HOUSE BILL NO. 224 "An Act relating to the prohibition of selling or giving tobacco or a product containing nicotine to a minor unless prescribed by a licensed physician." 3:07:42 PM Co-Chair Thomas MOVED to ADOPT proposed committee substitute for HB 224, Work Draft 27-LS0466\X (Gardner, 2/23/12). Co-Chair Stoltze OBJECTED for discussion. JOE MICHEL, STAFF, REPRESENTATIVE BILL STOLTZE, explained the changes in the CS. Language on page 1, line 13 had been changed from "under 18 years-of-age" to "under 19 years-of- age." Co-Chair Stoltze asked whether the change was consistent with current tobacco statutes. Mr. Michel replied in the affirmative. He communicated that a list had been inserted on page 2, line 5 of the CS: (A) prescribed by a health care professional; (B) given to a person by the person's parent or legal guardian; (C) provided by a state-approved tobacco cessation program administered by the Department of Health and Social Services; or (D) provided by a pharmacist to a person 18 years of age or older without a prescription. Co-Chair Stoltze asked whether an explanation would be provided regarding the disparate age parameters (18 years- of-age and 19 years-of-age) included in the legislation. He noted that the definition of the word "is" included on page 2, line 5 did not need to be explained. MARY JANE SHOWS, STAFF, REPRESENTATIVE PAUL SEATON, discussed that it had come to the sponsor's attention that there were new products containing nicotine. Co-Chair Stoltze asked Ms. Shows to address the changes in the CS. Ms. Shows explained that the language had been changed to "under 19 years-of-age" (page 1, line 13) to allow tobacco cessation programs to be accessible to youths who were 18 years-of-age or older. Changes in the bill addressed the concern that tobacco cessation programs had not been included in the list of people who could provide products. Additionally, 18 year-olds would be able to go directly to a pharmacist for a nicotine patch in order to quit using tobacco. Co-Chair Stoltze WITHDREW his OBJECTION. There being NO further OBJECTION, Work Draft 27-LS0466\X was ADOPTED. 3:12:11 PM Representative Gara asked whether products provided by a pharmacist to a person 18 years-of-age or older would only be used to help the individual quit smoking. Ms. Shows replied in the affirmative. She explained that items (1) and (2) in the bill referenced products that could be used under the program that were for cessation only. Representative Gara wondered about the necessity of the 18 years-of-age or older provision. He referenced youths under the age of 18 that wanted to quit smoking. Ms. Shows replied that Andrew Harrington with Department of Law had cited concern that the prior bill version would prohibit 18 year olds from receiving the cessation products from a pharmacy. The language had been changed to under 19- years-of-age to ensure that 18 year olds would have accessibility to the products; individuals under the age of 18 could receive the products from their parents. Representative Gara wondered whether 17 year olds could get a pharmacist prescription to help them quit nicotine. Ms. Shows replied in the negative; cessation programs would only provide literature to youths under 18 years-of-age. She expounded that the youth's parents or a physician could access and provide the product to the youth. 3:15:47 PM Vice-chair Fairclough wondered whether there were any other products containing nicotine that would not be regulated. She referenced caffeinated energy drinks. She wondered whether research had been done on other products that may contain nicotine and on concentration levels. Ms. Shows replied that the issue had been brought to the sponsor's attention because of new nicotine dissolvables that were not regulated by the Federal Drug Administration (FDA). The products were currently being test-marketed in four or five states and included nicotine hand wipes, lozenges, water, tooth picks, and orbs. The bill would prohibit minors from purchasing the new products coming to the market. Vice-chair Fairclough wondered whether research had been done to determine if other products contained nicotine. Ms. Shows replied that she could conduct the research and follow up with the information. She detailed that the research had been limited to the products that would be marketed as "non-cessation." Co-Chair Stoltze asked how the sponsor had obtained the list of products that Ms. Shows mentioned. Ms. Shows replied that a Virginia youth action group had compiled an informative packet that had included the products. Co-Chair Stoltze wondered whether the products were currently available. Ms. Shows responded that the products were currently in the test marketing phase in Ohio, Oregon, Indiana, Colorado, and North Carolina. Representative Costello asked about a $300 fine included in the bill and wondered whether there had been discussion around increasing the fine in order to act as a deterrent. Ms. Shows answered that there had been discussion of having the fine mirror a fine related to the sale of tobacco products; however, it was determined that the specific fine would make it onerous for businesses selling cessation products and would create a statutory problem. To avoid the difficulty, the fine had been limited to $300. 3:19:55 PM Representative Gara clarified that the language included in the bill stated that the fine was "not less than $300." Ms. Shows agreed. Co-Chair Stoltze referred to the zero fiscal notes. Representative Gara asked whether the sale or gifting of nicotine products to a minor was a misdemeanor or a felony. ANDREW HARRINGTON, ATTORNEY, COMMERCIAL/FAIR BUSINESS SECTION, DEPARTMENT OF LAW, (via teleconference), replied that the offence was a violation and did not reach the misdemeanor level. Representative Gara asked for verification that the store would be committing a violation and not a crime. Mr. Harrington responded that the individual clerk or employee making the sale would be responsible for the violation if they acted negligently. He detailed that under the parallel tobacco sale statute (AS 11.76.100) there were sanctions that could be imposed on the store if there was a negligent sale of tobacco to a minor; there was no parallel provision for the sale of other nicotine products because there was no endorsement required on the business license. Representative Gara pointed to the language related to a fine of not less than $300. He wondered whether there was a cap on the maximum fine. Mr. Harrington replied that the maximum fine was $500. Representative Gara queried whether the legislature could increase the cap on the fine. Mr. Harrington answered that there was no requirement for a public defender, jury trial, or other procedure protections that would accompany a misdemeanor or felony. The dividing line for how high the fine might before the Alaska Supreme Court determined that criminal protections would apply was not defined. He furthered that it may be constitutionally permissible to increase the $500 maximum, but at some point the fine would hit the constitutional ceiling. 3:25:03 PM Representative Doogan asked whether the determination that an offense was a minor violation was related to the amount of money that could be levied against it or whether it was a separate function that was not connected to the amount. Mr. Harrington replied that both items played a part. He explained that criminal statutes classified offenses as felonies, misdemeanors, or minor offences. Minor offenses included violations and the maximum fine was $500; there was no jail time available for a minor offense. The legislature could amend the statute to change the maximum fine, but at some point due process protections would kick in, which would change the prosecution procedures and the fiscal note. Representative Doogan surmised that the crime would have to be reclassified if the fine was increased substantially above $500. Mr. Harrington replied that when the amount got high enough the crime would have to be reclassified. He did not believe there would be any problem increasing the fine to $400 or $500, but a conforming amendment may be necessary if the amount was higher. He furthered that the crime may need to be increased to a misdemeanor in order for criminal due process protections to kick in if the fine was increased substantially (e.g. to $1000 or $2000). Co-Chair Stoltze noted that under the scenario the fiscal notes would change substantially. He asked the sponsor about the decision to set the minimum fine at $300. REPRESENTATIVE PAUL SEATON, SPONSOR, explained that currently it was not illegal to distribute nicotine to minors; therefore, stores were not required to keep the products behind the counter and were not prohibited from selling the products to youths. The bill would help ensure that stores would be responsible for controlling any nicotine products they sold. He relayed that the bill represented a preemptive move to prevent minors from becoming addicted to nicotine; the $300 minimum fine helped to act as a deterrent without getting into the due process issue. 3:29:48 PM Representative Edgmon wondered whether the $300 fine would apply towards the individual and the business that committed the crime. Representative Seaton replied that the fine would be charged to the individual who sold the product. The fine was not a business tax and was not attached to the business license to avoid challenges from occupational licensing and to business licenses. He felt that the bill represented a clean and financially reasonable way for the state to accomplish its goals without trying to increase the offense to a misdemeanor or felony, which would result in due process arguments. Representative Edgmon thought that the legal definition of the word "person" expanded beyond a single individual. Mr. Harrington replied that the term "person" could encompass a business; however, there was a practical limitation, given that in circumstances in which a product was negligently sold it would be relatively easy to show that an individual had been negligent because they had failed to check an ID. He furthered that it may be difficult to show that a business was negligent if it had policies and procedures in place that required employees to check for ID. He agreed that in some circumstances a case could be made against a business if it had not implemented procedures specifying that the sale of nicotine to minors was illegal. He noted that the occurrence was unlikely. Representative Gara stated that the bill provided no incentive for businesses to train their employees because the employee held all of the responsibility. He wondered how the sponsor would feel about adding language that would fine a business if they negligently allowed an employee to sell nicotine products to minors. Representative Seaton answered that there had been significant concern that things became very difficult if a violation was attached to the business license. He believed that if businesses knew that the sale of nicotine to minors was illegal that they would have to take measures to prevent minors from having access to the products (e.g. placing products behind the counter). He opined that rather than trying to include everything, the goal could be met by making the sale of the products illegal. Representative Gara understood and agreed with the concern; however, he was concerned that all of the liability rested on employees. 3:36:10 PM Representative Seaton replied that the products were not being test-marketed in Alaska. He believed that marketers would have a difficult time getting businesses to sell the products in the state if the distribution of the products to the target audience was illegal. He opined that the direction of the legislation was a matter of perspective. He had found that concern about attaching a fine to a business license was great enough that it would have been difficult to garner enough support for the bill. He believed it was better to have a bill in place that showed businesses that there would be a $300 fine to an employee that sold the products to minors. He hoped the products would never come to Alaska. Co-Chair Stoltze did not want to make the bill more complicated. He discussed that the bill was preemptive in nature and was a simple approach towards eliminating products that hopefully never made it to Alaska. Representative Doogan clarified that his questions related to the amount of the fine had been informational. Co-Chair Stoltze was happy the questions had been asked given that the information was informative. Co-Chair Stoltze CLOSED public testimony. He pointed to two zero fiscal notes from the Department of Law and the Department of Health and Social Services. Representative Gara would follow up with the sponsor to discuss his concerns that there should be an incentive for businesses to provide training to employees. Vice-chair Fairclough discussed that Anchorage currently provided compliance; businesses had been shut down based on the sale of cigarettes to minors. She believed that procedures were currently in place and the bill would dovetail on the training requirements that were included in current law. She opined that the bill was a good preventative strike and hoped that the products would not make it to Alaska for sale. Co-Chair Stoltze shared that he was proud of a business in Chugiak (Alice Mae's) for electing to limit the sale of tobacco products to individuals over the age of 21. Vice-chair Fairclough MOVED to report CSHB 224(FIN) out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 224(FIN) was REPORTED out of committee with a "do pass" recommendation and with one zero fiscal note from the Department of Health and Social Services and one zero fiscal note from the Department of Law. 3:42:20 PM AT EASE 3:43:25 PM RECONVENED