner nor the person in possession of the property is known, the Department must cause publication of the time and place of the hearing to be made at least once in each week for 3 weeks successively in a newspaper of general circulation in the county where the hearing is to be held.

If, as the result of the hearing, the Department determines that the retailer of vapor products was not properly licensed at the time the vapor products were seized, the Department must enter an order declaring the vapor products or vending devices confiscated and forfeited to the State, to be held by the Department for disposal by it as provided in Section 40. The Department must give notice of the order to the owner of the property, if the owner is known, and also to the person in whose possession the property was found, if that person is known and if the person in possession is not the owner of the property. If neither the owner nor the person in possession of the property is known, the Department must cause publication of the order to be made at least once in each week for 3 weeks successively in a newspaper of general circulation in the county where the hearing was held.

Section 35. Peace officer investigation.

(a) Whenever any peace officer of the State or any duly authorized officer or employee of the Department shall have reason to believe that any violation of this Act has occurred and that the person so violating the Act has in his, hers, or its possession any vapor product, or any vending device containing such vapor products, he may file or cause to be filed his complaint in writing, verified by affidavit, with any court within whose jurisdiction the premises to be searched are situated, stating the facts upon which such belief is founded, the premises to be searched, and the property to be seized, and procure a search warrant and execute the same.

(b) Upon the execution of such search warrant, the peace officer, or officer or employee of the Department, executing such search warrant shall make due return thereof to the court issuing the same, together with an inventory of the property taken thereunder. The court shall thereupon issue process against the owner of such property if he is known; otherwise, such process shall be issued against the person in whose possession the property so taken is found, if such person is known. In case of inability to serve such process upon the owner or the person in possession of the property at the time of its seizure, as hereinbefore provided, notice of the proceedings before the court shall be given as required by the statutes of the State governing cases of Attachment. Upon the return of the process duly served or upon the posting or publishing of notice made, as hereinabove provided, the court or jury, if a jury shall be demanded, shall proceed to determine whether or not such property so seized was held or possessed in violation of this Act, or whether, if a vending device has been so seized, it contained at the time of its seizure any vapor products held or possessed in violation of this Act.

Section 40. Destruction or use of forfeited property. When any vapor product or any vending device shall have been declared forfeited to the State and all proceedings for the judicial review of the Department's decision have terminated, the Department shall, to the extent that its decision is sustained on review, destroy or maintain and use such property in an undercover capacity.

Section 45. Retailers; records.

(a) A retailer of vapor products who is required to procure a license under this Act shall keep within Illinois complete and accurate records of vapor products purchased, sold, or otherwise disposed of and shall preserve and keep all invoices, bills of lading, sales records, and copies of bills of sale, returns, and other pertinent papers and documents relating to the purchase, sale, or disposition of vapor products. The records need not be maintained on the licensed premises, but must be maintained in the State of Illinois; however, if access is available electronically, the records may be maintained out-of-State. However, all original invoices or copies thereof covering purchases of vapor products must be retained on the licensed premises for a period of 90 days after such purchase, unless the Department has granted a waiver in response to a written request in cases where records are kept at a central business location within the State of Illinois or in cases where records that are available electronically are maintained out of State. The Department shall adopt rules regarding the eligibility for a waiver, revocation of a waiver, and requirements and standards for maintenance and accessibility of records located at a central location out-of-State pursuant to a waiver provided under this Section.

(b) Records shall be preserved for a period of at least 3 years after the later of the date of the records or the date of the entries appearing in the records, unless the Department, in writing, authorizes their destruction or disposal at an earlier date. At all times during the usual business hours of the day, any duly authorized agent or employee of the Department may enter any place of business of the retailer of vapor products without a search warrant and may inspect the premises to determine whether any of the provisions of this Act are being violated. If such agent or employee is denied free access or is hindered or interfered with in making such examination as herein provided, the license of the retailer of vapor products shall be subject to suspension or revocation by the Department.

Section 50. Distribution of vapor products to, and possession by, persons under 18 years of age prohibited.

(a) A person, either directly or indirectly by an agent or employee, or by a vending machine owned by the person or located in the person's establishment, may not sell, offer for sale, give, or furnish any vapor product to a person under 18 years of age.

(b) Before selling, offering for sale, giving, or furnishing an vapor product to another person, the person selling, offering for sale, giving, or furnishing the vapor product shall verify that the person is at least 18 years of age by:

(1) examining from any person that appears to be under 27 years of age a government-issued photographic identification that establishes the person is at least 18 years of age; or

(2) for sales made though the Internet or other remote sales methods, performing an age verification through an independent, third-party age verification service that compares information available from public records to the personal information entered by the person during the ordering process that establishes the person is 18 years of age or older.

(c) A person under 18 years of age shall not possess a vapor product.

Section 55. Penalties for distribution of vapor products to, and possession by, persons under 18 years of age.

(a) Any person who violates subsection (a) or (b) of Section 50 is guilty of a petty offense. For the first offense in a 24-month period, the person shall be fined $200 if his or her employer has a training program that facilitates compliance with minimum-age vapor product laws. For the second offense in a 24-month period, the person shall be fined $400 if his or her employer has a training program that facilitates compliance with minimum-age vapor products laws. For the third offense in a 24-month period, the person shall be fined $600 dollars if his or her employer has a training program that facilitates compliance with minimum-age vapor product laws. For the fourth or subsequent offense in a 24-month period, the person shall be fined $800 if his or her employer has a training program that facilitates compliance with minimum-age vapor products laws. For the purposes of this subsection, the 24-month period shall begin with the person's first violation of the Act. The penalties in this subsection are in addition to any other penalties provided by law.

(a-5) Any retailer of vapor products who violates subsection (a) or (b) of Section 50 is guilty of a petty offense. For the first offense in a 24-month period, the retailer of vapor products shall be fined $200 it does not have a training program that facilitates compliance with minimum-age vapor product laws. For the second offense in a 24-month period, the retailer of vapor products shall be fined $400 if it does not have a training program that facilitates compliance with minimum-age vapor products laws. For the third offense in a 24-month period, the retailer of vapor products shall be fined $600 dollars if it does not have a training program that facilitates compliance with minimum-age vapor product laws. For the fourth or subsequent offense in a 24-month period, the retailer of vapor products shall be fined $800 if it does not have a training program that facilitates compliance with minimum-wage vapor products laws. For the purposes of this subsection, the 24-month period shall begin with the person's first violation of the Act. The penalties in this subsection are in addition to any other penalties provided by law.

(a-10) A training program that facilitates compliance with minimum-age vapor products laws must include at least the following elements: (i) it must explain that only individuals displaying valid identification demonstrating that they are 18 years of age or older shall be eligible to purchase vapor products; and (ii) it must explain where a clerk can check identification for a date of birth. The training may be conducted electronically. Each retailer of vapor products that has a training program shall require each employee who completes the training program to sign a form attesting that the employee has received and completed the vapor products training. The form shall be kept in the employee's file and may be used to provide proof of training.

(b) If a minor violates subsection (c) of Section 50, he or she is guilty of a petty offense and the court may impose a sentence of 25 hours of community service and a fine of $50 for a first violation.

(c) A second violation by a minor of subsection (c) of Section 50 that occurs within 12 months after the first violation is punishable by a fine of $75 and 50 hours of community service.

(d) A third or subsequent violation by a minor of subsection (c) of Section 50 that occurs within 12 months after the first violation is punishable by a $200 fine and 50 hours of community service.

(e) Any second or subsequent violation not within the 12-month time period after the first violation is punishable as provided for a first violation.

(f) If a minor is convicted of or placed on supervision for a violation of subsection (c) of Section 50, the court may, in its discretion, and upon recommendation by the State's Attorney order that minor and his or her parents or legal guardian to attend a youth diversion program if that program is available in the jurisdiction where the offender resides. Attendance at a youth diversion program shall be time-credited against any community service time imposed for any first violation of subsection (c) of Section 50. In addition to any other penalty that the court may impose for a violation of subsection (c) of Section 50, the court, upon request by the State's Attorney, may in its discretion require the offender to remit a fee for his or her attendance at a youth diversion program.

For the purposes of this Section, a "youth diversion program" includes, but is not limited to, a seminar designed to educate a person on the physical and psychological effects of using nicotine products and the health consequences of using nicotine products that can be conducted with a locality's youth diversion program.

(g) All moneys collected as fines for violations of Section (a), (b), or (c) of Section 50 of this Act shall be distributed in the following manner:

(1) one-half of each fine shall be distributed to the unit of local government or other entity that successfully prosecuted the offender; and

(2) one-half shall be remitted to the State to be used for enforcement of this Act.

Any violation of subsection (a) or (b) of Section 50 shall be reported to the Department of Revenue within 7 business days.

Section 60. Display of vapor products.

(a) Vapor product displays. All vapor products must be sold from behind the counter or in an age restricted area or in a sealed display case.

(b) The restrictions in this Section do not apply to an adult-only facility.

(c) The restrictions in this Section do not apply to a retail store that (i) derives at least 90% of its revenue from tobacco, tobacco related products, or vapor products; (ii) does not permit persons under the age of 18 to enter the premises unless accompanied by a parent or legal guardian; (iii) posts a sign on the main entrance way stating that persons under the age of 18 are prohibited from entering unless accompanied by a parent or legal guardian; or (iv) is subject to the Cigarette Tax Act, the Tobacco Products Tax Act of 1995, the Prevention of Tobacco Use By Minors and Sale and Distribution of Tobacco Products Act, or the Display of Tobacco Products Act.

(d) A violation of this Section is a petty offense for which the court shall impose a fine of not less than $100 nor more than $1,000.

Section 65. The Prevention of Tobacco Use by Minors and Sale and Distribution of Tobacco Products Act is amended by changing Section 1.5 as follows:

(720 ILCS 675/1.5)

Sec. 1.5. Distribution of alternative nicotine products to persons under 18 years of age prohibited.

(a) For the purposes of this Section, "alternative nicotine product" means a product or device not consisting of or containing tobacco that provides for the ingestion into the body of nicotine, whether by chewing, smoking, absorbing, dissolving, inhaling, snorting, sniffing, or by any other means. "Alternative nicotine product" excludes cigarettes, smokeless tobacco, or other tobacco products as these terms are defined in Section 1 of this Act, vapor products as defined under Section 5 of the Vapor Products Regulatory Act, and any product approved by the United States Food and Drug Administration as a non-tobacco product for sale as a tobacco cessation product, as a tobacco dependence product, or for other medical purposes, and is being marketed and sold solely for that approved purpose.

(b) A person, either directly or indirectly by an agent or employee, or by a vending machine owned by the person or located in the person's establishment, may not sell, offer for sale, give, or furnish any alternative nicotine product, or any cartridge or component of an alternative nicotine product, to a person under 18 years of age.

(c) Before selling, offering for sale, giving, or furnishing an alternative nicotine product, or any cartridge or component of an alternative nicotine product, to another person, the person selling, offering for sale, giving, or furnishing the alternative nicotine product shall verify that the person is at least 18 years of age by:

(1) examining from any person that appears to be under 27 years of age a government-issued photographic identification that establishes the person is at least 18 years of age or

(2) for sales made through though the Internet or other remote sales methods, performing an age verification through an independent, third-party age verification service that compares information available from public records to the personal information entered by the person during the ordering process that establishes the person is 18 years of age or older.

(d) A person under 18 years of age shall not possess an alternative nicotine product.

(Source: P.A. 98-350, eff. 1-1-14; 99-496, eff. 6-1-16; revised 10-25-16.)

Section 99. Effective date. This Act takes effect January 1, 2018.".