H-3854.2
HOUSE BILL 2969
State of Washington
64th Legislature
2016 Regular Session
By Representatives Harris, Cody, Pollet, Robinson, and Jinkins
Read first time 02/03/16. Referred to Committee on Commerce & Gaming.
AN ACT Relating to vapor product taxation; amending RCW 66.08.145, 66.44.010, 82.24.510, 82.24.550, 82.26.060, 82.26.080, 82.26.150, 82.26.220, and 82.32.300; adding a new chapter to Title 82 RCW; creating a new section; prescribing penalties; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
PART I
Tax on Vapor Products
NEW SECTION.  Sec. 101.  The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Actual price" means the total amount of consideration for which vapor products are sold, valued in money, whether received in money or otherwise, including: (a) Any charges by the seller necessary to complete the sale such as charges for delivery, freight, transportation, or handling; and (b) in the case of a taxpayer importing vapor products into the state, any expenses of the taxpayer or any person affiliated with the taxpayer that are necessary to complete the importation, such as delivery, freight, transportation, federal taxes, or handling of the product.
(2) "Affiliated" means related in any way by virtue of any form or amount of common ownership, control, operation, or management.
(3) "Board" means the state liquor and cannabis board.
(4) "Business" means any trade, occupation, activity, or enterprise engaged in for the purpose of selling or distributing vapor products in this state.
(5) "Distributor" means: (a) Any person engaged in the business of selling vapor products in this state who brings, or causes to be brought, into this state from without the state any vapor products for sale; (b) any person who makes, manufactures, fabricates, or stores vapor products in this state for sale in this state; (c) any person engaged in the business of selling vapor products without this state who ships or transports vapor products to retailers in this state, to be sold by those retailers; and (d) any person engaged in the business of selling vapor products in this state who handles for sale any vapor products that are within this state but upon which tax has not been imposed.
(6) "Indian country" means the same as defined in chapter 82.24 RCW.
(7) "Manufacturer" means a person who manufactures and sells vapor products.
(8) "Manufacturer's representative" means a person hired by a manufacturer to sell or distribute the manufacturer's vapor products and includes employees and independent contractors.
(9) "Person" means: Any individual, receiver, administrator, executor, assignee, trustee in bankruptcy, trust, estate, firm, copartnership, joint venture, club, company, joint stock company, business trust, municipal corporation, corporation, limited liability company, association, or society; the state and its departments and institutions; any political subdivision of the state of Washington; and any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit, or otherwise. "Person" does not include any person immune from state taxation, including the United States or its instrumentalities, and federally recognized Indian tribes and enrolled tribal members, conducting business within Indian country.
(10) "Place of business" means any place where vapor products are sold or where vapor products are manufactured, stored, or kept for the purpose of sale, including any vessel, vehicle, airplane, or train.
(11) "Retail outlet" means each place of business from which vapor products are sold to consumers.
(12) "Retailer" means any person engaged in the business of selling vapor products to ultimate consumers.
(13)(a) "Sale" means any transfer, exchange, or barter, in any manner or by any means whatsoever, for a consideration, and includes and means all sales made by any person.
(b) "Sale" includes a gift by a person engaged in the business of selling vapor products, for advertising, promoting, or as a means of evading the provisions of this chapter.
(14)(a) "Taxable sales price" means:
(i) In the case of a taxpayer that is not affiliated with the manufacturer, distributor, or other person from whom the taxpayer purchased vapor products, the actual price for which the taxpayer purchased the vapor products;
(ii) In the case of a taxpayer that purchases vapor products from an affiliated manufacturer, affiliated distributor, or other affiliated person, and that sells those vapor products to unaffiliated distributors, unaffiliated retailers, or ultimate consumers, the actual price for which that taxpayer sells those vapor products to unaffiliated distributors, unaffiliated retailers, or ultimate consumers;
(iii) In the case of a taxpayer that sells vapor products only to affiliated distributors or affiliated retailers, the price, determined as nearly as possible according to the actual price, that other distributors sell similar vapor products of like quality and character to unaffiliated distributors, unaffiliated retailers, or ultimate consumers;
(iv) In the case of a taxpayer that is a manufacturer selling vapor products directly to ultimate consumers, the actual price for which the taxpayer sells those vapor products to ultimate consumers;
(v) In the case of a taxpayer that has acquired vapor products under a sale as defined in subsection (13)(b) of this section, the price, determined as nearly as possible according to the actual price, that the taxpayer or other distributors sell the same vapor products or similar vapor products of like quality and character to unaffiliated distributors, unaffiliated retailers, or ultimate consumers;
(vi) In cases where section 102(2)(b) of this act applies, the value of the article used as defined in RCW 82.12.010; or
(vii) In any case where (a)(i) through (vi) of this subsection do not apply, the price, determined as nearly as possible according to the actual price, that the taxpayer or other distributors sell the same vapor products or similar vapor products of like quality and character to unaffiliated distributors, unaffiliated retailers, or ultimate consumers.
(b) For purposes of (a)(i) and (ii) of this subsection only, "person" includes both persons as defined in subsection (9) of this section and any person immune from state taxation, including the United States or its instrumentalities, and federally recognized Indian tribes and enrolled tribal members, conducting business within Indian country.
(c) In any case where the taxable sales price is not indicative of a vapor product's true value at the time and place of the taxable event as provided in section 102(2)(a) of this act, "taxable sales price" means the true value of the vapor product as determined by the department. For purposes of this subsection, "true value" means market value based on sales at comparable locations in this state of the same or similar vapor product of like quality and character sold under comparable conditions of sale by comparable sellers to comparable purchasers. However, in the absence of such comparable sales, true value means the value of the vapor product as determined by all of the taxpayer's direct and indirect costs attributable to the vapor product.
(15) "Taxpayer" means a person liable for the tax imposed by this chapter.
(16) "Unaffiliated distributor" means a distributor that is not affiliated with the manufacturer, distributor, or other person from whom the distributor has purchased vapor products.
(17) "Unaffiliated retailer" means a retailer that is not affiliated with the manufacturer, distributor, or other person from whom the retailer has purchased vapor products.
(18)(a) "Vapor product" means any noncombustible product containing a solution or other consumable substance, regardless of whether it contains nicotine, that employs a mechanical heating element, battery, or electronic circuit regardless of shape or size that can be used to produce vapor from the solution or other substance, including an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar product or device. The term also includes any cartridge or other container of solution or other consumable substance, regardless of whether it contains nicotine, that is intended to be used with or in a vapor product to produce vapor and is sold for such purpose.
(b) The term does not include:
(i) Any product approved by the United States food and drug administration for sale as a tobacco cessation product, medical device, or for other therapeutic purposes when such product is marketed and sold solely for such an approved purpose;
(ii) Any product that will become an ingredient or component in a vapor product manufactured by a distributor; or
(iii) Any product that meets the definition of marijuana, useable marijuana, marijuana concentrates, marijuana-infused products, cigarette, or tobacco products.
(c) For purposes of this subsection (18):
(i) "Cigarette" has the same meaning as in RCW 82.24.010.
(ii) "Marijuana," "useable marijuana," "marijuana concentrates," and "marijuana-infused products" have the same meaning as in RCW 69.50.101.
(iii) "Tobacco products" has the same meaning as in RCW 82.26.010.
NEW SECTION.  Sec. 102.  (1)(a) There is levied and collected a tax upon the sale, use, consumption, handling, possession, or distribution of all vapor products in this state equal to forty-five percent of the taxable sales price. If the vapor product is sold together with products not taxable under this chapter for one price, the tax imposed by this section applies to the entire selling price of the product, except as provided in (b) of this subsection.
(b) If the seller can identify by reasonable and verifiable standards the portion of the selling price attributable to the vapor products from its books and records that are kept in the regular course of business for other purposes including, but not limited to, nontax purposes, the tax imposed by this section only applies to that portion of the selling price of the product attributable to the vapor products.
(2)(a) The tax under this section must be collected at the time the distributor: (i) Brings, or causes to be brought, into this state from without the state vapor products for sale; (ii) makes, manufactures, fabricates, or stores vapor products in this state for sale in this state; (iii) ships or transports vapor products to retailers in this state, to be sold by those retailers; or (iv) handles for sale any vapor products that are within this state but upon which tax has not been imposed.
(b) The tax imposed under this section must also be collected by the department from the consumer of vapor products where the tax imposed under this section was not paid by the distributor on such vapor products.
(3)(a) Except as provided under (b) of this subsection, state revenues collected from the tax imposed under this section must be deposited into the state general fund.
(b) At minimum, three percent of revenues collected from the tax imposed under this section must be appropriated from the general fund to the cancer research endowment fund match transfer account, in the omnibus appropriations act beginning in the biennium starting July 1, 2017.
(c) The legislature may use an estimate, provided by the department based on previous collections, to determine the revenue amount to be appropriated in (b) of this subsection.
(4) The department may adopt rules to implement this section.
NEW SECTION.  Sec. 103.  It is the intent and purpose of this chapter to levy a tax on all vapor products sold, used, consumed, handled, possessed, or distributed within this state. It is the further intent and purpose of this chapter to impose the tax only once on all vapor products in this state. Nothing in this chapter may be construed to exempt any person taxable under any other law or under any other tax imposed under this title.
NEW SECTION.  Sec. 104.  The tax imposed by section 102 of this act does not apply with respect to any vapor products, which under the Constitution and laws of the United States may not be made the subject of taxation by this state.
NEW SECTION.  Sec. 105.  (1) Every distributor must keep at each place of business complete and accurate records for that place of business, including itemized invoices, of vapor products held, purchased, manufactured, brought in or caused to be brought in from without the state, or shipped or transported to retailers in this state, and of all sales of vapor products made.
(2) These records must show the names and addresses of purchasers, the inventory of all vapor products, and other pertinent papers and documents relating to the purchase, sale, or disposition of vapor products. All invoices and other records required by this section to be kept must be preserved for a period of five years from the date of the invoices or other documents or the date of the entries appearing in the records.
(3) At any time during usual business hours the department, board, or its duly authorized agents or employees, may enter any place of business of a distributor, without a search warrant, and inspect the premises, the records required to be kept under this chapter, and the vapor products contained therein, to determine whether or not all the provisions of this chapter are being fully complied with. If the department, board, or any of its agents or employees are denied free access or are hindered or interfered with in making such examination, the registration certificate issued under RCW 82.32.030 of the distributor at such premises are subject to revocation by the department, and any licenses issued under this chapter or chapter 82.24 or 82.26 RCW are subject to suspension or revocation by the board.
NEW SECTION.  Sec. 106.  Every person required to be licensed under this chapter who sells vapor products to persons other than the ultimate consumer must render with each sale itemized invoices showing the seller's name and address, the purchaser's name and address, the date of sale, and all prices. The person must preserve legible copies of all such invoices for five years from the date of sale.
NEW SECTION.  Sec. 107.  (1) Every retailer must procure itemized invoices of all vapor products purchased. The invoices must show the seller's name and address, the date of purchase, and all prices and discounts.
(2) The retailer must keep at each retail outlet copies of complete, accurate, and legible invoices for that retail outlet or place of business. All invoices required to be kept under this section must be preserved for five years from the date of purchase.
(3) At any time during usual business hours the department, board, or its duly authorized agents or employees may enter any retail outlet, without a search warrant, and inspect the premises for invoices required to be kept under this section, and the vapor products contained in the retail outlet, to determine whether or not all the provisions of this chapter are being fully complied with. If the department, board, or any of its agents or employees are denied free access or are hindered or interfered with in making the inspection, the registration certificate issued under RCW 82.32.030 of the retailer at the premises is subject to revocation by the department, and any licenses issued under this chapter or chapter 82.24 or 82.26 RCW are subject to suspension or revocation by the board.
NEW SECTION.  Sec. 108.  (1)(a) Where vapor products upon which the tax imposed by this chapter has been reported and paid are shipped or transported outside this state by the distributor to a person engaged in the business of selling vapor products, to be sold by that person, or are returned to the manufacturer by the distributor or destroyed by the distributor, or are sold by the distributor to the United States or any of its agencies or instrumentalities, or are sold by the distributor to any Indian tribal organization, credit of such tax may be made to the distributor in accordance with rules prescribed by the department.
(b) For purposes of this section, the following definitions apply:
(i) "Indian distributor" means a federally recognized Indian tribe or tribal entity that would otherwise meet the definition of "distributor" under section 101 of this act, if federally recognized Indian tribes and tribal entities were not excluded from the definition of "person" in section 101 of this act.
(ii) "Indian retailer" means a federally recognized Indian tribe or tribal entity that would otherwise meet the definition of "retailer" under section 101 of this act, if federally recognized Indian tribes and tribal entities were not excluded from the definition of "person" in section 101 of this act.
(iii) "Indian tribal organization" means a federally recognized Indian tribe, or tribal entity, and includes an Indian distributor or retailer that is owned by an Indian who is an enrolled tribal member conducting business under tribal license or similar tribal approval within Indian country.
(2) Credit allowed under this section must be determined based on the tax rate in effect for the period for which the tax imposed by this chapter, for which a credit is sought, was paid.
NEW SECTION.  Sec. 109.  The credit authorized in section 108 of this act is not subject to the provisions of RCW 82.32.805 and 82.32.808.
NEW SECTION.  Sec. 110.  All of the provisions contained in chapter 82.32 RCW not inconsistent with the provisions of this chapter have full force and application with respect to taxes imposed under the provisions of this chapter.
NEW SECTION.  Sec. 111.  The department must authorize, as duly authorized agents, enforcement officers of the state liquor and cannabis board to enforce provisions of this chapter. These officers are not employees of the department.
NEW SECTION.  Sec. 112.  (1) The department may by rule establish the invoice detail required under section 105 of this act for a distributor under section 101(5)(d) of this act and for those invoices required to be provided to retailers under section 108 of this act.
(2) If a retailer fails to keep invoices as required under section 107 of this act, the retailer is liable for the tax owed on any uninvoiced vapor products but not penalties and interest, except as provided in subsection (3) of this section.
(3) If the department finds that the nonpayment of tax by the retailer was willful or if in the case of a second or plural nonpayment of tax by the retailer, penalties and interest must be assessed in accordance with chapter 82.32 RCW.
NEW SECTION.  Sec. 113.  (1) No person may transport or cause to be transported in this state vapor products for sale other than:
(a) A licensed distributor in the distributor's own vehicle, a manufacturer's representative authorized to sell or distribute vapor products in this state under section 118 of this act, or a licensed retailer in the retailer's own vehicle; or
(b) A person who has given notice to the board in advance of the commencement of transportation.
(2) When transporting vapor products for sale, the person must have in his or her actual possession, or cause to have in the actual possession of those persons transporting such vapor products on his or her behalf, invoices or delivery tickets for the vapor products, which must show the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of the vapor products being transported.
(3) In any case where the department, board, or any peace officer of the state has knowledge or reasonable grounds to believe that any vehicle is transporting vapor products in violation of this section, the department, board, or peace officer is authorized to stop the vehicle and to inspect it for contraband vapor products.
(4) This section does not apply to a motor carrier or freight forwarder as defined in 49 U.S.C. Sec. 13102 or an air carrier as defined in 49 U.S.C. Sec. 40102.
NEW SECTION.  Sec. 114.  (1) The licenses issuable by the board under this chapter are as follows:
(a) A distributor's license; and
(b) A retailer's license.
(2) Application for the licenses must be made through the business licensing system under chapter 19.02 RCW. The board may adopt rules regarding the regulation of the licenses. The board may refuse to issue any license under this chapter if the board has reasonable cause to believe that the applicant has willfully withheld information requested for the purpose of determining the eligibility of the applicant to receive a license, or if the board has reasonable cause to believe that information submitted in the application is false or misleading or is not made in good faith. In addition, for the purpose of reviewing an application for a distributor's license or retailer's license and for considering the denial, suspension, or revocation of any such license, the board may consider criminal conduct of the applicant, including an administrative violation history record with the board and a criminal history record information check within the previous five years, in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions, and the provisions of RCW 9.95.240 and chapter 9.96A RCW do not apply to such cases. The board may, in its discretion, issue or refuse to issue the distributor's license or retailer's license, subject to the provisions of section 121 of this act.
(3) No person may qualify for a distributor's license or a retailer's license under this section without first undergoing a criminal background check. The background check must be performed by the board and must disclose any criminal conduct within the previous five years in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions. If the applicant or licensee also has a license issued under chapter 66.24, 82.24, or 82.26 RCW, the background check done under the authority of chapter 66.24, 82.24, or 82.26 RCW satisfies the requirements of this subsection.
(4) Each license issued under this chapter expires on the business license expiration date. The license must be continued annually if the licensee has paid the required fee and complied with all the provisions of this chapter and the rules of the board adopted pursuant to this chapter.
(5) Each license and any other evidence of the license required under this chapter must be exhibited in each place of business for which it is issued and in the manner required for the display of a business license.
(6) License issuances and renewals are subject to board authority and the rules adopted under the board including, but not limited to, rights of cities, towns, county legislative authorities, the public, churches, schools, and public institutions that object to or prevent issuance of licenses.
NEW SECTION.  Sec. 115.  The board must compile and maintain a current record of the names of all distributors and retailers licensed under this chapter and the status of their license or licenses. The information must be updated on a monthly basis and published on the board's official internet web site. This information is not subject to the confidentiality provisions of RCW 82.32.330 and must be disclosed to manufacturers, distributors, retailers, and the general public upon request.
NEW SECTION.  Sec. 116.  (1)(a) No person may engage in or conduct business as a distributor or retailer in this state without a valid license issued under this chapter, except as otherwise provided by law. Any person who sells vapor products to persons other than ultimate consumers or who meets the definition of "distributor" under section 101(5)(d) of this act must obtain a distributor's license under this chapter. Any person who sells vapor products to ultimate consumers must obtain a retailer's license under this chapter.
(b) A violation of this subsection (1) is punishable as a class C felony according to chapter 9A.20 RCW.
(2)(a) No person engaged in or conducting business as a distributor or retailer in this state may:
(i) Refuse to allow the department or the board, on demand, to make a full inspection of any place of business where any of the vapor products taxed under this chapter are sold, stored, or handled, or otherwise hinder or prevent such inspection;
(ii) Make, use, or present or exhibit to the department or the board any invoice for any of the vapor products taxed under this chapter that bears an untrue date or falsely states the nature or quantity of the goods invoiced; or
(iii) Fail to produce on demand of the department or the board all invoices of all the vapor products taxed under this chapter within five years prior to such demand unless the person can show by satisfactory proof that the nonproduction of the invoices was due to causes beyond the person's control.
(b) No person, other than a licensed distributor or retailer, may transport vapor products for sale in this state for which the taxes imposed under this chapter have not been paid unless:
(i) Notice of the transportation has been given as required under section 113 of this act;
(ii) The person transporting the vapor products actually possesses invoices or delivery tickets showing the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of vapor products being transported; and
(iii) The vapor products are consigned to or purchased by a person in this state who is licensed under this chapter.
(c) A violation of this subsection (2) is a gross misdemeanor.
(3) Any person licensed under this chapter as a distributor, and any person licensed under this chapter as a retailer, may not operate in any other capacity unless the additional appropriate license is first secured, except as otherwise provided by law. A violation of this subsection (3) is a misdemeanor.
(4) The penalties provided in this section are in addition to any other penalties provided by law for violating the provisions of this chapter or the rules adopted under this chapter.
(5) This section does not apply to a motor carrier or freight forwarder as defined in 49 U.S.C. Sec. 13102 or an air carrier as defined in 49 U.S.C. Sec. 40102.
NEW SECTION.  Sec. 117.  (1) A retailer that obtains vapor products from an unlicensed distributor or any other person that is not licensed under this chapter must be licensed both as a retailer and a distributor under this chapter and is liable for the tax imposed under section 102 of this act with respect to the vapor products acquired from the unlicensed person that are held for sale, handling, or distribution in this state. For the purposes of this subsection, "person" includes both persons defined in section 101(9) of this act and any person immune from state taxation, such as the United States or its instrumentalities, and federally recognized Indian tribes and enrolled tribal members, conducting business within Indian country.
(2) Every distributor licensed under this chapter may sell vapor products to retailers located in Washington only if the retailer has a current retailer's license under this chapter.
NEW SECTION.  Sec. 118.  A manufacturer that has manufacturer's representatives who sell or distribute the manufacturer's vapor products in this state must provide the board a list of the names and addresses of all such representatives and must ensure that the list provided to the board is kept current. A manufacturer's representative is not authorized to distribute or sell vapor products in this state unless the manufacturer that hired the representative has a valid distributor's license under this chapter and that manufacturer provides the board a current list of all of its manufacturer's representatives as required by this section. A manufacturer's representative must carry a copy of the distributor's license of the manufacturer that hired the representative at all times when selling or distributing the manufacturer's vapor products.
NEW SECTION.  Sec. 119.  (1) The board must enforce this chapter. The board may adopt, amend, and repeal rules necessary to enforce this chapter.
(2) The department may adopt, amend, and repeal rules necessary to administer this chapter. The board may revoke or suspend the distributor's or retailer's license of any distributor or retailer of vapor products in the state upon sufficient cause showing a violation of this chapter or upon the failure of the licensee to comply with any of the rules adopted under it.
(3) A license may not be suspended or revoked except upon notice to the licensee and after a hearing as prescribed by the board. The board, upon finding that the licensee has failed to comply with any provision of this chapter or of any rule adopted under it, must, in the case of the first offense, suspend the license or licenses of the licensee for a period of not less than thirty consecutive business days, and in the case of a second or further offense, suspend the license or licenses for a period of not less than ninety consecutive business days but not more than twelve months, and in the event the board finds the licensee has been guilty of willful and persistent violations, it may revoke the license or licenses.
(4) Any licenses issued under chapter 82.24 or 82.26 RCW to a person whose license or licenses have been suspended or revoked under this section must also be suspended or revoked during the period of suspension or revocation under this section.
(5) Any person whose license or licenses have been revoked under this section may reapply to the board at the expiration of one year of the license or licenses. The license or licenses may be approved by the board if it appears to the satisfaction of the board that the licensee will comply with the provisions of this chapter and the rules adopted under it.
(6) A person whose license has been suspended or revoked may not sell vapor products, tobacco products, or cigarettes or permit vapor products, tobacco products, or cigarettes to be sold during the period of suspension or revocation on the premises occupied by the person or upon other premises controlled by the person or others or in any other manner or form.
(7) Any determination and order by the board, and any order of suspension or revocation by the board of the license or licenses issued under this chapter, or refusal to reinstate a license or licenses after revocation is reviewable by an appeal to the superior court of Thurston county. The superior court must review the order or ruling of the board and may hear the matter de novo, having due regard to the provisions of this chapter and the duties imposed upon the board.
(8) If the board makes an initial decision to deny a license or renewal, or suspend or revoke a license, the applicant may request a hearing subject to the applicable provisions under Title 34 RCW.
NEW SECTION.  Sec. 120.  (1) Any vapor products in the possession of a person selling vapor products in this state acting as a distributor or retailer and who is not licensed as required under section 116 of this act, or a person who is selling vapor products in violation of section 119(6) of this act, may be seized without a warrant by any agent of the department, agent of the board, or law enforcement officer of this state. Any vapor products seized under this subsection are deemed forfeited.
(2) Any vapor products in the possession of a person who is not a licensed distributor or retailer and who transports vapor products for sale without having provided notice to the board required under section 113 of this act, or without invoices or delivery tickets showing the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of vapor products being transported may be seized and are subject to forfeiture.
(3) All conveyances, including aircraft, vehicles, or vessels that are used, or intended for use to transport, or in any manner to facilitate the transportation, for the purpose of sale or receipt of vapor products under subsection (2) of this section, may be seized and are subject to forfeiture except:
(a) A conveyance used by any person as a common or contract carrier having in actual possession invoices or delivery tickets showing the true name and address of the consignor or seller, the true name and address of the consignee or purchaser, and the quantity and brands of the vapor products transported, unless it appears that the owner or other person in charge of the conveyance is a consenting party or privy to a violation of this chapter;
(b) A conveyance subject to forfeiture under this section by reason of any act or omission of which the owner establishes to have been committed or omitted without his or her knowledge or consent; or
(c) A conveyance encumbered by a bona fide security interest if the secured party neither had knowledge of nor consented to the act or omission.
(4) Property subject to forfeiture under subsections (2) and (3) of this section may be seized by any agent of the department, the board, or law enforcement officer of this state upon process issued by any superior court or district court having jurisdiction over the property. Seizure without process may be made if:
(a) The seizure is incident to an arrest or a search warrant or an inspection under an administrative inspection warrant; or
(b) The department, board, or law enforcement officer has probable cause to believe that the property was used or is intended to be used in violation of this chapter and exigent circumstances exist making procurement of a search warrant impracticable.
(5) This section may not be construed to require the seizure of vapor products if the department's agent, board's agent, or law enforcement officer reasonably believes that the vapor products are possessed for personal consumption by the person in possession of the vapor products.
(6) Any vapor product seized by a law enforcement officer must be turned over to the board as soon as practicable.
(7) This section does not apply to a motor carrier or freight forwarder as defined in 49 U.S.C. Sec. 13102 or an air carrier as defined in 49 U.S.C. Sec. 40102.
NEW SECTION.  Sec. 121.  (1) In all cases of seizure of any vapor product made subject to forfeiture under this chapter, the department or board must proceed as provided in RCW 82.24.135.
(2) When vapor products are forfeited under this chapter, the department or board may:
(a) Retain the property for official use or upon application by any law enforcement agency of this state, another state, or the District of Columbia, or of the United States for the exclusive use of enforcing this chapter or the laws of any other state or the District of Columbia or of the United States; or
(b) Sell the vapor products at public auction to the highest bidder after due advertisement. Before delivering any of the goods to the successful bidder, the department or board must require the purchaser to pay the proper amount of any tax due. The proceeds of the sale must be first applied to the payment of all proper expenses of any investigation leading to the seizure and of the proceedings for forfeiture and sale, including expenses of seizure, maintenance of custody, advertising, and court costs. The balance of the proceeds and all money must be deposited in the general fund of the state. Proper expenses of investigation include costs incurred by any law enforcement agency or any federal, state, or local agency.
(3) The department or the board may return any property seized under the provisions of this chapter when it is shown that there was no intention to violate the provisions of this chapter. When any property is returned under this section, the department or the board may return the property to the parties from whom they were seized if and when such parties have paid the proper amount of tax due under this chapter.
NEW SECTION.  Sec. 122.  When the department or the board has good reason to believe that any of the vapor products taxed under this chapter are being kept, sold, offered for sale, or given away in violation of the provisions of this chapter, it may make affidavit of facts describing the place or thing to be searched, before any judge of any court in this state, and the judge must issue a search warrant directed to the sheriff, any deputy, police officer, or duly authorized agent of the department or the board commanding him or her diligently to search any building, room in a building, place, or vehicle as may be designated in the affidavit and search warrant, and to seize the vapor products and hold them until disposed of by law.
NEW SECTION.  Sec. 123.  (1) A fee of ninety-three dollars must accompany each retailer's license application or license renewal application. A separate license is required for each separate location at which the retailer operates.
(2) The fee imposed under subsection (1) of this section does not apply to any person applying for a retailer's license or for renewal of a retailer's license if the person has a valid retailer's license under RCW 82.24.510 for the place of business associated with the retailer's license application or renewal application.
NEW SECTION.  Sec. 124.  A fee of six hundred fifty dollars must accompany each distributor's license application or license renewal application. If a distributor sells or intends to sell vapor products at two or more places of business, whether established or temporary, a separate license with a license fee of one hundred fifteen dollars is required for each additional place of business.
Sec. 125.  RCW 66.08.145 and 2007 c 221 s 1 are each amended to read as follows:
(1) The liquor ((control)) and cannabis board may issue subpoenas in connection with any investigation, hearing, or proceeding for the production of books, records, and documents held under this chapter or chapters 70.155, 70.158, 82.24, ((and)) 82.26 ((RCW)), and 82.-- RCW (the new chapter created in section 203 of this act), and books and records of common carriers as defined in RCW 81.80.010, or vehicle rental agencies relating to the transportation or possession of cigarettes or other tobacco products.
(2) The liquor ((control)) and cannabis board may designate individuals authorized to sign subpoenas.
(3) If any person is served a subpoena from the board for the production of records, documents, and books, and fails or refuses to obey the subpoena for the production of records, documents, and books when required to do so, the person is subject to proceedings for contempt, and the board may institute contempt of court proceedings in the superior court of Thurston county or in the county in which the person resides.
Sec. 126.  RCW 66.44.010 and 1998 c 18 s 1 are each amended to read as follows:
(1) All county and municipal peace officers are hereby charged with the duty of investigating and prosecuting all violations of this title, and the penal laws of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor, and all fines imposed for violations of this title and the penal laws of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor ((shall)) belong to the county, city or town wherein the court imposing the fine is located, and ((shall)) must be placed in the general fund for payment of the salaries of those engaged in the enforcement of the provisions of this title and the penal laws of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor((: PROVIDED, That)). However, all fees, fines, forfeitures and penalties collected or assessed by a district court because of the violation of a state law ((shall)) must be remitted as provided in chapter 3.62 RCW as now exists or is later amended.
(2) In addition to any and all other powers granted, the board ((shall have)) has the power to enforce the penal provisions of this title and the penal laws of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor.
(3) In addition to the other duties under this section, the board ((shall)) must enforce chapters 82.24 ((and)), 82.26 ((RCW)), and 82.-- RCW (the new chapter created in section 203 of this act).
(4) The board may appoint and employ, assign to duty and fix the compensation of, officers to be designated as liquor enforcement officers. Such liquor enforcement officers ((shall)) have the power, under the supervision of the board, to enforce the penal provisions of this title and the penal laws of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor. They ((shall)) have the power and authority to serve and execute all warrants and process of law issued by the courts in enforcing the penal provisions of this title or of any penal law of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor, and the provisions of chapters 82.24 ((and)), 82.26 ((RCW)), and 82.-- RCW (the new chapter created in section 203 of this act). They ((shall)) have the power to arrest without a warrant any person or persons found in the act of violating any of the penal provisions of this title or of any penal law of this state relating to the manufacture, importation, transportation, possession, distribution and sale of liquor, and the provisions of chapters 82.24 ((and)), 82.26 ((RCW)), and 82.-- RCW (the new chapter created in section 203 of this act).
Sec. 127.  RCW 82.24.510 and 2013 c 144 s 50 are each amended to read as follows:
(1) The licenses issuable under this chapter are as follows:
(a) A wholesaler's license.
(b) A retailer's license.
(2) Application for the licenses must be made through the business licensing system under chapter 19.02 RCW. The board must adopt rules regarding the regulation of the licenses. The board may refrain from the issuance of any license under this chapter if the board has reasonable cause to believe that the applicant has willfully withheld information requested for the purpose of determining the eligibility of the applicant to receive a license, or if the board has reasonable cause to believe that information submitted in the application is false or misleading or is not made in good faith. In addition, for the purpose of reviewing an application for a wholesaler's license or retailer's license and for considering the denial, suspension, or revocation of any such license, the board may consider any prior criminal conduct of the applicant, including an administrative violation history record with the board and a criminal history record information check within the previous five years, in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions, and the provisions of RCW 9.95.240 and chapter 9.96A RCW do not apply to such cases. The board may, in its discretion, grant or refuse the wholesaler's license or retailer's license, subject to the provisions of RCW 82.24.550.
(3) No person may qualify for a wholesaler's license or a retailer's license under this section without first undergoing a criminal background check. The background check must be performed by the board and must disclose any criminal conduct within the previous five years in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions. A person who possesses a valid license on July 22, 2001, is subject to this subsection and subsection (2) of this section beginning on the date of the person's business license expiration under chapter 19.02 RCW, and thereafter. If the applicant or licensee also has a license issued under chapter 66.24 ((or)), 82.26 ((RCW)), or 82.-- RCW (the new chapter created in section 203 of this act), the background check done under the authority of chapter 66.24 ((or)), 82.26 ((RCW)), or 82.-- RCW (the new chapter created in section 203 of this act) satisfies the requirements of this section.
(4) Each such license expires on the business license expiration date, and each such license must be continued annually if the licensee has paid the required fee and complied with all the provisions of this chapter and the rules of the board made pursuant thereto.
(5) Each license and any other evidence of the license that the board requires must be exhibited in each place of business for which it is issued and in the manner required for the display of a business license.
Sec. 128.  RCW 82.24.550 and 2015 c 86 s 307 are each amended to read as follows:
(1) The board must enforce the provisions of this chapter. The board may adopt, amend, and repeal rules necessary to enforce the provisions of this chapter.
(2) The department may adopt, amend, and repeal rules necessary to administer the provisions of this chapter. The board may revoke or suspend the license or permit of any wholesale or retail cigarette dealer in the state upon sufficient cause appearing of the violation of this chapter or upon the failure of such licensee to comply with any of the provisions of this chapter.
(3) A license may not be suspended or revoked except upon notice to the licensee and after a hearing as prescribed by the board. The board, upon finding that the licensee has failed to comply with any provision of this chapter or any rule adopted under this chapter, must, in the case of the first offense, suspend the license or licenses of the licensee for a period of not less than thirty consecutive business days, and, in the case of a second or further offense, must suspend the license or licenses for a period of not less than ninety consecutive business days nor more than twelve months, and, in the event the board finds the licensee has been guilty of willful and persistent violations, it may revoke the license or licenses.
(4) Any licenses issued under chapter 82.26 ((RCW)) or 82.-- RCW (the new chapter created in section 203 of this act) to a person whose license or licenses have been suspended or revoked under this section must also be suspended or revoked during the period of suspension or revocation under this section.
(5) Any person whose license or licenses have been revoked under this section may reapply to the board at the expiration of one year from the date of revocation of the license or licenses. The license or licenses may be approved by the board if it appears to the satisfaction of the board that the licensee will comply with the provisions of this chapter and the rules adopted under this chapter.
(6) A person whose license has been suspended or revoked may not sell cigarettes or tobacco products or permit cigarettes or tobacco products to be sold during the period of such suspension or revocation on the premises occupied by the person or upon other premises controlled by the person or others or in any other manner or form whatever.
(7) Any determination and order by the board, and any order of suspension or revocation by the board of the license or licenses issued under this chapter, or refusal to reinstate a license or licenses after revocation is reviewable by an appeal to the superior court of Thurston county. The superior court must review the order or ruling of the board and may hear the matter de novo, having due regard to the provisions of this chapter and the duties imposed upon the board.
(8) If the board makes an initial decision to deny a license or renewal, or suspend or revoke a license, the applicant may request a hearing subject to the applicable provisions under Title 34 RCW.
(9) For purposes of this section, "tobacco products" has the same meaning as in RCW 82.26.010.
Sec. 129.  RCW 82.26.060 and 2009 c 154 s 3 are each amended to read as follows:
(1) Every distributor ((shall)) must keep at each place of business complete and accurate records for that place of business, including itemized invoices, of tobacco products held, purchased, manufactured, brought in or caused to be brought in from without the state, or shipped or transported to retailers in this state, and of all sales of tobacco products made.
(2) These records ((shall)) must show the names and addresses of purchasers, the inventory of all tobacco products, and other pertinent papers and documents relating to the purchase, sale, or disposition of tobacco products. All invoices and other records required by this section to be kept ((shall)) must be preserved for a period of five years from the date of the invoices or other documents or the date of the entries appearing in the records.
(3) At any time during usual business hours the department, board, or its duly authorized agents or employees, may enter any place of business of a distributor, without a search warrant, and inspect the premises, the records required to be kept under this chapter, and the tobacco products contained therein, to determine whether or not all the provisions of this chapter are being fully complied with. If the department, board, or any of its agents or employees, are denied free access or are hindered or interfered with in making such examination, the registration certificate issued under RCW 82.32.030 of the distributor at such premises shall be subject to revocation, and any licenses issued under this chapter or chapter 82.24 ((RCW)) or 82.-- RCW (the new chapter created in section 203 of this act) are subject to suspension or revocation, by the department or board.
Sec. 130.  RCW 82.26.080 and 2005 c 180 s 5 are each amended to read as follows:
(1) Every retailer ((shall)) must procure itemized invoices of all tobacco products purchased. The invoices ((shall)) must show the seller's name and address, the date of purchase, and all prices and discounts.
(2) The retailer ((shall)) must keep at each retail outlet copies of complete, accurate, and legible invoices for that retail outlet or place of business. All invoices required to be kept under this section ((shall)) must be preserved for five years from the date of purchase.
(3) At any time during usual business hours the department, board, or its duly authorized agents or employees may enter any retail outlet without a search warrant, and inspect the premises for invoices required to be kept under this section and the tobacco products contained in the retail outlet, to determine whether or not all the provisions of this chapter are being fully complied with. If the department, board, or any of its agents or employees, are denied free access or are hindered or interfered with in making the inspection, the registration certificate issued under RCW 82.32.030 of the retailer at the premises is subject to revocation, and any licenses issued under this chapter or chapter 82.24 ((RCW)) or 82.-- RCW (the new chapter created in section 203 of this act) are subject to suspension or revocation by the department.
Sec. 131.  RCW 82.26.150 and 2013 c 144 s 52 are each amended to read as follows:
(1) The licenses issuable by the board under this chapter are as follows:
(a) A distributor's license; and
(b) A retailer's license.
(2) Application for the licenses must be made through the business licensing system under chapter 19.02 RCW. The board may adopt rules regarding the regulation of the licenses. The board may refuse to issue any license under this chapter if the board has reasonable cause to believe that the applicant has willfully withheld information requested for the purpose of determining the eligibility of the applicant to receive a license, or if the board has reasonable cause to believe that information submitted in the application is false or misleading or is not made in good faith. In addition, for the purpose of reviewing an application for a distributor's license or retailer's license and for considering the denial, suspension, or revocation of any such license, the board may consider criminal conduct of the applicant, including an administrative violation history record with the board and a criminal history record information check within the previous five years, in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions, and the provisions of RCW 9.95.240 and chapter 9.96A RCW do not apply to such cases. The board may, in its discretion, issue or refuse to issue the distributor's license or retailer's license, subject to the provisions of RCW 82.26.220.
(3) No person may qualify for a distributor's license or a retailer's license under this section without first undergoing a criminal background check. The background check must be performed by the board and must disclose any criminal conduct within the previous five years in any state, tribal, or federal jurisdiction in the United States, its territories, or possessions. If the applicant or licensee also has a license issued under chapter 66.24 ((or)), 82.24 ((RCW)), or 82.-- RCW (the new chapter created in section 203 of this act), the background check done under the authority of chapter 66.24 ((or)), 82.24 ((RCW)), or 82.-- RCW (the new chapter created in section 203 of this act) satisfies the requirements of this section.
(4) Each license issued under this chapter expires on the business license expiration date. The license must be continued annually if the licensee has paid the required fee and complied with all the provisions of this chapter and the rules of the board adopted pursuant to this chapter.
(5) Each license and any other evidence of the license required under this chapter must be exhibited in each place of business for which it is issued and in the manner required for the display of a business license.
Sec. 132.  RCW 82.26.220 and 2015 c 86 s 308 are each amended to read as follows:
(1) The board must enforce this chapter. The board may adopt, amend, and repeal rules necessary to enforce this chapter.
(2) The department may adopt, amend, and repeal rules necessary to administer this chapter. The board may revoke or suspend the distributor's or retailer's license of any distributor or retailer of tobacco products in the state upon sufficient cause showing a violation of this chapter or upon the failure of the licensee to comply with any of the rules adopted under it.
(3) A license may not be suspended or revoked except upon notice to the licensee and after a hearing as prescribed by the board. The board, upon finding that the licensee has failed to comply with any provision of this chapter or of any rule adopted under it, must, in the case of the first offense, suspend the license or licenses of the licensee for a period of not less than thirty consecutive business days, and in the case of a second or further offense, suspend the license or licenses for a period of not less than ninety consecutive business days but not more than twelve months, and in the event the board finds the licensee has been guilty of willful and persistent violations, it may revoke the license or licenses.
(4) Any licenses issued under chapter 82.24 ((RCW)) or 82.-- RCW (the new chapter created in section 203 of this act) to a person whose license or licenses have been suspended or revoked under this section must also be suspended or revoked during the period of suspension or revocation under this section.
(5) Any person whose license or licenses have been revoked under this section may reapply to the board at the expiration of one year of the license or licenses. The license or licenses may be approved by the board if it appears to the satisfaction of the board that the licensee will comply with the provisions of this chapter and the rules adopted under it.
(6) A person whose license has been suspended or revoked may not sell tobacco products or cigarettes or permit tobacco products or cigarettes to be sold during the period of suspension or revocation on the premises occupied by the person or upon other premises controlled by the person or others or in any other manner or form.
(7) Any determination and order by the board, and any order of suspension or revocation by the board of the license or licenses issued under this chapter, or refusal to reinstate a license or licenses after revocation is reviewable by an appeal to the superior court of Thurston county. The superior court must review the order or ruling of the board and may hear the matter de novo, having due regard to the provisions of this chapter and the duties imposed upon the board.
(8) If the board makes an initial decision to deny a license or renewal, or suspend or revoke a license, the applicant may request a hearing subject to the applicable provisions under Title 34 RCW.
Sec. 133.  RCW 82.32.300 and 1997 c 420 s 9 are each amended to read as follows:
(1) The administration of this chapter, chapter 82.--- RCW (the new chapter created in section 203 of this act), and chapters 82.04 through 82.27 RCW ((of this title)) is vested in the department ((of revenue which shall)), which must prescribe forms and rules of procedure for the determination of the taxable status of any person, for the making of returns and for the ascertainment, assessment, and collection of taxes and penalties imposed thereunder.
(2) The department ((of revenue shall)) must make and publish rules and regulations, not inconsistent therewith, necessary to enforce provisions of this chapter and chapters 82.02 through 82.23B and 82.27 RCW, and the liquor ((control)) and cannabis board ((shall)) must make and publish rules necessary to enforce chapters 82.24 ((and)), 82.26 ((RCW)), and 82.-- RCW (the new chapter created in section 203 of this act), which ((shall)) must have the same force and effect as if specifically included therein, unless declared invalid by the judgment of a court of record not appealed from.
(3) The department may employ such clerks, specialists, and other assistants as are necessary. Salaries and compensation of such employees ((shall)) must be fixed by the department and ((shall)) must be charged to the proper appropriation for the department.
(4) The department ((shall)) must exercise general supervision of the collection of taxes and, in the discharge of such duty, may institute and prosecute such suits or proceedings in the courts as may be necessary and proper.
PART II
Miscellaneous Provisions
NEW SECTION.  Sec. 201.  If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.
NEW SECTION.  Sec. 202.  If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of this act is inoperative solely to the extent of the conflict and with respect to the agencies directly affected, and this finding does not affect the operation of the remainder of this act in its application to the agencies concerned. Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state.
NEW SECTION.  Sec. 203.  Sections 101 through 124 of this act constitute a new chapter in Title 82 RCW.
NEW SECTION.  Sec. 204.  This act takes effect July 1, 2016.
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