05/11/2023 09:00 AM Senate FINANCE

SENATE BILL NO. 89                                                                                                            
                                                                                                                                
     "An   Act  relating   to  tobacco,   tobacco  products,                                                                    
     electronic  smoking  products, nicotine,  and  products                                                                    
     containing  nicotine;   raising  the  minimum   age  to                                                                    
     purchase,  sell,   exchange,  or  possess   tobacco,  a                                                                    
     product containing  nicotine, or an  electronic smoking                                                                    
     product;  relating   to  the  taxation   of  electronic                                                                    
     smoking products and vapor  products; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
9:20:24 AM                                                                                                                    
                                                                                                                                
Co-Chair Olson informed the committee that due to technical                                                                     
difficulties SB 89 would be taken up before SB 125.                                                                             
                                                                                                                                
9:20:43 AM                                                                                                                    
                                                                                                                                
Senator Kiehl MOVED to ADOPT proposed committee substitute                                                                      
for SB 89, Work Draft 33-LS0247\R (Nauman, 5/10/23).                                                                            
                                                                                                                                
Co-Chair Olson OBJECTED for discussion.                                                                                         
                                                                                                                                
9:21:08 AM                                                                                                                    
                                                                                                                                
KEN ALPER,  STAFF, SENATOR DONNY  OLSON, confirmed  that all                                                                    
members  had  the  summary  of  changes  for  the  committee                                                                    
substitute as well as the most current version of the bill.                                                                     
                                                                                                                                
Mr. Alper referenced a summary of changes document (copy on                                                                     
file):                                                                                                                          
                                                                                                                                
CS for Senate Bill 89: Age for Tobacco / E-Cigarette Tax                                                                        
Changes from Labor & Commerce Committee Version ("U" to                                                                         
                                                                                                                                
                                                                                                                                
     Change #1: Page 1, line  4. Adds reference in the title                                                                    
     to the tobacco use and cessation fund.                                                                                     
                                                                                                                                
     Change  #2:  Page  3,  lines   24  to  26.  Requires  a                                                                    
     mandatory court  appearance with  a parent  or guardian                                                                    
     for minors  (under 18) caught possessing  tobacco or e-                                                                    
     cig products.                                                                                                              
                                                                                                                                
     Change  #3:  Deletes  former Section  5,  the  internet                                                                    
     sales  ban for  cigarettes and  Other Tobacco  Products                                                                    
     (OTP) to private individuals.                                                                                              
                                                                                                                                
     Change  #4: Page  4,  line 12.  Increases  the age  for                                                                    
     online sales of  e-cig products to persons  aged 21 and                                                                    
     over. It also maintains  online sales of e-cig products                                                                    
     to  private  individuals,  provided  there  is  an  age                                                                    
     verification process, and the tax is paid.                                                                                 
                                                                                                                                
     Change #5: Page 6, lines 6  to 15. Adds new Section 11,                                                                    
     moving  the Tobacco  Use Education  and Cessation  Fund                                                                    
     (AS  37.05.580) to  a separate  fund  within the  state                                                                    
     treasury,  instead of  being a  special account  within                                                                    
     the general fund.                                                                                                          
                                                                                                                                
     Change #6: Page 8, lines 7  to 12. Adds new Section 16,                                                                    
     relating  to the  Tobacco Use  Education and  Cessation                                                                    
     Fund, reflecting  three revenue sources going  into the                                                                    
     fund:                                                                                                                      
          (1) 20% of the annual payment under the Tobacco                                                                       
          Master Settlement Agreement;                                                                                          
          (2) 8.9% of the general portion of the cigarette                                                                      
          tax; and                                                                                                              
          (3) the proceeds from the new tax on electronic                                                                       
          smoking products (ESPs).                                                                                              
                                                                                                                                
     Change  #7: Page  10, lines  17-20. Requires  an online                                                                    
     vender with  200 or more  transactions in the  state to                                                                    
     register with DOR, and collect and remit the tax.                                                                          
                                                                                                                                
                                                                                                                                
     Change #8:  Page 11,  lines 2  to 3.  Further clarifies                                                                    
     that marijuana and hemp products  are exempted from the                                                                    
     tax  under this  bill  if those  products  do not  also                                                                    
     contain nicotine.                                                                                                          
                                                                                                                                
     Change #9:  Page 12, line  30 to  page 13, line  3. The                                                                    
     new  tax revenues  are deposited  into the  Tobacco Use                                                                    
     Education and  Cessation Fund, and  may be used  by the                                                                    
     tobacco control  program managed  by the  Department of                                                                    
     Health for  efforts to prevent  tobacco and ESP  use in                                                                    
     schools.                                                                                                                   
                                                                                                                                
     Change  #10:  Page  15,  line  7.  Lowers  the  maximum                                                                    
    nicotine concentration of ESPs from 60 to 50mg/ml.                                                                          
                                                                                                                                
9:25:02 AM                                                                                                                    
                                                                                                                                
SENATOR  GARY  STEVENS,  SPONSOR,  asserted  that  the  bill                                                                    
protected children  from becoming  addicted to  nicotine. He                                                                    
appreciated the work  that had been done  on the legislation                                                                    
and approved of the changes in the CS.                                                                                          
                                                                                                                                
9:25:35 AM                                                                                                                    
                                                                                                                                
Senator Wilson  asked whether there  was a timeline  for the                                                                    
state to  move to a T-21  in order to receive  federal funds                                                                    
or settlements.                                                                                                                 
                                                                                                                                
9:25:58 AM                                                                                                                    
                                                                                                                                
TIM LAMKIN,  STAFF, SENATOR GARY STEVENS,  informed that the                                                                    
timeframe had passed in December  2022, which meant that the                                                                    
state could  lose out on federal  funds if the bill  did not                                                                    
pass.                                                                                                                           
                                                                                                                                
Senator  Wilson wondered  if there  should be  a quick  T-21                                                                    
bill to ensure  that the state did not  lose federal funding                                                                    
opportunities.                                                                                                                  
                                                                                                                                
Mr. Lamkin  thought that  Senator Wilson's  idea would  be a                                                                    
policy decision. He argued that  taxing the products was the                                                                    
single best way to keep people from smoking.                                                                                    
                                                                                                                                
9:27:16 AM                                                                                                                    
                                                                                                                                
Co-Chair  Olson  WITHDREW  his  objection.  There  being  NO                                                                    
further OBJECTION, it  was so ordered. The CS for  SB 89 was                                                                    
ADOPTED.                                                                                                                        
                                                                                                                                
9:27:27 AM                                                                                                                    
                                                                                                                                
Senator Kiehl MOVED to report  CSSB 89(FIN) out of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes. There being NO OBJECTION, it was so ordered.                                                                             
                                                                                                                                
CSSB 89(FIN)  was REPORTED out  of committee with  three "do                                                                    
pass"     recommendations,    two      no    recommendation                                                                     
recommendations,  and one   amend   recommendation and  with                                                                    
one new zero fiscal note  from the Judiciary, one new fiscal                                                                    
impact  note  from  the  Department   of  Revenue,  and  six                                                                    
previously  published  zero  fiscal notes:  FN1  (CED),  FN2                                                                    
(ADM), FN3(ADM), FN4(DOH), FN6(DPS), and FN7 (LAW).                                                                             
                                                                                                                                
9:27:42 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:32:23 AM                                                                                                                    
RECONVENED