BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 24| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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: SB 24 Page 2 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 SB 24 Page 3 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 SB 24 Page 4 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 SB 24 Page 5 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 SB 24 Page 6 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). SB 24 Page 7 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) SB 24 Page 8 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. SB 24 Page 9 Prepared by:Reyes Diaz / HEALTH / 6/1/15 19:25:16 **** END ****