BILL ANALYSIS Ó AB 1301 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1301 (Hill) As Amended August 9, 2012 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |61-15|(May 31, 2011) |SENATE: |32-5 |(August 20, | | | | | | |2012) | ----------------------------------------------------------------- Original Committee Reference: G.O. SUMMARY : Repeals and recasts the Board of Equalization's (BOE) existing penalty structure for violations of the Stop Tobacco Access to Kids Enforcement (STAKE) Act, a statewide enforcement program related to the illegal sales of tobacco products to persons under the age of 18. Specifically, this bill : The Senate amendments : 1)Require the Department of Public Health (DPH) 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 within 60 days of an uncontested violation or payment of the civil penalty for an uncontested violation. Requires DPH to provide BOE with unspecified information about the entity receiving the violation. 2)Repeal BOE's existing penalty structure for the STAKE Act and Penal Code Section 308 and instead requires BOE to levy an additional $250 civil penalty on an entity receiving a violation from DPH to be deposited into a specified fund. 3)Delete the Assembly's revised schedule for BOE action in response to a violation of the STAKE Act, and instead requires BOE to suspend or revoke the entity's license in the following manner: a) A 45-day suspension for a third violation at the same location within five years, b) A 90-day suspension for a fourth violation at the same location within five years, and, c) Revocation of the license for a fifth violation at the AB 1301 Page 2 same location within five years. 4)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. 5)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. 6)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. 7)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 location. 8)Prohibits the BOE from considering violations that occurred prior to January 1, 2013. EXISTING LAW : 1)Requires states to enact and enforce laws that prohibit the sale of cigarettes and tobacco products to minors under the age of 18. 2)Makes it a misdemeanor, subject to civil action and fines, any individual who knowingly or under circumstances furnishes, gives, or sells cigarettes or tobacco products to minors under the age of 18. 3)Requires, according to the California Cigarette and Tobacco Licensing Act of 2003 (Licensing Act), a retailer to obtain a license from BOE to engage in the sale of cigarette and tobacco products in California. 4)Establishes, through the STAKE Act, various requirements for retailers relating to tobacco sales to minors. Specifically: a) Prevents retailers from selling cigarettes and tobacco AB 1301 Page 3 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, as specified; and, f) Permits DPH to enter into an agreement with a local law enforcement agency for delegation of enforcement of the STAKE Act. 1)Makes it a misdemeanor (Penal Code Section 308) for a retailer to knowingly or under circumstances in which it has knowledge, or should otherwise have grounds for knowledge, sell, give, or in any way furnish a minor with tobacco products or paraphernalia. 2)Violations of the STAKE Act or Penal Code Section 308 result in BOE action, on a set schedule, relating to the licensure of the retailer when the youth purchase survey finds that 13% or more of youth are able to purchase cigarettes, and makes BOE's authority inoperative when a youth purchase survey shows less than 13% of youth were able to purchase cigarettes. 3)Provides that for the first conviction of a violation of the STAKE Act or Penal Code Section 308, the retailer receives a warning letter, as specified. For the second conviction of a violation in 12 months, the retailer is subject to a fine of $500. For the third conviction of a violation in 12 months, AB 1301 Page 4 the retailer is subject to a fine of $1,000. For the fourth to seventh conviction of a violation, inclusive, in 12 months, the retailer's license to sell cigarettes and tobacco products is suspended for 90 days. For the eighth conviction of a violation in 24 months, the retailer's license is revoked. 4)Existing law provides for a 30-day appeal of BOE's decision. FISCAL EFFECT : Unknown COMMENTS : Purpose the bill : This bill is intended to hold retailers more accountable for repeated violations of the STAKE Act or Penal Code Section 308, by requiring the BOE to take further action against a retailer's license that engage in the sale of cigarettes or tobacco products in this state. This bill would revise the schedule for BOE action in response to the occurrence of the violation, as specified. This bill is needed to reduce the availability and accessibility of tobacco products for minors. Despite existing laws that prohibit the sale of tobacco products to minors and media efforts aimed at deglamorizing tobacco use, children are still sold tobacco products by a variety of retailers and commercials are marketed increasingly to younger audiences. According to the author, the penalty provisions, under the Licensing Act have only been utilized twice because Business and Professions Code (BPC) Section 22974.8 (d) contains a "trigger" making the penalty provisions inoperative if the Department of Public Health's (DPH) annual youth purchase survey finds that less than 13% of youth were able to purchase tobacco products. In recent years the youth purchase survey has been around 10%. In addition, during the periods of operation, BOE did not receive any conviction information. The author maintains, however, the DPH survey results can be deceiving since rates of sales to minors in STAKE Act inspections have been around 17% or higher. According to data from the San Mateo County Tobacco Education Coalition, 25% of stores in San Mateo County sold tobacco to a minor decoy between 2005-2010. According to the United States Centers for Disease Control and AB 1301 Page 5 Prevention (CDCP), almost 90% of adults who are regular smokers started at or before age 19. A 2009 CDCP survey found that more than one out of four high school students were current tobacco users. Smoking-related diseases remain the leading cause of preventable death in the United States, claiming the lives of 438,000 Americans annually. According to the State Department of Public Health's California Tobacco Control Program survey, 74% of youth access enforcement agencies reported issuing warnings to merchants selling tobacco products to minors in 2006. The California Tobacco Control Program survey also found that law enforcement agencies continued to rank the suspension or revocation of licenses and civil and criminal penalties for owners and clerks, as effective strategies to reduce youth access to tobacco. The author states, the "trigger" provision in the Licensing Act prevents the state license penalties from becoming operative for any length of time. This bill will allow BOE to start using the Licensing Act so all retailers who sell tobacco products to minors can be held accountable for their adverse actions while having to endure a more stringent penalty upon a violation of the STAKE Act or Penal Code Section 308, as defined. Background : According to the United States Department of Health and Human Services (DHS), approximately 80% 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. According to the DHS, with the passage of Proposition 99 in 1988 and the enactment of subsequent legislation throughout the 1990s, California has mounted the largest and most comprehensive anti-smoking campaign in the United States. DHS states that California's campaign sets the standard for the rest of the nation and the world, setting a goal of changing public perception of tobacco use and emphasizing local interventions, regional coalitions, media, research, and evaluation. The campaign has focused on four key areas: countering pro-tobacco influences; protecting youth and adults from secondhand smoke; reducing the availability of tobacco products to youth; and, providing support for quitting tobacco use. Since the passage of Proposition 99, adult smoking prevalence dropped by more than 30% and per-capita cigarette consumption in California fell by more than 50%. AB 1301 Page 6 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. Up to 40% 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, enacted the STAKE Act to address the increase in tobacco sales to minors in California and fulfill the federal mandate. Authority for enforcement and responsibility for implementation of the Act was delegated to the then-State Department of Health Services' Food and Drug Branch, which is required to: 1)Implement the program to reduce the illegal sale of tobacco products to minors and to conduct sting operations using 15 and 16 year old minors; 2)Operate a toll-free number for the public to report illegal tobacco sales to minors; 3)Ensure that tobacco retailers post signs, which include the toll-free number, to report violations; 4)Ensure that clerks check the identification of youthful-appearing persons prior to a sale; 5)Assess civil penalties ranging from $200 to $6,000 against store owners for violations; and, 6)Comply with the Synar Amendment and prepare an annual report for the federal government, state Legislature, and the Governor regarding enforcement activities and their effectiveness. Penal Code Section 308 : Penal Code Section 308 prohibits every person, firm, or corporation which knowingly or under circumstances in which it has knowledge, or should otherwise have grounds for knowledge, from selling, giving, or in any way furnishing to another person who is under the age of 18 years: Any tobacco, cigarette, or cigarette papers, or blunt wraps, or any other preparation of tobacco, or any other instrument or AB 1301 Page 7 paraphernalia that is designed for the smoking or ingestion of tobacco, products prepared from tobacco, or any controlled substance. Any person failing to comply is subject to criminal action for a misdemeanor or to a civil action brought by a city attorney, a county counsel, or a district attorney, punishable by a fine of $200 for the first offense, $500 for the second offense, and $1,000 for the third offense. Section 308 also requires every person, firm, or corporation which sells, or deals in tobacco or any preparation thereof, to post conspicuously and keep posted at each point of purchase a notice that states, in part, selling tobacco products to anyone under 18 years of age is illegal. Cigarette and Tobacco Products Licensing Act of 2003 : The Licensing Act requires the BOE to take action against a retailer convicted of a violation of either the STAKE Act or Penal Code Section 308, according to the following schedule: 1)Upon the first conviction of a violation, the retailer receives a warning letter from the BOE that delineates the circumstances under which a retailer's license may by suspended or revoked and the amount of time the license may be suspended or revoked. The retailer and its employees are required to receive training on tobacco control laws from DPH upon a first conviction. 2)Upon the second conviction of a violation within 12 months, the retailer is subject to a fine of $500. 3)Upon the third conviction of a violation within 12 months, the retailer is subject to a fine of $1,000. 4)Upon the fourth to the seventh conviction of a violation within 12 months, the BOE is required to suspend the retailer's license to sell cigarette and tobacco products for 90 days. 5)Upon the eighth conviction of a violation within 24 months, the BOE is required to revoke the retailer's license to sell cigarette and tobacco products. Convictions of violations by a retailer at one retail location are not accumulated against AB 1301 Page 8 other locations of that same retailer. This provision becomes operative on the date results from the Youth Tobacco Survey are released if the survey finds that 13% or more of youth were able to purchase cigarettes (trigger language). Currently, the BOE has approximately 37,000 retailers and 1,000 distributors and wholesalers licensed to engage in the sale of cigarettes and tobacco products in California. " Trigger language :" This bill removes the "trigger language" for the BOE to impose penalties for STAKE Act and Penal Code Section 308 violations. Existing law provides that the BOE's authority to take action against retailers pursuant to BPC Section 22974.8 commences on the date results from the Youth Tobacco Survey are released if the survey finds that 13% or more of youth were able to purchase cigarettes. Further, the BOE's authority to take action under this provision will become inoperative on or after the date of the subsequent release of the results from the survey showing that less than 13% of youth were able to purchase cigarettes. In 2009, the results of the Youth Tobacco Survey found that 8.6% of youth were able to purchase cigarettes; this was a decrease from the 2008 results which was 12.6%. In 2004 and 2006 when the survey results were over 13%, the BOE had the authority to take action against a retailer, however the BOE was never notified of a conviction of a violation. According to DPH, final administrative adjudication occurs when a violation is appealed and processed through an administrative hearing with an administrative law judge making a ruling on that violation. However, not all violations of the STAKE Act are appealed and heard before an administrative law judge. Such violations include those in which the fines imposed pursuant to the STAKE Act are simply paid upon receipt of a demand letter and the violation is not contested, which would also be considered a violation under Section BPC 22974.8. Local ordinances : Many local cities and counties in California have adopted local tobacco retailer licensing laws which require a retailer to pay an annual licensing fee and be subject to suspension or revocation of that license if they are found selling tobacco to minors. Therefore, California retailers AB 1301 Page 9 engaged in the sale of cigarettes or tobacco products and located in a city or county that has adopted local tobacco retailer licensing laws have two licenses (state and city/county). Existing local ordinances in some jurisdictions 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. Arguments in support : Supporters state it has been well established in numerous studies since the 1980s that active enforcement of state and local tobacco sales to minors laws reduce the percentage of retailers who illegally sell tobacco to minors. It is time to put some teeth into the state licensing law. A strong state tobacco licensing law makes sense because keeping retailers from selling tobacco to children is crucial if we want to prevent future generations from suffering a lifetime of addiction to one of the world's most deadly products. Selling tobacco products to minors remains a problem in California. Every category of retail-large supermarkets, mom and pop stores, pharmacies, gas stations and convenience stores-has a responsibility to not sell cigarettes and other tobacco products to minors. Analysis Prepared by : Felipe Lopez / G. O. / (916) 319-2531 FN: 0004816