BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 24 (Hill) - Electronic cigarettes: licensing and
restrictions
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|Version: April 21, 2015 |Policy Vote: HEALTH 6 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 28, 2015 |Consultant: Brendan McCarthy |
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SUSPENSE FILE. AS AMENDED.
Bill
Summary: SB 24 would raise the minimum legal age to purchase or
consume tobacco products and electronic cigarettes from 18 to
21. The bill would extend many existing restrictions or
prohibitions on the use of tobacco products to electronic
cigarettes. The bill would require electronic cigarette
manufacturers, wholesalers, and retailers to be licensed.
Fiscal Impact (as approved on May 28,
2015):
One-time costs of about $180,000 to revise regulations and
educational materials relating to the prohibition on the sale
of tobacco products to minors by the Department of Public
Health (General Fund or tobacco tax funds).
SB 24 (Hill) Page 1 of
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Ongoing costs in the hundreds of thousands per year for
additional survey activities at retail stores selling
electronic cigarettes (General Fund or tobacco tax funds).
Current federal law 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
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.
Federal law would continue to require the Department to
conduct the existing survey. There are about 1,100 retail
locations that only sell electronic cigarettes and related
products. Because this bill would expand the universe of
retail locations subject to the inspection requirement, the
Department is likely to incur additional costs to survey a
sample of those retail locations to accurately determine the
rate at which minors can purchase electronic cigarettes.
Ongoing costs in the hundreds of thousands per year for
enforcement actions relating to illegal sales of tobacco
products and electronic cigarettes to minors (General Fund or
tobacco tax funds).
Under current law, the Department of Public Health enforces
the law prohibiting the sale of tobacco products to minors by
conducting compliance inspections using youth decoy purchasers
and following up on complaints from the public. The total
annual cost for the Department's enforcement program is $1.6
million per year.
By adding electronic cigarette retailers to the current
enforcement program, the bill will increase the Department's
enforcement efforts, particularly for retailers who do not
already sell traditional tobacco products. The amount of that
increased enforcement activity will depend both on the number
of additional retailers covered by the law and the compliance
rate of those retailers (or if retailers of traditional
tobacco products are found to be selling electronic cigarettes
to minors at higher rates than traditional tobacco products).
SB 24 (Hill) Page 2 of
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Because the state has fully allocated the existing federal
funding for this program, any additional costs will be borne
by the General Fund, tobacco tax funds, or other fund sources.
Ongoing licensing costs of about $300,000 for the Board of
Equalization to license retailers who sell electronic
cigarettes but are not currently licensed because they do not
sell tobacco products (Compliance Fund). Under current law,
the Board licenses wholesalers and retailers of tobacco
products, to facilitate the collection of tobacco taxes. This
bill will require the Board to also license electronic
cigarette retailers. Currently, the Board expends about $280
per licensee to operate the licensing program. Licensees pay a
one-time licensing fee of $100. The remaining program costs
are offset with tobacco tax revenues. According to the
Stanford Prevention Center, there are about 1,000 retailers in
the state that specialize in electronic cigarettes and do not
sell other tobacco products. The Board would incur additional
licensing costs to license those retailers, which would be
offset by the initial licensing fee. The author's amendments
authorize the Board to assess an additional licensing fee up
to $280 to cover the Board's licensing costs
Background: Under current law (the Stop Tobacco Access to Kids Enforcement
or STAKE Act) the Department of Public Health is responsible for
enforcing the prohibition on furnishing tobacco products to
minors (those under 18 years of age). Federal law requires
states to demonstrate that they are complying with federal law
in this area, by demonstrating that the rate at which minors can
purchase tobacco products does not exceed 20%. The Department
fulfills these requirements by conducting a survey of about 750
retail stores, using minors to attempt a purchase. Using
information from the survey, as well as public complaints and
other sources, the Department conducts enforcement actions
against retailers in violation of the law. In addition to
assessing fines for non-compliance, the Department is authorized
to notify the Board of Equalization of repeated violations by a
retailer; the Board is then authorized to suspend the retailer's
license.
Current law requires the Board of Equalization 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
SB 24 (Hill) Page 3 of
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both a specific excise tax on tobacco products as well as the
general Sales and Use Tax.
Current state law prohibits smoking of tobacco products in
various places, such as school campuses, public buildings,
places of employment, retail food facilities, and other places.
Current law requires employers generally, and operators of
certain facilities such as hospitals, clinics, and food
facilities specifically, to post signs declaring that no smoking
is permitted, with certain exceptions. Those requirements are
enforced at the local level.
Proposed Law:
SB 24 would raise the minimum legal age to purchase or consume
tobacco products and electronic cigarettes from 18 to 21. The
bill would extend many existing restrictions or prohibitions on
the use of tobacco products to electronic cigarettes. The bill
would require electronic cigarette manufacturers, wholesalers,
and retailers to be licensed. The bill does not redefine tobacco
products to include electronic cigarettes, but rather adds
electronic cigarettes specifically to many provisions of law
regulating the use of tobacco products.
Specific provisions of the bill would:
Raise the minimum legal age to purchase or consume tobacco
products and electronic cigarettes from 18 to 21;
Extend the existing provisions of the STAKE Act to electronic
cigarettes;
Prohibit the use of electronic cigarettes in specific places,
such as schools, places of employment, public buildings,
apartments, and other places;
Require places where smoking is currently prohibited to have
signage that states both "no smoking" and "no using electronic
cigarettes";
Make electronic cigarette wholesalers and retailers subject to
licensure by the Board of Equalization;
Require all cartridges for electronic cigarettes and solutions
for refilling electronic cigarettes to be in childproof
packaging.
SB 24 (Hill) Page 4 of
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Related
Legislation:
SB 140 (Leno) would expand the definition current law of
"tobacco product" in certain sections of law to include
electronic cigarettes. That bill is on this committee's
Suspense File.
SB 151 (Hernandez) would raise the minimum legal age to
purchase or consume tobacco products from 18 to 21. That bill
is on this committee's Suspense File.
AB 216 (Garcia) would raise the fine for selling an electronic
cigarette to a minor. That bill is pending in the Assembly.
AB 768 (Thurmond) would prohibit the use of electronic
cigarettes in any baseball stadium. That bill is pending in
the Assembly
Staff
Comments: The only costs that may be incurred by a local agency
relate to crimes and infractions. Under the California
Constitution, such costs are not reimbursable by the state. As
noted above, the bill requires operators of certain buildings to
change existing no smoking signage to specifically prohibit the
use of electronic cigarettes. This provision is likely to impose
costs on local governments. However, because the provisions of
the bill apply generally (to employers or operators of
hospitals, for example) this requirement does not create a
reimbursable state mandate.
Author's amendments (as adopted May 28, 2015): make raising the
smoking age from 18 to 21 contingent on the enactment of SB 151
(Hernandez) and authorize the Board of Equalization to impose an
additional one-time licensing fee, up to $280, to cover the
costs of licensing electronic cigarette retailers.
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