Guam Legislature takes up bill to tax and regulate Vape products

BY PAULY SUBA
Journal Staff

Lawmakers heard testimony on Oct. 6, regarding a proposal to impose a new tax and licensing system on vaping products sold on island.

Bill No. 3-38 (COR), introduced by Senator Joe S. San Agustin, would create the “Electronic Nicotine Delivery Systems (ENDS) Excise Act of 2025,” establishing a 20% excise tax on all vape products and setting up new enforcement and licensing requirements for retailers and wholesalers.

The measure would also create two revolving funds, one for the Department of Revenue and Taxation to support compliance and enforcement, and another for the Guam Memorial Hospital Authority to help pay for operations, maintenance, and vendor costs.

Under the bill, retailers would pay an annual $500 license fee, and wholesalers would pay $2,000. The proposal also prohibits the sale of vape products to anyone under 21 and establishes penalties of up to $20,000 and license revocation for violations.

During the public hearing at the Guam Congress Building, Marie Lizama, DRT director said the department supports the intent of the bill but emphasized the complexity of taxing electronic nicotine products.

“We provided input on previous draft legislation, in other words Bill 193-37, and we are glad to note that some of the recommendations submitted then have been included in this particular Bill 3-38 COR,” Lizama said. “Governments have struggled to determine how best to classify and tax these products, and as Senator San Agustin mentioned, the governor had expressed some of her concerns with that.”

Lizama said DRT currently issues 356 tobacco retail licenses and nine wholesale licenses, but vape products are not tracked separately. “It should be noted, though, that our current reporting process does not separate out ENDS products and are included instead in the retail sales portion of the return,” she said.

She said that while DRT does not yet have data on how much vape product is sold on Guam, the measure represents progress. “Bill 3-38 COR takes that first step toward addressing ENDS products as a separate group, and we hope that better practices will eventually emerge,” Lizama said.

Senator Therese Terlaje questioned whether the bill addresses the governor’s prior concerns about whether vaping products should be taxed at the wholesale or retail level.

Lizama said the administration’s policy team has not yet finalized its position but said, “There is recognition that there needs to be action taken. And what that ideal way is, is not entirely clear.”

Terlaje also asked if the new tax would appear on customer receipts. Lizama said, “That burden will actually be on the stores or the places that sell them. We don’t currently do that for anyone.”

Senator Sabrina Salas Matanane pressed Lizama on how the new revenue would be captured and what approach would be easiest for the government to implement. Lizama replied, “For me, personally, I think if you just did the value, the percentage based on all ENDS products, whether it’s the refillable part of it, whether it’s the one-time use, whether it’s the heating element… that’s probably the easiest for now.”

She said that DRT would likely need additional staff to implement and enforce the law if it passes. “We should expect to have some full-time dedicated staff just to this part alone,” she said.

Senator Telo Taitague expressed support for the measure but said more input is needed from the vaping industry. “I do know that the vape community believes and feels that it is just to tax vaping. So that’s good to hear. But to do it right is important to them,” she said.

Taitague also raised concerns about sales practices and youth access. “We’re having a lot of issues with kids getting their hands on it,” she said. “How do you feel about taking these vape products out of the gas stations and put it in just the stores?”

Lizama agreed that restricting sales to dedicated vape shops could improve oversight. “It certainly would make things easier for our team,” she said. “It will also perhaps provide greater control.”

Senator Shawn Gumataotao cited data showing the scale of youth vaping. “One in three or 35.2% of high school students and nearly one in three or 34.6% middle school students reported using e-cigarettes or vape products,” he said, referring to the 2021 Guam State Epidemiological Profile.

Gumataotao also questioned DRT on findings from a 2023 audit regarding tax compliance among wholesalers. Lizama responded that businesses with payment plans in good standing can still renew licenses. “There is nothing that prevents us from being able to renew your business license,” she said. 

Bill sponsor San Agustin said the measure aims to ensure vaping products are properly taxed and regulated. “At the end of the day, it’s going to provide funding to the compliance branch… and any additional funding that you may need,” he said.

Committee chairman, senator Chris Dueñas closed the hearing by saying the committee would hold markups and possibly a roundtable with vape businesses before the bill moves to session. “We don’t move forward until things are set,” Dueñas said. “We’ll make sure the bill is ready for primetime.” mbj