Nicotine liquid tax and labels tightened

Summary#

Alabama HB 663 would amend Section 40-25-81 of the Alabama Code, which the bill says was added by Act 2025-377. Its stated aim is to change the excise-tax rate according to nicotine concentration and require labels showing nicotine amount and liquid volume. The bill is pending and is not law; it sets October 1, 2026, as its proposed effective date.

  • The tax would be 10 cents per milliliter for products with more than 6 milligrams of nicotine per milliliter, and 5 cents for products with 6 milligrams or less.
  • An unlabelled product would be taxed at 10 cents per milliliter regardless of its nicotine concentration.
  • E-liquid manufacturers would have to label each product with its nicotine amount per milliliter and total liquid volume in milliliters.
  • The Alcoholic Beverage Control Board would have to fine manufacturers for each day an unlabelled product is offered for sale, and fine retailers who offer one for sale. A retailer’s third or later offence within four years would also require permit revocation for at least one year.
  • The bill does not ban vapor products. It changes the tax and adds label and penalty rules.

What it means for you#

  • Manufacturers: E-liquid manufacturers would have to put the required nicotine and volume information on each product’s label. If a manufacturer sells, gives, or supplies an unlabelled product, the Board must assess a $1,000 fine for each day it is offered for sale, until it is removed from the market or properly labelled.
  • Retailers: A retailer with the specified electronic nicotine delivery system permit that offers an unlabelled product for sale would face a $1,000 fine for a first offence, $2,500 for a second, and $5,000 for a third or later offence within four years. The Board must also revoke the permit after a third or later offence, with no new permit for that holder for at least one year.
  • Wholesalers and importers: The tax would apply to products sold at wholesale in Alabama or imported for use, consumption, or retail sale. The bill says the wholesaler acts as the state’s collection agent and the tax is a levy on the ultimate consumer or user.
  • Consumers: The tax rate would be lower for labelled products at or below 6 milligrams of nicotine per milliliter. Whether that changes the price consumers pay is not stated.

Money#

No cost estimate is available in the supplied material.

  • The tax would be 5 or 10 cents per milliliter, depending on nicotine concentration and whether the required label is attached.
  • Manufacturers and retailers could owe the stated fines. The bill gives no estimate of how often fines might be assessed.
  • Manufacturers would have to meet the label requirements, but the bill gives no estimate of compliance costs or staffing costs for the Alcoholic Beverage Control Board.

What is unclear#

  • The full current version of the amended section and Act 2025-377 were not supplied, so the existing law could not be independently checked against the bill’s description.
  • The bill does not explain how the Board would determine that a product was “offered for sale” on a particular day, or how it would count days for the manufacturer fine.
  • It does not set out procedures for assessing or challenging fines, or explain how a retailer’s offences are recorded within the four-year period.
  • The label rule applies to “e-liquid products,” while the tax rate for missing labels applies to “consumable vapor products.” Whether these terms cover exactly the same products is unclear from the supplied text.
  • The bill does not provide a transition period for products already in stores or explain how the label rules would be checked.

Case for#

  • A lower tax rate for products at or below 6 milligrams per milliliter makes the tax depend on nicotine concentration rather than applying one rate to every product.
  • Labels showing nicotine concentration and total liquid volume could give buyers clearer product information and make the tax category easier to determine.
  • The higher tax rate for unlabelled products, along with fines, could encourage manufacturers and retailers to meet the label requirement.

Case against#

  • The manufacturer fine can add up by the day, and retailer penalties include losing a permit for at least a year. The bill does not spell out how violations would be identified or how fines could be challenged.
  • The bill does not clarify whether the label and tax rules cover the same range of products. That could leave manufacturers, retailers, and enforcers uncertain about which products qualify.
  • The tax is described as a levy on the ultimate consumer, but the bill does not say how much of any tax change would be reflected in retail prices.