BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                         SB 24|
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                                   THIRD READING 


          Bill No:  SB 24
          Author:   Hill (D)
          Amended:  6/1/15  
          Vote:     21  

           SENATE HEALTH COMMITTEE:  6-0, 4/15/15
           AYES:  Hernandez, Nguyen, Monning, Nielsen, Roth, Wolk
           NO VOTE RECORDED:  Hall, Mitchell, Pan

           SENATE APPROPRIATIONS COMMITTEE:  6-1, 5/28/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza, Nielsen
           NOES:  Bates

           SUBJECT:   Electronic cigarettes: licensing and restrictions


          SOURCE:    Author
          
          DIGEST:   This bill extends Stop Tobacco Access to Kids  
          Enforcement Act requirements to the sale of electronic  
          cigarettes (e-cigs), distinct from the definition of tobacco  
          products, and requires enforcement, as specified, to begin July  
          1, 2016; extends current smoke-free laws and penalties to  
          e-cigs; requires e-cig cartridges to be in childproof packaging,  
          as defined; broadens the current definition of e-cigs, as  
          specified; requires all retailers of e-cigs to apply for  
          licensure to sell e-cigs, as specified; and raises the minimum  
          age requirement to purchase and use e-cigs to 21, as specified.   
           
          
          ANALYSIS:

          Existing law:








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          1)Authorizes the California Department of Public Health (DPH),  
            under the Stop Tobacco Access to Kids Enforcement (STAKE) Act,  
            to assess civil penalties ranging from $400 to $6,000,  
            depending on the number of infractions, against any person,  
            firm, or corporation that sells, gives, or in any way  
            furnishes tobacco products to a person who is under the age of  
            18.

          2)Establishes "smoke-free laws," which prohibit the smoking of  
            tobacco products in various places, including, but not limited  
            to, school campuses, public buildings, places of employment,  
            apartment buildings, day care facilities, retail food  
            facilities, health facilities, and vehicles when minors are  
            present, and makes a violation of some of the prohibitions  
            punishable as an infraction.

          3)Defines "tobacco product" as any product containing tobacco  
            leaf, including, but not limited to, cigarettes, cigars, pipe  
            tobacco, snuff, chewing tobacco, dipping tobacco, bidis, or  
            any other preparation of tobacco.

          4)Defines "electronic cigarette" as a device that can provide an  
            inhalable dose of nicotine by delivering a vaporized solution.  
            Prohibits a person from selling or otherwise furnishing an  
            electronic cigarette to a person under the age of 18.

          5)Requires the Board of Equalization (BOE), under the Cigarette  
            and Tobacco Products Licensing Act, to administer a statewide  
            program to license cigarette and tobacco products  
            manufacturers, importers, distributors, wholesalers, and  
            retailers. Requires a retailer to obtain a separate license  
            for each retail location that sells cigarettes and tobacco  
            products and to pay a one-time fee of $100 for each license.  
            Requires BOE to suspend or revoke a retailer's license upon  
            notification by DPH of certain STAKE Act violations. Permits  
            BOE to assess various civil penalties for violations of the  
            Licensing Act.
          
          This bill:
          
          1)Extends the requirements of the STAKE Act to the sale of  
            e-cigs, distinct from the definition of tobacco products, and  
            requires DPH to enforce the provisions related to e-cigs  







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            beginning July 1, 2016. Makes it a crime if retailers fail to  
            post a notice on or after July 1, 2016, at each point of  
            purchase that states the sale of e-cigs to minors is illegal.

          2)Adds e-cigs to current smoke-free laws and makes the use of  
            them in restricted areas a crime, which is subject to the same  
            penalties as tobacco products. 

          3)Requires all cartridges for e-cigs and solutions for filling  
            or refilling an e-cig to be in childproof packaging, defined  
            as packaging that contains elements, including, but not  
            limited to, safety caps or blister packs, designed to protect  
            children from being able to open and ingest the contents.

          4)Broadens the current definition of e-cigs to include any  
            aerosol or vapor cartridge or other container of a solution,  
            that may or may not contain nicotine, that is intended to be  
            used with or in an e-cig.

          5)Requires retailers of e-cigs to apply for a license from BOE  
            to sell e-cigs beginning July 1, 2016, and to pay a one-time  
            fee not to exceed $280 for each e-cig retail location.  
            Requires retailers to display the license at each retail  
            location by September 30, 2016. Requires BOE to administer a  
            statewide program to license e-cig retailers.

          6)Raises the minimum age requirement to purchase and use e-cigs  
            to 21, contingent upon the passage and enactment of Senate  
            Bill 151 (Hernandez).

           
           Comments

          1)Author's statement.  According to the author, youth use of  
            e-cigs is on the rise. According to the National Institute on  
            Drug Abuse, youth use is now higher than that of traditional  
            cigarettes: 17.1 percent of 12th graders reported using an  
            e-cig in the past month, while only 13.6 percent reported  
            smoking a traditional cigarette in the past month.  
            Nevertheless, California's premier law to prevent youth access  
            to cigarettes and other tobacco products-STAKE Act-does not  
            extend to e-cigs. E-cig retailers also do not have to be  
            licensed by the state. Additionally, an increasing number of  
            children in California are being poisoned by e-cig liquids. In  







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            2012, there were 28 calls to the California Poison Control  
            System for liquid nicotine poisoning; in 2013, there were 106  
            calls; and in 2014, there were 243 calls. At least 60 percent  
            of calls were for children 5 years old or younger. Nothing in  
            current law requires that e-cig liquids be equipped with child  
            proof packaging. Children can easily open and ingest the often  
            fruit flavored e-cig liquids. Nicotine liquids can be toxic  
            even if ingested in small amounts-just one teaspoon of liquid  
            nicotine can be deadly.  

          2)E-cigs. According to a 2014 report by the World Health  
            Organization (WHO), e-cigs are battery heated devices that  
            deliver nicotine by heating solution that users inhale. E-cig  
            cartridges (e-liquids) contain liquid nicotine, and chemicals  
            introduced into a liquid vehicle produce aromas and various  
            flavors such as tobacco, chocolate mint, cotton candy, gummy  
            bear, and grape. The concentration of nicotine varies both  
            across different manufacturers and sometimes within the same  
            brand. The report states that although some e-cigs are shaped  
            to look like conventional cigarettes, they also take the form  
            of everyday items like pens and USB flash drives.

          3)Are e-cigs safe? The Food and Drug Administration (FDA) states  
            that the safety and efficacy of e-cigs has not been fully  
            studied. Some of the uncertainty stems from the wide variety  
            of devices and liquids available, and therefore separate  
            components need to be studied, including the e-cig device, the  
            e-liquid, the inhaled aerosol, and the exhaled aerosol that  
            may be inhaled secondhand. E-cig devices vary in their  
            engineering, battery voltage, and ability to heat the  
            e-liquid, meaning e-liquids can deliver a different aerosol  
            and nicotine dose depending on the device. E-liquids currently  
            have no requirements for labeling, and The National Institute  
            of Health (NIH) states that there is poor correlation between  
            labeled and actual nicotine content.

            A July 2014 report, "Electronic nicotine delivery systems  
            (ENDS)," by the WHO stated that existing evidence shows e-cigs  
            do not produce merely a water vapor but an aerosol that poses  
            serious threats to adolescents and fetuses. The aerosol  
            inhaled by smokers contains ultra-fine particulate matter that  
            gets trapped in the small airways of the lungs. According to a  
            2013 study entitled "Does electronic cigarette consumption  
            cause passive vaping?," aerosol exhaled by e-cig smokers  







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            contains nicotine, formaldehyde, and other chemicals, although  
            at much lower levels than emissions from conventional  
            cigarettes, and nicotine metabolites were found in nonsmokers  
            exposed to the exhaled aerosol. A 2012 publication from  
            Reproductive Toxicology showed a wide variety of toxicity on  
            human cells, and that toxicity did not correlate with nicotine  
            concentration but did correlate with the amount of flavor  
            additives that were used. Since California passed legislation  
            prohibiting the sale of e-cigs to minors, the Attorney  
            General's office has been investigating a number of e-cig  
            companies that sell products on the Internet to ensure  
            compliance with the statute, as well as other consumer  
            protection provisions. Many companies are coming into  
            compliance voluntarily.  

          4)Health risks and increase in use of e-cigs. DPH's State Health  
            Officer released a report in January 2015, "A Community Health  
            Threat," about e-cigs that cites, among other things, the  
            concern about the health risks of e-cigs and the growing  
            number of e-cig users. E-cig poisonings increased from seven  
            in 2012 to 154 in 2014. By the end of 2014, e-cig poisonings  
            to young children tripled in one year, making up more than 60  
            percent of all e-cig poisoning calls, according to the report.  
            The State Health Officer also noted that in California, use of  
            e-cigs among those between the ages of 18 and 29 tripled in  
            one year, from 2.3 percent to 7.6 percent. Nearly 20 percent  
            of these young adult e-cig users had never smoked traditional  
            cigarettes. The State Health Officer concludes that there is a  
            high need to educate the public about e-cig safety concerns  
            and that existing laws currently in place to protect minors  
            and the general public from traditional tobacco products  
            should be extended to cover e-cigs.
             
          5)Marketing of e-cigs as cessation devices. The DPH report also  
            cites the unrestricted marketing tactics for e-cigs. E-cig  
            marketing continues to claim they are a safer alternative to  
            traditional cigarettes. To date, the effectiveness of e-cigs  
            as cessation aids has not been proven by e-cig companies or  
            approved by the FDA as such. The report states that a number  
            of studies actually show that e-cig users are no more likely  
            to quit than smokers of traditional cigarettes, and in one  
            study, 89 percent of e-cig users were still using them one  
            year later. Dual use of e-cigs and traditional cigarettes  
            continues to rise, which, according to the report, may be  







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            attributed to the unrestricted marketing of e-cigs. E-cig  
            companies are using tactics previously used by tobacco  
            companies that have since been banned. These include running  
            unrestricted ads and promotions on TV, radio, and social  
            media, and in magazines, newspapers, and retail stores, as  
            well as sponsoring sport and music events and giving out free  
            samples, according to the report. 
          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          According to the Senate Appropriations Committee:  

           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 DPH (General Fund or  
            tobacco tax funds).

           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 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. 

            Federal law would continue to require the DPH 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 DPH 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).








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            Under current law, the DPH 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  
            DPH's enforcement program is $1.6 million per year. 

            By adding electronic cigarette retailers to the current  
            enforcement program, the bill will increase the DPH'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). 

            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 BOE 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 BOE licenses  
            wholesalers and retailers of tobacco products, to facilitate  
            the collection of tobacco taxes. This bill will require the  
            BOE to also license electronic cigarette retailers. Currently,  
            the BOE 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 BOE would incur additional licensing costs to license  
            those retailers, which would be offset by the initial  
            licensing fee. The author's amendments authorize the BOE to  
            assess an additional licensing fee up to $280 to cover the  
            BOE's licensing costs.




          SUPPORT: (Verified 5/28/15)








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          California Poison Control System
          Junior Leagues of California
          California College and University Police Chiefs
          Consumer Federation of California
          City of San Marcos
          California Police Chiefs Association


          OPPOSITION:   (Verified5/28/15)


          American Cancer Society
          American Heart Association 
          American Lung Association
          Smoke-Free Alternatives Trade Association
          Smoke-Free Marin Coalition
          Solano County


          ARGUMENTS IN SUPPORT:      Supporters argue that the increase in  
          e-cig use, sales, and marketing is alarming. They state that use  
          has increased particularly by youth who use the devices to smoke  
          illegal substances. Calls to poison control centers have also  
          risen because of children accessing e-cig cartridges. Supporters  
          believe that this bill will curb youth e-cig use by extending  
          STAKE Act laws to e-cigs, as well as requiring that e-cig  
          packaging be childproof.


          ARGUMENTS IN OPPOSITION:     Organizations writing in  
          opposition, unless the bill is amended, argue that this bill  
          threatens decades of tobacco control and public health campaigns  
          in California by distinguishing e-cigs from tobacco products.  
          They state that the tobacco industry has been working diligently  
          to ensure that e-cigs are defined separately from tobacco  
          products in order to weaken regulation of e-cigs. Also, by not  
          including all components that make up e-cigs, certain parts sold  
          separately could still be sold to minors. They argue that the  
          FDA and DPH recommend that e-cigs be regulated in the same  
          manner as tobacco products. These organizations would like to  
          see this bill amended to include only the requirement that e-cig  
          cartridges be packaged in a childproof manner.









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          Prepared by:Reyes Diaz / HEALTH / 
          6/1/15 19:25:16


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