SENATE BILL NO. 45 "An Act raising the minimum age to purchase, sell, exchange, or possess tobacco, a product containing nicotine, or an electronic smoking product; relating to transporting tobacco, a product containing nicotine, or an electronic smoking product; relating to the taxation of electronic smoking products; and providing for an effective date." 9:05:34 AM Co-Chair Bishop relayed that it was the second hearing for SB 45. The committee had previously opened and closed public testimony. The committee intended to consider a Committee Substitute (CS) and one proposed amendment. Co-Chair Stedman MOVED to ADOPT proposed committee substitute for SB 45, Work Draft 32-LS0311\D (Nauman, 4/5/22). Co-Chair Bishop OBJECTED for discussion. 9:06:20 AM ERIN SHINE, STAFF, SENATOR CLICK BISHOP, highlighted that the proposed CS removed the mandatory product manufacturer liability insurance policy requirement. It removed a prohibition on flavored electronic smoking products and bifurcated the excise tax rate between tobacco products. The tax rate would stay at 75 percent of wholesale and would include an electronic smoking product (which included close-systems electronic smoking products), which was now an excise tax rate of 45 percent. Ms. Shine addressed an Explanation of Changes document (copy on file): Updated Title Section 3 Amends AS 11.76.105(c) to reduce the existing violation fine of $500 to be not more than $300 for possession of tobacco, an electronic smoking product or a product containing nicotine by a person under 21 years of age. Section 4 Adds a new subsection, AS 11.76.105(d), that directs the court system to treat violations for possession of tobacco and ESP products similar to a traffic violation, with a maximum fine of $300, and to waive mandatory court appearance. This replaces Section 4 of version O, relating to prohibition of internet sales, as that is now addressed in Section 11 and 19 of version D, below, allowing internet sales but with 3rd party age verification. Section 10 The section pertaining to mandatory product manufacturer liability insurance policy was struck from Version O, and instead replaced Section 10 by adding a new subsection in Version D, AS 11.81.900(b)(69), that provides a definition of "nicotine." Section 14 Amends AS 43.50.300 by establishing an excise tax rate of 45% of the wholesale price of the Eliquid contained in an ESP. Section 15 Amends AS 43.50.300 by adding a new subsection (c) that provides a definition of "closed system electronic smoking product" Section 16 Amends AS 43.50.310(b) to exclude marijuana products from any provisions of the bill. Section 18 Amends AS 43.50.320 to: ? delete the prohibition of flavored electronic smoking products; and ? adds a prohibition of marketing electronic smoking product, including a flavored products in a manner likely to promote the use of them by a person under 21 years of age. 9:10:00 AM Ms. Shine continued to address the Explanation of Changes document: Section 27 Amends AS 43.50.390 to provide a reference to the definition of "nicotine" established in Section 10. Section 32 Amends AS 45.50.471(b)(58) with conforming changes made in Section 18, relating to unlawful marketing practices. Section 35 Conforming changes to the applicability section as well as providing a grandfather clause for persons 19 years of age or older who are employed on the effective date of the act by a person with a business license endorsement to sell tobacco products. Section 36 Amends the effective date from "January 1, 2022" to "July 1, 2023" Ms. Shine noted that in Section 33 there was a section of existing law missing from the original bill draft, which had now been added on page 17. The language had been omitted via a drafting error in the previous version of the bill. Co-Chair Bishop WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. The CS for SB 45 was ADOPTED. 9:12:19 AM SENATOR GARY STEVENS, SPONSOR, explained that the bill was very simple and was about protecting children from becoming addicted to nicotine. He shared that he had been working on the legislation for seven years, during which time the products addressed in the bill continued to evade any meaningful public policy to restrict youth access. He suggested that the more time that passed, the greater number of young Alaskans would become addicted. He thought it was common knowledge that the products were unhealthy. He thought the state seemed to be giving tacit approval that the products were safe, and he strongly disagreed. Co-Chair Bishop asked if the sponsor was comfortable with the proposed CS. Senator Stevens stated he was fine with the CS. 9:13:54 AM TIM LAMKIN, STAFF, SENATOR GARY STEVENS, had nothing to add but was available to answer questions. Senator Wielechowski referenced the change to allow flavors and asked if the sponsor had any concerns. Mr. Lamkin suggested that the CS contained what could be interpreted as a compromise, where it was recognized that there were legitimate instances of adults that had used the products to stop smoking cigarettes and may have a legitimate reason to prefer the flavored product. He continued that the compromise was struck that included provisions allowing that it was unlawful for marketing that would promote minor use of the products. Senator Wielechowski asked if the CS would allow for the sale or marketing of flavors such as Fruit Loops or Lucky Charms. Mr. Lamkin thought the matter would be called into question and the references could be cited as unlawful marketing. Senator Wilson MOVED to ADOPT Amendment 1: TO: CSSB45(FIN), Draft Version "D" Page 7, line 3, following "is": Insert "15 [AT THE RATE OF 75] percent of the wholesale price of" Co-Chair Bishop OBJECTED for discussion. Senator Wilson spoke to Amendment 1. He explained that the main point of the bill was to reduce underage usage, which would conform to the federal law. He thought the bill was being saddled with penalties. He cited that some of the products referenced were considered by the Food and Drug Administration to be appropriate for the protection of public health and were used for smoking cessation tools. Instead of raising the age to 21, he considered that a less harmful alternative should be encouraged. He clarified that he did not encourage smoking and did not personally use the products. He thought a less lethal alternative should be offered. He explained that the intent was to lower the vape tax to 15 percent instead of the proposed rate of 45 percent. 9:17:36 AM AT EASE 9:17:59 AM RECONVENED Co-Chair Bishop asked if there was further discussion on the amendment. Senator Wielechowski asked how the sponsor felt about the amendment offered by Senator Wilson. Senator Stevens was opposed to the amendment. Co-Chair Bishop MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Wilson OPPOSED: Wielechowski, Hoffman, Olson, Bishop, Stedman The MOTION FAILED (1/5). 9:19:31 AM AT EASE 9:20:48 AM RECONVENE Co-Chair Bishop relayed that the committee would request updated fiscal notes and set the bill aside until the new fiscal notes were available. SB 45 was HEARD and HELD in committee for further consideration. 9:21:08 AM AT EASE 9:24:17 AM RECONVENED