Legislature(2021 - 2022)ADAMS 519
05/05/2022 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB45 | |
| SB173 | |
| SB131 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 131 | TELECONFERENCED | |
| + | SB 173 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 45 | 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."
1:48:02 PM
Co-Chair Merrick relayed that the meeting would continue
consideration of amendments to SB 45. [Secretary Note: The
amendments were also considered during the morning meeting,
05/05/22 9:00 A.M.]
Representative Rasmussen MOVED to ADOPT Amendment 4
Replacement, 32-LS0311\D.16 (Nauman, 5/5/22)(copy on file):
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 (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:
"* Sec. 17. AS 43.50.310 is amended by adding a new
subsection to read:
(c) In this section,
(1) "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
43.50.310(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 (1) 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 Wool OBJECTED.
Representative Rasmussen asked her staff and the bill
sponsor's staff to explain the changes in the new
amendment.
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SARAH RASMUSSEN,
explained the amendment. She explained that the amendment
exempted marijuana, marijuana products, hemp, and hemp
products from the tax. The original language in Amendment 4
created an unintended loophole for industrial hemp license
holders operating another business and they would not be
subject to the tax. She clarified that was not the
sponsors intention and assured the committee that any
nicotine and other taxable products outside of marijuana
and hemp were subject to the tax. She shared that the
sponsor worked with Mr. Lamkin to correct the issue.
Representative Rasmussen asked to hear comments from the
bill sponsor's staff.
1:49:59 PM
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, answered that the
amendment had been negotiated for a specific carve out for
the hemp industry. He communicated that the hemp industry
was in its inception and the sponsor wanted to let the
program grow before considering taxing its products. He
pointed to page 2, line 15 of the amendment that reads:
(B) is an individual registered under AS 03.05.076;
Mr. Lamkin cautioned that someone that had a tobacco
endorsement and was registered as a hemp grower could still
be exempted from the tax. He recommended conceptually
striking line 15.
Representative Rasmussen moved Conceptual Amendment 1 to
Amendment 4 Replacement to delete line 15 on page 2.
Representative Wool OBJECTED for discussion.
Representative Wool stated his understanding of the
conceptual amendment. He thought it seemed strange that
someone with an industrial hemp license would also operate
a retail store selling tobacco products.
1:52:54 PM
Mr. Lamkin answered that he could not imagine that a hemp
farmer would open a shop on their farm. He exemplified a
retailer of tobacco, vape, and hemp products in an urban
center who could also own a hemp farm in Delta Junction. He
clarified that line 15 indicates that a registered hemp
grower was exempted from paying taxes on products at their
vape shop.
Representative Wool WITHDREW his OBJECTION. There being NO
further OBJECTION, conceptual Amendment 1 to Amendment 4
Replacement was ADOPTED.
Representative Josephson asked what was lost by the removal
of the language retail marijuana store from subsection
(d) on page 2, line 18 to 19 from the original Amendment 4:
(d) In this section, retail marijuana store has the
meaning given in AS17.38.900.
Mr. Lamkin replied that elimination of the subsection
removed the potential loopholes where if someone only sold
to marijuana stores, they would be exempt and removed the
incentive for retailers to sell both nicotine products and
cannabis.
Representative Wool recalled that when marijuana was first
legalized in the state, a marijuana shop could not sell
Cannabidiol (CBD) oil because they lacked the proper
license, but a grocery store could. He was uncertain what
marijuana stores could sell and if that included selling
tobacco with a proper license.
1:55:14 PM
Mr. Lamkin answered that he was not a student of the
marijuana statutes. He indicated that the amendment
clarified that if something like Representative Wools
example happened the products would not automatically be
exempt from the tax. Representative Wool referenced CBD
oil. He was previously unaware that there was a vape
product without THC. He asked if the amendment meant the
item was exempt from the tobacco tax and the marijuana tax.
Mr. Lamkin answered it was correct provided it did not also
contain nicotine. He stated that once a product contained
nicotine it triggered the tax. Representative Wool recalled
that in an earlier discussion vape liquid that did not
contain nicotine was taxed as a tobacco product because the
action of vaping mimics how tobacco products were consumed
and could lead to consuming tobacco. He voiced that he did
not object to taxing all vape liquid. He thought the
amendment seemed contradictory to an earlier statement.
1:58:05 PM
Mr. Lamkin clarified that if products were approved by the
Food and Drug Administration (FDA) for a therapeutic
purpose such as cessation they would be exempt from the
bill. He deduced that certain CBD products might fall
under the FDA exemption. He added that the research
strongly suggested that when products claimed not to
contain nicotine, when tested they found nicotine in
varying amounts. He qualified that the hemp and CBD carve
out did not imply that consuming the products was safe. He
relayed that a consumer alert and some growing research
questioned their safety and whether it was safe or not was
not known. The carve out was merely a negotiated
concession.
Ms. Koeneman pointed to a definition for hemp and hemp
products at the top of page 2 of the amendment. She
explained that it applied to products that were registered
under the current hemp statute AS 03.05.076 and would
remove products containing nicotine or other substances.
She elaborated that one of the main reasons people used CBD
was for medical ailments including seizures, anxiety, and
other issues. She understood unknown health or safety
reasons regarding CBD but there were medical reasons for
its use. She thought that many times the risk of CBD was
offset by the benefit provided to patients.
2:00:39 PM
Co-Chair Merrick interjected that there was a request for
the department to comment.
DAVID SCHADE, DIRECTOR, DIVISION OF AGRICULTURE, DEPARTMENT
OF NATURAL RESOURCES (via teleconference), clarified that
three types of industrial hemp registrations existed under
the program: producer, manufacturer, and retail sale
registrations. He elaborated that the definition in the
amendment referred to hemp or hemp products produced under
AS 03.05.076. He delineated that the problem with the
language was that it did not contemplate the fact that what
was done to ensure product safety was via an endorsement.
The products were endorsed and proven to be safe and free
of unintended products. He emphasized that currently there
were no endorsed products that contained nicotine and the
division did not intend to allow nicotine in industrial
hemp products sold in the state. He ascertained that the
definition needed to be expanded to ensure it did not
contain nicotine.
Representative Wool understood the carveout and
negotiation. He was not taking a jab at the marijuana and
hemp industry. He spoke to the intent of the bill to tax
vaped nicotine products. He thought vaping as a mode of
ingestion should be taxed because it mimicked ingesting
tobacco products, which the bill was attempting to
discourage. He felt carving out CBD oil was antithetical to
the bills motives.
2:04:24 PM
Representative Rasmussen thought the bill specifically
pertained to nicotine and marijuana products already fell
under a certain tax. She believed that not adopting the
amendment would inadvertently double tax the products which
was not the purpose of the bill.
Mr. Lamkin was not personally convinced that CBD was
completely safe to inhale. He remarked that the studies
were still in progress. He noted that some common vape base
ingredients were polyethylene glycol, vegetable glycerin,
and vitamin E acetate, etc. He maintained that the hemp
carve out had been a negotiation to not injure a new
industry; however, the heartbeat of the bill was to
prevent nicotine products use before the age of 21. He
delineated that if initiation to nicotine could be avoided
up to the age of 21 the likelihood of a lifetime of
addiction was substantially lower. He shared that he began
smoking in his youth and quit 20 years ago.
2:07:30 PM
Representative Rasmussen appreciated the sponsor's office
stating that the underlying intention of the bill was to
prevent addiction to nicotine. She believed that many
ingested substances had harmful consequences like ibuprofen
and fast food that were not taxed to prevent use. She
understood that the intention of the bill was to prevent
nicotine addiction therefore, she offered Amendment 4
Replacement to offer clarity and focus on the underlying
intention of the bill.
Representative Wool referenced the phrase double tax used
by Representative Rasmussen. He understood that CBD oil
sold in a marijuana store, was taxed under marijuana laws,
and if sold in a convenience store it would currently have
no tax but if the bill was passed it would be taxed under
SB 45. He ascertained that it would not be double taxed. He
wondered whether he was correct. Mr. Lamkin knew that the
hemp and marijuana statutes were separate and distinct and
did not overlap. Hemp was tested to confirm that it did not
contain THC and was not taxed under marijuana laws. He
noted that only products containing THC were taxed under
marijuana laws. He confirmed that a CBD product sold in a
marijuana store was not taxed. Representative Wool
referenced the point about preventing nicotine use. He
agreed that the act of smoking tobacco should be
discouraged. He understood that the point was to not have
youth mimicking smoking. He supported taxing all vape
products under the bill.
2:11:07 PM
Representative Josephson asked if the amendment was
acceptable to the sponsor. Mr. Lamkin stated that Senator
Stevens currently found the amendment agreeable. He guessed
that sometime in the future the sponsor might introduce a
bill taxing hemp under the program.
Representative Wool MAINTAINED his OBJECTION to Amendment 4
Replacement as amended.
A roll call vote was taken on the motion.
IN FAVOR: LeBon, Rasmussen, Carpenter, Josephson, Foster,
Merrick
OPPOSED: Ortiz, Wool, Edgmon, Johnson
The MOTION PASSED (6/4). There being NO further OBJECTION,
Amendment 4 Replacement was ADOPTED as amended.
2:12:56 PM
Representative Rasmussen MOVED to ADOPT Amendment 5, 32-
LS0311\D.12 (Nauman, 5/3/22)(copy on file):
Page 7, line 6:
Delete "45"
Insert "15"
Representative Josephson OBJECTED.
Representative Rasmussen explained that the amendment would
reduce the tax from 45 percent to 15 percent as a
compromise to create revenue for health education. She
believed that taxing vape products was the wrong approach
by creating barriers to less harmful alternatives to
combustible cigarettes.
2:14:06 PM
Representative Josephson asked the sponsors staff if the
bill contained a 75 percent tax before its referral to the
House Labor and Commerce Committee (HL&C). Mr. Lamkin
answered in the affirmative. He pointed to a document in
the members files titled Local Level Tobacco Products
Taxation Rates in Alaska (copy on file). He explained that
there were three types of nicotine taxes: Cigarette tax,
Other Tobacco Products, and an E-cigarette tax. He noted
that in the other tobacco column the same percent of
wholesale was applied to the e-cigarette tax in any
community. He corrected and error and reported that the
City of Fairbanks had an 8 percent e-cigarette tax. He
informed the committee that the national average tax was
currently 45 percent. He reiterated that the bill
originally had a 75 percent tax, and that 45 percent was
the average between 15 percent and 75 percent. He was not
speaking on behalf of what percentage he thought the
sponsor would support.
2:16:30 PM
Representative Josephson asked what the tax resources would
be used for. Mr. Lamkin answered that the funds would be
used for education programs and rehabilitation. He noted
that the Division of Behavioral Health was available for
additional information.
2:17:17 PM
Representative Josephson repeated the question.
KATIE STEFFENS, DEPUTY PROGRAM MANAGER, TOBACCO PREVENTION
AND CONTROL PROGRAM, DEPARTMENT OF HEALTH AND SOCIAL
SERVICES (via teleconference), answered that the tax
revenue would be deposited into the general fund and was
available for educational programs, healthcare, etc. and
was not directly dedicated to the program. She deferred to
the tax division as well for further clarification
2:18:53 PM
AT EASE
2:31:03 PM
RECONVENED
Vice-Chair Ortiz MOVED to ADOPT conceptual amendment 1 to
Amendment 5 that would insert 25 percent instead of 15
percent.
Representative Josephson OBJECTED.
Representative Carpenter asked for clarification.
Co-Chair Merrick clarified that the language was on page 7,
line 6 of the bill and on the amendment, it was found on
line 3.
2:32:13 PM
Representative Josephson shared that according to a prior
United States (US) surgeon general, taxation was one way to
deter use of tobacco products. He noted that research by
the Campaign for Tobacco Free Kids concluded that if the
price of vape products were increased usage decreased. He
voiced that the HL&C committee already reduced the tax to
45 percent. He noted the prevalence of a 45 percent tax
used by municipalities according to the document. He
related that e-cigarettes were not considered a harm
reduction device per the FDA and believed that they were
hazardous and unhealthy. He opposed the amendment.
Representative Carpenter stated that his community was not
on the list. His municipality had not chosen to tax the
product. He supported the conceptual amendment only because
less tax meant less government.
2:34:48 PM
Representative Rasmussen MOVED to call the question.
2:35:01 PM
AT EASE
2:35:30 PM
RECONVENED
Representative Rasmussen WITHDREW her motion to call the
question.
Representative Wool opposed the conceptual amendment.
Representative Edgmon opposed the conceptual amendment
because the rational in favor of the high taxation was
based on cause and effect. He wanted to hear an
explanation and justification why 25 percent would provide
the prevention the bill was meant to achieve. He thought 25
percent was insufficient and arbitrary.
2:36:41 PM
Representative Rasmussen felt it was a fair compromise as
Representative Carpenter noted his community had not taxed
the products. She appreciated the amendment as a fair
compromise and thought it struck a balance between the
municipalities tax levels.
Representative Edgmon noted that the previous comments did
not answer his question about the regulatory aspect of a 25
percent tax.
2:37:27 PM
Co-Chair Merrick deduced that some people prefer no tax,
and some prefer lower taxes, so that any tax was a
compromise.
Representative Rasmussen noted that in communities with 75
and 90 percent taxes some people were still using the
product, but its use was limited to those that could afford
it. She believed that it did not halt use and the amendment
was a compromise.
Senator Stevens commented that studies had found less
consumption every time tobacco tax was increased. He heard
that the governor would veto anything over 25 percent. He
stated that something was better than nothing and hoped the
bill would not be vetoed by the governor. He declared that
he would introduce a bill with a higher tax next year.
2:39:13 PM
Vice-Chair Ortiz related that his amendment was offered in
the spirit of compromise. He fully agreed with the
concerns raised by those that oppose the amendment.
Representative Josephson MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Rasmussen, Carpenter, Johnson, LeBon,
Merrick, Foster
OPPOSED: Wool, Edgmon, Josephson
The MOTION PASSED (7/3). There being NO further OBJECTION,
conceptual Amendment 1 to Amendment 5 was ADOPTED.
2:40:38 PM
Co-Chair Merrick addressed Amendment 5 as amended.
Co-Chair Foster voiced his support of the 75 percent tax
and believed that it was a deterrent but based on Senator
Stevens statement he supported the amendment.
Vice-Chair Ortiz stated that no one liked paying taxes;
however, he believed sometimes taxes were necessary.
2:41:48 PM
Representative Josephson appreciated the senators
position. He warned of a Masons Manual provision that
prohibited talking about the administration's position
during deliberations. He opposed the amendment but would
support moving the bill out of committee.
Representative Wool opposed the amendment. He agreed that
if taxes were raised, consumption would decrease. He noted
that the states alcohol taxes were the highest in the
nation, but no one supported lowering them. He thought that
vaping products were not taxed because they were relatively
new compared to standard tobacco products.
2:43:44 PM
Representative Rasmussen provided wrap up on Amendment 5 as
amended and asked for support.
Representative Edgmon MAINTAINED his OBJECTION to Amendment
5 as amended.
A roll call vote was taken on the motion.
IN FAVOR: Rasmussen, Carpenter, Johnson, LeBon, Ortiz,
Foster, Merrick
OPPOSED: Wool, Edgmon, Josephson
The MOTION PASSED (7/3). There being NO further OBJECTION,
Amendment 5 was ADOPTED as amended.
2:44:39 PM
Co-Chair Merrick noted that Amendment 7 had been withdrawn.
Representative Edgmon supported Representative Josephsons
comments. He strongly objected to the executive branch
influencing what was happening in committee during the
meeting. He believed it was unfair and pierced the veil of
the separation of powers doctrine.
2:45:33 PM
Co-Chair Foster MOVED to REPORT HCS CSSB 45(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
HCS CSSB 45(FIN) was REPORTED out of committee with one "do
pass" recommendation, five "no recommendation"
recommendations and four "amend" recommendations and with
one new fiscal impact note from the Department of Revenue
and two previously published zero fiscal notes: FN4
(DHS/DOH) and FN6 (GOV/Combined).
2:46:07 PM
RECESSED
3:58:24 PM
RECONVENED
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 131 AKPFFA Letter of Support Miranda.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 131 CVFRD Letter Benningfield.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 131 Firefighter Final rdh.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 131 Sectional Analysis.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 131 Sponsor Statement.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 131 Summary of Changes.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 45 - Replacement Amendment #4 Rasmussen D.16 050522.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 45 |
| SB 131 PUBLIC TESTIMONY Rec'd by 050622.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 131 |
| SB 173 Sponsor Statement v. I 1.28.2022.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 173 |
| SB 173 Sectional Analysis v. W 4.25.2022.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 173 |
| SB 173 Testimony as of 1.31.22.pdf |
HFIN 5/5/2022 1:30:00 PM |
SB 173 |