Legislature(2019 - 2020)BELTZ 105 (TSBldg)
02/27/2020 01:30 PM LABOR & COMMERCE
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|Presentation: Alaska Hire|
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SB 182-AGE FOR NICOTINE/E-CIG; TAX E-CIG. 1:43:45 PM CHAIR BISHOP announced the consideration of SENATE BILL NO. 182, "An Act raising the minimum age to purchase, sell, exchange, or possess tobacco, a product containing nicotine, or an electronic smoking product; relating to the taxation of electronic smoking products; and providing for an effective date." 1:44:09 PM SENATOR GARY STEVENS, speaking as sponsor of SB 182, stated that this legislation is about protecting children from becoming addicted to nicotine by restricting sales and possession of various tobacco products to young people, including electronic cigarettes. He said scientific evidence and public health advocates have helped to put the use of traditional tobacco products on the decline and tobacco manufacturers are responding by offering new and more fashionable smoking options related to e-cigarettes. These are designed to be particularly appealing to young people. He said the claim that these products are safe is simply not true and it is therefore important to act quickly to protect young Alaskans who are being targeted. 1:45:46 PM TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State Legislature, Juneau, Alaska, began the presentation on SB 182 with a short video to demonstrate the importance of preventing youth from accessing e-cigarettes because it is becoming an epidemic. MR. LAMKIN advised that the committee will hear that e- cigarettes are not targeting youth, that e-cigarettes help people quit smoking, that these products are safe and healthy, and that taxation will kill the industry. He said he would refute each claim. He related that vaping started in the 1940s but it was not seen as a fashionable form of smoking. The practice was revitalized in the early 2000s and it entered the U.S. market in early 2007. The federal government has scrambled to catch up with this elusive industry since then. These largely unregulated products contain five known chemicals. He displayed a slide to demonstrate that these ultra-fine particles that form an aerosol are inhaled into the lungs. He said it would be difficult to suggest that they are safe. He noted that the benefits of ingesting vitamin E have been demonstrated but inhaling it as an aerosol is very harmful. MR. LAMKIN said some people argue that the expense of these products is a barrier to youth access. He refuted that claim by displaying a depiction of a $50 JUUL starter kit and $4-$5 refillable cartridges. He said these products are advertised with a multitude of flavorings but it's primarily nicotine that keeps customers coming back. He displayed a slide showing vintage advertising of tobacco products alongside current advertising of vaping products. He pointed out that vapor product marketing is largely unregulated. The next slides show different celebrities and young people using e-cigarettes, including Donny Smokes, a social media celebrity who is alleged to receive $1,000 per post. He called it a "youth frenzy" as demonstrated by the social media postings and videos such as "My First Time Vaping With Friends!" and "BAD IDEA Vaping in front of my mom for the 1st time." He noted that the latter had more than 1.5 million views. 1:53:53 PM MR. LAMKIN displayed a slide showing the wide array of flavors that are available for vaping and notied that the bill addresses this aspect of e-cigarettes. The images depicted on this slide refute the claim that these products are not marketed to youth. This is one avenue for getting people addicted to nicotine. He pointed out that these nicotine disguised flavors are completely unregulated. MR. LAMKIN said the argument that these products do not have nicotine and are not addictive is refuted by a 2015 report by the Food and Drug Administration (FDA). Testing found that over 99 percent of the tested products contained nicotine, even when labeled nicotine free. The risks of e-cigarettes are not known, but the FDA has not found that any are safe. They may help someone stop smoking, but they do not treat the addiction. Recent research indicates that more than half of adult e- cigarette users also continue to use traditional cigarettes. He pointed out that quitting means ending the addiction, not switching to another method of nicotine delivery. The 2017 Alaska Youth Risk Behavioral Survey indicates that 13 percent of high school youth currently use tobacco and 16 percent use e-cigarettes while 34 percent have tried tobacco and 40 percent have tried e-cigarettes. He offered his understanding that the most recent data suggests that the current use of e- cigarettes has almost doubled, from 16 percent to between 30-35 percent. Those numbers will be published in April. 1:57:00 PM MR. LAMKIN pointed to the next slide that shows a wide variety of the e-devices that have been confiscated in Anchorage schools. He said these devices are in children's hands and they are aware of the disparity between state and federal law. Federal law prohibits, without exception, the sale or possession of e-cigarette products to anyone under the age of 21. SB 182 will bring state law in line with federal law with the exception of those in the military and in prison. He said the sponsor will introduce amendments to SB 182 to remove those exceptions to conform to federal law. State law currently allows those who are age 19 to buy, sell, or possess cigarette products. He said the federal government relies on the state for enforcement but the state's enforcement hands are tied because of the conflict between the laws. He reiterated that SB 182 will align state law with the federal law. Furthermore, the bill will tax these products. MR. LAMKIN concluded the presentation by showing a picture from 1994 when the CEOs of the major U.S. cigarette manufacturers swore under oath to Congress that their products were neither addictive nor harmful to human health. He pointed out that industry advocates today insist that e-cigarettes are neither addictive nor harmful. They maintain these products are a safe, healthy alternative to tobacco and that more time, research, and data is needed to study their effect on human health. He said this is a multibillion dollar business and lobbyists are in the committee room and online right now monitoring the progress of the bill. CHAIR BISHOP asked him to go through the sectional analysis. 2:00:16 PM MR. LAMKIN summarized that SB 182 will bring all statutes related to buying, selling, or possessing tobacco from a minimum age of 19 to the age of 21. Further, it will bring all e- cigarettes under the existing tax code for tobacco. He paraphrased the sectional analysis for SB 182: Sec. 1: AS 11.76.100(a), relating to selling or giving tobacco to a minor, raises the minimum age from 19 to 21. Sec. 2: AS 11.76.100(b), relating to the requirement for vendors to supervise the operation of tobacco product vending machines (TVM), amends the exemption for TVMs situated in a private break room, provided there is signage posted indicating the minimum age to possess tobacco products is age 21 (from 19). Sec. 3: AS 11.76.100(c), provides an exemption for selling or giving tobacco products to incarcerated minors, raising the minimum age from 19 to 21 years of age. Sec. 4: AS 11.76.105, relating to possession of tobacco, electronic smoking products (ESP), or products containing nicotine, raises the minimum age to possess from 19 to 21 years of age. Sec. 5: AS 11.76.106(b), relating to the 'behind the counter' control provisions of selling tobacco products, allowing exemptions for tobacco shops or online sales, raising the minimum, age to sell from 19 to 21 years of age Sec. 6: AS 11.76.109(a), relating to other products containing nicotine, including chew, gum, patches, or E-cigarette products, raises the minimum age to sell or give such products from 19 to 21. Sec. 7: AS 11.76.109(b), relating to exemptions to selling products containing nicotine to persons under the age of 21, if the product is FDA-approved, prescribed by a doctor, or given by a parent or legal guardian. Sec. 8: AS 11.76.109(d), relating to the requirement for vendors to supervise the operation of ESP or nicotine product vending machines (EVM), amends the exemption for EVMs situated in a private break room, provided there is signage posted indicating the minimum age to possess tobacco products is age 21 (from 19). Sec. 9: AS 11.76.109(g), relating to the penalty for selling or giving ESP or nicotine products to a minor as being a violation, raises the minimum age from 19 to 21 years of age. Sec. 10: AS 43.50.105(b), relating to wholesale tobacco sales and licensees, to restrict licensees from selling or transporting tobacco products to persons that are at least 21 (from 19) years of age. Sec. 11: AS 43.50.150(c), relating to state being in partnership with municipalities in taxing tobacco products, is amended to include taxing ESPs. Sec. 12: AS 43.50.300, relating to existing state excise tax on tobacco products, is amended to include taxing ESPs. 2:04:54 PM Sec. 13: AS 43.50.310(b) exempts the excise tax for electronic smoking products that do not contain nicotine, or those ESPs that are FDA-approved. MR. LAMKIN noted that there are no FDA-approved electronic smoking products at this time. Sec. 14: AS 43.50.320(a), includes a requirement to be licensed as a distributor of ESPs for those products subject to an excise tax. Sec. 15: AS 43.50.330(a), relating to annual reporting requirements for tax purposes, amends existing tobacco sales reporting to include ESP reporting. Sec. 16: AS 43.50.335, relating to existing tobacco tax credits and refunds for faulty or destroyed products, to include credits for similarly faulty or destroyed ESPs. Sec. 17: AS 43.50.340, relating to existing record keeping requirements for licensed businesses selling tobacco products, to also be required to track sales and product information on ESPs being sold. Sec. 18: AS 43.50.390(1), relating to the definition of a distributor of tobacco products, to also include ESPs, for purposes of identifying business who bring ESPs in and out of state, manufactures ESPs in the state, or ships ESPs to retailers in the state. Sec. 19: AS 43.50.390(5), relating to the term "wholesale price" for purposes of taxing tobacco products, includes ESPs as part of wholesale pricing and taxing. 2:07:00 PM Sec. 20: AS 43.50.390 provides a definition of "electronic smoking product" consistent with use of the phrase elsewhere in statute, specifying an ESP means a: (A)component, solution, vapor product, or other related product that is manufactured and sold for use in an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or other similar device for the purpose of delivering nicotine or other substances to the person inhaling; (B) product under (A) of this paragraph that is sold as part of a disposable integrated unit containing a power source and delivery system or as a kit containing a refillable electronic smoking system and power source. Sec. 21: AS 43.70.075(f), relating to business license endorsements for selling tobacco products, amends the existing requirement for signage to be posted on vendor premises, stating it being illegal to sell tobacco or ESPs to minors under the age of 21 (from 19). Sec. 22: AS 43.70.075(m), relating to the process for suspending business licensees holding a tobacco endorsement, amends existing statute referring to tobacco or ESPs being sold to minors under the age of 21 (from 19). Sec. 23: AS 43.70.075(t), relating to penalties for licensees violating the T21 laws, amends existing statute for lessening the penalties if a license holder has a written tobacco or ESPs sales policy to include employees not selling tobacco or ESPs to minors under the age of 21 (from 19). Sec. 24: AS 43.70.075(w), relating to the appeal and administrative process of license suspension, conforms existing law regarding tobacco and ESP sales, to apply to sales to minors under the age of 21 (from 19). Sec. 25: AS 47.12.030(b), relating to the juvenile justice system, and minors accused of possessing tobacco, confirms existing law to apply to possession by minors under the age of 21 (from 19). Sec. 26: Applies an effective date of January 1, 2021. 2:08:35 PM CHAIR BISHOP said he would hold his questions until the next hearing so there was time to hear from the invited testimony. 2:09:16 PM MARGE STONEKING, Executive Director, American Lung Association of Alaska, Anchorage, Alaska, reported that Alaska achieved a 70 percent reduction in cigarette smoking among youth between 1995 and 2013 by following the Centers for Disease Control and Prevention's (CDC) comprehensive tobacco control program that includes a strong public media component, cessation systems, a smoke-free workplace law, and increasing tobacco taxes. E- cigarettes threaten that progress but raising the minimum sales age to 21 is a tool to help stem this epidemic. She pointed out that youth are particularly vulnerable to the impacts of tobacco use and that the tobacco industry has long targeted this age group. In fact, big tobacco spends about $17 million a year marketing their products in Alaska while smoking costs the state about $438 million annually in healthcare costs, 93 million of which are Medicaid dollars. MS. STONEKING said the data shows that 95 percent of current tobacco or e-cigarette users started using tobacco before age 21 so it's particularly important to prevent teens from starting to smoke. She described the spending bill that President Trump signed in December 2019 that raised the legal age for tobacco products from 18 to 21 as a major accomplishment. It became effective on the date it was signed and there are no exemptions anywhere in the U.S. She described the federal Synar Amendment that requires states to enforce the minimum age laws or risk losing substance abuse grant funds, and reported that Alaska has been 95 percent compliant. She said SB 182 updates the statute to reflect the age requirements in the new federal law and adds electronic smoking devices to the definition of other tobacco products so that they are taxed fairly along with all other tobacco products. She said this will also reduce use by young people because a ten percent increase at the cash register reduces consumption among youth by about seven percent. MS. STONEKING reported that a 2019 statewide poll for the American Lung Association found that 73 percent of Alaskans who were polled supported taxing e-cigarettes and vaping devices at the same, 75 percent of wholesale, rate as cigarettes. She said this is consistent with the $2 per pack tax on cigarettes so $3.75 would be added to a $10 pack of Juul cartridges, for example. MS. STONEKING said the Alaska 2019 Youth Risk Behavior Survey results have not been released but the expectation is that it will show a drastic increase in the prevalence of e-cigarette and vape usage, which is reflective of the 78 percent national increase of youth vaping between 2017 and 2018. She said the American Lung Association and its partners are working with school districts to update policies and programs to respond to this increase in youth vaping but the legislature needs to do its part by passing SB 182. 2:19:10 PM SENATOR STEVENS expressed appreciation that her testimony touched on both the age and taxation issues and the idea that education is necessary for children and adults. He noted his surprise to learn from students and teachers that parents often supply their kids with vaping products. He asked her to comment. MS. STONEKING replied the American Lung Association is also fighting the battle of misinformation about the safety of these products and is encouraging parents to educate themselves by looking at the video at thevapetalk.org. CHAIR BISHOP suggested she leave her written testimony with the committee aide. 2:21:03 PM JOE DARNELL, Chief Investigative Officer, Tobacco Youth Education & Enforcement Program, Division of Behavioral Health, Department of Health and Social Services (DHSS), Juneau, Alaska, said he would touch on what is happening in enforcement. He explained that the youth enforcement program started in 2003 when underage sale of tobacco to minors was 36 percent. That has dropped to the 4-6 percent range with education and changes in the licensing laws. When vaping became popular, baseline studies showed that underage use of vaping products over a three year period was 37 percent statewide. When data from Anchorage was viewed independently, it showed the sell rate of vaping products to youth was 50 percent. Every other vape shop was blatantly selling to kids, he said. The numbers started to drop once SB 15 went into effect on January 1, 2019. In Anchorage, sales dropped from 50 percent to 30 percent. He said SB 182 would align state law with the new federal law, which would help both the state and businesses because the laws conflict and this puts merchants in limbo. He said 95 percent of the tobacco and e-cigarette vendors want to do the right thing and follow the law but it's difficult when the laws don't jibe. MR. DARNESS noted that the ads in convenience store windows now feature e-cigarettes more frequently than tobacco. He said the effort to reduce tobacco smoking in youth has been successful and an equally robust effort is needed for electronic products. 2:24:48 PM CHAIR BISHOP asked if the youth enforcement program receives any federal money. MR. DARNELL replied the program receives money indirectly through the Tobacco Master Settlement Agreement. CHAIR BISHOP said he wanted to know if the state would jeopardize receipt of federal funds if it did not comply with the new federal law. 2:25:40 PM SENATOR STEVENS asked Mr. Darnell what happens to youths that violate this law. MR. DARNELL explained that the young people who work for the enforcement program are interns with the state. They receive several days of training and then visit tobacco/vape shops and try to purchase product. If the intern is successful in purchasing tobacco or e-cigarettes, the vender receives a citation that requires a court appearance and a fine that ranges from $300 to $500. Any convictions are sent to licensing and that is used to suspend the tobacco endorsement. On the first offense the retailer can show seven things they were doing ahead of time to mitigate their suspension time. There is no opportunity to mitigate a suspension after the first offense. 2:27:28 PM CHAIR BISHOP held SB 182 in committee for future consideration.