BILL ANALYSIS SB 882 Page 1 Date of Hearing: June 23, 2010 ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION Joe Coto, Chair SB 882 (Corbett) - As Amended: June 17, 2010 SENATE VOTE : 28-0 SUBJECT : Electronic cigarettes. SUMMARY : Prohibits the sale or distribution of an electronic cigarette (e-cigarette) to a minor less than 18 years of age and establishes infractions for violating this prohibition. Specifically, this bill : 1)Makes it unlawful for a person to sell or otherwise furnish an e-cigarette to a minor less than 18 years of age to the extent not preempted by federal law, including but not limited to regulation of e-cigarettes by the federal Food and Drug Administration (FDA). 2)Defines "electronic cigarette" as a device that can provide an inhalable dose of nicotine by delivering a vaporized solution. 3)Requires a violation of this section shall be an infraction punishable by the following fine schedule: a) A fine not exceeding $200 for the first violation, b) A fine not exceeding $500 for the second violation, c) A fine not exceeding $1,000 for a third or subsequent violation. 4)Adds a preemption clause which states that neither this section nor any other provision of law shall invalidate an ordinance adopted by a city, county, or city and county if it is more restrictive than this section to the extent that the ordinance is not preempted by federal law. 5)Makes findings and declarations. EXISTING LAW : 1)Makes it a misdemeanor, subject to civil action and fines, any SB 882 Page 2 individual who knowingly or under circumstances furnishes, gives, or sells cigarettes or tobacco products to minors under the age of 18. 2)Provides that any individual desiring to engage in the sale of cigarettes or tobacco products as a distributor shall file with the State Board of Equalization (BOE) an application for a distributor's license. A distributor must apply and obtain a license for each place of business where he or she will engage in the business of distributing cigarettes or tobacco products. 3)Provides that any individual desiring to engage in the sale of cigarettes or tobacco products as a wholesaler shall file with the BOE an application for a wholesaler's license. A wholesaler must apply and obtain a license for each place of business where he or she will engage in the business of selling cigarettes or tobacco products as a wholesaler. 4)Requires, under the Stop Tobacco Access to Kids Enforcement (STAKE) Act- a) Retailers from selling cigarettes and tobacco products to minors under the age of 18 and requires that retailers check identification of individuals trying to buy cigarettes and tobacco products who appear under the age of 18. b) Increases civil penalties and expands the number of agencies that are permitted to carry out investigations of illegal tobacco sales to minors from the State Department of Public Health (DPH) to include the Attorney General and other state and local agencies. c) Makes certain violations of the STAKE Act a criminal offense. d) Requires DPH to take primary responsibility for enforcement of the STAKE Act and requires DPH to conduct random, onsite inspections of retail sites. e) Requires DPH to enlist the assistance of persons who are 15 or 16 years of age for this purpose and requires the DPH to adopt and publish guidelines for the use of minors in inspections. SB 882 Page 3 f) Requires the peace officer accompanying the minor to re-enter the retail site following the completion of a sale and inform the seller of the random inspection. Existing law requires DPH, following an attempted sale, to notify the retailer of the inspection. g) Permits DPH to enter into an agreement with a local law enforcement agency for delegation of enforcement of the STAKE Act. h) Requires any enforcement by DPH, in cases where DPH has delegated enforcement to a local law enforcement agency, to be coordinated with the local law enforcement agency and prohibits duplication of enforcement activities that result in a duplication of civil penalties or assessments. i) Requires DPH to reimburse local law enforcement agencies for enforcement costs pursuant to delegation contracts from the Sale of Tobacco to Minors Control Account, which was created under the STAKE Act and receives moneys collected as civil penalties under the Act. FISCAL EFFECT : Unknown. COMMENTS : This bill is similar to legislation introduced last year (Corbett, SB 400, 2009 Legislative Session), which sought to prohibit the sale of e-cigarettes to minors under the STAKE Act. This bill places the prohibition under its own stand-alone section of the Health and Safety Code. Background . According to a 2008 report titled " Current Practices in Enforcement of California Laws Regarding Youth Access to Tobacco Products and Exposure to Secondhand Smoke " that was prepared by the Public Health Institute for DPH and the California Tobacco Control Program, found that law enforcement agencies continue to rank policies and procedures, such as suspension or revocation of business licenses and civil and criminal penalties for owners and clerks who sell tobacco to minors, as effective strategies to reduce youth access to tobacco. According to the author, another study published by the Journal of the National Cancer Institute found that teens were more likely to be influenced to smoke by cigarette marketing than by SB 882 Page 4 peer pressure. The author states that a similar report published by the Journal of the American Medical Association discovered that approximately one-third of underage experimentation with smoking was attributable to tobacco company marketing efforts. According to the author, e-cigarettes are unregulated by both state and federal laws. The author claims that because the producers of electronic cigarettes, many of which are predominantly foreign-based companies, have not applied for approval from the FDA, some retailers have taken the opportunity to market and sell these products to adults and minors, alike, through using shopping mall kiosks and promoting flavored cartridges. This bill seeks to define e-cigarettes and, make illegal, the sale of these devices to minors. Electronic cigarettes . The most recent innovation in marketing tobacco products to the public are electronic cigarettes (e-cigarettes). E-cigarettes are considered to be a tobacco substitute that is being marketed as a healthy and smokeless alternative to traditional cigarettes. These devices are battery-operated, rechargeable drug delivery devices that look similar to cigarettes and allow the user to inhale a smokeless vapor that often contains nicotine. According to the FDA, e-cigarettes generally contain cartridges filled with nicotine, flavor (e.g. chocolate and mint) and other chemicals. These devices work by turning nicotine and the other chemicals into a vapor that is inhaled by the user. E-cigarette brands, like NJOY, can argue that these devices can serve as an "alternative to traditional smoked tobacco products" and are "designed to replicate the adult experience of smoking without combustion or the use of cancerous by-products." In a July 22, 2009 press release, the FDA states, "These products are marketed and sold to young people and are readily available online and in shopping malls." FDA also says, "[T]hese products do not contain any health warnings comparable to FDA-approved nicotine replacement products or conventional cigarettes." The FDA and the e-cigarette manufacturers disagree over these devices and whether they are safer than cigarettes. SB 882 Page 5 Civil litigation . FDA is being challenged in federal court by e-cigarette manufacturers and distributors regarding its jurisdiction over certain e-cigarettes in a federal district court case (Smoking Everywhere, Inc., and Sottera, Inc., doing business as NJOY, v. U.S. Food and Drug Administration, et al., Civil Case No. 09-771). On January 14, 2010, the U.S. District Court for the District of Columbia ruled against the FDA from taking action to regulate e-cigarettes as drugs/devices under the federal Food, Drug, and Cosmetics Act, thus allowing e-cigarette brands to sell and distribute their products in retail facilities throughout the United States. In short, these devices can be regulated as tobacco products under the federal Family Smoking Prevention and Tobacco Control Act of 2009. The federal judge in the case opined that, "[T]he FDA has no authority to regulate the products and can't stop them from entering the country." The FDA is appealing the federal district court's ruling and has asked a federal appeals court to immediately stay an order that prevents them from blocking the entry of e-cigarettes from entering the country. The U.S. Court of Appeals ruled to temporarily reinstate the FDA's authority and granted the stay. Related legislation . SB 400 (Corbett, 2009 Legislative Session) would have amended the STAKE Act to include electronic cigarettes in its definition of tobacco product and halt the sale of electronic cigarettes to minors. Vetoed by the Governor on October 11, 2009. Prior legislation . SB 1927 (Hayden, Chapter 1009, Statutes of 1994) enacts the Stop Tobacco Access to Kids Enforcement (STAKE) Act to address the increase in tobacco sales to minors in California and fulfill the federal mandate that prohibited the sale of cigarettes and tobacco products to minors. AB 71 (Jerome Horton, Chapter 890, Statutes of 2003) enacts the Cigarette and Tobacco Products Licensing Act of 2003 and imposes licensing requirements on tobacco manufacturers, wholesalers, retailers, and importers. Requires manufacturers to pay a one-time fee. Imposes civil and criminal penalties on individuals and businesses that violate tobacco-related, anti-contraband laws, and laws prohibiting tobacco-related sales to minors. SB 882 Page 6 AB 2344 (Beall, 2008 Legislative Session) would have required tobacco retailers to pay an annual licensing fee of $185 to offset the State Board of Equalization's funding shortfall for the administration and enforcement of the California Cigarette and Tobacco Products Act. Vetoed by the Governor on September 27, 2008. SB 400 (Kuehl, 2005 Legislative Session) would seek to make changes to the penalties imposed on a retailer convicted of furnishing cigarettes or tobacco products to a minor under 18 years of age. Held on the Senate Appropriations Committee Suspense File. SB 433 (Ortiz, 2004 Legislative Session) would change the conditions under which the State Board of Equalization levies penalties against tobacco retailers for sales to minors and requires local agencies to report convictions for illegal sales to the State Board of Equalization. Held on the Senate Appropriations Committee Suspense File. SB 1843 (Budget and Fiscal Review Committee, 2002 Legislative Session) would have enacted the Cigarette and Tobacco Products Licensing Act of 2002. Also, would have established licensing requirements for cigarettes and tobacco products retailers, wholesalers and importers, creates an enhanced cigarette tax compliance and enforcement program; revises the cigarette "distributor discount" for applying tax stamps; appropriates funds to implement the program in 2002-2003; establishes a long-term funding mechanism for the program. Held in the Assembly. AB 2205 (Koretz, Chapter 687, Statutes of 2002) creates an additional $100 penalty on each knowingly possessed carton of untaxed cigarettes where the proceeds would be used to fund a local competitive grant program to reduce availability of tobacco products on the black market. The program had a sunset clause that took place on January 1, 2006. SB 1766 (Ortiz, Chapter 686, Statutes of 2002) requires that all sales of cigarettes in the State be vendor-assisted, face-to-face sales unless the seller receives valid identification, that the purchaser is over 18, the product is shipped to the address provided on the identification, the sales is at least for two cartons, and the seller either provides the State Board of Equalization with all taxes due on the sale or includes with the shipment a notice that the purchaser is SB 882 Page 7 responsible for state taxes. AB 1830 (Frommer, Chapter 685, Statutes of 2002) prohibits the sales of tobacco products to minors through the United States Postal Service or through any other public or private postal or package delivery service, and imposes specified age-verification requirements on tobacco product sellers or distributors. REGISTERED SUPPORT / OPPOSITION : Support First 5 Association of California Health Officers Association of California Opposition None on file Analysis Prepared by : Rod Brewer / G. O. / (916) 319-2531