By Timothy S. Donahue

Top Takeaways:

• New tax: Iowa lawmakers approve nickel tax on vapes and nicotine products
• Research funding: First $3 million earmarked for pediatric cancer research
• Policy shift: State adds excise structure to nicotine pouches and vape products

Iowa lawmakers have approved a new excise tax on vaping and alternative nicotine products, with revenue initially directed toward pediatric cancer research as states continue to expand taxation frameworks beyond traditional tobacco.

The legislation, passed before the close of the legislative session, imposes a five-cent tax on vape products and modern oral nicotine products, such as pouches and nicotine gum.

State Sen. Kara Warme, who introduced the Senate version of the bill, said the measure reflects growing concern about cancer rates in Iowa. “The legislature has really been focused on cancer in Iowa,” Warme told Iowa’s News Now, pointing to “data around Iowa having a growing cancer rate and one of the highest in the country.”

Under the bill, the first $3 million in annual revenue will go to the University of Iowa for childhood cancer research, while additional revenue would support Medicaid funding. Warme said the legislation was partly intended to close what lawmakers viewed as a gap in Iowa’s excise structure.

“Before her bill, the products being taxed were the only addictive substance that doesn’t have an incremental tax,” the report stated. “We know that there are dangers to using these products and it was time to make sure that we have a framework in place.”

The proposal received support from some retailers. Pink Clouds Smoke Shop owner Aftab Afridi said the store supports the measure because of its link to cancer research funding. “Anything that is for the people we want to support that,” Afridi said. “It doesn’t matter that it is five cent, or 10 cent or whatever it is you know.”

Afridi added that his shop plans to post signs explaining where the money generated by the tax will go, according to media reports. “We will actually make some signs that would be next to the cash register that will have the explanation,” he said.

Some critics reportedly argued that the tax level was too low to meaningfully deter consumption, particularly among younger consumers. Warme responded that Iowa’s approach mirrors the rates adopted by nearby states, including Nebraska, Kansas and Wisconsin.

“That seemed like the right place to start,” she said. “We know that higher taxes can be a deterrent, especially for young people in using these products.”

The bill now heads to Governor Kim Reynolds’ desk for consideration. If signed, the tax would take effect Jan. 1, 2027.