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