SB 45-AGE FOR NICOTINE/E-CIG; TAX E-CIG.  1:59:17 PM CHAIR COSTELLO reconvened the meeting and announced the consideration of 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." She said this is the third hearing in this committee, public testimony is closed, and there is a committee substitute (CS). 1:59:58 PM SENATOR HOLLAND moved to adopt the Committee Substitute (CS) for SB 45, work order 32-LS0311\W, as the working document. 2:00:32 PM CHAIR COSTELLO objected for an explanation of the changes. 2:00:48 PM MELODIE WILTERDINK, Staff, Senator Mia Costello, Alaska State Legislature, Juneau, Alaska explained the changes from version B to version W of SB 45, paraphrasing the following document: Sec. 10 AS 21.96, Page 5, Lines 29-31, Page 6, Lines  1-11  Is amended by adding a new subsection AS 21.96.055 to require manufacturers of electronic smoking products sold in Alaska to file a bond of $10,000,000 with the Division of Insurance on the condition that manufacturers must promise to pay monetary judgments related to product liability in the state. Persons having claims against an electronic smoking product manufacturer required to file a bond may bring suit on the bond for failure to pay a liability described in AS 21.96.055. Sec. 17 AS 43.50.320, Page 8, Lines 11-16  Is amended by adding a new subsection AS 43.50.320(i) to prohibit the distribution of flavored electronic smoking products and electronic smoking products designed or packaged so as not to be clearly recognizable as a tobacco product. Sec. 22 AS 43.50.350, Page 11, Lines 14-20  Is amended to insert an exception, described in Section 23, to the depositing of tax collected into the general fund, which may be used by the legislature to make appropriations for health care, health research, heal promotion, and health education. Sec. 23 AS 43.50.350, Page 11, Lines 21-25  Is amended to add a new subsection AS 43.50.350 to direct tax collected on electronic smoking products to be accounted for separately and may be appropriated by the legislature to provide for education, programs, and advertising related to the hazards of electronic smoking products. Sec. 26 AS 43.50.390, Page 12, Lines 14-23  Is amended to update the definition of electronic smoking product to clarify that an "electronic smoking device" includes all parts, excluding batteries and battery chargers when sold separately. Sec. 31 AS 45.50.471(b), Page 16, Lines 3-6  Is amended by adding a new paragraph to prohibit the marketing of electronic smoking devices to persons under 21 years of age. MS. WILTERRDINK advised that the title was updated to reflect the changes. 2:04:20 PM CHAIR COSTELLO removed her objection; finding no further objection, version W of SB 45 was adopted. She asked Ms. Wing-Heier to explain the bill section relating to posting a bond and the precedence in Alaska for these companies to carry a certain type of liability policy when doing business in the state. She also noted the conceptual amendment for the committee to consider. 2:05:08 PM LORI WING-HEIER, Director, Division of Insurance, Department of Commerce, Community, and Economic Development, Anchorage, Alaska, stated that SB 45 asks for a bond to guarantee that the manufacturer of e-cigarettes has the capital, character, and capacity to perform. For example, a bond protects the homeowner against liens on their house if their building contractor fails to pay bills associated with building that house. If the bills are unpaid, the homeowner would make a claim against the bond. By comparison, a liability policy insures against damages in the event of injury. In the instance of SB 45, she advised that if the committee is looking for damages caused to people over age 21 because of e- cigarettes, it would be asking for a general liability policy to cover injuries or diseases associated with the use of that product. She noted that the precedence for this was established several years ago when the legislature required Uber to file a certificate of insurance with the division showing liability coverage. She recalled it was a $10 million policy. SENATOR GRAY-JACKSON asked for the cost of a $10 million bond. MS. WING-HEIER offered to do some research and follow up with the information. SENATOR GRAY-JACKSON said it wasn't necessary. CHAIR COSTELLO summarized her understanding that the liability policy is backing the ability to do business in the state. Those businesses would file a commercial general liability policy with the division. She asked Ms. Wing-Heier to discuss the precedent set with Uber for this type of policy and how it would work. MS. WING-HEIER explained that if Uber is in an accident, the injured party could ask the division, as the certificate holder, who to contact to file a claim. Policies under SB 45 would be the same. The policyholders would update and file annually and the division would be able to tell consumers, in the event they wanted to file a claim against the manufacturer, who has the manufacturer's liability insurance in the state of Alaska. CHAIR COSTELLO asked the members if they were comfortable with a conceptual amendment in [Section 10] to replace the term "bond" with "commercial general liability policy" where it is appropriate. 2:09:40 PM SENATOR HOLLAND moved Conceptual Amendment 1 to replace the term "bond" with "commercial general liability policy" in Section [10]. CHAIR COSTELLO clarified that the amendment is in Section 10 of the bill, and it amends Title 21. 2:10:14 PM CHAIR COSTELLO found no objection and Conceptual Amendment 1 was adopted. CHAIR COSTELLO noted who was available to answer questions. 2:10:54 PM SENATOR STEVENS, speaking as sponsor, expressed appreciation for the Committee Substitute and what it does to help children today who are jeopardized by nicotine addiction. CHAIR COSTELLO thanked the sponsor for allowing the committee to improve an already great bill. 2:11:51 PM SENATOR HOLLAND sympathized with the people who worry about the tax and those who use vaping instead of tobacco products. He said he carefully looked into changing the tax but could not find a reason to do so at this time. SENATOR GRAY-JACKSON stated that she has always supported age 21 the 75 percent tax on e-cigarettes. CHAIR COSTELLO stated that she believes it is important that some of the changes in the CS mimic the federal law. It reflects the spirit of what the federal government is doing in terms of marketing e-products to young people. She said it is also important that a provision in the bill calls for the tax to be calculated separately so a legislature in the future could use those funds to educate young people about the dangers of e- cigarettes. 2:14:58 PM SENATOR HOLLAND moved to report the committee substitute for SB 45, work order 32-LS0311\W as amended, from committee with individual recommendations and attached fiscal note(s). 2:15:17 PM CHAIR COSTELLO found no objection and CSSB 45(L&C), as amended, was reported from the Senate Labor and Commerce Standing Committee.