“On December 9, 2020, the Tennessee Department of Revenue issued its Notice #20-21, on the subject of the State of Tennessee’s excise tax on other tobacco products or “OTP”. The Department will not apply the tobacco tax to these non-tobacco products without statutory clarification on what is considered a tobacco substitute. The Notice then goes on to clarify the Department’s analysis with respect to several specific tobacco and non-tobacco segments: With respect to “e-cigarettes and vape devices,” which the Notice defines as products that “transform a liquid into its gaseous form, allowing the user to inhale and ingest the vapor,” and where “the liquid that is vaporized does not contain tobacco,” such products are not subject to the tobacco tax because these products do not contain tobacco. The Department’s action strikes us as an example of good governance, where an agency correctly acknowledges the limitations of its enforcement authority and provides the business community with clear and actionable guidance.”
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