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H 8188Sales & Use

Taxation - Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System Products

This bill creates new taxes on alternative nicotine products like pouches and revises tax rates for electronic vaping devices.

Held for study
Population
Affected
25
Email Legislator
Introduced Feb 27, 2026Committee House Finance

Plain-English Summary

This legislation amends Rhode Island's tax laws regarding tobacco and nicotine products. It creates a specific definition for "alternative nicotine products," such as nicotine pouches that do not contain tobacco leaf, and establishes a tax of $2.00 per container for them. The bill also revises the tax structure for electronic nicotine-delivery systems (vapes), setting a tax of $0.50 per milliliter for prefilled, sealed pods and 10% of the wholesale cost for other open-system devices. Additionally, it mandates an inventory floor tax on retailers and distributors holding these products when the new taxes are implemented.

For younger readers

This new law changes how the state taxes products that have nicotine in them. Nicotine is the ingredient in cigarettes that makes people want to keep using them. There are new products today, like small pouches you put in your mouth or liquid for electronic cigarettes (vapes), that don't use tobacco leaves. This law puts a specific extra cost, called a tax, on these items. For example, a pack of nicotine pouches will cost $2.00 more. This is designed to make these products more expensive for people to buy and use.

Who & Where It Applies

Impacted groups
Nicotine product consumersVape shop ownersConvenience store operatorsTobacco distributorsDepartment of Revenue
Impacted communities
All

Constitutional & Fiscal Check

None Likely

Estimated cost
Nicotine consumers: $2.00/container, Vapers: $0.50/mL or 10% wholesale cost
Estimated revenue
Amount unknown

Bill Analysis

Both viewpoints
For Progressives
  • Increases the cost of addictive substances, which serves public health goals by potentially discouraging use and reducing addiction rates in the community.
  • Closes regulatory loopholes by defining and taxing "alternative nicotine products" and synthetic nicotine, preventing corporations from bypassing existing tobacco laws.
  • Generates additional revenue for the state's General Fund, which can be utilized to support public services and the social safety net.
  • Implements a regressive tax structure that disproportionately affects lower-income individuals who statistically use nicotine products at higher rates than the wealthy.
  • May undermine harm reduction efforts by increasing the cost of vaping and nicotine pouches, potentially discouraging smokers from switching to less harmful alternatives compared to combustible cigarettes.
  • Imposes complex floor taxes on existing inventory, which creates a financial and administrative burden that may hurt small, local business owners more than large corporate chains.
For Conservatives
  • Utilizes consumption-based taxation (user fees) rather than broad-based income or property taxes to generate state revenue.
  • Supports traditional social values by discouraging the use of addictive substances and potentially reducing youth access to nicotine products.
  • Clarifies legal definitions and tax obligations for businesses, ensuring a more level playing field where new product types cannot evade established tax rules.
  • Increases the overall tax burden on businesses and consumers, interfering with the free market and driving up the cost of living.
  • Imposes significant regulatory burdens on business owners, requiring detailed inventory reporting and immediate payment of floor taxes on goods they have already purchased.
  • Expands the government's reach by broadening definitions to tax products that do not contain tobacco leaf, setting a precedent for wider government intrusion.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 31 additions · 22 deletions

SECTION 1. Section 44-20-1 of the General Laws in Chapter 44-20 entitled "Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System Products" is hereby amended to read as follows: 44-20-1. Definitions. Whenever used in this chapter, unless the context requires otherwise:

(1) “Administrator” means the tax administrator.

(2) "Alternative nicotine product" means any noncombustible product that does not contain tobacco leaf but does contain nicotine from any source and is intended for human consumption, whether chewed, absorbed, dissolved, ingested, inhaled, or consumed by any other means. "Alternative nicotine products" does not include any cigarettes, electronic nicotine-delivery system products, snuff, or any product regulated as a drug or device by the United States Food and Drug Administration under Chapter V of the Food, Drug and Cosmetic Act, 21 U.S.C. ch. 9 § 301 et seq. (2)(3) “Cigarettes” means and includes any cigarettes suitable for smoking in cigarette form, “heat not burn products,” and each sheet of cigarette rolling paper, including but not limited to, paper made into a hollow cylinder or cone, made with paper or any other material, with or without a filter suitable for use in making cigarettes. (3)(4) “Dealer” means any person whether located within or outside of this state, who sells or distributes cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products to a consumer in this state. (4)(5) “Distributor” means any person:

(i) Whether located within or outside of this state, other than a dealer, who sells or distributes cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products within or into this state. Such term shall not include any cigarette or other tobacco product manufacturer, export warehouse proprietor, or importer with a valid permit under 26 U.S.C. § 5712, if such person sells or distributes cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products in this state only to licensed distributors, or to an export warehouse proprietor or another manufacturer with a valid permit under 26 U.S.C. § 5712;

(ii) Selling cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products directly to purchasers in this state by means of at least twenty-five (25) vending machines;

(iii) Engaged in this state in the business of manufacturing cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products or any person engaged in the business of selling cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products to dealers, or to other persons, for the purpose of resale only; provided, that seventy-five percent (75%) of all cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products sold by that person in this state are sold to dealers or other persons for resale and selling cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products directly to at least forty (40) dealers or other persons for resale; or

(iv) Maintaining one or more regular places of business in this state for that purpose; provided, that seventy-five percent (75%) of the sold cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products are purchased directly from the manufacturer and selling cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products directly to at least forty (40) dealers or other persons for resale. (5)(6) “Electronic nicotine-delivery system” means an electronic device that may be used to simulate smoking in the delivery of nicotine or other substance to a person inhaling from the device, and includes, but is not limited to, an electronic cigarette, electronic cigar, electronic cigarillo, electronic little cigars, electronic pipe, electronic hookah, e-liquids, e-liquid products, or any related device and any cartridge or other component of such device. (6)(7) “Electronic nicotine-delivery system products” means any combination of electronic nicotine-delivery system and/or e-liquid and/or any derivative thereof, and/or any e-liquid container. Electronic nicotine-delivery system products shall include hemp-derived consumable CBD products as defined in § 2-26-3. (7)(8) “E-liquid” and “e-liquid products” mean any liquid or substance placed in or sold for use in an electronic nicotine-delivery system that generally utilizes a heating element that aerosolizes, vaporizes, or combusts a liquid or other substance containing nicotine or nicotine derivative:

(i) Whether the liquid or substance contains nicotine or a nicotine derivative; or

(ii) Whether sold separately or sold in combination with a personal vaporizer, electronic nicotine-delivery system, or an electronic inhaler. (8)(9) “Importer” means any person who imports into the United States, either directly or indirectly, a finished cigarette or other tobacco product and/or electronic nicotine-delivery system product for sale or distribution. (9)(10) “Licensed,” when used with reference to a manufacturer, importer, distributor, or dealer, means only those persons who hold a valid and current license issued under § 44-20-2 for the type of business being engaged in. When the term “licensed” is used before a list of entities, such as “licensed manufacturer, importer, wholesale dealer, or retailer dealer,” such term shall be deemed to apply to each entity in such list. (10)(11) “Manufacturer” means any person who manufactures, fabricates, assembles, processes, or labels a finished cigarette and/or other tobacco products and/or electronic nicotine- delivery system products. (11)(12) “Other tobacco products” (OTP) means any products that are made from or derived from tobacco or that contain nicotine, whether natural or artificial, including, but not limited to, cigars (excluding Little Cigars, as defined in § 44-20.2-1, which are subject to cigarette tax), cheroots, stogies, smoking tobacco (including granulated, plug cut, crimp cut, ready rubbed and any other kinds and forms of tobacco suitable for smoking in a pipe or otherwise), chewing tobacco (including Cavendish, twist, plug, scrap and any other kinds and forms of tobacco suitable for chewing), any and all forms of hookah, shisha and “mu’assel” tobacco, snuff, alternative nicotine products and shall include any other articles or products made of, derived from, or containing tobacco or nicotine, in whole or in part, or any tobacco or nicotine substitute, except cigarettes and electronic nicotine-delivery system products. Other tobacco products shall not mean any product that has been approved by the United States Food and Drug Administration for the sale of or use as a tobacco or nicotine cessation product or for other medical purposes and is marketed and sold or prescribed exclusively for that approved purpose. (12)(13) “Person” means any individual, including an employee or agent, firm, fiduciary, partnership, corporation, trust, or association, however formed. (13)(14) “Pipe” means an apparatus made of any material used to burn or vaporize products so that the smoke or vapors can be inhaled or ingested by the user. (14)(15) “Place of business” means any location where cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products are sold, stored, or kept, including, but not limited to; any storage room, attic, basement, garage or other facility immediately adjacent to the location. It also includes any receptacle, hide, vessel, vehicle, airplane, train, or vending machine. (15)(16) “Sale” or “sell” means gifts, exchanges, and barter of cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products. The act of holding, storing, or keeping cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products at a place of business for any purpose shall be presumed to be holding the cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products for sale. Furthermore, any sale of cigarettes and/or other tobacco products and/or electronic nicotine-delivery system products by the servants, employees, or agents of the licensed dealer during business hours at the place of business shall be presumed to be a sale by the licensee. (16)(17) “Stamp” means the impression, device, stamp, label, or print manufactured, printed, or made as prescribed by the administrator to be affixed to packages of cigarettes, as evidence of the payment of the tax provided by this chapter or to indicate that the cigarettes are intended for a sale or distribution in this state that is exempt from state tax under the provisions of state law; and also includes impressions made by metering machines authorized to be used under the provisions of this chapter.

SECTION 2. Section 44-20-13.2 of the General Laws in Chapter 44-20 entitled "Cigarette, Other Tobacco Products, and Electronic Nicotine-Delivery System Products" is hereby amended to read as follows: 44-20-13.2. Tax imposed on other tobacco products, smokeless tobacco, cigars, pipe tobacco products, and electronic nicotine-delivery products Tax imposed on other tobacco products and electronic nicotine-delivery products.

(a) A tax is imposed on all other tobacco products, smokeless tobacco, cigars, pipe tobacco products, and electronic nicotine-delivery system products sold, or held for sale in the state by any person, the payment of the tax to be accomplished according to a mechanism established by the administrator, division of taxation, department of revenue. The tax imposed by this section shall be as follows:

(1) For all other tobacco products, except for alternative nicotine products and snuff smokeless tobacco, cigars, and pipe tobacco products, at the rate of eighty percent (80%) of the wholesale cost of other tobacco products, cigars, pipe tobacco products, and smokeless tobacco other than snuff.

(2) Notwithstanding the eighty percent (80%) rate in subsection (a)(1) of this section, in the case of cigars, the tax shall not exceed fifty cents ($.50) for each cigar.

(3) At the rate of one dollar ($1.00) per ounce of snuff, and a proportionate tax at the like rate on all fractional parts of an ounce thereof. Such tax shall be computed based on the net weight as listed by the manufacturer; provided, however, that any product listed by the manufacturer as having a net weight of less than 1.2 ounces shall be taxed as if the product has a net weight of 1.2 ounces.

(4) Effective January 1, 2025:

(i) For electronic nicotine-delivery system products that are prefilled, sealed by the manufacturer, and not refillable, at the rate of fifty cents per milliliter ($0.50/mL) of the e-liquid and/or e-liquid products contained therein; and

(ii) For any other electronic nicotine-delivery system products, at the rate of ten percent (10%) of the wholesale cost of such products, whether or not sold at wholesale, and if not sold, then at the same rate upon the use by the wholesaler.

(iii) Existing Inventory Floor Tax. For all electronic nicotine-delivery system products held by licensed electronic nicotine-delivery system products retailers as of January 1, 2025: Each person engaging in the business of selling electronic nicotine-delivery system products at retail in this state shall pay a tax measured by the volume of e-liquid and/or e-liquid products contained in electronic nicotine-delivery system products that are prefilled, sealed by the manufacturer, and not refillable and the wholesale cost of all other electronic nicotine-delivery system products held by the person in this state at 12:01 a.m. on January 1, 2025, and is computed for electronic nicotine- delivery system products that are prefilled, sealed by the manufacturer, and not refillable, at the rate of fifty cents per milliliter ($0.50/mL) of the e-liquid and/or e-liquid products contained therein and for any other electronic nicotine-delivery system products at the rate of ten percent (10%) of the wholesale cost of such products on January 1, 2025. Each person subject to the payment of the tax imposed by this section shall, on or before January 16, 2025, file a return, under oath or certified under the penalties of perjury, with the administrator on forms furnished by the administrator, showing the volume of e-liquid and/or e-liquid products contained in electronic nicotine-delivery system products which are prefilled, sealed by the manufacturer, and not refillable and the wholesale cost of all other electronic nicotine-delivery system products in that person’s possession in this state at 12:01 a.m. on January 1, 2025, as described in this section, and the amount of tax due, and shall at the time of filing the return pay the tax to the administrator. Failure to obtain forms shall not be an excuse for the failure to make a return containing the information required by the administrator.

(iv) For all electronic nicotine-delivery system products sold by licensed electronic nicotine-delivery system products distributors, manufacturers, and/or importers in Rhode Island as of January 1, 2025: Any person engaging in the business of distributing at wholesale electronic nicotine-delivery system products in this state shall pay a tax measured by the volume of e-liquid and/or e-liquid products contained in electronic nicotine-delivery system products that are prefilled, sealed by the manufacturer, and not refillable computed at the rate of fifty cents per milliliter ($0.50/mL) of the e-liquid and/or e-liquid products contained therein and for all other electronic nicotine-delivery system products at the rate of ten percent (10%) of the wholesale cost of such products.

(5) For alternative nicotine products, at the rate of two dollars ($2.00) per container containing up to twenty (20) units, and a proportionate tax at the like rate on containers that have more than twenty (20) units. (b)(1) Prior to January 1, 2025, any dealer having in the dealer’s possession any other tobacco products with respect to the storage or use of which a tax is imposed by this section shall, within five (5) days after coming into possession of the other tobacco products in this state, file a return with the tax administrator in a form prescribed by the tax administrator. The return shall be accompanied by a payment of the amount of the tax shown on the form to be due. Records required under this section shall be preserved on the premises described in the relevant license in such a manner as to ensure permanency and accessibility for inspection at reasonable hours by authorized personnel of the administrator.

(2) Effective January 1, 2025, all other tobacco products, except for cigars, and electronic nicotine-delivery system products sold at wholesale in Rhode Island must be sold by a Rhode Island licensed distributor, manufacturer, or importer, and purchases of other tobacco products, except for cigars, and/or electronic nicotine-delivery system products, from an unlicensed distributor, manufacturer, or importer are prohibited. Any other tobacco products, except for cigars, and/or electronic nicotine-delivery system products purchased and/or obtained from an unlicensed person shall be subject to the terms of this chapter including, but not limited to, § 44-20-15 and shall be taxed pursuant to this section.

(3) Effective January 1, 2025, any dealer having in the dealer’s possession any cigars with respect to the storage or use of which a tax is imposed by this section shall, within five (5) days after coming into possession of cigars in this state, file a return with the tax administrator in a form prescribed by the tax administrator. The return shall be accompanied by a payment of the amount of the tax shown on the form to be due. Records required under this section shall be preserved on the premises described in the relevant license in such a manner as to ensure permanency and accessibility for inspection at reasonable hours by authorized personnel of the administrator.

(c) Existing Inventory Floor Tax.

(1) For all nicotine products defined in § 44-20-1 as other tobacco products but not previously taxed as other tobacco products held by licensed retailers as of October 1, 2025: Each person engaging in the business of selling nicotine products at retail in this state shall pay a tax at the rate of eighty percent (80%) of the wholesale cost of such products on October 1, 2025. Each person subject to the payment of the tax imposed by this section shall, on or before October 16, 2025, file a return, under oath or certified under the penalties of perjury, with the administrator on forms furnished by the administrator, showing the wholesale cost of all nicotine products not previously taxed as other tobacco products in that person’s possession in this state at 12:01 a.m. on October 1, 2025, as described in this section, and the amount of tax due, and shall at the time of filing the return pay the tax to the administrator. Failure to obtain forms shall not be an excuse for the failure to make a return containing the information required by the administrator.

(2) For all nicotine products defined in § 44-20-1 as other tobacco products but not previously taxed as other tobacco products held by licensed distributors, manufacturers, and/or importers in Rhode Island as of October 1, 2025: Each person engaging in the business of distributing at wholesale nicotine products defined in § 44-20-1 as other tobacco products but not previously taxed as other tobacco products in this state shall pay a tax at the rate of eighty percent (80%) of the wholesale cost of such products on October 1, 2025. Each person subject to the payment of the tax imposed by this section shall, on or before October 16, 2025, file a return, under oath or certified under the penalties of perjury, with the administrator on forms furnished by the administrator, showing the wholesale cost of all nicotine products not previously taxed as other tobacco products in that person’s possession in this state at 12:01 a.m. on October 1, 2025, as described in this section, and the amount of tax due, and shall at the time of filing the return pay the tax to the administrator. Failure to obtain forms shall not be an excuse for the failure to make a return containing the information required by the administrator.

(d) The proceeds collected are paid into the general fund.

SECTION 3. This act shall take effect on July 1, 2026.