Key Points:
·Tennessee will impose a 10% wholesale tax on e-cigarette products starting in July 2025.
·From 2026 onwards, only PMTA-compliant products will be legally allowed for sale, while unregistered products can be sold until early 2027.
·The use of e-liquid produced in "hostile countries" will be prohibited, effectively limiting most disposable e-cigarettes from China.
·Age verification and advertising restrictions will be strengthened, with harsher penalties for violations.
According to a report from Vaping360 on April 25th, the Tennessee state legislature submitted the SB 763 bill to Governor Bill Lee for signing on April 22nd. This bill will establish a premarket tobacco product application (PMTA) system for the e-cigarette product market and introduce a wholesale tax on e-cigarette products for the first time. Although the governor has the power to veto, considering the overwhelming support from both chambers of the legislature, it is highly likely that this bill will become law.
The bill was pushed by lobbying efforts from the tobacco industry, and the original version had proposed a total ban on all products not authorized by the FDA, which would have put almost all e-cigarette stores in the state at risk of closure. In the face of strong opposition from local industry groups, led by the Tennessee Smoke Free Association, the bill ultimately underwent several key revisions.
The main contents of the bill include:
·Wholesale tax regulations: Starting on July 1, 2025, a 10% wholesale tax will be imposed on all vapor products.
·PMTA registration directory system: Starting on January 1, 2026, the Tennessee Department of Revenue will publicly release a directory of vapor products legally available for sale. Manufacturers must submit product certifications by August 1, 2025, and pay a $25 annual fee for each product.
·Compliance requirements: Products must meet at least one of the following criteria to be registered: have FDA marketing authorization, be under FDA review, or have had an FDA refusal decision which has been suspended or revoked by the court or FDA.
·Ingredient sourcing limitations: Manufacturers must declare that the "consumable substances" in vapor products are processed or mixed in FDA-registered U.S. factories and may not come from "hostile nations."
·Sales transition period arrangements: Products not included in the registration directory may be legally sold until January 1, 2027. Retailer compliance requirements: Retailers are required to check the identification of customers who appear to be under 50 years old and face heavier penalties for selling to minors; several advertising restrictions will also be implemented.
The final version of the bill has a relatively small impact on local tobacco shops compared to the original proposal, with the main focus being on disposable e-cigarette products sold in convenience stores. As long as the e-liquid products sold in tobacco shops comply with the requirements of the PMTA catalog and are not subject to further restrictions from "hostile countries" in the future, they are expected to continue operating normally.
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