What did the 2017 Kansas laws change for cigarettes, e-cigarettes, consumable material, and tobacco licensing?

Plain-English summary

Kansas Notice 17-12 summarizes 2017 amendments to the Cigarette and Tobacco Products Act made by House Bill 2230 and Senate Bill 13.

House Bill 2230 -- licensing and enforcement (mostly amending K.S.A. 79-3301 and related sections).

• Added definitions for "conspicuous location or place" and "electronic cigarette," and amended "self-service display."
• Lowered the revenue percentage to qualify as a "tobacco specialty store" from 75% to 65%.
• Expanded the grounds on which KDOR may refuse, suspend, or revoke a license (K.S.A. 79-3303, 79-3304).
• Extended the deadline to request a citation hearing from 10 days to 30 days (K.S.A. 79-3309).
• Required a wholesaler to be in good standing to get the tax-stamp purchase discount, and required returned stamps to be whole and complete (K.S.A. 79-3311).
• Required cigarette wholesalers and tobacco distributors to file electronically (K.S.A. 79-3316, 79-3378).
• Dropped the separate-invoice requirement for a commonly owned fuel outlet selling cigarettes (a separate license is still needed for a different address) (K.S.A. 79-3316).
• Raised the number of cigarettes allowed without tax indicia from 200 to 1,000 (5 cartons) under stated segregation/notice conditions (K.S.A. 79-3323), and set misdemeanor/felony penalties for certain violations (K.S.A. 79-3322).

Consumable material (e-cigarette liquid). The tax's effective date was changed to July 1, 2017, and the rate was reduced from $0.20 to $0.05 per milliliter. The definition was changed to "any liquid solution or other material that is depleted as an electronic cigarette is used." Tax previously remitted becomes a credit applied to future reports (or a refund on request) (K.S.A. 79-3399).

Senate Bill 13 -- liquor stores. Liquor stores may sell cigarettes and other tobacco products effective April 1, 2019; those wanting to sell must apply for a license, and applications are not accepted until 2019.

What this means for you

Cigarette wholesalers and tobacco distributors

• File electronically, keep good standing for the stamp discount, and note the new 1,000-cigarette untaxed-possession limit and 30-day hearing window.

E-cigarette / vape businesses

• The consumable material tax is $0.05 per milliliter effective July 1, 2017; tax you already remitted becomes a credit (or refund on request).

Retailers and tobacco specialty stores

• The specialty-store revenue threshold dropped to 65%, and commonly owned fuel outlets no longer need separate cigarette invoices.

Liquor stores

• You may sell cigarettes and tobacco starting April 1, 2019, but cannot apply for a license until 2019.

Common questions

What is the new consumable material tax rate? $0.05 per milliliter, effective July 1, 2017 (down from $0.20).

How many untaxed cigarettes may a licensee possess? Up to 1,000 (5 cartons) under the stated conditions, up from 200.

How long do I have to request a citation hearing? 30 days (up from 10).

When can liquor stores sell tobacco? Effective April 1, 2019, with applications starting in 2019.

Citations and references

• House Bill 2230 (2017) -- amended the Cigarette and Tobacco Products Act, including K.S.A. 79-3301 (definitions and the 65% specialty-store threshold) and licensing, filing, and possession provisions.
• K.S.A. 79-3399 -- consumable material tax effective July 1, 2017 at $0.05 per milliliter, with prior remittances credited.
• Senate Bill 13 (2017) -- allows liquor stores to sell cigarettes and tobacco effective April 1, 2019.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: Notice 17-12

Original ruling text

Division of Taxation Phone: 785-368-8222
915 SW Harrison St. FAX: 785-296-4993
Topeka KS 66612-1588 www.ksrevenue.org
Samuel M. Williams, Secretary Department of Revenue Sam Brownback, Governor

                                       NOTICE 17-12

                2017 LEGISLATIVE AMENDMENTS REGARDING
            CIGARETTES, ELECTRONIC CIGARETTES, CONSUMABLE
                MATERIAL AND OTHER TOBACCO PRODUCTS

The 2017 Legislature passed House Bill 2230 and Senate Bill 13, which make a number of
amendments to the Cigarette and Tobacco Products Act. Below is a summary of those changes.

HOUSE BILL 2230
The bill added definitions for "Conspicuous location or place" and "Electronic Cigarette". It also
amended the definition of "Self-service display". K.S.A. 79-3301.

The percentage of revenue from cigarettes and tobacco to be considered a "Tobacco specialty
store" was amended from 75% to 65%. K.S.A. 79-3301.

KDOR may refuse to issue or renew a license or may suspend or revoke a license for specified
reasons listed in the bill. K.S.A. 79-3303 and K.S.A. 79-3304.

Should your business receive a citation, the number of days you will have to request a hearing in
writing, before the director, changed from 10 days to 30 days. K.S.A. 79-3309.

A Cigarette Wholesaler must be in good standing with the director at the time of purchasing tax
stamps in order to receive a discount of stamps purchased. Additionally, any tax stamps returned
for refund must be whole and complete stamps. K.S.A. 79-3311.

Cigarette Wholesalers and Tobacco Distributors are required to file electronically in the manner
prescribed by the director. If you are not currently electronically filing, please contact our office
for further instructions. K.S.A. 79-3316 and K.S.A. 79-3378.

An outlet, fuel outlet or fuel center owned by the same (licensed) entity are no longer required to
have separate invoices if cigarettes are sold from the fuel outlet. However, the fuel center is still
required to have a separate license if it has a different address than the store. For example, if a
company owns a store that has a fuel center, you are no longer required to have separate invoices
for cigarettes for the fuel center. K.S.A. 79-3316.

The number of cigarettes allowed without the required tax indicia was amended from 200
cigarettes to 1,000 cigarettes (5 cartons). Cigarettes in quantities of 1,000 or less in the possession
of a licensee are not declared a common nuisance and contraband if the licensee has: (1)
segregated the cigarettes from public view; (2) marked the cigarettes as not for retail sale to
consumers; and (3) within 72 hours of receipt, notified the wholesale dealer in writing that the
cigarettes do not bear indicia of Kansas tax and that the wholesale dealer shall remove the
cigarettes from the licensee's premise. K.S.A. 79-3323.

Certain violations of K.S.A. 79-3321 are misdemeanors for the first violation. For a second and
subsequent violation, they are a severity level 6, nonperson felony. K.S.A. 79-3322.

CONSUMABLE MATERIAL
The effective date of the consumable material tax was amended to July 1, 2017. The tax rate was
reduced from $.20 per milliliter to $.05 per milliliter. The definition of consumable material was
changed to "any liquid solution or other material that is depleted as an electronic cigarette is
used." If you have previously remitted tax on consumable material, this tax will be considered a
credit that can be applied to future tax reports, filed after July 1, 2017, until the credit is fully used.
If you prefer to receive a refund, please contact our office. K.S.A. 79-3399.

SENATE BILL 13
Liquor stores will be allowed to sell cigarettes and other tobacco products, effective April 1, 2019.
Those liquor stores that are wanting to sell cigarettes must apply for a license. However,
applications will not be accepted until 2019.

For a full text copy of these bills, please visit www.kslegislature.org.

If you have questions or need additional information, you may call 785-368-8222, choose option
5, then option 4, from 8 a.m. to 4:45 p.m., Central time, Monday through Friday; or you may
email us at: [email protected].