                                 CODE OF VIRGINIA

TAX ON TOBACCO PRODUCTS AND LIQUID NICOTINE (§ 58.1-1021.02)

A. In addition to all other taxes now imposed by law, there is hereby imposed a
tax upon the privilege of selling or dealing in tobacco products and liquid
nicotine in the Commonwealth by any person engaged in business as a distributor
or remote retail seller thereof, at the following rates:

   1. Upon each package of moist snuff, at the rate of $0.18 per ounce with a
   proportionate tax at the same rate on all fractional parts of an ounce. The
   tax shall be computed based on the net weight as listed by the manufacturer on
   the package in accordance with federal law.

   2. For purposes of the tax under this article, loose leaf tobacco shall be
   classified as loose leaf tobacco single-units, loose leaf tobacco half
   pound-units, and loose leaf tobacco pound-units. Such tax shall be imposed
   upon the distributor for loose leaf tobacco as follows:
   				a. $0.21 for each loose leaf tobacco single-unit;				b. $0.40 for each
   loose leaf tobacco half pound-unit;				c. $0.70 for each loose leaf tobacco
   pound-unit; and				d. For any other unit, pouch, or package of loose leaf
   tobacco, the tax shall be by net weight and shall be $0.21 per unit, pouch, or
   package plus $0.21 for each increment of four ounces or portion thereof that
   the loose leaf tobacco exceeds 16 ounces.				The tax for each unit, pouch, or
   package of loose leaf tobacco shall be in accordance with the provisions of
   subdivisions a through d only and regardless of sales price.

   3. Except as otherwise provided, upon tobacco products other than moist snuff
   or loose leaf tobacco, at the rate of 10 percent of the manufacturer&#8217;s
   sales price of such tobacco products.
   				Upon cigars and pipe tobacco products sold by remote retail sellers, the
   tax rates delineated in this subdivision shall apply to:				a. The actual
   cost; or				b. If the actual cost is not available, the average of the actual
   cost over the 12 calendar months before January 1 of the year in which the
   sale occurs.

   4. a. Upon the privilege of selling or dealing in liquid nicotine in the
   Commonwealth by any person engaged in business as a distributor of liquid
   nicotine, at the following rates:

      1. Upon liquid nicotine in closed systems at the rate of $0.066 per
      milliliter beginning July 1, 2024, for taxable sales or purchases occurring
      on and after such date.

      2. Upon liquid nicotine in open systems at the rate of 10 percent of the
      wholesale price beginning July 1, 2024, for taxable sales or purchases
      occurring on and after such date.
      					b. For any transaction involving liquid nicotine between a distributor
      and a retail dealer, both the distributor and the retail dealer shall
      maintain and retain records of any invoice or sales receipt that shall
      include itemized lists of the types of products included in such
      transaction, the tax due on each product pursuant to this subsection, and
      the total amount of taxes paid. In every instance, a distributor shall be
      responsible for paying the tax on liquid nicotine pursuant to this
      subdivision 4 at the time of sale to a retail dealer. Such taxes shall apply
      only to liquid nicotine and not to any batteries, filters, or other
      mechanical or aesthetic components of liquid nicotine in a closed system or
      an open system.					Such tax shall be imposed at the time the remote retail
      seller located within or outside the Commonwealth makes a remote retail sale
      to a consumer within the Commonwealth. It is the intent and purpose of this
      subdivision that the remote retail seller be liable for the tax. It is
      further the intent and purpose of this article to impose the tax once, and
      only once on all tobacco products, including cigars and pipe tobacco sold in
      the Commonwealth.					Except as otherwise provided, such tax shall be
      imposed on tobacco products (i) at the time of retail sale by a retail
      dealer or distributor; (ii) at the time the distributor makes, manufactures,
      or fabricates tobacco products in the Commonwealth for sale in the
      Commonwealth; or (iii) at the time the distributor ships or transports
      tobacco products to retailers in the Commonwealth to be sold by those
      retailers. It is the intent and purpose of this article that the distributor
      who first possesses the tobacco product subject to this tax in the
      Commonwealth shall be the distributor liable for the tax. It is further the
      intent and purpose of this article to impose the tax once and only once on
      all tobacco products for sale in the Commonwealth.

B. No tax shall be imposed pursuant to this section upon tobacco products not
within the taxing power of the Commonwealth under the Commerce Clause of the
United States Constitution.

C. A distributor that calculates and pays the tax pursuant to subdivision A 1 or
A 2 in good faith reliance on the net weight listed by the manufacturer on the
package or on the manufacturer&#8217;s invoice shall not be liable for
additional tax, or for interest or penalties, solely by reason of a subsequent
determination that such weight information was incorrect.

HISTORY: 2004, Sp. Sess. I, c. 3; 2005, c. 71; 2010, cc. 191, 804; 2022, cc.
738, 779; 2024, cc. 796, 821.