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