BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON
          BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
                              Senator Jerry Hill, Chair
                                2015 - 2016  Regular 

          Bill No:            SB 1470         Hearing Date:    April 11,  
          2016
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          |Author:   |Wieckowski                                            |
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          |Version:  |February 19, 2016                                     |
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          |Urgency:  |No                     |Fiscal:    |No               |
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          |Consultant|Mark Mendoza                                          |
          |:         |                                                      |
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                                  Subject:  Tobacco


          SUMMARY:  Revises a definitional requirement of "tobacco store" to  
          indicate that a retail business primarily sells tobacco products  
          and tobacco paraphernalia.

          Existing law:
          
          1) Defines a "tobacco store", under the Stop Tobacco Access to  
             Kids Enforcement Act, as a retail business that meets the  
             following requirements:   (Business and Professions Code  
             (BPC) § 22962(4)(A))

             a)   Primarily sells tobacco products.

             b)   Generates more than 60 percent of its gross revenues  
               annually from the sale of tobacco products and tobacco  
               paraphernalia.

             c)   Does not permit any person under 18 years of age to be  
               present or enter the premises at any time, unless  
               accompanied by the person's parent or legal guardian, as  
               defined in Family Code § 6903.

             d)   Does not sell alcoholic beverages or food for  
               consumption on the premises.  

          2) Establishes the Cigarette and Tobacco Products Licensing Act,  







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             which outlines the licensing requirements on all retailers,  
             wholesalers, and distributors of cigarettes and tobacco  
             products, and all manufacturers and importers of cigarettes. 
          (BPC § 22970 et seq.)

          3) Requires the State 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.  (BPC § 22970.2)

          4) Defines "retail location" as both any building from which  
             cigarettes or tobacco products are sold at retail and a  
             vending machine.  (BPC § 22971(q))

          5) 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.  (BPC § 22973(7)(d))

          6) Prohibits selling tobacco products without a valid license,  
             and makes violations punishable as a misdemeanor.  (BPC §  
             22980.2; 22981)

          This bill:  Revises a definitional requirement of "tobacco  
          store" to indicate that a retail business primarily sells  
          tobacco products and tobacco paraphernalia.


          FISCAL  
          EFFECT:  None.  This bill is not keyed fiscal by Legislative  
          Counsel.   


          COMMENTS:
          
          1. Purpose.  The  Author  is the sponsor of the bill.  According  
             to the Author, "SB 1470 is a companion bill to SB 1400. With  
             this in mind, this bill seeks to build on SB 1400 to further  
             specify where tobacco products can be purchased."

          2. Background.  While California boasts the second-lowest  
             smoking rate in the nation, tobacco-related diseases still  
             claim the lives of 40,000 Californians every year.  The state  








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             has worked successfully to discourage people from smoking;  
             however, tobacco products are easily available in a gas  
             station or grocery store. Unlike tobacco shops, there are no  
             age restrictions on entering a gas station or grocery store.   
             Consequently, tobacco products sold in these stores are  
             visible and easily available to minors to purchase.  Tobacco  
             advertising is also commonplace at many retail locations. 

             A 2004 Stanford University study found that cigarettes are  
             marketed more heavily in stores where adolescents shop -  
             particularly the cigarette brands most popular with  
             adolescent smokers.  The report underscores that, "Compared  
             to other stores in the same community, stores popular among  
             adolescents displayed more than three times as many cigarette  
             marketing materials outside, and contained almost three times  
             more marketing materials and twice as much shelf space for  
             Marlboro, Camel, and Newport.  These three brands account for  
             more than 80% of the cigarettes bought by US adolescents."

          3. License for Retailers.  Through  AB 71  (Jerome Horton, Chapter  
             890, Statutes of 2003), the State of California enacted the  
             Cigarette and Tobacco Products Licensing Act, which  
             established a statewide licensing program under the Business  
             and Professions Code (BPC § 22970 et seq.).  The Act imposed  
             licensing requirements on all retailers, wholesalers, and  
             distributors of cigarettes and tobacco products, and all  
             manufacturers and importers of cigarettes.  These licensing  
             requirements are in addition to the permits and licenses that  
             may be required depending on the individual's business  
             operations.  The Act, intended to decrease tax evasion on the  
             sales of cigarettes and tobacco products in California, also  
             included provisions for new recordkeeping requirements,  
             inspection and seizure of any untaxed cigarettes or tobacco  
             products, and imposed civil and criminal penalties for  
             violations.

             Every retailer who sells or will sell cigarettes or tobacco  
             products in California is required to obtain a retailer's  
             license from the BOE.  An individual must obtain a license  
             for each retail location they own or operate.  For example,  
             if a person operates several different stores, which each  
             sell cigarettes or tobacco products, they must obtain a  
             separate license for each store location.  However, a person  
             may submit a single application for multiple licenses, and  








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             include $100 for each location's license (BPC § 22972 (a)).   
             The license is valid for one year and must be renewed  
             annually.  There is no additional charge to renew a license. 

             There are severe penalties of up to $5,000, or up to one year  
             imprisonment in the county jail, or both the fine and  
             imprisonment if an individual is caught selling cigarettes or  
             tobacco products without a license (BPC § 22972(a);  
             22980.1(h); 22981).

          4. Tobacco Products Banned from Pharmacies.  In 2008, San  
             Francisco became the first city in the United States to ban  
             the sale of tobacco products from retail pharmacies.  The  
             Author reports that San Francisco has "since expanded the law  
             to apply to all stores containing pharmacies, such as Costco.  
              One hundred six cities have since joined San Francisco in  
             passing tobacco-free pharmacy laws."
          
             Additionally, CVS has announced that it will ban tobacco  
             products from all of its stores. 
          
          5. The Potential Impacts of Expanding the Definition of "Tobacco  
             Store".  As mentioned in the analysis for SB 1400  
             (Wieckowski) of 2016, SB 1400 would prohibit retailers from  
             selling cigarettes and tobacco products in retail locations  
             by revising the definition of "retail location" to mirror  
             that of "tobacco store".  This bill builds on that measure  
             and further limits the sale of tobacco paraphernalia.  SB  
             1400 (Wieckowski) and this measure are meant to complement  
             each other. 
               
          6. Related and Prior Legislation.   SB 1400  (Wieckowski) of 2016  
             recasts the definition of "retail location" as a tobacco  
             store that is a retail business that, among other things,  
             generates more than 60% of its gross revenues annually from  
             the sale of tobacco products and tobacco paraphernalia.   
             (  Status:   This bill is currently set to be heard in this  
             committee on April 11, 2016.) 
           
               SBX2 - 5  (Leno) of 2015 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  








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             for manufacturers, importers, distributors, wholesalers, and  
             retailers of tobacco products to electronic cigarettes; and  
             requires electronic cigarette cartridges to be  
             child-resistant.  (  Status:   This bill is currently in  
             engrossing and enrolling, pending the Governor's signature.)

              SB X2 - 7  (Hernandez) of 2015 increases the minimum legal age  
             to purchase or consume tobacco from 18 to 21 and makes  
             additional conforming changes to restrictions and enforcement  
             mechanisms in current law.  (  Status:   This bill is currently  
             in engrossing and enrolling, pending the Governor's  
             signature.)

              SB X2 - 10  (Beall) of 2015 revised the Cigarette and Tobacco  
             Products Licensing Act of 2003 to change the retailer license  
             fee from a $100 one-time fee to a $265 annual fee, and  
             increased the distributor and wholesaler license fee from  
             $1,000 to $1,200.  (  Status:   This bill was held at the  
             Assembly desk.)

              SB 24  (Hill) of 2015 would have classified electronic  
             cigarettes separately from tobacco products, added electronic  
             cigarettes to the Stop Tobacco Access to Kids Enforcement  
             Act, and smoking location prohibitions, and mandated  
             childproof packaging for e-liquid used in electronic  
             cigarettes.   (  Status:   This bill was ultimately amended to  
             deal with the California Public Employees' Pension Reform Act  
             of 2013.)  

              ABX2 - 6  (Cooper) of 2015 defined the term smoking for  
             purposes of the Stop Tobacco Access to Kids Enforcement Act,  
             expanded the definition of a tobacco product to include  
             electronic cigarettes (e-cigarettes), and extended current  
             restrictions and prohibitions against the use of tobacco  
             products to electronic cigarettes.  The bill further extended  
             current licensing requirements for manufacturers, importers,  
             distributors, wholesalers, and retailers of tobacco products  
             to electronic cigarettes.  (  Status:   This bill was never  
             heard on the Assembly Floor.)
              
             AB 1500  (Dickinson) of 2014 would have prohibited a delivery  
             seller, as defined, from selling or delivering an electronic  
             cigarette to a person under 18 years of age . (  Status  AB  
             1500 failed passage in the Assembly Appropriations  








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             Committee.)
              
             SB 568  (Steinberg, Chapter 336, Statues of 2013) prohibits an  
             operator of an Internet Web site, online service, online  
             application, or mobile application, as specified, from  
             marketing or advertising electronic cigarettes to a minor.
              
             SB 648  (Corbett) of 2013 would have restricted electronic  
             cigarettes from being sold in vending machines.  (  Status:   SB  
             648 failed passage in the Assembly Appropriations Committee.)
              
             SB 882  (Corbett, Chapter 312, Statutes of 2010) made it  
             unlawful, to the extent not preempted by federal law, for a  
             person to sell or otherwise furnish an electronic cigarette  
             to a person less than 18 years of age.
              
             SJR 8  (Corbett) of 2009 would have requested that the FDA  
             prohibit sale of electronic cigarettes until they are deemed  
             safe.  (  Status:   SJR8 failed passage in the Assembly.)
          
          SUPPORT AND OPPOSITION:
          
          Support:  

           None on file as of April 4, 2016.

           Opposition:  

          None on file as of April 4, 2016.

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