Legislature(2021 - 2022)ADAMS 519
05/05/2022 09:00 AM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| 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 |
CS FOR SENATE BILL NO. 45(FIN)
"An Act raising the minimum age to purchase, sell,
exchange, or possess tobacco, a product containing
nicotine, or an electronic smoking product; relating
to selling a tobacco product; relating to possession
of tobacco, electronic smoking products, or products
containing nicotine by a person under 21 years of age;
relating to the definition of 'nicotine'; relating to
transporting tobacco, a product containing nicotine,
or an electronic smoking product; relating to the
taxation of electronic smoking products; relating to
electronic smoking products; relating to the marketing
of electronic smoking products; relating to tobacco
products; and providing for an effective date."
9:05:52 AM
Co-Chair Merrick relayed that the committee would consider
amendments to the bill. She indicated that the bill was
previously heard on April 29, 2022. She asked if the bill
sponsor had any opening comments.
SENATOR GARY STEVENS, SPONSOR, thanked the committee for
hearing the bill. The bill addressed the danger of nicotine
addiction for children in Alaska.
9:06:44 AM
Representative Josephson MOVED to ADOPT Amendment 6.
Page 7, lines 6 - 7:
Delete "an electronic smoking product, including a
closed-system electronic smoking product"
Insert "(A) a closed-system electronic smoking
product;
(B) a vapor product sold as part of an open-system
electronic smoking product;
(C) a vapor product sold separately from a closed- or
open-system electronic smoking product"
Page 7, lines 23 - 26:
Delete all material and insert:
"( c) In this section,
(1) "closed-system electronic smoking product" means a
nonrefillable electronic smoking product;
(2)"open-system electronic smoking product" means a
refillable electronic smoking product."
Page 8, line 9:
Delete "solely"
Page 8, line 11:
Delete "only
Page 12, line 24, following "a":
Insert "(i)"
Page 12, lines 27 - 28:
Delete "a substance intended to be aerosolized or
vaporized during use of the device"
Insert "(ii) vapor product"
Page 12, line 29:
Delete "battery or battery charger"
Insert "(i) battery, battery charger, or mouthpiece"
Page 12, following line 30:
Insert a new sub-subparagraph to read:_
"(ii) cartridge, pod, tank, or similar container when
sold
empty;"
Page 12, line 31, following "AS l l.81.900(b)":
Insert";
(8) "vapor product" means a substance intended to be
aerosolized or vaporized during the use of an
electronic smoking product"
22 Page 18, line 3:
23 Delete "July 1"
24 Insert "January 1"
Representative LeBon OBJECTED for discussion.
Representative Josephson explained the amendment. He
delineated that the amendment defined closed and open vape
systems and taxed the closed system entirely as a unit
targeting disposable pens and puff bars. The proposal
taxed only the liquid inside of a vape product and not the
hardware associated with the item. Specific to open systems
the provision excluded batteries, chargers, empty tanks,
pods, and cartridges. The amendment attempted to carve out
marijuana products more clearly and made the effective date
the following year to comply with federal law.
Co-Chair Merrick indicated that Representative Rasmussen
had joined the meeting.
9:08:19 AM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, summarized the
amendment. He provided the definitions. He explained that
the most common device resembled a pen, and its components
could not be accessed. It was the most commonly bought, the
most popular product, and was designed to be puffed on and
disposed of. The bill considered the system as a closed
system, and the entire unit would be taxed. He noted that
to do otherwise would require someone to apportion the
value of the vape liquid. It was common in other states to
include the definition of closed systems as such a unit.
There were also open systems where accessories and hardware
could be swapped out including batteries, cartridges, and
pods and tanks that held the vape fluid. He wanted to hold
the hardware harmless without a tax. The juice put in the
tank was targeted for the tax.
9:10:38 AM
Representative Wool asked if a person bought a starter kit
with all of the components in one box would the entire box
be taxed. Mr. Lamkin answered that the purpose was to
target the liquid with the tax. He clarified that the item
he was holding was an actual vape pen he purchased for $1.
Representative Wool asked if the proposal was to tax at the
wholesale level. Mr. Lamkin replied in the affirmative.
Representative Wool clarified that if there were three
components in the kit the value of the nicotine component
could be extracted and taxed accordingly. Mr. Lamkin
responded in the affirmative. Representative Wool asked if
the percentage of nicotine had no bearing on the tax.
Therefore, a zero nicotine vape would be taxed. Mr. Lamkin
answered in the affirmative. He elaborated that even if the
products specified it contained no nicotine typically, it
did contain trace amounts of nicotine as the very fine
print on the product informed the consumer. He added that
when tested it was typical to detect nicotine in non-
nicotine vape liquid.
9:14:02 AM
Representative Rasmussen stated it appeared there were
products specifically for cessation with no nicotine or
marijuana products added to the liquid. She asked whether
those products would also be taxed at 45 percent. Mr.
Lamkin answered that as the bill was currently written it
did not matter what was in the device it would be taxed.
The bill was targeted for children and the goal was to
prevent youth from developing a smoking habit.
Representative Rasmussen asked if there was a benefit for a
parent to have access to a cessation vaping device. She
thought that cessation devices should be available for
parents that vape if the goal was to deter children from
vaping. She asked if her reasoning was accurate. Mr. Lamkin
was not sure he tracked the question. He stated that what
people did in their own homes was their own business and
what parents did with their children was their business.
The bill merely put a policy in place that acknowledged the
harm from smoking and attempted to deter the habit.
9:16:29 AM
Representative Josephson asked for the cost of a typical
closed system unit. Mr. Lamkin replied that the cost was a
moving target and difficult to determine due to the
variety of products. He observed that a closed system could
range from $10 to $22 retail.
Co-Chair Merrick noted Representative Edgmon had joined the
meeting.
Representative Josephson asked what the cost of an open
system was. Mr. Lamkin answered that broadly speaking the
devices cost in the range of $40 to $150. The costlier
units could be modified for other products and were known
as mods.
Representative Josephson discussed carving out the tax for
the devices. He asked whether the motivation for the carve
out was to not affect the cost associated with marijuana.
Mr. Lamkin answered that the statement was not inaccurate.
He elaborated that it had been negotiated with the industry
to hold harmless the products not directly related to the
liquid that was consumed. The liquid entering the lungs was
the target for the tax.
9:19:09 AM
Representative Josephson deduced that the carve out was a
policy call. Mr. Lamkin agreed. He offered that many other
states taxed everything.
Vice-Chair Ortiz understood that the closed system was for
one-time use and was discarded. He asked for confirmation.
Mr. Lamkin responded in the affirmative. Vice-Chair Ortiz
asked if the sponsor agreed with Amendment 6. Mr. Lamkin
responded in the affirmative.
Representative LeBon withdrew his OBJECTION.
There being NO further OBJECTION, Amendment 6 was ADOPTED.
9:20:33 AM
Representative Wool MOVED to ADOPT Amendment 1
Page 1, line 4:
Delete "a person under 21 years of age"
Insert "an underaged person"
Page 1, lines 11 - 12:
Delete "a person under 21 years of age ["
Insert "an underaged person [A"
Page 2, line 4:
Delete "21"
Insert "18"
Page 2, line 25:
Delete "21"
Insert "18"
Page 2, line 29:
Delete "21"
Insert "18"
Page 2, line 30:
Delete "21"
Insert "18" Page 3, line 6:
Delete "21"
Insert "18"
Page 3, line 20:
Delete "21"
Insert "18"
Page 3, line 21:
Delete "$300"
Insert "$50"
Page 4, line 9:
Delete "a person under 21 years of age["
Insert "an underaged person [A"
Page 4, line 14:
Delete "21"
Insert "18"
Page 4, line 23:
Delete "to a person under 21 [19] years of age"
Insert "[TO A PERSON UNDER 19 YEARS OF AGE]"
Page 5, line 20:
Delete "21"
Insert "18"
Delete "AS 11.76.109"
Insert "AS 11.76.105 [AS 11.76.109]
Page 5, line 23:
Delete "a person under 21 years of age["
Insert "an underaged person [A"
Page 16, line 27:
Delete "21"
Insert "18"
Representative Josephson OBJECTED for discussion.
Representative Wool explained the amendment. He related
that the amendment bifurcated different ages. The ages of
18 to 21 was adulthood and the bill was targeting children.
The amendment prohibited individuals between the ages of 18
to 21 from purchasing tobacco products and vendors from
selling to those 18 to 21 years of age. However, the
amendment allowed individuals in that age bracket to
possess the products. He indicated that Amendment 1
originated with federal law. He ascertained that the
federal law only applied to sale and purchase, but not
possession. He referred to a federal law that was part of
an appropriation bill called T 21 that only dealt with
sale and purchase and not possession. He emphasized that it
would be illegal to purchase or sell to those 18 to 21
years of age, but possession would be legal. He strongly
believed that at the age of 18 years one could join the
military, marry, purchase a gun, etc. He contended that
there was hypocrisy in the law regarding adulthood. He
believed that individuals under the age of 18 should not
possess tobacco products. The amendment also reduced the
fine to $50 for possession of tobacco under the age of 18.
He deemed that the amount was more reasonable for kids
versus the current $300 fine. He reasoned that smoking was
prohibited almost everywhere and was not tolerated in
schools at all. He guessed that children caught smoking
were rarely fined. He relayed that the military was not
enforcing possession of tobacco for members aged 18 or
older.
9:25:33 AM
Representative Josephson asked for the sponsor's position
on the amendment.
Mr. Lamkin indicated that Amendment 1 did not reference a
fine or penalty and only appeared to pertain to age.
Co-Chair Merrick pointed to the amendments reference of the
fine on page 2, lines 11 and 12.
Mr. Lamkin answered that in regard to age there were
purchase, use, and possession (PUP) laws in 36 states that
restricted tobacco use to 21 years old. He elaborated that
the federal government via former President Trump signed
into law the prohibition on purchase and sales but was
silent on possession. The military acknowledged that troops
were not healthy and were failing physical training. The
policy on bases was that healthy troops was a healthy force
to defend the country. He noted that municipalities,
schools, and parents were prohibiting possession and use.
He believed that by adopting the amendment the state was
turning its back on all who objected by endorsing tobacco
use. He delineated that regarding the penalty, currently in
statute the penalty was $500 with a mandatory court
appearance. The bill proposed to reduce the fine to $300
for underage sale and possession. In addition, SB 45
created a new bail schedule and made the court appearance
voluntary. He noted that the legislation made it like a
traffic ticket, where a person could appear in court and
explain the situation with the expectation of a reduced
fine. He recalled that some of the vaping devices exceeded
$100 in value. He opined that a penalty of $300 seemed
reasonable to make it meaningful to the offender.
9:29:45 AM
Representative Josephson stated the amendment would allow
18 year old individuals to possess tobacco products. He
thought many aged 18 were seniors in high school. He asked
if that was a concern. Mr. Lamkin pointed out that standing
school policy prohibited tobacco products at schools. He
shared from personal experience that his daughter at the
age of 19 had seen the products in school and his 14 year
old son had seen the products in sixth grade on the school
bus in the past and others had relayed stories of tobacco
products associated with third grade students. He deemed
that since 18 year old students were still in school the
amendment opened the door to negative consequences. He did
not support the amendment.
9:31:11 AM
Representative Josephson MOVED to AMEND Amendment 1 to
increase the fine from $50 to $150.
Co-Chair Merrick restated the conceptual amendment as
follows: Conceptual Amendment 1 amended Amendment 1 on page
2, line 12, to delete $300 and insert $150. Representative
Josephson concurred with her account of Conceptual
Amendment 1.
Representative Wool OBJECTED.
Representative Wool contended that studies had shown that a
fine did not make a difference and impacted low income
families more. He referred to Mr. Lamkins statements
regarding finding vape products in third grade. He
questioned if the $500 fine was currently working. He
asserted that what worked was educating the public. He
believed that more fines would be issued at $50. He wanted
to discourage smoking and vaping and make the fine
reasonable. He contended that fines were not issued at
schools. The tobacco product or vape device was
confiscated, and the student could be expelled. He thought
that was a more serious penalty and schools had a big
hammer when dealing with the issue. He favored the schools
measures. He averred that fines were ineffective and vaping
devices were still in schools regardless of the $500 fine.
He stressed that schools had more effective tools to deal
with tobacco use. He believed curtailing use was paramount
but maintained that fines were ineffective at achieving the
outcome.
Vice-Chair Ortiz cited the discussion pertaining to the
case that 18 year olds were seniors in high school. He
asked the amendment sponsor if he would consider amending
the age to 19 from 18.
Co-Chair Merrick clarified that Conceptual Amendment 1 only
changed the fine. She wanted to confine the conceptual
amendment to the fine.
Representative Wool commented that Representative Josephson
had another amendment that reduced the fine to $100 and
felt that the amount was a moving target.
Representative Josephson provided wrap up on Conceptual
Amendment 1. He noted that his two other amendments not yet
offered, reduced the fine by two amounts to $100 and $200
and stated that his Conceptual Amendment 1 met his
amendments in the middle. He indicated that Representative
Wool stated the amendments increased penalties. He
countered that the conceptual amendment decreased the
penalty by more than 300 percent versus the current $500
fine. Representative Wool's proposal reduced the fine by
1000 percent. He believed that his conceptual amendment was
generous enough. He agreed with Mr. Lamkin's thesis that
some people were aware of authority and attempted to abide
by it and a fine would have an effect.
Representative Johnson asked if it would be out of line to
offer Vice-Chair Ortizs conceptual amendment that changed
the age from 18 to 19.
Co-Chair Merrick clarified that Conceptual Amendment 1
decreased the amount of the fine and she preferred to
restrict it to that topic.
Representative Wool maintained his objection.
A roll call vote was taken on the motion.
IN FAVOR: Carpenter, Josephson, Ortiz, Rasmussen, Foster,
Merrick
OPPOSED: Wool, Edgmon, Johnson, LeBon, Thompson
The MOTION PASSED (6/5).
9:39:18 AM
Representative Johnson offered Conceptual Amendment 2 to
Amendment 1 to change from the legal age of possession from
18 to 19 years of age.
Representative Johnson deduced that most students in grade
12 were 18 years of age or younger. She believed that the
age increase would further protect students in school.
Representative Wool OBJECTED.
Representative Wool voiced that there should be some value
to being 18 years old. He reasoned that 18 year old
students would not be prohibited from voting because they
were still in school. He firmly believed that there should
be some sanctity in being 18. He reiterated that vaping
was still highly prohibited in schools. He noted that
adults 21 and over were prohibited from smoking in many
places even though it was legal. He reminded the committee
that sale and purchase would still be illegal.
Co-Chair Merrick asked Mr. Lamkin what was in current
statute regarding the issue. Mr. Lamkin answered that
presently the age was 19.
Representative Wool maintained his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Johnson, Josephson, LeBon, Ortiz, Rasmussen,
Thompson, Carpenter, Merrick, Foster
OPPOSED: Edgmon, Wool,
The MOTION PASSED (9/2).
9:42:52 AM
Representative Wool recounted that Amendment 1 was amended
to increase the fine to $150 from $50 and increase the age
of possession to 19 from 18 years of age. He still wanted
to move amendment 1.
Co-Chair Merrick asked if it was 19 and over or over 19
years of age.
Representative Wool replied that from the ages of zero to
18 possession was illegal and at the ages of 19 and 20
possession was legal.
Co-Chair Merrick wanted to clarify that the legal age was
19 and over.
Representative Rasmussen thought it was a reasonable
compromise and she supported the amendment. She respected
those who served the country at age 18. She noted that her
son would be 18 for most of his senior year and believed
that 19 was much more appropriate when attempting to keep
vaping out of high school.
Representative LeBon asked if the bill sponsor supported
the amendment.
Senator Stevens related that the issue had been very tough
on teachers. He agreed with changing it to 19 and thought
that would help control use in school. He was fine with the
compromise.
Representative Wool provided wrap-up comments. He
appreciated the approval of the bills sponsor.
Representative Josephson withdrew the objection.
There being NO further OBJECTION, Amendment 1 was adopted
as amended.
9:44:55 AM
Representative Josephson WITHDREW Amendment 2 and Amendment
3.
Representative Rasmussen MOVED to ADOPT Amendment 4.
Page 7, line 30:
Delete "or"
Page 8, lines 1 - 2:
Delete all material.
Reletter the following subparagraphs accordingly.
Page 8, lines 10 - 13:
Delete "or marijuana products and intended for sale
only in a retail marijuana store; in this
subparagraph, "marijuana," "marijuana products," and
"retail marijuana store" have the meanings given in AS
17.38.900"
Insert ", marijuana products, hemp, or hemp products;
for purposes of meeting the requirements of this
subparagraph, the department shall accept a notarized
affidavit from the seller attesting to the intended
use of the product; or
I 6 (3) marijuana, marijuana products, hemp, or hemp
products if the marijuana, marijuana product, hemp, or
hemp product does not contain nicotine"
Page 8, following line 13:
Insert a new bill section to read:
22 "* Sec. 17. AS 43.50.310 is amended by adding a new
subsection to read:
(c) In this section,
(1) "hemp" and "hemp products" means hemp or a hemp
product
produced by an individual registered under AS
03.05.076;
(2) "marijuana" and "marijuana products" have the
meanings given in
AS 17.38.900."
Renumber the following bill sections accordingly.
Page 11 , following line 5:
Insert a new bill section to read:
"* Sec. 22. AS 43.50.330 is amended by adding a new
subsection to read:
(c) A licensee is not required to file a return under
this section if the licensee
(1) either
(A) sells only products exempt under AS 43.50.31 0(b)
(2)(C) or
(b)(3) from the tax under this chapter; or
(B) is an individual registered under AS 03.05.076;
and
(2) provides a notarized affidavit attesting to the
licensee's qualification under ( l) of this
subsection."
Renumber the following bill sections accordingly.
Page 17, line 28:
Delete "sec. 19"
Insert "sec. 20"
Page 17, line 29:
Delete "sec. 33"
Insert "sec. 35"
Representative Josephson OBJECTED for discussion.
Representative Rasmussen explained the amendment. She read
from a prepared statement. She indicated that Amendment 4
was offered to help clarify the bill and help protect
Alaskas young and growing cannabis and hemp industries.
She understood that SB 45 was offered to help prevent
children from using and getting addicted to vape devices.
She also learned that the vape devices relied on nicotine
and that was the target of the bill. The bill seemed to be
written broadly and it was unclear if the intent was to tax
all vape products including those using cannabis,
cannabidiol (CBD), and cessation only products. She favored
taxing nicotine but the way the bill was currently drafted
it encapsulated all vaping products. The amendment relied
on AS 17.38.900 to define marijuana and marijuana products
and references from the Department of Natural Resources
(DNR) industrial hemp program. The bill attempted to
protect marijuana in some provisions, but after consulting
with stakeholders, she believed that SB 45 left the door
open for taxation of CBD and other non-THC
[Tetrahydrocannabinol (THC)] derivatives of hemp. She added
that the committee previously heard the amendment that
protected the devices and Replacement Amendment 4 pertained
to the vape substance. She asked for the members support.
9:48:39 AM
Representative Josephson asked for the opinion of the bill
sponsor and staff.
Mr. Lamkin answered that page 1 of the amendment reflected
the negotiation with the growing hemp industry. He
cautioned that CBD and hemp oil was typically something
that was applied as a lotion or ingested. He indicated that
had research in the form of a Consumer Alert from the
Department of Law (DOL) warning against the unregulated use
of CBD oil when inhaling the substances. Currently data was
sparse, but there were many warnings about inhaling CBD
oil. He agreed with page 1 and considered it reasonable. He
added that it was currently popular to combine CBD oil with
nicotine in an aerosolized form, but severe lung damage had
been observed. He opined that as long as the product did
not contain nicotine and until use was discovered to be
harmful, he agreed with the provision. However, page 2
introduced a new Section 22, and the language had not been
negotiated. He shared his interpretation with Legislative
Legal and it agreed that the language exempted sellers from
filing monthly returns who were licensed to sell tobacco
and other tobacco products if they were selling their
products only to marijuana stores. The language was found
on page 2, line 13. He furthered that if a seller sold to
both a marijuana store and nicotine vape shop the seller
would be exempt from taxation of those products. He
contended that it would substantially undermine the bill
and the purpose of the legislation. He referenced 18 local
communities in Alaska that taxed e-cigarettes and the
filings were already occurring. He maintained that it was
not overly onerous for sellers to copy and paste their
reports they submitted locally to also submit them to the
state.
9:52:27 AM
NICOLE REYNOLDS, DEPUTY DIRECTOR, TAX DIVISION, DEPARTMENT
OF REVENUE (via teleconference), asked for the question to
be repeated.
Co-Chair Merrick complied with the request. She asked if
complying with the law to file the monthly reports was
burdensome.
Mr. Lamkin interjected and clarified that page 2 of
Amendment 4 , Section 22 pertained to instances where
licensees under tobacco products who only sold to marijuana
stores were exempt. However, if sellers sold to both a
marijuana store and a shop selling nicotine the provision
created an incentive for licensees to sell both marijuana
and nicotine products and be exempt from filing.
Ms. Reynolds answered that the department had not seen the
amendment prior to the current morning and needed
additional time to analyze it pertaining to filing a
report. She offered to provide the answer to the committee.
9:54:42 AM
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SARAH RASMUSSEN,
explained that the intent behind the amendment was to hold
the marijuana and hemp industry harmless. She offered to
circle back with industry and Legislative Legal Services to
determine whether the language did what she believed it
would accomplish or aligned with the sponsors
interpretation.
Co-Chair Merrick agreed with the action and thought that it
was prudent.
Representative Wool asked if Ms. Koeneman was referring to
the marijuana industry. Ms. Koeneman answered in the
affirmative. Representative Wool asked whether Ms. Koeneman
was involved in the marijuana industry. Ms. Koeneman
answered that she was not. Her husband was in the marijuana
industry, but she had no connection to the business.
Representative Wool deduced that a vape hemp product
without THC could be sold at a vape store. The goal was to
discourage the act of vaping and puffing on any substance
mimicked vaping. He wondered if a hemp product with zero
THC and no nicotine that was sold at a vape store would be
taxed as a tobacco related product.
Co-Chair Merrick indicated that Ms. Koeneman offered to
verify the information and report her findings to the
committee.
Representative Rasmussen WITHDREW her motion to adopt
Amendment 4.
Co-Chair Merrick reviewed the agenda for the afternoon
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 45 Public Testimony Rec'd by 050422.pdf |
HFIN 5/5/2022 9:00:00 AM |
SB 45 |
| SB 45 Amendments 1-5 050522.pdf |
HFIN 5/5/2022 9:00:00 AM |
SB 45 |
| SB 45 Amendment 6. Josephson 050522.pdf |
HFIN 5/5/2022 9:00:00 AM |
SB 45 |