SD HB1240

Creates a state licensing system for vapor product distributors ($100 fee) and retailers ($250 fee) administered by the Department of Revenue, with licenses expiring annually and requiring a South Dakota sales and use tax license

Restricts flavored vapor products (other than tobacco, mint, or menthol) to adult-only retail locations that derive at least 25% of gross revenue from vapor and tobacco products

Prohibits vapor products from containing ingredients other than vegetable glycerin, propylene glycol, food-grade flavoring, and nicotine, with contamination limits set by USP and Food Chemicals Codex standards

Bans public advertising of vapor products including billboards, digital media, and exterior signage, while requiring retailers to use third-party age verification systems at point of sale

Establishes a vapor product regulatory fund receiving 80% of licensing fees, with 20% directed to the tobacco prevention and reduction trust fund, and mandates annual legislative reports on licensing, enforcement, and public health outcomes