BILL ANALYSIS Ó
SENATE COMMITTEE ON HEALTH
Senator Ed Hernandez, O.D., Chair
BILL NO: AB 1301
AUTHOR: Hill
AMENDED: January 18, 2012
HEARING DATE: June 13, 2012
CONSULTANT: Orr
SUBJECT : Retail tobacco sales: STAKE Act.
SUMMARY : Repeals and recasts the Board of Equalization's (BOE)
existing penalty structure for violations of specified laws
pertaining to the sale of tobacco to persons less than 18 years
of age.
Existing federal law: Requires states to enact and enforce laws
that prohibit the sale of cigarettes and tobacco products to
minors under the age of 18 under the Public Health Service Act,
the relevant portions of which are commonly referred to as the
"Synar Amendment." Provides that the federal government may
reduce each state's alcohol and substance abuse block grant
funding unless the youth purchase survey conducted by each state
is below 20 percent.
Existing state law:
1.Establishes the Stop Tobacco Access to Kids Enforcement Act
(STAKE Act) for the purpose of prohibiting the furnishing of
tobacco products to, and the purchase of tobacco products by,
persons under 18 years of age. Requires, under the STAKE Act,
all persons engaging in the retail sale of cigarettes and
tobacco products to check identification to establish the age
of a tobacco purchaser, if a purchaser reasonably appears to
be under 18 years of age. Makes any individual who knowingly
or under any circumstances furnishes, gives, or sells
cigarettes or tobacco products to minors under the age of 18,
subject to a misdemeanor or subject to civil action and fines.
2.Requires the California Department of Public Health (CDPH) to
take primary responsibility for enforcement of the STAKE Act.
Permits additional enforcing state and local agencies,
including the Attorney General, to carry out investigations of
illegal tobacco sales to minors.
3.Allows an enforcing agency to assess civil penalties against a
person, firm or corporation that furnishes tobacco or tobacco
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AB 1301 | Page 2
paraphernalia to a person under 18 years of age, as specified.
4.Requires BOE to administer the Cigarette and Tobacco Products
Licensing Act of 2003 (Licensing Act), a statewide cigarette
and tobacco products license program. Requires BOE to license
manufacturers, distributors, wholesalers, importers and
retailers of cigarette or tobacco products who are engaged in
business in California.
5.Subjects any person, firm, or corporation that furnishes,
knowingly or otherwise, a person under 18 years of age with
tobacco and/or related products to a criminal action for a
misdemeanor or to a civil action brought by a city attorney, a
county counsel, or a district attorney, punishable by fines
for the first, second and third offenses, as described
(referenced as Penal Code 308).
6.Provides BOE the authority to take action against a retailer
that is convicted of either a Penal Code 308 violation of
selling cigarettes or tobacco products to any person who is
under the age of 18, or if a retailer is convicted of
violating the provisions of the STAKE Act. Specifies the
penalties that must be levied, which range from issuing a
warning letter on the first violation and requiring the
retailer and its employees to receive training on tobacco
control laws, to revoking the license on the eighth violation
within a 24-month period. Limits BOE's penalty authority only
to those periods when the statewide underage sales rate in
California, as measured in an annual survey conducted by CDPH,
is 13 percent or more.
7.Allow any decisions of the BOE to suspend or revoke the
retailer's license to be appealed within 30 days after the
notice of suspension or revocation.
8.Prohibits convictions of violations by a retailer at one
retail location from being accumulated against other locations
of that same retailer. Prohibits convictions of violations
accumulated against a prior retail owner at a licensed
location from being accumulated against a new retail owner at
the same retail location.
This bill:
1.Requires CDPH to notify BOE of the third, fourth or fifth
violations it assesses against a person, firm, or corporation
that furnishes tobacco products or instruments to minors
AB 1301 | Page 3
within 30 days of an uncontested violation or payment of the
civil penalty for an uncontested violation. Requires CDPH to
provide BOE with unspecified information about the entity
receiving the violation.
2.Repeals BOE's existing penalty structure for STAKE Act and
Penal Code 308 violations. Instead, requires BOE to levy an
additional $200 civil penalty on an entity receiving a
violation from CDPH to be deposited into a specified fund.
Requires BOE to suspend or revoke the entity's license in
accordance with this schedule:
a. 45-day suspension for a third violation at the same
location within 5 years,
b. 90-day suspension for a fourth violation at the same
location within 5 years, and
c. Revocation of the license for a fifth violation at the
same location within 5 years.
3.Repeals existing law that allows a licensee to appeal a BOE
decision to suspend or revoke a license in writing within 30
days after the notice of the suspension or revocation.
Requires BOE to provide a licensee with at least 10 days
written notice of a pending suspension or revocation, except
where specified, and an opportunity to appeal the suspension
or revocation and the civil penalty, but only for the purpose
of correcting a mistake or clerical error.
4.Repeals existing law stipulating that convictions of
violations by a retailer at one retail location cannot be
accumulated against other locations of that same retailer.
Repeals existing law stipulating that convictions of
violations accumulated against a prior retail owner at a
licensed location cannot be accumulated against a new retail
owner at the same retail location.
5.Deletes a provision that made BOE's enforcement authority
contingent upon the specified youth purchase survey results.
6.Makes persons under 18 years of age participating in law
enforcement activities pertaining to the STAKE Act immune from
prosecution for the purchase, receipt or possession of tobacco
products while participating.
7.Makes legislative findings and declarations supporting the
bill's purpose.
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FISCAL EFFECT : According to the Assembly Appropriations
Committee, based on BOE estimates of similar legislation,
administering the provisions in this bill including the workload
associated with suspending and revoking licenses, processing
appeals, inspecting retail licensee locations with suspending
and revoked licenses, and seizing cigarettes or tobacco products
being sold by former licensees, the costs could exceed $1
million per year (Cigarette and Tobacco Products Compliance
Fund).
PRIOR VOTES :
Assembly Governmental Organization:14- 2
Assembly Appropriations: 12- 5
Assembly Floor: 61- 15
Senate Governance and Finance:7- 0
COMMENTS :
1.Author's statement. AB 1301 improves the Licensing Act and
the STAKE Act in order to reduce sales of tobacco to minors by
California's 37,000 retailers of tobacco products. AB 1301
allows the BOE to suspend a retailers' tobacco sales license
if the store is caught selling to a minor three or more times
in a five-year period. The BOE will suspend a license based
only on convictions obtained through existing annual CDPH
stings. On the third conviction, the license to sell would be
suspended for 45 days, a fourth conviction would result in a
90-day suspension, and the fifth conviction in 5 years would
result in license revocation. CDPH conducts thousands of
stings each year throughout the state. These stings typically
catch over 600 first-time offenders, over 70 second-time
offenders, and fewer third, fourth and subsequent offenders.
The BOE utilizes provisions in the Licensing Act to license
retailers who sell tobacco products. BOE is authorized to
suspend a license if a store gets caught selling to minors
multiple times. Unfortunately, license suspensions have never
been utilized by BOE because the law contains a "trigger"
making the penalty provisions inoperative if CDPH's annual
youth purchase survey finds that less than 13 percent of youth
statewide are able to purchase tobacco products. In recent
years the statewide youth purchase survey has been around 10%.
However, CDPH survey results can be deceiving since rates of
sales to minors in STAKE Act inspections performed at the
local level have been around 17-25 percent or higher.
According to data from the San Mateo County Tobacco Education
Coalition, 25 percent of stores in San Mateo County sold
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tobacco to a minor decoy between 2005-2010.
2.Background. According to the United States Department of
Health and Human Services, approximately 80 percent of adult
smokers began smoking before the age of 18. Youth smoking is
associated with greater likelihood of adult smoking, heavier
use of cigarettes, and more difficulty in quitting. Smoking
prevalence (indicated by whether or not an individual has
"smoked in the last 30 days") among California youth declined
dramatically between 1996 and 2004, according to CDPH.
However, California experienced an increase in smoking
prevalence among all grade levels and demographic groups from
2004 to 2006. Possible factors that may contribute to
increased smoking prevalence in California youth can include a
decrease in students' intentions not to smoke, decreasing
cigarette prices, and substantial increases in tobacco
industry marketing.
Despite California's relatively low smoking prevalence, the
federal Centers for Disease Control and Prevention estimates
that smoking caused the deaths of over 37,000 Californians age
35 years and older. Smokers incur $17,500 more in lifetime
health care costs than non-smokers. A 2004 University of
California study estimated the annual societal cost of
smoking, without considering the cost of tobacco, is $3,331
per smoker, including $1,810 in medical costs and $1,521 in
lost productivity costs.
3.Tobacco sales to minors. According to CDPH, the rate of
illegal tobacco sales to minors in California has dropped to a
record low of 8.6 percent in 2009, down from 12.6 percent in
2008. The CDPH 2009 Youth Tobacco Purchase Survey showed this
rate is a historical low from the 37 percent rate of tobacco
sales to minors recorded in 1995, when the state first started
monitoring the illegal sales to minors. Retail stores commonly
associated with the selling of tobacco products, such as
grocery, drug, tobacco, liquor, or gas stations, sold at an
all-time low of 8.5 percent. Drugstores and pharmacies had the
lowest rate of illegal sales at 2.3 percent.
Despite the overall drop in illegal sales statewide, the
survey found sales in certain retail outlets remain high.
Non-traditional retail stores, such as doughnut shops,
discount stores, or deli/meat markets, were found on average
to sell tobacco to minors at 13 percent. The highest rate of
illegal sales occurred at doughnut shops at 21.6 percent and
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tobacco shops at 21.1 percent.
4.Synar Amendment and the STAKE Act. In 1992, Congress passed
the Synar Amendment, which requires states to pass and enforce
laws that prohibit the sale of tobacco to minors. It also
requires that federal alcohol and substance abuse block grant
funding be applied to enforcing state law in a manner that can
reasonably be expected to reduce the illegal sales rate of
tobacco products to minors. The rate is calculated by sending
underage decoys to attempt to buy cigarettes from retailers.
Up to 40 percent of the block grant funding can be withheld
from states for not complying with the Synar Amendment. SB
1927 (Hayden), Chapter 1009, Statutes of 1994, known as the
STAKE Act, was enacted to address the increase in tobacco
sales to minors in California and fulfill the federal mandate.
Onsite inspections of retailers under the STAKE Act have been
occurring since late 1995. Program results, compiled in 2008
have shown:
Almost 30,000 compliance checks have been conducted
statewide;
Almost 8,000 compliance checks have resulted in illegal
sales of tobacco to minors, or about 26 percent;
Over 7,000 cases have resulted in penalties with over
$2.4 million collected;
The toll-free public complaint line has generated over
31,000 calls; and
Site visits have determined if tobacco billboards
existed within 1,000 feet of schools and playgrounds, which
is a violation of state law.
1.California licensing requirements. AB 71 (Horton), Chapter
890, Statutes of 2003, established the Licensing Act, a
statewide program to license manufacturers and importers of
cigarettes, and distributors, wholesalers, and retailer of
cigarettes and tobacco products. AB 71 was intended to provide
an additional enforcement tool to address the unlawful
distribution and sales of untaxed cigarettes and tobacco
products. AB 71 also provided BOE's Investigation Division
with the statutory authority to more effectively and
efficiently conduct their investigative duties, including new
limited peace officer status and strengthened penalties and
avenues for the collection of cigarette and tobacco products
excise taxes.
Many local governments have also instituted their own tobacco
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regulations and licensing laws. Jurisdictions may require
cigarette and tobacco product retailers to comply with
specific provisions of the jurisdiction's land use and zoning
ordinances, including provisions that regulate the location of
these retailers. For example, 23 municipalities in California
have adopted ordinances to restrict the location of tobacco
retailers within a certain distance from a school, according
to the Center for Tobacco Policy & Organizing. These
municipalities can enforce their provisions by revoking or
suspending a retailer's license for underage sales.
2.Double referral. This bill was heard in the Senate Governance
and Finance Committee on January 11, 2012, and passed with a
7-0 vote. Should it pass out of this Committee, it will be
referred to the Senate Committee on Rules.
3.Related legislation. SB 330 (Padilla) would have required CDPH
to develop and maintain a Tobacco license Query System for the
purpose of compiling information on retailers that violate
laws prohibiting tobacco sales to minors. SB 330 was held in
the Senate Health Committee.
SB 331 (Padilla) would have prohibited the issuance of a new
tobacco license for a retail location located within 600 feet
of an elementary school. SB 331 died in the Senate
Appropriations Committee.
4.Prior legislation. SB 601 (Padilla) of 2009 would have
prohibited BOE from issuing a new cigarette and tobacco
products license for a retail location within 600 feet of a
public or private elementary and secondary school, unless
public convenience or necessity would be served by the
issuance, as specified. Would have restricted the issuance of
a new retail license to "traditional retail locations." SB 601
was held in Senate Appropriations Committee.
SB 602 (Padilla) of 2009 would have prohibited BOE from
issuing new retail tobacco licenses in areas of over
concentration, among other things. These provisions were
subsequently amended out SB 602.
SB 603 (Padilla) of 2009 would have established a $100 annual
fee on each license issued by BOE for the retail sale of
cigarette and tobacco products. SB 603 died in the Assembly
Governmental Organization Committee.
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AB 2344 (Beall) of 2008 would have required tobacco retailers
to pay an annual licensing fee of $185 to offset BOE's funding
shortfall for the administration and enforcement of the
California Cigarette and Tobacco Products Act. AB 2344 was
vetoed by the Governor.
SB 624 (Padilla), Chapter 653, Statutes of 2007, increased the
civil penalties under the STAKE Act and expanded the agencies
that are permitted to carry out investigations of illegal
tobacco sales to minors under the STAKE Act from CDPH to
include the Attorney General and other state and local
agencies.
AB 71 enacted the Licensing Act and imposes licensing
requirements on tobacco manufacturers, wholesalers, retailers,
and importers. Imposes civil and criminal penalties on
individuals and businesses that violate tobacco-related,
anti-contraband laws, and laws prohibiting tobacco-related
sales to minors. The tobacco-to-minors component becomes
effective only if CDPH's annual survey of sales to minors
report rises above 13 percent.
SB 1927 established the STAKE Act to address the increase in
tobacco sales to minors in California and fulfill the federal
mandate.
5.Support. The Tobacco Education and Research Oversight
Committee (TEROC) supports penalties that include suspension
or revocation of a tobacco license as a key strategy to reduce
youth access to tobacco. TEROC is a legislatively mandated
oversight committee that monitors the use of Proposition 99
tobacco tax revenues for tobacco control and prevention
education and functions as an advisory committee to CDPH,
among others. TEROC claims that tobacco use remains the number
one cause of preventable death and disease and that earlier
tobacco use increases the likelihood of lifelong tobacco
addiction.
Asian American Recovery Services (AARS) supports this bill and
believes that existing tobacco control laws passed in
California were steps in the right direction, but the
penalties fall short of holding tobacco retailers to the
standards intended by the initial laws. AARS claims that
allowing retailers to violate the law up to eight times before
being subjected to license revocation sends a terrible message
and provides no real deterrent to retailers.
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6.Policy comment. The bill currently requires CDPH to notify
BOE of third or subsequent violations, and requires BOE to
assess an additional $200 civil penalty on an entity receiving
a violation from CDPH. However, this amount does not include
costs to collect the fees, nor does it cover costs to conduct
follow-up investigations to ensure that retailers have
discontinued tobacco product sales during a suspension or
revocation. The author may wish to provide for additional
authority to allow BOE to recover their collection and
follow-up investigation costs.
7.Technical amendments. Technical amendments are necessary to
correct a minor error and to clarify a reference to the "State
Board of Equalization" within the STAKE Act. On page 3, line
36, delete "andsuspends" and insert "and suspends." On page 4,
line 13, strike "board" and insert "Board of Equalization."
SUPPORT AND OPPOSITION :
Support: American Heart Association
American Lung Association
Asian American Recovery Services, Inc.
Breathe California
California Law Enforcement Association of Records
Supervisors
California Probation Parole and Correctional
Association
California State Sheriffs' Association
San Mateo County Sheriff's Office
San Mateo County Tobacco Education Coalition
Tobacco Education and Research Oversight Committee
Youth Leadership Institute
Oppose: None received.
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