Legislature(2021 - 2022)SENATE FINANCE 532
02/02/2022 01:00 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB45 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 45 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 2, 2022
1:04 p.m.
1:04:03 PM
CALL TO ORDER
Co-Chair Bishop called the Senate Finance Committee meeting
to order at 1:04 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lyman Hoffman
Senator Donny Olson
Senator Natasha von Imhof
Senator Bill Wielechowski
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Senator Gary Stevens, Sponsor; Tim Lamkin, Staff, Senator
Gary Stevens.
PRESENT VIA TELECONFERENCE
Christy Knight, Program Manager, AKHSS Tobacco Prevention
and Control, Anchorage; Joe Darnell, Chief Investigator,
AKHSS Tobacco Enforcement and Youth Education Program,
Anchorage; Emily Nenon, AK Government Relations Director,
American Cancer Society, Cancer Action Network, Anchorage;
Megan A. Boelter, Western Regional Director, Preventing
Tobacco Addiction Foundation/Tobacco 21, New Mexico; David
Hancox, RJ Reynolds, New York; Hunter Johnson, Self,
Soldotna; Wade Nelson, Self, Soldotna; Rich Marianos,
Professor, Georgetown University, Washington DC; Cody
Walker, Self, Soldotna; Steven Green, Western Director, R
Street Institute, Sacramento; Guy Bentley, Reason
Foundation, Director of Consumer Freedom, Virginia; Amanda
Wheeler, President, American Vapor Manufactures, Arizona;
Justin Hansen, Youth Encouraging Alaska Health, Kenai; Alex
McDonald, Self, Fairbanks; Jon Berrier, Vice-President,
State Government Affairs, Juul Labs, California; Shaun
D'Sylva, Member, Alaska Smoke Free Trade Association,
Anchorage; Elizabeth Hicks, Consumer Choice Center,
Detroit; Crystal Meade, Alaska Native Tribal Health
Consortium, Anchorage; Tenny Palmquist, Self, Anchorage;
Terrence Robbins, Self, Ketchikan; Lindsey Straud, Tax
Payers Alliance, Washington DC; Robin Minard, Chief
Communication Officer, Matsu Health Foundation, Wasilla;
Jay Oku, Self, California; Gregory Conley, American Vaping
Association, Medford, NJ; Kassandra Moody, Self, Soldotna;
Jesse Walton, Self, Fairbanks; Ben Rajadurai, Americans for
Tax Reform, Washington DC; Jamie Morgan, Government
Relations Regional Lead American Heart Association,
Sacramento; Adam Dotson, Self, Soldotna.
SUMMARY
SB 45 AGE FOR NICOTINE/E-CIG; TAX E-CIG.
SB 45 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 45
"An Act raising the minimum age to purchase, sell,
exchange, or possess tobacco, a product containing
nicotine, or an electronic smoking product; relating
to transporting tobacco, a product containing
nicotine, or an electronic smoking product; relating
to the taxation of electronic smoking products; and
providing for an effective date."
1:04:13 PM
SENATOR GARY STEVENS, SPONSOR, stated that electronic
cigarettes were a current trend in smoking, and was
commonly referred to as vaping. He shared that use of
traditional tobacco cigarettes was clearly on the decline,
but tobacco manufacturers had recently offered new smoking
options in the form of e-cigarettes and related devices
that were designed to appeal to a wide variety of consumers
particularly young people. He felt that as time went on,
people would become addicted to this unhealthy habit, and
therefore allowing the companies to profit off that habit.
1:05:49 PM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, discussed the
presentation, Senate Bill 45, Restricting Youth Access To
Tobacco and E-Cigarettes (copy on file). He looked at
slide 2, which outlined the different types of options for
e-cigarettes. He addressed slide 3:
5 Given Ingredients:
1. Glycerol
2. Propylene Glycol
3. Flavors
4. Nicotine
5. Benzoic Acid
Other ingredients found:
Acetaldehyde Cancer Causing
Acrolein - created by heating up glycerin, can damage
lungs and contribute to heart disease
Diacytal causes popcorn lung (bronchiolitis
obliterans)
Antifreeze
Arsenic
Benzene
Cadmium
A variety of Carcinogens
Formaldehyde
Heavy Metals: Lead, Nickel, Tin, Aluminum, Mercury
Mr. Lamkin pointed to slide 4, E-CIGARETTE AEROSOL: NOT
JUST A VAPOR:
E-cigarette juices can contain harmful and potentially
harmful ingredients, including:
Ultrafine particles that create an aerosol (not
water vapor)
Flavorents such as diacetyl, a chemical linked to
serious lung disease
Volatile organic compounds
Heavy metals, such as nickel, tin, and lead
Nicotine
Benzoic Acid in pod systems to create nicotine
salts
Mr. Lamkin pointed to slide 5, E-Cigarette Marketing:
Youth are targets of industry marketing.
While the legislation protects advertising of tobacco
products on the left, vapor product marketing is
totally unregulated.
Mr. Lamkin addressed slide 6, which showed many celebrities
glamorizing vape use. He looked at slide 7, which showed
how social media targeted young people with vape use. He
noted slide 8, which addressed how nicotine was disguised
as different flavors. He looked at slide 9, What are the
health risks of E-cigarettes?
E-cigarettes are not a quit smoking product
The Food and Drug Administration has not found any e-
cigarette to be safe or effective in helping smokers
quit.
Mr. Lamkin pointed to slide 10:
E-cigarettes help sustain the addiction to nicotine
and tobacco. "Quiting" means ending the addiction.
More than half of all adult e-cigarette users
continue to use traditional cigarettes at the same
time.
? Only 10.1 percent of the smokers who used e-
cigarettes had quit smoking after six months compared
to 26.6 percent of smokers who did not use e-
cigarettes
Mr. Lamkin discussed slide 11, 2017 Alaska Youth Risk
Behavioral Survey: Current Use Rates.
Mr. Lamkin pointed to slide 13, 1994 The "Waxman
Hearings" After 50+ years, the CEO's of the major U.S.
cigarette manufacturers appear before Congress, swearing
under oath that their products (nicotine in particular)
were neither addictive nor harmful to human health.
2007-present Industry advocates insist E-Cigarettes
are neither addictive nor harmful, that they are
safe, a healthy alternative to tobacco, and that more
time, research, and data is needed to study its
effect on human health.
Mr. Lamkin pointed to slide 14, Factors Leading to Youth
Smoking:
Youth-Appealing Flavors
Youth-Resonating Themes
Low Prices / Price Promotions
Ease of Access and Use
Exposure to Ads
Health Claims
1:14:01 PM
Co-Chair Bishop wondered whether the military had a
prohibition.
Mr. Lamkin replied in the affirmative.
Senator Olson wondered what specific diseases or tumors
were caused by vaping.
Mr. Lamkin pointed to slide 3, which had disease-causing
ingredients.
Senator Olson asked the types of cancers and other diseases
were caused by vaping.
Mr. Lamkin agreed to provide the detailed information.
Co-Chair Bishop listed those available for testimony who
could speak to the health and disease questions.
1:19:10 PM
Mr. Lamkin discussed the Sectional Analysis (copy on file):
Sec. 1: AS 11.76.100(a), relating to selling or giving
tobacco to a minor, raises the minimum age from
19 to 21.
Sec. 2: AS 11.76.100(b), relating to the requirement
for vendors to supervise the operation of tobacco
product vending machines (TVM), amends the exemption
for TVMs situated in a private
break room, provided there is signage posted
indicating the minimum age to possess tobacco
products is age 21 (from 19).
Sec. 3: AS 11.76.105, relating to possession of
tobacco, electronic smoking products (ESP), or
products containing nicotine, raises the minimum age
to possess from 19 to 21 years of age,
and removes the exemption for incarcerated minors.
Sec. 4: AS 11.76.106(a), bans tobacco and ESPs sales
to individuals over the internet.
Sec. 5: AS 11.76.106(b), relating to the 'behind the
counter' control provisions of selling tobacco
products, allowing exemptions for wholesalers, tobacco
shops or online sales, raising the
minimum, age to sell from 19 to 21 years of age.
Sec. 6: AS 11.76.109(a), relating to other products
containing nicotine, including chew, gum, patches,
or E-cigarette products, raises the minimum age to
sell or give such products from 19 to 21.
Sec. 7: AS 11.76.109(b), relating to exemptions to
selling products containing nicotine to persons
under the age of 21, if the product is FDA-approved,
prescribed by a doctor, or given by a
parent or legal guardian.
Sec. 8: AS 11.76.109(d), relating to the requirement
for vendors to supervise the operation of ESP or
nicotine product vending machines (EVM), amends the
exemption for EVMs situated in a
private break room, provided there is signage posted
indicating the minimum age to possess
tobacco products is age 21 (from 19).
Sec. 9: AS 11.76.109(g), relating to the penalty for
selling or giving ESP or nicotine products to a minor
as being a $300 violation, raises the minimum age from
19 to 21 years of age.
Sec. 10: AS 21.96.055 adds a new subsection, under
miscellaneous provisions of state insurance law,
requiring a manufacturer of ESPs sold in the state to
obtain a commercial general liability
insurance policy filed with the state Division of
Insurance in the amount of $10,000,000.
Persons having claims against an electronic smoking
product manufacturer required to file a
bond may bring suit on the bond for failure to pay a
liability described in AS 21.96.055.
Sec. 11: AS 43.50.105(b), relating to wholesale
tobacco sales and licensees, to restrict licensees
from selling or transporting tobacco products to
persons that are at least 21 (from 19) years of age,
and to implement an age verification process when
conducting transactions.
Sec. 12: AS 43.50.105(c), relating to common carrier
transportation of cigarettes and tobacco
products, to verify the age of the recipient before
delivery.
Sec. 13: AS 43.50.150(c), relating to state being in
partnership with municipalities in taxing tobacco
products, is amended to include taxing ESPs.
Sec. 14: AS 43.50.300, relating to existing state
excise tax on tobacco products, is amended to include
taxing ESPs at the same 75% of their wholesale value.
Sec. 15: AS 43.50.310(b) exempts the excise tax for
ESPs that are a marijuana product, and do not
contain nicotine, or are FDA-approved.
Sec. 16: AS 43.50.320(a), includes a requirement to be
licensed as a distributor of ESPs for those
products subject to an excise tax.
Sec. 17: AS 43.50.320, is a new subsection prohibiting
distributors from selling ESPs with flavorings,
if an ESP is not clearly packaged and labelled as a
tobacco product, and any ESP that resembles
a household or school object.
Sec. 18: AS 43.50.325 adds a new section in the tax
code, restricting the transportation of tobacco and
ESPs into the state, requiring licensing to do so, and
makes clear provisions for age verification
for delivery of and labelling for such products. This
is a conforming amendment, replicating
AS 43.50.015, which applies only to cigarettes.
Sec. 19: AS 43.50.330(a), relating to annual reporting
requirements for tax purposes, amends existing
tobacco sales reporting to include ESP reporting.
Sec. 20: AS 43.50.335, relating to existing tobacco
tax credits and refunds for faulty or destroyed
products, to include credits for similarly faulty or
destroyed ESPs.
Sec. 21: AS 43.50.340, relating to existing record
keeping requirements for licensed businesses selling
tobacco products, to also be required to track sales
and product information on ESPs being
sold.
Sec. 22: AS 43.50.350 adds an exception, described in
Section 23 below, to depositing of tax collected
into the general fund, which may be used by the
legislature to make appropriations for health
care, health research, heal promotion, and health
education.
Sec. 23 AS 43.50.350(b) adds a new subsection
directing taxes collected on ESPs to be accounted for
separately and may be appropriated by the legislature
to provide for education, programs, and
advertising related to the hazards of ESPs.
Sec. 24: AS 43.50.390(1), relating to the definition
of a distributor of tobacco products, to also include
ESPs, for purposes of identifying business who bring
ESPs in and out of state, manufactures
ESPs in the state, or ships ESPs to retailers in the
state.
Sec. 25: AS 43.50.390(5), relating to the term
"wholesale price" for purposes of taxing tobacco
products, includes ESPs as part of wholesale pricing
and taxing.
Sec. 26: AS 43.50.390 provides a definition of
"electronic smoking product" for taxing purposes, to
clarify an ESP includes all its parts, but excludes
batteries and chargers when sold separately.
Sec. 27: AS 43.70.075(f), relating to business license
endorsements for selling tobacco products,
amends the existing requirement for signage to be
posted on vendor premises, stating it being
illegal to sell tobacco or ESPs to minors under the
age of 21 (from 19).
Sec. 28: AS 43.70.075(m), relating to the process for
suspending business licensees holding a tobacco
endorsement, amends existing statute referring to
tobacco or ESPs being sold to minors under
the age of 21 (from 19).
Sec. 29: AS 43.70.075(t), relating to penalties for
licensees violating the T21 laws, amends existing
statute for lessening the penalties if a license
holder has a written tobacco or ESPs sales policy
to include employees not selling tobacco or ESPs to
minors under the age of 21 (from 19).
Sec. 30: AS 43.70.075(w), relating to the appeal and
administrative process of license suspension,
conforms existing law regarding tobacco and ESP sales,
to apply to sales to minors under the
age of 21 (from 19).
Sec. 31: AS 45.50.471(b), relating to consumer
protection and unlawful business practices, adds a new
subsection making it unlawful to market or advertise
ESPs to persons under the age of 21 in
the state.
Sec. 32: AS 47.12.030(b), relating to the juvenile
justice system, and minors accused of possessing
tobacco, confirms existing law to apply to possession
by minors under the age of 21 (from 19).
Sec. 33: AS 11.76.100(e), relating to sales exemptions
for incarcerated persons, and AS 11.76.106(b)(4),
relating to exemptions for ESP internet sales, are
both repealed.
Sec. 34: Relates to applicability of offenses
committed on or after the effective of the bill.
Sec. 35: Applies an effective date of January 1, 2022
1:22:22 PM
Senator von Imhof queried the tax effect of e-cigarettes on
the effective date.
Mr. Lamkin replied that there was an desire to amend the
effective date to 2023.
Senator Wilson wondered whether there was a tax increase,
and how it compared to the tobacco tax.
Mr. Lamkin replied that the current rate was 75 percent of
the wholesale product. He stated that how the tax was
applied was a moving target. He noted that it would put
the state at one of the highest in the country.
Senator Wilson queried the social economic class of e-
cigarette users.
Mr. Lamkin replied that the data would be presented shortly
by a presenter.
Senator Wilson assumed that it could be the highest tax
increase on a community that could least afford it, and
doubted that people would stop using because of the tax,
and rather substitute other means in order to continue to
purchase even with the tax.
Senator von Imhof looked at Section 17, and wondered
whether other states had prohibited flavorings.
Mr. Lamkin replied in the affirmative, and stated that the
Public Health Law Center had published that data.
Senator von Imhof felt that the prohibition was
prescriptive to the detail.
1:26:47 PM
Senator Wielechowski looked at Section 4, and queried the
enforcement agency for internet sales. He wondered whether
there would be a penalty on the purchaser of the product.
Mr. Lamkin replied that it was a challenge in the
discussions. He stated that the business community tended
to police itself, so the amendment would assist the
storefront that did not want the competition of the
internet.
Senator Wielechowski wondered whether there would be jobs
lost due to the increase in the age requirement for
sellers.
Mr. Lamkin replied that it was conforming language and felt
that the issue could be compared to bars who could not hire
those individuals who were not at least 21 years old.
Senator Olson queried the amount of money spent on health
care related to smoking or e-cigarettes in Alaska.
Mr. Lamkin agreed to provide that information.
Senator Olson wondered whether the bill would lower the
amount of money spent on health care related to smoking or
e-cigarettes in Alaska.
Mr. Lamkin stated that the data related to taxing the
product showed that it drove people away from the additive
behavior.
Senator von Imhof wondered whether the tax would be on both
the hardware and oils.
Mr. Lamkin replied that the approach had been difficult to
craft due to the wide variety of products. He stated that
the approach was to tax all items related to e-cigarettes.
Senator Wilson wondered how the bill would halt the after
market products. He noted that he recently was visited by a
physician who advocated for the use of e-cigarettes versus
smoking, and noted that there was a report from the FDA
that stated that e-cigarettes were an approved alternative
to smoking. He felt that there was some conflicting
information.
Mr. Lamkin replied that e-cigarettes might be safer than
smoking, but were not proven to be safe.
Senator Wilson felt that encouraging a person to use a
safer product, and tax had shown a decrease in any usage.
He wondered why there should be a decrease in the use of a
safer product.
Mr. Lamkin responded that the focus was to first enact a
policy to restrict access to help deter the beginning of
the addiction. He stressed that there was less of a focus
on the tax aspect of the proposal.
1:35:24 PM
Senator Olson stressed that he wanted to ensure that young
people did not become addicted to vaping.
Mr. Lamkin shared an anecdote, where he asked his teenage
son if he had been exposed to vaping, who said that he was
exposed when he was 12 years old after finding a vaping
product on the street.
Senator Stevens stressed that there were two issues within
the bill. He stated that the first issue was keeping the e-
cigarettes from young people. He furthered that the second
issue was taxation, and he did not have the right answer
about the exact tax level.
Senator Wielechowski surmised that Alaska did not have any
tax on e-cigarette products.
Mr. Lamkin replied in the affirmative.
Senator Wielechowski asked whether there was a federal tax
on e-cigarette products.
Mr. Lamkin agreed to provide that information.
Senator Wilson stated that he did not oppose the age
restriction in the bill.
1:40:32 PM
Co-Chair Bishop wondered whether one cartridge of an e-
cigarette was equivalent to smoking one pack of cigarettes.
Mr. Lamkin responded that it varied greatly.
1:43:41 PM
CHRISTY KNIGHT, PROGRAM MANAGER, AKHSS TOBACCO PREVENTION
AND CONTROL, ANCHORAGE (via teleconference), testified in
support of the legislation.
1:50:57 PM
Senator Wielechowski queried any research related to health
costs to the state.
Ms. Knight replied that there was no current data for
current costs to the state.
Senator Wielechowski queried the way that youth were
obtaining e-cigarettes.
Ms. Knight replied that the large majority of youth borrow
the products from older peers.
Senator Wielechowski wondered whether the bill adequately
addressed that aspect acquisition.
Ms. Knight felt that by increase the age to 21, there was
an increase in the gap between high school and those who
were legally able to purchase the products.
1:54:27 PM
JOE DARNELL, CHIEF INVESTIGATOR, AKHSS TOBACCO ENFORCEMENT
AND YOUTH EDUCATION PROGRAM, ANCHORAGE (via
teleconference), spoke in support of the legislation.
1:58:10 PM
EMILY NENON, AK GOVERNMENT RELATIONS DIRECTOR, AMERICAN
CANCER SOCIETY, CANCER ACTION NETWORK, ANCHORAGE (via
teleconference), spoke in support of the bill.
2:03:38 PM
MEGAN A. BOELTER, WESTERN REGIONAL DIRECTOR, PREVENTING
TOBACCO ADDICTION FOUNDATION/TOBACCO 21, NEW MEXICO (via
teleconference), spoke in support of the bill.
2:09:23 PM
Co-Chair Bishop OPENED public testimony.
2:09:41 PM
DAVID HANCOX, RJ REYNOLDS, NEW YORK (via teleconference),
testified against the legislation.
2:12:10 PM
HUNTER JOHNSON, SELF, SOLDOTNA (via teleconference),
testified against the legislation.
2:13:35 PM
WADE NELSON, SELF, SOLDOTNA (via teleconference), spoke to
the comments of Ms. Nenon. He spoke against the
legislation.
2:14:29 PM
RICH MARIANOS, PROFESSOR, GEORGETOWN UNIVERSITY, WASHINGTON
DC (via teleconference), spoke against the legislation.
2:16:52 PM
CODY WALKER, SELF, SOLDOTNA (via teleconference), stated
that there was no trace of formaldehyde in vape pens. He
wanted to ask about why there was legislation proposed by
ignorant people.
Co-Chair Bishop asked for a position on the legislation.
Mr. Walker stated that he was against the bill.
2:17:47 PM
STEVEN GREEN, WESTERN DIRECTOR, R STREET INSTITUTE,
SACRAMENTO (via teleconference), testified against the
bill.
2:19:38 PM
GUY BENTLEY, REASON FOUNDATION, DIRECTOR OF CONSUMER
FREEDOM, VIRGINIA (via teleconference), spoke against the
bill.
2:21:23 PM
AMANDA WHEELER, PRESIDENT, AMERICAN VAPOR MANUFACTURES,
ARIZONA (via teleconference), spoke against the bill.
2:24:14 PM
JUSTIN HANSEN, YOUTH ENCOURAGING ALASKA HEALTH, KENAI (via
teleconference), spoke in support of the bill.
2:25:13 PM
Senator Wilson requested the testimony in writing.
2:25:31 PM
ALEX MCDONALD, SELF, FAIRBANKS (via teleconference),
testified against the bill.
2:28:34 PM
JON BERRIER, VICE-PRESIDENT, STATE GOVERNMENT AFFAIRS, JUUL
LABS, CALIFORNIA (via teleconference), spoke against the
age requirement in the bill.
2:30:46 PM
SHAUN D'SYLVA, MEMBER, ALASKA SMOKE FREE TRADE ASSOCIATION,
ANCHORAGE (via teleconference), spoke against the bill.
2:33:03 PM
ELIZABETH HICKS, CONSUMER CHOICE CENTER, DETROIT (via
teleconference), spoke against the legislation.
2:35:08 PM
CRYSTAL MEADE, ALASKA NATIVE TRIBAL HEALTH CONSORTIUM,
ANCHORAGE (via teleconference), spoke in support of the
legislation.
2:36:57 PM
TENNY PALMQUIST, SELF, ANCHORAGE (via teleconference),
testified in support of the bill.
2:38:35 PM
TERRENCE ROBBINS, SELF, KETCHIKAN (via teleconference),
spoke in support of the legislation.
2:41:26 PM
LINDSEY STRAUD, TAXPAYERS ALLIANCE, WASHINGTON DC (via
teleconference), testified against the bill.
2:43:37 PM
ROBIN MINARD, CHIEF COMMUNICATION OFFICER, MATSU HEALTH
FOUNDATION, WASILLA (via teleconference), spoke in support
of the bill.
2:45:09 PM
JAY OKU, SELF, CALIFORNIA (via teleconference), testified
against the bill.
2:47:59 PM
GREGORY CONLEY, AMERICAN VAPING ASSOCIATION, MEDFORD, NJ
(via teleconference), spoke against the bill.
2:49:19 PM
KASSANDRA MOODY, SELF, SOLDOTNA (via teleconference),
testified against the bill.
2:50:05 PM
JESSE WALTON, SELF, FAIRBANKS (via teleconference), spoke
against the bill.
2:51:24 PM
BEN RAJADURAI, AMERICANS FOR TAX REFORM, WASHINGTON DC (via
teleconference), spoke against the bill.
2:52:38 PM
JAMIE MORGAN, GOVERNMENT RELATIONS REGIONAL LEAD AMERICAN
HEART ASSOCIATION, SACRAMENTO (via teleconference), spoke
in support of the bill.
2:55:22 PM
ADAM DOTSON, SELF, SOLDOTNA (via teleconference), testified
against the bill.
2:56:26 PM
Co-Chair Bishop CLOSED public testimony.
SB 45 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
2:56:44 PM
The meeting was adjourned at 2:56 p.m.