On August 28, 2024, the California legislature passed two laws – Assembly Bill 3218 (“AB 3218”) and Senate Bill 1230 (“SB 1230”) – that expand the scope of the state’s enforcement powers against flavored tobacco products. These laws, which have been signed by the Governor and are set to go into effect on January 1, 2025, will have a significant impact on the tobacco, nicotine, and vapor product industries.
Prohibition of Online Sales of Flavored Products
AB 3218 makes a seemingly minor, but very significant, change to Section 30101.7 of the California Revenue and Taxation Code, which outlines the conditions that tobacco product delivery sellers (i.e., online retailers that deliver products directly to adult California consumers) must meet to sell tobacco products in the state. The law adds an additional condition that provides that delivery sellers must comply with all “applicable state laws or local ordinances that impose[] restrictions on the retail sale of cigarettes or tobacco products directly to the public from a retail location . . . as if the delivery sales occurred entirely within the state and place.”
In short, this added provision will make online delivery sellers subject to the same restrictions as tobacco product retailers. Therefore, since the California flavor ban explicitly prohibits the sale of flavored tobacco products at brick-and-mortar retail stores and vending machines, once AB 3218 goes into effect, the sale of such products by delivery sellers will be treated as retail sales and, therefore, prohibited — closing the last remaining avenue to sell flavored tobacco products to California adult consumers.
Expanded Definition of Nicotine
Both AB 3218 and SB 1230 expand the definition of “nicotine” beyond tobacco-derived nicotine to include synthetically derived nicotine and nicotine analogs. Under the revised definition, nicotine will consist of “any form of the chemical nicotine, including any salt or complex, regardless of whether the chemical is naturally or synthetically derived, and includes nicotinic alkaloids and nicotine analogs.” We note that while this expanded definition pulls synthetic nicotine and nicotine analog products into the state flavor ban, this new definition appears to be limited to the flavor ban and, therefore, would not apply to California tax regulations.
Characterizing Flavor Expanded
Of note, both laws revise the definition of “characterizing flavor” to now capture “menthol sensation” products, which do not contain menthol flavor ingredients but typically contain synthetic cooling agents like WS-3. Characterizing flavor is now defined as any “taste or odor, distinguishable by an ordinary consumer either prior to or during the consumption of a tobacco product, other than the taste or odor of tobacco, including, but not limited to, tastes or odors relating to any fruit, chocolate, vanilla, honey, candy, cocoa, dessert, alcoholic beverage, menthol, mint, wintergreen, herb, or spice, or a cooling sensation distinguishable by an ordinary consumer during the consumption of a tobacco product.”
Unflavored Tobacco List
AB 3218 prohibits wholesalers, distributors, and delivery sellers from selling or attempting to sell tobacco products that are not listed on the “Unflavored Tobacco List” (“UTL”). The UTL, which will be published on the Attorney General’s website by December 31, 2025, will catalogue all tobacco products that lack characterizing flavor and are thus eligible for sale in California. Entities that sell or intend to sell unlisted products within the state may be fined up to $10,000 per violation.
While the Attorney General will promulgate the specific regulations implementing UTL, AB 3218 states that tobacco product manufacturers and importers will be required to report to the Attorney General the unflavored tobacco products that these entities manufacture or import for sale or distribution in California. Manufacturers and importers will have to follow reporting procedures similar to those in states that have passed PMTA directory regulations, “including the submission of an attestation signed under penalty of perjury that the product in question is unflavored.”
AB 3218 authorizes the Attorney General to issue fines (up to $50,000) against entities that report tobacco products as lacking a characterizing flavor if the entities did not have a reasonable basis to do so. The Attorney General will also have the power to charge reporting entities up to $1,000 for each product that they submit for UTL listing and for relisting applications.
CDTFA Authority
Both laws also authorize the California Department of Tax and Fee Administration (“CDTFA”) and other state or local law enforcement agencies to seize and, when appropriate, destroy flavored tobacco products from retailers that sold or intended to sell the products. Violators may also be fined $50 for each individual package of flavored tobacco products that was seized. AB 3218 makes wholesalers subject to the same treatment.
We will discuss these and other state laws and enforcement trends at Keller and Heckman’s 2025 Annual E-Vapor and Tobacco Law Symposium on January 27-28, 2025, in Las Vegas, Nevada. Details and registration information can be found here.