BILL ANALYSIS                                                                                                                                                                                                    Ó






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                                   THIRD READING 


          Bill No:  SBX2 5
          Author:   Leno (D), et al.
          Amended:  8/26/15  
          Vote:     21  

           SENATE PUBLIC HEALTH & DEVELOP. SVCS. COMM.:  9-3, 8/19/15
           AYES:  Hernandez, Beall, Hall, Leno, McGuire, Mitchell,  
            Monning, Pan, Wolk
           NOES:  Morrell, Moorlach, Nielsen
           NO VOTE RECORDED:  Anderson

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 8/24/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           SUBJECT:   Electronic cigarettes


          SOURCE:    American Cancer Society Cancer Action Network
                     American Heart Association/American Stroke  
          Association
                     American Lung Association
          
          DIGEST:   This bill recasts and broadens the definition of  
          "tobacco product" in current law to include electronic  
          cigarettes as specified; 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; and  
          requires electronic cigarette cartridges to be child-resistant.
          
          ANALYSIS:








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          Existing law:

          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. Prohibits selling tobacco products without a valid  
            license, and makes violations punishable as a misdemeanor.  

          6)Requires a retailer, for purposes of collecting a tobacco tax,  
            to obtain a separate license for each retail location that  
            sells cigarettes and tobacco products and pay a one-time fee  
            of $100. Requires BOE to suspend or revoke a retailer's  
            license upon notification by DPH of certain STAKE Act  
            violations.

          This bill:







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          1)Recasts and broadens the definition of  "tobacco product" to  
            include a product  made or derived from tobacco or nicotine  
            that is intended for human consumption, whether smoked,  
            heated, chewed, absorbed, dissolved, inhaled, snorted,  
            sniffed, or ingested by any other means,  and includes  
            electronic devices that deliver nicotine or other substances  
            to the person inhaling from the device, including, but not  
            limited to, an electronic cigarette, cigar, pipe, or hookah;  
            and any component, part, or accessory of a tobacco product,  
            whether or not sold separately. By broadening the definition  
            of "tobacco products," this bill extends all existing laws  
            that relate to tobacco products to electronic cigarettes.

          2)Exempts from the definition of "tobacco product" a product  
            that has been approved by the 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.


          3)Requires retailers of electronic cigarettes, which are not  
            subject to a tobacco tax, to apply for a license and pay a  
            license fee, in an amount to be determined by the BOE,  
            beginning October 1, 2016.

          4)Requires all cartridges for electronic cigarettes and  
            solutions for filling or refilling an electronic cigarette to  
            be in child-resistant packaging, as defined by the Code of  
            Federal Regulations. 

          Comments  
           
          1)Author's statement.  According to the author, California has  
            invested 25 years and $2.5 billion in public health measures  
            aimed at reducing tobacco use. However, that investment is now  
            threatened by a new tobacco product: electronic cigarettes.  
            According to a DPH report, e-cigarette aerosol contains at  
            least 10 chemicals that are on California's Proposition 65  
            list of chemicals known to cause cancer, birth defects or  
            other reproductive harm. Despite industry claims that  
            e-cigarettes do not present secondhand smoke concerns, studies  
            have found formaldehyde, benzene, and tobaccospecific  
            nitrosamines (a carcinogen) coming from the secondhand  







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            emissions of ecigarettes. 

            Despite these potentially serious risks to public health,  
            e-cigarette use is growing nationwide. The Centers for Disease  
            Control and Prevention found that more than a quarter of a  
            million youth who had never smoked a cigarette used electronic  
            cigarettes in 2013. electronic cigarettes come in enticing  
            flavors such as gummy bear and mango. While California  
            currently bans the sale of e-cigarettes to minors under the  
            age of 18, many youth are still able to access the product. 
            
            DPH recommends that "[e]xisting laws that currently protect  
            minors and the general public from traditional tobacco  
            products should be extended to cover e-cigarettes." SBX2 5  
            will do exactly this by including e-cigarettes within  
            California's smoke-free laws and the STAKE Act.
          
          2)What is an electronic cigarette?  According to a 2014 report  
            by the World Health Organization (WHO), electronic cigarettes  
            are battery heated devices that deliver nicotine by heating a  
            solution that users inhale. Electronic cigarette cartridges  
            (e-liquids) contain liquid nicotine, and chemicals introduced  
            into a liquid vehicle produce various flavors such as tobacco,  
            cotton candy, and gummy bear. Although some electronic  
            cigarettes look like conventional cigarettes, others take the  
            form of items such as pens and USB flash drives.

          3)Electronic cigarette safety. The FDA states that the safety  
            and efficacy of electronic cigarettes 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 electronic  
            cigarette device, the e-liquid, the inhaled aerosol, and the  
            exhaled aerosol that may be inhaled secondhand. Electronic  
            cigarette 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 states "[t]here is poor  
            correlation between labeled and actual nicotine content."

            A 2014 article in the journal Addiction states that because of  
            device inconsistencies, there is also no correlation between  
            the nicotine content in the e-liquid and the resulting inhaled  







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            aerosol. A July 2014 report, "Electronic nicotine delivery  
            systems (ENDS)," by the WHO stated that existing evidence  
            shows electronic cigarettes do not produce merely a water  
            vapor, but an aerosol that poses serious threats to  
            adolescents and fetuses. According to a 2013 study entitled  
            "Does electronic cigarette consumption cause passive vaping?,"  
            aerosol exhaled by electronic cigarette users contains  
            nicotine, formaldehyde, and other chemicals.  
             
          4)DPH report. The California State Health Officer released a  
            report in January 2015, "A Community Health Threat," about  
            electronic cigarettes that cites, among other things, the  
            concern about the health risks of electronic cigarettes, the  
            growing number of electronic cigarette users, and the  
            unrestricted marketing tactics for electronic cigarettes.  
            Electronic cigarette poisonings increased from seven in 2012  
            to 154 in 2014. 

            To date, the effectiveness of electronic cigarettes as  
            cessation aids has not been proven or approved by the FDA as  
            such. The report states that a number of studies show that  
            electronic cigarette users are no more likely to quit than  
            regular smokers. Electronic cigarette companies are using  
            tactics previously used by tobacco companies that have since  
            been banned, such as advertising on TV, radio, and social  
            media, and sponsoring sport and music events. The State Health  
            Officer concludes that existing laws currently in place to  
            protect minors and the general public from traditional tobacco  
            products should be extended to cover electronic cigarettes.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          According to the Senate Appropriations Committee:

          1)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 DPH (General Fund or tobacco  
            tax funds).

          2)Ongoing costs in the tens of thousands to low hundreds of  
            thousands per year for additional survey activities at retail  
            stores selling electronic cigarettes (General Fund or tobacco  
            tax funds). 







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            Current federal law requires the state to determine the rate  
            at which minors can illegally purchase tobacco products. 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. 

            There are many retail locations that sell both traditional  
            tobacco products as well as electronic cigarettes. There are  
            also a significant number of retail locations that only sell  
            electronic cigarettes and related products. Because this bill  
            expands the universe of retail locations subject to the  
            inspection requirement, DPH will need to conduct additional  
            visits to newly regulated retail locations which only sell  
            electronic cigarettes. There are about 1,000 retailers in the  
            state that sell electronic cigarettes but not tobacco  
            products. 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.  
            Because retailers that sell both tobacco products and  
            electronic cigarettes are not likely (in the long-term) to  
            sell those products to minors at different rates, DPH will  
            likely be able to combine survey efforts at retailers that  
            sell both types of products.

          3)Ongoing costs in the hundreds of thousands per year for  
            enforcement actions relating to illegal sales of electronic  
            cigarettes to minors (General Fund or tobacco tax funds).

            Under current law, 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 DPH's  
            enforcement program is $1.6 million per year. By adding  
            additional retailers to the current prohibition on sales to  
            minors, the bill will increase 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  







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            rates than traditional tobacco products). The total  
            enforcement cost is unknown at this time, but is likely to be  
            in the hundreds of thousands per year, based on existing  
            enforcement costs. 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.

          4)Ongoing licensing costs of about $300,000 for 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, BOE licenses wholesalers and  
            retailers of tobacco products, to facilitate the collection of  
            tobacco taxes. This bill will require BOE to also license  
            electronic cigarette retailers. Currently, 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. BOE would incur additional  
            licensing costs to license those retailers, which would be  
            offset by the existing initial licensing fee and a new  
            one-time licensing fee on electronic cigarette retailers not  
            currently licensed by BOE.

          5)No anticipated change in tobacco tax revenue (General Fund and  
            special fund). This bill does not change the definition of  
            "tobacco product" in the Revenue and Taxation Code to include  
            electronic cigarettes. Thus, this bill does not extend the  
            state's existing tax on those products to electronic  
            cigarettes.


          SUPPORT:   (Verified8/25/15)


          American Cancer Society Cancer Action Network (co-source)
          American Heart Association/American Stroke Association  
          (co-source)
          American Lung Association (co-source)
          Attorney General Kamala Harris
          Alameda County Board of Supervisors
          American Academy of Pediatrics







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          Americans for Nonsmokers' Rights
          Association of California Healthcare Districts
          Association of Northern California Oncologists
          Breathe California
          California Academy of Family Physicians
          California Academy of Preventive Medicine
          California Black Health Network
          California Chapter of the American College of Emergency  
          Physicians
          California Chronic Care Coalition
          California College and University Police Chiefs 
          California Dental Association
          California Medical Association
          California Narcotic Officers' Association 
          California Optometric Association
          California Pan-Ethnic Health Network
          California Pharmacists Association
          California Police Chiefs Association
          California Primary Care Association
          California Society for Addiction Medicine
          California State Association of Counties
          Common Sense Kids Action
          Community Action Fund of Planned Parenthood Orange & San  
          Bernardino Counties
          County Health Executives Association
          County Health Executives Association of California
          First 5 Association of California
          Health Officers Association of California
          Kaiser Permanente
          Los Angeles City Attorney Mike Feuer
          March of Dimes, California Chapter
          Medical Oncology Association of Southern California
          Planned Parenthood Advocacy Project Los Angeles
          Planned Parenthood Mar Monte
          Planned Parenthood Northern California Action Fund
          Planned Parenthood of the Pacific Southwest
          San Dieguito Alliance for Drug Free Youth
          San Mateo County Tobacco Education Coalition
          Santa Clara County Board of Supervisors
          SEIU California
          Sonoma County Board of Supervisors


          OPPOSITION:   (Verified8/25/15)







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          Smoke-Free Alternative Trade Association

          ARGUMENTS IN SUPPORT:  The American Cancer Society Cancer Action  
          Network, the co-sponsor of this bill, the California Primary  
          Care Association, and the California Black Health Network state  
          that defining electronic cigarettes as a tobacco product in the  
          STAKE act tackles the issue of retailers selling electronic  
          cigarettes to minors, which is critical in preventing youth  
          tobacco use. The cosponsor also states that this bill will  
          address the issue of second-hand exposure to electronic  
          cigarette aerosol by prohibiting the use of electronic  
          cigarettes in all places where smoking is currently prohibited.   
          The American Lung Association, another cosponsor of the bill,  
          and Kaiser Permanente, state that SBX2 5 aligns state laws with  
          proposed federal regulations that define electronic cigarettes  
          as tobacco products per FDA oversight. Breathe California states  
          that SBX2 5is the best way to face the threat that electronic  
          cigarettes pose to young people. The California Dental  
          Association states that SBX2 5 will ensure electronic cigarettes  
          receive the same oversight and regulation as other harmful  
          tobacco products sold at the retail level. SEIU California,  
          Common Sense Kids Action, Association of Northern California  
          Oncologists , and the Medical Oncology Association of Southern  
          California state that, although California bans the sale of  
          electronic cigarettes to minors, many youth are still able to  
          access these products due to lack of oversight and enforcement.  
          The California Medical Association states that electronic  
          cigarettes should be classified as tobacco products because they  
          contain derived nicotine. 

          ARGUMENTS IN OPPOSITION:  The Smoke-Free Alternative Trade  
          Association states that enactment of SBX2 5 would shut down  
          hundreds of small business-owned vape shops throughout the  
          state, and that the existing statutory definition of electronic  
          cigarettes can achieve the public policy goals of protection of  
          children and minors. 

          Prepared by:Shannon Muir / HEALTH / 
          8/26/15 17:31:51


                                   ****  END  ****







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