2026 -- S 3131

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LC006176

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2026

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A N   A C T

RELATING TO TAXATION -- CIGARETTE, OTHER TOBACCO PRODUCTS, AND

ELECTRONIC NICOTINE-DELIVERY SYSTEM PRODUCTS

     Introduced By: Senator Louis P. DiPalma

     Date Introduced: March 20, 2026

     Referred To: Senate Finance

     It is enacted by the General Assembly as follows:

     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.

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     (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

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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

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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

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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

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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.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- CIGARETTE, OTHER TOBACCO PRODUCTS, AND

ELECTRONIC NICOTINE-DELIVERY SYSTEM PRODUCTS

***

     This act would define “alternative nicotine product” to mean 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 and would also tax an alternative nicotine product 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.

     This act would take effect on July 1, 2026.

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