BILL ANALYSIS Ó
AB 6 X2
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ASSEMBLY THIRD READING
AB 6
X2 (Cooper)
As Amended August 27, 2015
Majority vote
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Public Health |10-2 |Bonta, Maienschein, |Mayes, Steinorth |
| | |Baker, Bonilla, | |
| | |Eduardo Garcia, | |
| | |Levine, Santiago, | |
| | |Mark Stone, Thurmond, | |
| | |Wood | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Finance |6-3 |Weber, Bloom, Gomez, |Melendez, Bigelow, |
| | | |Obernolte |
| | | | |
| | |Jones-Sawyer, | |
| | |McCarty, Ting | |
| | | | |
| | | | |
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SUMMARY: Defines the term smoking for purposes of the Stop
Tobacco Access to Kids Enforcement (STAKE) Act; expands the
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definition of a tobacco product to include electronic cigarettes
(e-cigarettes) and extends current restrictions and prohibitions
against the use of tobacco products to electronic cigarettes.
Extends current licensing requirements for manufacturers,
importers, distributors, wholesalers, and retailers of tobacco
products to electronic cigarettes. Specifically, this bill:
1)Defines smoking as inhaling, exhaling, burning, or carrying
any lighted or heated cigar, cigarette, or pipe, or any other
lighted or heated tobacco or plant product intended for
inhalation, whether natural or synthetic, in any manner or in
any form. Includes the use of an electronic smoking device
that creates an aerosol or vapor, in any manner or in any
form, or the use of any oral smoking device for the purpose of
circumventing the prohibition of smoking.
2)Expands the definition of tobacco product to include an
electronic device that delivers nicotine or other vaporized
liquids to the person inhaling from the device, including, but
not limited to an electronic cigarette, cigar, pipe, or
hookah. Includes in the definition any component, part, or
accessory of a tobacco product, whether or not sold
separately.
3)Clarifies that a tobacco product does not include a product
that has been approved by the United States Food and Drug
Administration (FDA) for sale as a tobacco cessation product
or for other therapeutic purposes where the product is
marketed and sold solely for such an approved purpose.
4)Requires all cartridges for electronic cigarettes and solution
for filling or refilling an electronic cigarette to be in
childproof packaging. Defines child-resistant packaging as
packaging that meets current federal regulations.
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FISCAL EFFECT: According to the Assembly Finance Committee:
Approximately $115,00 (Proposition 99) for the Department of
Public Health (DPH) for purchasing retailer lists, revising
informational materials, and conducting annual scientific
surveys, and General Fund cost pressure to increase STAKE Act
enforcement activities.
Approximately $3.8 million in costs for the Board of
Equalization in 2015-16, minor savings in 2016-27, $1.8 million
in costs in 2017-18, and minor costs in out-years for the
proposed Board of Equalization (BOE) licensing program.
DPH estimates the following costs, which are described in the
narrative below the chart:
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| DPH Cost & Fund Source | 2015-16 | 2016-17 | 2017-18 |
| | | | |
| | | | |
|------------------------------+-----------+-----------+----------|
|Revise regulations (0236 | $0| $64,400| $0|
|Unallocated Account, | | | |
|Proposition 99 Funds) | | | |
| | | | |
| | | | |
|------------------------------+-----------+-----------+----------|
|E-cig retailer lists for | $8,000| $8,000| $8,000|
|enforcement (0066 STAKE | | | |
|Special Fund) | | | |
| | | | |
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| | | | |
|------------------------------+-----------+-----------+----------|
|Revise informational | $107,172| $0| $0|
|materials (0236 Unallocated | | | |
|Account, Proposition 99 | | | |
|Funds) | | | |
| | | | |
| | | | |
|------------------------------+-----------+-----------+----------|
|Annual scientific survey for | $0| $400,000| $400,000|
|monitoring illegal e-cig | | | |
|sales to youth (0236 | | | |
|Unallocated Account, | | | |
|Proposition 99 Funds) | | | |
| | | | |
| | | | |
|------------------------------+-----------+-----------+----------|
|STAKE Act program | $1,600,000| $1,600,000|$1,600,000|
|requirements to monitor | | | |
|illegal E-cig sales to youth | | | |
|(General Fund) | | | |
| | | | |
| | | | |
|------------------------------+-----------+-----------+----------|
| NET COSTS | $1,715,172| $2,072,400|$2,008,000|
| | | | |
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Revise regulations. According to DPH, this bill would require
the DPH Food and Drug Branch (FDB) to revise STAKE Act
regulations for conducting compliance checks in vape shops and
vape lounges. DPH, Office of Regulations (OOR) estimates that
regulations would be complete within 18 months. Regulations
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would also be required to be revises related to signage.
E-cigarette retailer lists. In order to incorporate e-cigarette
retailers that are not already BOE-licensed as a tobacco
retailer into STAKE Act compliance checks, DPH/FDB would
purchase an e-cigarette vendor list developed by a database
company for an estimated minimum cost of $4,000-$8,000 per year.
Revise informational materials. DPH would need to revise STAKE
Act signage, educational materials, and training materials to
include the e-cigarette provisions. The cost of revising and
printing STAKE Act signs and clean air materials (signs,
posters, cards, manuals/booklets) and the Tobacco Control Laws
brochure is estimated at $100,000. DPH staff time associated
with revising educational materials and training materials is
estimated at 10% Full-Time Equivalent, Health Program Specialist
I for one year at $7,172.
Annual scientific survey. Business and Professions Code Section
22959 requires the annual transfer of $2 million from the
Department of Health Care Services' federal Substance Abuse
Prevention & Treatment (SAPT) Block Grant to DPH to administer
the provisions of the Synar Amendment. The FDB STAKE Program's
portion of these funds is $1.6 million. This funding is used
for conducting STAKE Act compliance inspections that include
undercover youth tobacco purchase inspections with an undercover
youth decoy, operating a STAKE Act complaint line, and following
up on illegal youth tobacco sales complaints. The remaining
$400,000 is used to conduct a scientific youth tobacco purchase
survey in order to annually report the annual illegal youth
sales rate, as required by the federal Synar Amendment.
Pursuant to guidance received from the federal Center for
Substance Abuse Prevention (CSAP) Project Officer, if this bill
passes, California would have the option to include e-cigarettes
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in its Synar inspections since these products would be
considered eligible for Synar compliance activities. The annual
youth tobacco survey which is a random survey of approximately
725 stores and results in a sample that is sufficient in size to
provide a statewide rate. While this bill does not require a
separate survey, absent additional resources, DPH would be
required to split the funds between two separate enforcement
requirements. This could result in a diminished survey on
tobacco retailers to accommodate e-cigarette only retailers.
For fiscal years beyond 2015-2016, DPH would request additional
funds in the amount of $400,000 to augment the annual scientific
survey to monitor the illegal e-cigarette sales rate to youth.
STAKE Act program requirements. The DPH STAKE enforcement
program's portion fund is $1.6 million. This funding is used
for conducting STAKE Act compliance inspections that include
undercover youth tobacco purchase inspections with an undercover
youth decoy, operating a STAKE Act complaint line, and following
up on illegal youth tobacco sales complaints. Current DPH STAKE
Act enforcement activities include any activity subsequent to a
violation of the STAKE Act, including issuance of the notice of
violation and civil penalty, administrating and preparing the
STAKE Act case package for an administrative hearing. Fines and
penalties collected as a result of STAKE Act activities are
collected by DPH and used to pay for a portion of legal staff.
The budget for the STAKE Act program has been flat since the
program was created 20 years ago and the funds collected from
penalties have decreased due to increased compliance with the
tobacco sales to minors law.
Currently, DPH performs approximately 2,000 buys with the $1.6
million block grant funds. CDPH currently spends approximately
$5-$6 per tobacco purchase resulting in approximately $10,000 to
$12,000 to buy the cigarettes during compliance buys. DPH
conducted online research and found e-cigarettes range in cost
from $10-$50. The variety in inventory for e-cigarettes and
availability from one retailer to another is much wider than for
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regular cigarettes.
While this bill authorizes DPH to enforce e-cigarette sales
compliance through the STAKE Act, absent additional resources,
DPH would be required to enforce both e-cigarette and tobacco
sale compliance with the funds available currently for tobacco.
Given the comparably high cost of e-cigarettes, this requirement
could result in diminished oversight of tobacco retailers to
accommodate e-cigarette retailers. In order to mirror the
current STAKE Act program, DPH would request additional funds in
the amount of $1.6 million in General Fund to monitor the
illegal e-cigarette sales rate to youth.
By including electronic devices in the definition of tobacco,
this bill could impact California's ability to maintain no more
than a 20% rate of illegal tobacco sales to minors. Pursuant to
42 United States Code (U.S.C.) 300x-26, commonly known as the
Synar Amendment, if California does not meet the 20 percent
threshold, the Department of Health Care Services (DHCS) could
lose up to 40 percent of its SAPT Block Grant allocation. This
means that DHCS could lose approximately $100 million of its
SAPT Block Grant award if illegal tobacco sales to minors
exceeds 20%. Nevertheless, it is unclear how likely it is that
these new legal requirements threaten California's ability to
meet the federal threshold, and also unclear how much new
resources would be needed to ensure that California continue to
meet the federal threshold.
The BOE estimates the following costs and revenues:
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| Costs | 2015-16 | 2016-17 | 2017-18 |2018-19 |
| | | | | |
| | | | | |
| (In Millions) | | | | |
| | | | | |
| | | | | |
|----------------------+-----------+----------+----------+--------|
|BOE Administrative | $3.8| $3.1| $2.5| $1.3|
|Costs | | | | |
| | | | | |
| | | | | |
|----------------------+-----------+----------+----------+--------|
| Revenue | | | | |
| | | | | |
| | | | | |
| (In Millions) | | | | |
| | | | | |
| | | | | |
|----------------------+-----------+----------+----------+--------|
|BOE Licensing Revenue | $0| $3.4| $0.7| $0.7|
| | | | | |
| | | | | |
|----------------------+-----------+----------+----------+--------|
| NET COSTS | $3.8| -$0.3| $1.8| $0.6|
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BOE Costs. According to BOE, the bill results in additional BOE
administrative costs to identify, notice, and license
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e-cigarette and tobacco device retailers and to suspend or
revoke retailer licenses for e-cigarette and tobacco device
sales to minors violations. These costs include: e-cigarette
identification, notification, and registration; publication and
form revisions; compliance, inspection and enforcement tasks;
public inquiry responses; and related computer programming.
BOE Revenue. The anticipated revenue would be generated by the
new licensing fee proposed in the bill to which e-cigarette
retailers would be subject. AB X2 11 (Nazarian) of the current
legislative session addresses related issues that might have an
impact on this bill. AB X2 11 proposes to increase existing
licensing fees on tobacco retailers in light of reported
insufficient resources for the tobacco licensing program within
the BOE. This bill creates a new licensing fee that mirrors the
existing fee by creating a one-time fee for e-cigarette
retailers who are not already tobacco retailers who have already
paid the one-time tobacco licensing fee of $100.
COMMENTS: According to the author e-cigarette usage by youth is
exploding, for example, amongst high school students use has
shot up from 600,000 in 2013 to around two million in 2014. The
author states this bill is about preventing an entire new
generation of nicotine addicts. The author contends that
licensing e-cigarette retailers like tobacco retailers will
prevent young people from accessing e-cigarettes. The author
points out that prohibiting the use of e-cigarettes in all the
places where smoking is currently prohibited is important
because, while the health effects of e-cigarettes are still
being determined, we do know that both inhaled and exhaled
e-cigarette aerosol contains particulate matter that has shown
to be potentially harmful to the lungs and that 10 chemicals in
the Prop 65 warning on chemicals that cause cancer and birth
defects have been found in e-cigarettes.
E-cigarettes are defined in California law as a device that can
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provide an inhalable dose of nicotine by delivering a vaporized
solution. Typically, they are composed of a rechargeable,
battery-operated heating element, a replaceable cartridge that
may contain nicotine or other chemicals, and an atomizer that,
when heated, converts the contents of the cartridge into a
vapor. This vapor can then be inhaled by the user. These
products are often made to look like such products as
cigarettes, cigars, and pipes. They are also sometimes made to
look like everyday items such as pens and USB memory sticks, for
people who wish to use the product without others noticing.
The health effects of e-cigarettes have not been fully studied,
so consumers currently don't know the potential risks of
e-cigarettes, how much nicotine or other potentially harmful
chemicals are being inhaled during use, or whether there are any
benefits associated with using these products. According to the
January 2015 State Health Officer's report on E-Cigarettes, A
Community Health Threat, e-cigarette use is rising rapidly. The
report notes that while the long-term health impact resulting
from use of this product is presently unknown, it is known that
e-cigarettes emit at least 10 chemicals that are found on
California's Proposition 65 list of chemicals known to cause
cancer, birth defects, or other reproductive harm.
The FDA has issued a proposed rule that would extend the
agency's tobacco authority to cover additional products that
meet the legal definition of a tobacco product, such as
e-cigarettes. The agency intends to regulate electronic
cigarettes and related products in a manner consistent with its
mission of protecting the public health. The FDA has not
completed its' evaluation of e-cigarettes for safety or
effectiveness. When the FDA conducted limited laboratory
studies of certain samples, they found significant quality
issues that indicate that quality control processes used to
manufacture these products are substandard or non-existent.
They also found that cartridges labeled as containing no
nicotine contained nicotine and that three different electronic
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cigarette cartridges with the same label emitted a markedly
different amount of nicotine with each puff. Experts have also
raised concerns that the marketing of products such as
e-cigarettes can increase nicotine addiction among young people
and may lead kids to try other tobacco products.
In California, use among young adults ages 18 to 29 tripled in
one year. A 2015 study funded by the National Institute of
Health and published in the Journal of the American Medical
Association, compared tobacco use initiation among 222 students
who had used e-cigarettes, but not combustible tobacco products,
and 2,308 who had neither used e-cigarettes or combustible
tobacco products when initially surveyed at the start of ninth
grade. During the first six months after being surveyed, 30.7%
of those who had used e-cigarettes started using combustible
tobacco products, such as cigarettes, cigars, and hookahs,
compared to only 8.1% of those who had never used e-cigarettes.
A study published July 27, 2015, in the Journal of Pediatrics
surveyed almost 2,100 California high school students, and found
that one-quarter had tried e-cigarettes. Ten percent were
currently using e-cigarettes, and those current users where much
more likely than their peers to also smoke cigarettes.
California law prohibits anyone from selling or furnishing an
electronic cigarette to anyone under the age of 18. There are
no restrictions on where they may be used.
Numerous organizations support this bill, including the
California Primary Care Association, the California Medical
Association, the California Society of Addiction Medicine, and
Planned Parenthood Affiliates of California. Supporters state
that they are deeply concerned that e-cigarettes are starting
kids on a lifetime of addiction to nicotine. Supporters note
that there are more than 470 brands of e-cigarettes for sale,
offered in more than 7,700 flavors including Captain Crunch,
gummy bear, cotton candy, and Fruit Loops. They also contend
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that youth are clearly the marketing targets, noting that in the
last two years youth usage rates for electronic cigarettes have
tripled. Finally, supporters note that very little is known
about the health effects of electronic cigarettes or the aerosol
they release, and there is no evidence that show the aerosol
emitted by e-cigarettes is safe for non-users to inhale.
The Smoke-Free Alternatives Trade Association (SFATA) states
they are opposed to this bill unless it is amended to remove the
definition of e-cigarettes and vapor products as tobacco. SFATA
states the classification of vapor products as tobacco is
grossly inappropriate given that the products clearly do not
contain tobacco. SFATA contends that defining e-cigarettes and
vapor products is scientifically inaccurate, and appears to be
part of a broader and misleading campaign to equate vapor
products with tobacco, and has potentially unfair and
unwarranted tobacco tax-related implications. Finally, SFATA
notes that California is the birthplace of innovative
technologies that continue to drive new markets and growing
industries and stifling innovation runs counter to the FDA,
which encourages manufacturers to use innovation to reduce risk
and exposure.
Analysis Prepared by:
Lara Flynn / HEALTH / (916) 319-2097 FN:
0002354
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