Statement of Scope
Department of Revenue
Relating to: | Cigarette, Tobacco, and Vapor Product Regulation |
Rule Type: | Emergency and Permanent |
This scope statement was approved by the Governor on October 17, 2024.
1.
Finding/nature of emergency (Emergency Rule only): 2023 Wisconsin Acts 73 and 150 became law in December 2023 and March 2024, respectively. In addition to significant changes relating to alcohol beverages, these Acts changed the regulation and/or taxation of cigarettes, tobacco and vapor products, and electronic vaping devices. These changes impact new and existing businesses. Due to the short amount of time to implement and provide guidance to businesses prior to the effective date of the law, emergency rulemaking is necessary to preserve public peace, health, safety, and welfare and to ensure voluntary tax compliance and regulatory fairness. 2.
Detailed description of the objective of the proposed rule:The objective of the proposed rule is all the following:
- Create rules as necessary to administer the new electronic vaping device directory created by 2023 Wisconsin Act 73. - Create rules as necessary for regulation and taxation of tobacco and vapor products to mirror corresponding or similar requirements that are prescribed for cigarettes, and to administer the new municipal retail licensing requirements, created by 2023 Wisconsin Act 73. - Create rules as necessary to administer the new excise tax permit for remote retail sellers for sales of cigars and pipe tobacco created by 2023 Wisconsin Act 150. 3.
Description of existing policies relevant to the rule, new policies proposed to be included in the rule, and an analysis of policy alternatives:Existing policies related to the regulation and taxation of the cigarette, tobacco, and vapor products industry include Administrative Code Chapter Tax 9 and Wisconsin Statute Chapter 139, and sections 134.65 to 66 and 995.10 to 15, Wis. Stats. New policies created by 2023 Wisconsin Acts 73 or 150 that may require rulemaking include, but are not limited to: - Licensing and minimum qualification requirements for retail sellers of cigarettes, tobacco products and electronic vaping devices.
- Requirements and procedures for remote retail sellers of cigars and pipe tobacco to obtain a permit and pay taxes.
- Requirements and procedures for manufacturers to have their electronic vaping devices on the directory.
Further, additional subchapters may be created to clarify policies for tobacco and vapor products regulation and taxation.
4. Detailed explanation of statutory authority for the rule (including the statutory citation and language):
Section 227.11 (2), Stats., provides statutory rule-making authority as follows: (a) "Each agency may promulgate rules interpreting the provisions of any statute enforced or administered by the agency, if the agency considers it necessary to effectuate the purpose of the statute...”
(b) "Each agency authorized to exercise discretion in deciding individual cases may formalize the general policies evolving from its decisions by promulgating the policies as rules …"
Section 139.08 (2), Stats, provides statutory rule-making authority as follows: (2) RULES. The secretary of revenue shall adopt rules necessary to carry out the secretary's duties under this chapter.
Section 139.39 (1), Stats, provides statutory rule-making authority as follows: (1) The department shall administer and enforce ss. 139.30 to 139.44, 139.75 to 139.85, and 134.65. The department shall adopt rules necessary to administer and enforce its duties. Section 995.15 (14), Stats, provide statutory rule-making authority as follows: (14) The department may promulgate rules to administer this section.
5. Estimate of amount of time that state employees will spend developing the rule and of other resources necessary to develop the rule:
The department estimates it will take approximately 200 hours to develop the rule.
6. List with description of all entities that may be affected by the proposed rule:
New and existing cigarette, tobacco product, and electronic vaping device manufacturers, distributors, retailers, jobbers, sub jobbers, remote retail sellers, and municipal governing bodies including law enforcement and clerks may be affected by the proposed rule.
7. Summary and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule:
Federal regulations generally govern the manufacturing, import, export, and marketing of tobacco products in the United States.
21 USC 387 – 387v governs federal regulation of tobacco products. 21 USC 387j prescribes the requirements for tobacco product manufacturers to obtain FDA approval to market these products in the United States. 26 USC 5701 – 5763 governs federal taxation of cigarettes and tobacco products. Title 27 of the Code of Federal Regulations governs tobacco regulatory requirements for the manufacturing, import/export, and payment of tax on tobacco products.
8. Anticipated economic impact of implementing the rule (note if the rule is likely to have a significant economic impact on small businesses):
There will be some costs incurred by the industry associated with acquiring permits, submitting required documents, and general compliance with the administrative code. However, these costs were created by the adoption of 2023 Wisconsin Acts 73 and 150, or by existing provisions of Subchapters II and III of Chapter 139, and sections 134.65 to 66 and 995.10 to 15 of the statutes. Contact Person:
Ann DeGarmo
Excise Tax Specialist
