SB 89-AGE FOR TOBACCO/NICOTINE/E-CIG; TAX E-CIG  1:34:02 PM CHAIR BJORKMAN announced the consideration of 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." This was the first hearing of SB 89. Chair Bjorkman invited Senator Gary Stevens to introduce his bill. 1:34:48 PM SENATOR GARY STEVENS, District C, Alaska State Legislature, Juneau, Alaska, Sponsor of SB 89, paraphrased from the following sponsor statement: SPONSOR STATEMENT  SENATE BILL 89   Increasing the Minimal Age for Tobacco and E- Cigarettes: "T-21" Senate Bill 89 proposes two key policies: 1) to align state law with federal law in raising the minimum age to buy, sell or possess tobacco and electronic smoking products (ESPs) from age 19 to 21; and 2) to establish a sales tax for ESPs. In December 2019, Congress passed and the President signed into law a provision raising the age of sale for all tobacco, nicotine and ESP products to age 21 nationally *with no exceptions*. Preventing illegal vendor sales is a critical part of the overall effort to prevent and reduce youth smoking. Alaska has an active underage sales enforcement program which has been effective in reducing sales of smoking products to minors. Updating Alaska statutes from 19 to 21 to mirror the federal minimum age of sale of these products will allow the state enforcement program to be effective. The latest Tobacco Facts 2022 Update issued by the Alaska Dept. of Health, Division of Public Health shows an increasing trend among young Alaskans in high school, indicating 26 percent of the statewide population as active users of ESPs in 2019 alone, and 46 percent of students having "tried" ESPs. Those statewide figures, along with national ones, are projected to have grown substantially since then. Despite claims that e-cigarettes help adults quit smoking, or offer adults a "safe" alternative to smoking tobacco, ESPs are under-regulated and have not been found by the Food and Drug Administration (FDA) to be effective in helping smokers actually quit, let alone to be legitimately "safe." Nearly all e- cigarettes contain some amount of nicotine, and some contain as much or more nicotine as a pack of cigarettes. It is not yet known with any certainty what other compounds these vapor products are delivering into users' airways, let alone the long- term effect these products have on human health. Meanwhile, taxes have been proven to reduce youth tobacco use, resulting in fewer kids becoming lifelong smokers, and thus ultimately reducing healthcare costs. In addition to deterring kids from beginning to use these products, taxes help adults who actually want to quit, do so. Thank you for your consideration of this important piece of legislation. 1:37:36 PM TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State Legislature, Juneau, Alaska, gave a presentation on SB 89. MR. LAMKIN began the E-Cigarette presentation with slide 1, with the explanation that SB 89 would align Alaska's state law with federal law. E-cigarettes, emerged in the United States in 2005-2007, though they were originally patented during WWII. The decline of cigarette use has since caused the e-cigarette market to explode. He described the components of an e-cigarette, explaining that a battery is used to heat up a liquid containing nicotine, flavoring, and a broad swath of chemicals. Users inhale the aerosol into their lungs. E-cigarettes typically consist of a few basic parts: a cartridge or reservoir, a heating element such as a battery, and a mouthpiece. A substantial part of the market consists of closed-unit e- cigarettes, intended to be used and then thrown away. These disposable e-cigarettes are inexpensive and readily available in convenience stores. Open-unit e-cigarettes can be taken apart and the components are replaceable and customizable. MR. LAMKIN advanced to slide 2, Cigarette Marketing. He said e-cigarette manufacturers have secured their position in the foreseeable market by using old tobacco marketing techniques. Promoting the modern e-cigarette by mirroring fashionable vintage tobacco advertisements has been exceedingly effective. These marketing methods are unregulated. For instance, unlike tobacco, e-cigarette commercials play freely on public radio stations. Marketing tactics include highlighting celebrity use of e-cigarettes, also known as vaping, aligning the product with sex appeal and coolness. MR. LAMKIN advanced to slide 3, Social Media - Instagram/Twitter/YouTube. He explained that e-cigarette companies manage a wide and diverse network of brand promotions and campaigns across popular social media platforms. This kind of messaging from influencers has resulted in a substantial population of parents and kids who believe that these products are safe. MR. LAMKIN advanced to slide 4, Recent Confiscations. The slide provided images, and he brought examples of confiscated e- cigarette products, to illustrate their portability and ease of discretion. In addition, he recently surveyed educators about e- cigarettes to gather a sampling of raw data on the public consensus and found that e-cigarette use is a problem across the state. 1:45:32 PM MR. LAMKIN advanced to slide 5, Sample Disposable Vaping Product Pricing - January 2023. 1:45:58 PM MR. LAMKIN advanced to slide 6, Cigs in a Pod. He discussed how e-cigarettes compare to traditional cigarettes. The average price of a pack of cigarettes was $16. There are 7.5 puffs per cigarette, so there are 150 puffs in a pack of 20 cigarettes. The inherent value of smoking is the satisfaction of inhaling each puff; that value is then quantified at 11 cents per puff. E-cigarettes can have 1900-5000 hits in a single pod. In a JUUL pod, which sells for $24, one puff is 2 cents. When purchased online that drops to 0.5 cents per puff. Though some may argue that this tax might be too high, he posited that it may not be high enough. 1:48:59 PM MR. LAMKIN advanced to slide 7, 1994 The "Waxman Hearings." After 50 years, the leading CEOs in the United States stood up under oath on record before Congress and avowed that nicotine and tobacco products were neither addictive nor harmful to consumers. Tobacco and e-cigarette industry manufacturers are presently claiming that their products are safe, non-addictive, and non- toxic. He said that e-cigs might be a pathway to quitting smoking traditional cigarettes. However, these e-cigarettes are not outright safe and do not end addiction; they merely replace the delivery system. An 18-year-old can join the military, but cannot use tobacco or e-cigarette products on the base; recruits need to be healthy enough to perform physical activity without losing their breath. MR. LAMKIN relayed a personal story about his father passing away from lung cancer, intimating that he wanted to protect his son from the same fate. 1:52:12 PM SENATOR DUNBAR commented that when the Anchorage Assembly passed a similar ordinance, there were 19- and 20-year-olds who were going to be put out of work. He asked Mr. Lamkin whether a 19- year-old who worked at a gas station that happened to sell e- cigarettes would lose their job if SB 89 passed. 1:53:24 PM MR. LAMKIN referred to the text on page 22, lines 19-22 and said, grandfathering is specifically included in this bill as a result of a compromise. SENATOR DUNBAR offered his understanding of the answer. MR. LAMKIN clarified that employees of establishments that sell e-cigarettes and tobacco products who are 19 and 20 years old on the date the bill becomes effective may continue working at those jobs. SENATOR DUNBAR asked if that was only for the tobacco shops or all places that may sell these products. MR. LAMKIN answered yes, however, when a vendor sells these products, especially with alcohol sales, a manager will step in to execute the transaction. 1:55:10 PM CHAIR BJORKMAN segued to invited testimony. 1:55:41 PM KAREN BLOXSOM, Assistant Principal, Wasilla High School, Wasilla, Alaska, offered invited testimony on SB 89, declaring that the number of students caught vaping or in possession of a vape is on the rise each year. Students start to vape in middle school and are addicted by the time they are first-year students in high school. The Wasilla Police Department has given out 31 citations for students caught vaping. Students in the Mat-Su school district who are caught vaping a second time are given a $500 citation. More students are choosing to get nicotine from vapes because of the flavoring. They do not realize they are inhaling more nicotine in a day from a vape than if they smoked a pack of cigarettes. Most students tell her that they would never smoke cigarettes, but they would use a vape or an e-cigarette if there weren't the threat of citation. 1:57:35 PM KATIE STEFFENS, Deputy Program Manager, Tobacco Prevention Control Program, Division of Public Health, Department of Health, Anchorage, Alaska, offered invited testimony on SB 89, speaking to how tobacco and nicotine products affect Alaskan youth and proven strategies for preventing youth from starting use of such products and reducing their current use. Tobacco is the leading cause of preventable death in Alaska. Smoking is linked to about 600 deaths each year. Alaska loses an estimated $400 million because of smoking-related illness effects on workers unable to perform their duties. There is an ongoing epidemic of e-cigarette use. According to the 2019 Alaska Youth Risk Behavior Survey, one out of four high school students in Alaska were using e-cigarettes and almost half had tried them. Only one in twenty adult Alaskans use these products. The National Youth Tobacco Survey indicated that in 2022, 2.5 million youths nationwide were using e-cigarettes. During the 2021-22 school year, there were 964 tobacco-related suspensions among students in grades 1-12. The number of suspensions has increased 232 percent since the 2015-16 school year. She stated that increasing the price of tobacco products is the single most effective way to prevent initiation and reduce consumption. Young adults are more likely to respond to price increases on tobacco products, which prove even more effective when implemented in combination with other strategies such as increasing the minimum legal age to purchase tobacco and e- cigarette products. She stated that SB 89 includes both approaches and creates additional protection for youth by restricting online sales, implementing age verification when transporting products, and limiting nicotine content in e-cigarette devices. 2:01:12 PM JOE DARNELL, Chief Investigator, Tobacco Enforcement Program, Division of Behavioral Health, Department of Health (DOH), Anchorage, Alaska, offered invited testimony on SB 89. Pulling from his field experience, he posited that the state should increase the minimum legal age for using tobacco products from 19 to 21 to make the law fair to retailers. Some retailers are opting not to enforce the federal age requirement that e- cigarette purchasers be 21 years of age; they are only enforcing the state law at 19 years of age. Increasing the minimum legal age would also make it easier for retailers to verify identification. State driver's licenses are set up so that if the holder is over 21 the license has a horizontal layout; a vertical layout gives them heads up to thoroughly check the identification. The division collaborates with schools around the state. He received a call from Dillingham saying that there is an increase in vape products. A state trooper told him that schools on Prince of Wales Island are being inundated with vape products and they dont know what to do with them. He emphasized the importance of getting together the key stakeholders, such as the legislature, national partners, schools, and retailers. He said it comes down to working together to protect Alaska's youths. 2:04:10 PM BRANDON SPANOS, Deputy Director, Tax Division, Department of Revenue (DOR), Anchorage, Alaska, provided an explanation for DOR's fiscal note for SB 89. The tax would generate $3.2 million in FY24, and $3.3 million in FY25. The division anticipates growth in the market. He explained that the cost to implement the tax is high because SB 89 is a new kind of bill and additional personnel will be required. 2:06:20 PM CHAIR BJORKMAN asked him to speak about the ease of using the point-of-sale system to implement the tax on the retail level. MR. SPANOS replied that most retailers would have point-of-sale software that includes a tax line. The retailer would insert the tax rate for the product, the software would calculate the tax, and the retailer would collect the tax. The department's online system is robust and by January 2024 taxpayers will be able to file tax returns online, including new taxes like this one. 2:07:59 PM CHAIR BJORKMAN announced the committee will not take public testimony or hear the sectional analysis today. He held SB 89 in committee.