BILL ANALYSIS Ó
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Date of Hearing: September 8, 2015
ASSEMBLY COMMITTEE ON FINANCE
Shirley Weber, Chair
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(Wood) - As Introduced July 16, 2015
SUBJECT: Tobacco products: minimum legal age.
SUMMARY: Specifically, this bill:
1) Raises the minimum legal age to purchase and/or consume
tobacco products from 18 years of to 21 years of age.
2) Applies the 21-years of age restriction to all
provisions of the Stop Tobacco Access to Kids Enforcement
Act (better known as the STAKE Act).
EXISTING LAW:
1) Requires the state to determine the rate at which
individuals under 18 years of age can illegally purchase
tobacco products. The Department of Public Health (DPH)
conducts random inspections at about 750 retail locations
annually to determine a statewide average rate at which
retailers are not in compliance with state and federal law.
The total annual cost to conduct the current survey is
$400,000.
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2) Requires the DPH to enforce the law prohibiting the sale
of tobacco products to minors by conducting compliance
inspections. The current annual cost for the DPH's
enforcement program is $1.6 million per year.
3) Requires the Board of Equalization (BOE) to license
tobacco wholesalers and retailers. The purpose of this
licensing requirement is to facilitate the collection of
state tobacco taxes and prevent tax evasion. Tobacco
products are subject to both a specific excise tax on
tobacco products as well as the general Sales and Use Tax.
FISCAL EFFECT:
1. This bill would likely result in an ongoing, annual,
cost increase of several hundred thousand dollars to
support the DPH's expected workload increase associated
with enforcement, inspections and surveying of retailers
participating in the sell of tobacco products (General fund
or the Cigarette and Tobacco Tax Surcharge Fund).
2. Local governments may incur new costs associated with
this bill related to crimes and infractions. Under the
California Constitution, such costs are not reimbursable by
the state.
3. According to the BOE, assuming fiscal year 2016-17 will
be the first complete year of the measure's impact, total
excise tax and sales tax revenues would decline by $68.4
million for FY 2016-17. Specifically, for FY 2016-17,
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cigarette excise tax revenue losses are forecast to be
$37.6 million, tobacco products excise tax losses would be
$5.5 million, and related sales and use tax losses would be
$25.3 million.
a. The BOE notes that this revenue estimate does
not account for any further changes in economic
activity that may or may not result from enactment of
the bill.
COMMENTS: This bill would undoubtedly create new
distinguishable costs for the state. However, it would also
result in unquantifiable, but significant, health care cost
savings for the state.
According to the Centers for Disease Control and Prevention,
estimates of annual direct health care costs related to smoking
are between $130 billion and $180 billion per year, nationally.
This bill is likely to reduce health care costs, by reducing
tobacco use rates. If the long-term reduction in the expenditure
of health care costs relating to smoking is proportional to the
reduction in the use rate, total direct health care costs in the
state would be reduced by as much as $2 billion per year in the
long-run. A significant portion of those savings would likely
accrue to public payers such as the Medi-Cal program and
CalPERS.
REGISTERED SUPPORT / OPPOSITION:
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Support
American Cancer Society Cancer Action Network
American Heart Association/American Stroke Association
American Lung Association in California
Association of Northern California Oncologists
California Academy of Preventive Medicine
California Black Health Network
California Chronic Care Coalition
California Dental Association
California Medical Association
California Optometric Association
California Pan-Ethnic Health Network
California Primary Care Association
California State Association of Counties
California Society of Addiction Medicine
Community Action Fund of Planned parenthood of Orange and San
Bernardino Counties
First 5 Association of California
Health Access California
Health Officers Association of California
Medical Oncology Association of Southern California, Inc.
Planned Parenthood Action Fund of the Pacific Southwest
Planned Parenthood Advocacy Project Los Angeles
Planned Parenthood Affiliates of California
Planned Parenthood Mar Monte
Planned Parenthood Northern California Action Fund
Santa Clara County Board of Supervisors
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Service Employees International Union, California
Opposition
American Legion-Department of California
AMVETS-Department of California
Association of the United States Army, California State
Commanders Veterans Council
Fleet Reserve Association
Jewish War Veterans, Department of California
Military Officers Association of America, California Council of
Chapters
Military Order of the Purple Heart, Department of California
Vietnam Veterans of America - California State Council
Analysis Prepared by:Marvin Deon/ FINANCE /916-319-2099