Classify nicotine products as tobacco products, to increase tax rates on cigarettes and tobacco products, to create the healthcare workforce development fund, and to make an appropriation therefor.
Summary
SB194 would expand South Dakota’s tobacco tax code by expressly classifying products containing nicotine or synthetic nicotine intended for consumption as “tobacco products,” while preserving the existing exclusion for FDA-approved nicotine replacement therapies used to treat tobacco dependence. The bill also raises the cigarette excise tax from 76.5 mills to 151.5 mills per cigarette and increases the tax on tobacco products from 35% to 45% of wholesale purchase price.
In addition to the tax changes, the bill revises how tobacco tax revenue is allocated. It increases the amount of annual tobacco tax revenue deposited into the general fund, preserves funding for the tobacco prevention and reduction trust fund, and directs a new tranche of revenue to a newly created healthcare workforce development fund. That fund would be administered by the Department of Health and continuously appropriated to support training and growth of the state’s healthcare workforce.
Impact
The bill would amend multiple provisions in chapter 10-50 of South Dakota law governing cigarette and tobacco taxation. It broadens the statutory definition of tobacco products to include nicotine and synthetic nicotine products, increases excise tax rates on cigarettes and tobacco products, and changes the revenue distribution formula for tobacco tax receipts. It also creates a new state treasury fund administered by the Department of Health, with dedicated revenue and continuous appropriation authority for healthcare workforce training and development.
Sentiment
The available voting history suggests the bill did not advance in committee, as it was tabled on a 5-0 vote. With no committee transcript available, there is no recorded floor or committee debate to show support or opposition in detail. The structure of the bill indicates a policy mix of public health regulation, tax increases, and workforce investment, which may have appealed to supporters of tobacco control and healthcare staffing, but the tabling vote suggests the proposal faced sufficient concern or lack of consensus to halt progress at that stage.
Contention
The most likely points of contention are the higher cigarette and tobacco tax rates, the expansion of the tobacco-product definition to cover nicotine and synthetic nicotine products, and the diversion of tobacco tax revenue to a new healthcare workforce fund. Opponents may have objected to the tax burden on consumers and retailers, the regulatory treatment of nicotine products, or the earmarking of revenue away from the general fund. Supporters would likely emphasize public health benefits, consistency in taxing nicotine products, and the use of new revenue to address healthcare workforce shortages.
Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.
Relating to the sale of certain e-cigarettes in this state and a directory of e-cigarette manufacturers and their products; authorizing fees; authorizing administrative and civil penalties; creating a criminal offense.