Senate committee moves to close hemp-vape tax loophole, imposing 10% wholesale tax on cartridges

Senate Bill 22 95, as amended, was presented April 14 to the Senate Finance, Ways and Means Committee and was recommended for placement on the calendar. Sponsor Senator Wally said the amendment closes an unintended conversion error that left vapor cartridge products effectively untaxed under last year’s law and replaces the mistaken per‑gallon conversion with a 10% wholesale tax on cartridge products.

Senator Wally told the committee the change is intended to capture revenue the legislature originally intended and to require out‑of‑state suppliers to obtain Tennessee licenses; he said that because the Department of Agriculture previously issued licenses and later responsibility moved to the Alcoholic Beverage Commission (ABC), ABC needs the revenue and staff capacity to license and collect from out-of-state vendors.

Committee members praised the goal of closing the loophole but raised concerns about fiscal-note uncertainty and whether collections to date support the revenue estimate. Senator Yarbrough asked whether collection delays and market changes might reduce anticipated revenue; Senator Hensley queried whether the 10% replaces or is added to the previous levy. The sponsor and other members clarified their intent was to replace the previous per-gallon measure (an effectively negligible per‑unit amount) with the 10% wholesale tax, though several members urged staff to verify fiscal assumptions.

The committee recorded a roll-call result showing 10 ayes and 1 no and recommended the bill as amended for passage to the calendar.

The committee did not complete final Senate passage in this session; the item moves next to the chamber calendar.