SENATE BILL NO. 15 "An Act relating to possession of an electronic smoking product or a product containing nicotine by a minor and to selling or giving an electronic smoking product to a minor; relating to business license endorsements to sell cigarettes, cigars, tobacco, products containing tobacco, electronic smoking products, or products containing nicotine; and relating to citations for certain offenses concerning tobacco or nicotine products." 9:22:07 AM Co-Chair MacKinnon reviewed the bill title and noted that Senator Stevens was the bill sponsor. She asked if he had comments for the committee. SENATOR GARY STEVENS, SPONSOR stated that the bill was about protecting Alaska's youth from becoming addicted to nicotine and adopting unhealthy habits. He noted it was a concern nationwide and a major problem in Alaska. The bill was about restricting sales to and possession of the products by youth. Additionally, the bill would give state agencies the authority to enforce restrictions. He spoke to the importance of acting quickly to face the new industry and to help protect the state's children who were being targeted. Co-Chair MacKinnon reviewed that the committee had heard the bill on February 16 and had heard public testimony. She announced she would reopen the public hearing. Co-Chair MacKinnon OPENED and CLOSED public testimony. Senator Stevens MOVED to ADOPT Amendment 1, 30-LS0170\N.3 (Bruce/Martin, 2/26/18) (copy on file): Page 12, line 28: Delete "11.76.109(a)(3)" Insert "11.76.109(a)(4)" Page 13, line 6: Delete "AS 11.76.900" Insert "AS 11.8l.900(b)" Co-Chair MacKinnon OBJECTED for discussion. 9:24:22 AM TIM LAMKIN, STAFF, SENATOR GARY STEVENS, explained that Amendment 1 was a simple technical amendment. There had been several drafting errors in the bill that had been overlooked as it had gone through the committee substitute process (CS). He referenced the first part of the amendment and explained that AS 11.76.109(a)(3) and (a)(4) pointed to the wrong section. The amendment was conforming. Likewise, the statute in the second portion of the amendment did not exist. The amendment would insert the correct section of law that addressed the definition of e-cigarettes. Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO further OBJECTION, Amendment 1 was ADOPTED. Senator Stevens MOVED to ADOPT Amendment 2, 30-LS0170\N.2 (Martin, 2/23/18) (copy on file): Page 2, following line 20: Insert a new bill section to read: "* Sec. 3. AS 1l.76.106(a) is amended to read: (a) Except as provided under (b) of this section, a person may not sell cigarettes, cigars, tobacco, products [OR A PRODUCT] containing tobacco, electronic smoking products, or products containing nicotine unless the sale occurs in a manner that allows only the sales clerk to control access to the cigarettes, cigars, tobacco, products [OR PRODUCT] containing tobacco, electronic smoking products, or products containing nicotine. Renumber the following bill sections accordingly. Page 2, line 27: Delete "or" Insert "[OR]" Page 2, line 31, following "older": Insert "; or {4) is of electronic smoking products over the Internet to a person 19 years of age or older" Page 13, line 19, following "Act,": Insert "AS 11.76.l06(a), as amended by sec. 3 of this Act," Page 13, line 20: Delete "sec. 3" Insert "sec. 4" Delete "sec. 4" Insert "sec. 5" Page 13, line 21: Delete "sec. 5" Insert "sec. 6" Delete "sec. 6" Insert "sec. 7" 13 Page 13, line 22: Delete "sec. 7" Insert "sec. 8" 17 Page 13, line 23: Delete "sec. 8" Insert "sec. 9" Co-Chair MacKinnon OBJECTED for discussion. Mr. Lamkin explained Amendment 2, which was more substantive than Amendment 1. He detailed that AS 1l.76.106(a) was commonly known as the "behind the counter" law. He elaborated that tobacco and nicotine products were required to be placed behind the counter and sales of the products had to be under the direct supervision of a sales clerk. For example, Fred Meyer shoppers had to go to a specific counter to purchase cigarettes and tobacco related products and were required to present their identification. The law was originally targeted to prevent vendors from situating the products in locations that could be easily accessed and would attract the attention of youth. For example, products could be placed in the candy or snack aisle (or toy section). Additionally, the law served to prevent or eliminate the possibility of the products. Mr. Lamkin relayed that in the Senate Judiciary Committee there had been concern the particular section of the law would prevent adult sales of the products over the internet because there was not a person immediately supervising the sale or transaction. He elaborated that due to confusion and misunderstanding, the sponsor had removed the section of the bill at that time. He explained that while removing the section clarified adult sales could be conducted over the internet, it would also allow stores to place e- cigarettes in aisles where they may not be appropriately located. The amendment would restore the prior language. Mr. Lamkin detailed there were exceptions to the particular law. He cited a bar vending machine as an example where the transaction did not have to be under direct supervision or require a sales clerk. The bottom of the amendment made an exception for internet sales provided the buyer was over 19 years of age. Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO further OBJECTION, Amendment 2 was ADOPTED. 9:28:18 AM Senator Micciche MOVED to ADOPT Amendment 3, 30-LSO170\N.1 (Martin, 2/16/18) (copy on file): Page 7, line 10: Delete "$1,000" Insert "$500" Page 7, line 25: Delete "indefinitely [ONE YEAR]" Insert "one year" Co-Chair MacKinnon OBJECTED for discussion. Senator Micciche stated that he had spoken to the sponsor about the amendment and believed Senator Stevens was supportive. He thought a penalty of $1,000 for a first offense was too severe. He believed a $500 penalty left room for a person to make a mistake. He noted the existing penalty was $300. He explained that sometimes a new store employee could make the mistake of not getting adequate identification. He did not change the other numbers in the legislation. Senator Micciche also believed the word "indefinitely" on page 7, line 25 would mean the end of a business, particularly a vape business. He reasoned that one year was likely very difficult [for a business] to survive from, but the amendment would mean the loss of a license for one year for a fourth and future offense. He stated that a fourth or fifth offense would constitute the loss of a license for another year. He believed a person could probably argue that vaping was better for someone's health than traditional tobacco simply because it did not involve burning plant matter. He furthered that vape shops were more likely to be closed indefinitely with a one-year closure. He believed one year was an adequate penalty. Senator Stevens supported the amendment. Co-Chair MacKinnon WITHDREW her OBJECTION. There being NO further OBJECTION, Amendment 3 was ADOPTED. JULI LUCKY, STAFF, SENATOR ANNA MACKINNON, addressed the committee's first Statement of Zero Fiscal Impact. She had been working with the executive branch and the Legislative Finance Division (LFD) to develop a more efficient way to deal with zero fiscal notes. She explained that SB 15 had been accompanied by four fiscal notes, three of which were zero notes and had been consolidated into the Statement of Zero Fiscal Impact. The hope was to make it easier for the public and committee members to easily see all of the departments impacted by a bill, but that did not incur any fiscal impact. She highlighted that the one piece of paper replaced six sheets of paper. Ms. Lucky pointed out that the bill had one fiscal impact note from the Department of Commerce, Community and Economic Development for the Division of Corporations, Business and Professional Licensing. There was a fiscal impact of $5,600 in FY 19. She directed attention to page 2 of the analysis and read: This legislation requires changes to warning signage and the department must make available to a person who holds a business license endorsement. It also requires a change to the CBPL database warning signs, forms, online filing, websites, investigations, and a regulation change. The committee substitute changes the required notice from two separate signs to one combined sign and changes the required minimum dimensions of those signs. If the bill passes the following expenses will be incurred: services, $3,000 in legal costs to amend regulations, printing, and postage in the first year; $1,000 for IT services for the system change; and $1,600 for printing and postage to mail new signage. Ms. Lucky continued that the analysis included a note that legal and hearing service expenses would be incurred in outyears, but the costs were unknown. The costs would be covered by receipt supported services (undesignated general fund code 1005). 9:33:44 AM Vice-Chair Bishop MOVED to report CSSB 15(FIN) out of Committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSSB 15(FIN) was REPORTED out of committee with a "do pass" recommendation and with a new Statement of Zero Fiscal Impact by the Office of the Governor for the Department of Health and Social Services, the Department of Law, and Department of Public Safety; and a new fiscal impact note from Department of Commerce, Community and Economic Development. 9:34:38 AM AT EASE 9:36:47 AM RECONVENED Co-Chair MacKinnon discussed the agenda for the following day. She noted that she would reopen the public hearing for SB 104 the following day in order for the public to have opportunity to comment on a forthcoming amendment from Senator von Imhof.