Bill Text: HI SB2654 | 2018 | Regular Session | Amended
Bill Title: Relating To Chapter 245, Hawaii Revised Statutes.
Spectrum: Partisan Bill (Democrat 10-0)
Status: (Engrossed - Dead) 2018-04-26 - Conference committee meeting to reconvene on 04-27-18 9:00AM in conference room 229. [SB2654 Detail]
Download: Hawaii-2018-SB2654-Amended.html
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THE SENATE |
S.B. NO. |
2654 |
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TWENTY-NINTH LEGISLATURE, 2018 |
S.D. 2 |
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STATE OF HAWAII |
H.D. 1 |
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A BILL FOR AN ACT
RELATING TO CHAPTER 245, HAWAII REVISED STATUTES.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
PART
I
SECTION 1. The legislature finds that tobacco use is the single most preventable cause of disease, disability, and death in the United States. Tobacco use continues to be a problem in Hawaii, causing approximately one thousand four hundred deaths per year among adults. An estimated twenty-one thousand children in Hawaii currently under the age of eighteen will ultimately die prematurely from smoking. Tobacco use poses a heavy burden on Hawaii's health care system and economy. Each year, smoking costs approximately $526,000,000 in direct health care expenditures and $387,300,000 in lost productivity in the State.
The legislature further finds that tobacco products are addictive and inherently dangerous, causing many different types of cancer, heart disease, and other serious illnesses. Hawaii has a substantial interest in reducing the number of individuals of all ages who use tobacco products, and a particular interest in protecting adolescents from tobacco dependence and the illnesses and premature death associated with tobacco use.
The legislature additionally finds that electronic smoking devices, also known as e-cigarettes, are battery-operated products designed to turn highly addictive nicotine, flavor, and other chemicals into an aerosol that is inhaled by the user. Consumers may choose from varying strengths of e-liquid nicotine as well as liquids consisting of different flavors. A 2015 study of more than fifty-eight million e-cigarettes found that ninety-nine per cent contained nicotine, whether or not they were labeled as "zero nicotine" or "nicotine-free". The legislature is concerned that labeling alone is not an effective measure of nicotine content.
The electronic smoking device industry, including the production of e‑liquids, is growing rapidly. According to a 2016 report from the United States Surgeon General, e-cigarette use amongst the nation's youth and young adults has become a major public health concern. The Surgeon General's report noted that e-cigarette use has increased considerably in recent years, growing an astounding nine hundred per cent among high school students from 2011 to 2015. More than three million middle school and high school students were users of e-cigarettes in 2015. Furthermore, e‑cigarettes are now the most commonly used tobacco product among youth, surpassing conventional cigarettes in 2014. E‑cigarette use among youth and young adults is also strongly associated with the use of other tobacco products, including combustible tobacco products. Toxicologists have also warned that e-liquids pose significant risks to public health, particularly to children. According to the Surgeon General's report, if the contents of refill cartridges or bottles are consumed, ingestion of e-liquids containing nicotine can cause acute toxicity and possibly death. The Surgeon General's report also found that there are numerous policies and practices that can be implemented at the state and local levels to address electronic smoking device use among youth and young adults, including preventing access to e‑cigarettes by youth, significant increases in tax and price of e-cigarettes, retail licensure, and regulation of e-cigarette marketing.
The legislature finds that the rapid growth of the electronic smoking device industry, including retail businesses selling electronic smoking devices or e-liquids, necessitates further regulations to protect consumers, such as requiring retailers of e-liquids to obtain a retail tobacco permit.
The legislature notes that the federal Food and Drug Administration recently finalized a rule that expands its regulatory authority to all tobacco products, including electronic smoking devices, cigars, and hookah and pipe tobacco. However, the legislature also notes that there is currently no state tobacco tax attached to e-liquid, even though electronic smoking devices are now regulated as tobacco products. The legislature finds that states such as Indiana, Pennsylvania, and West Virginia tax e-liquids that may or may not contain nicotine. Furthermore, tobacco products other than cigarettes are currently taxed at a lower rate than cigarettes, even though their use carries similar health risks. Research has shown that increasing cigarette prices, such as through cigarette taxes, tends to reduce the rate of smoking by adult and youth smokers. However, the legislature is concerned that as the price of cigarettes increases, smokers may purchase less expensive tobacco products, such as electronic smoking devices or e‑liquids.
Finally, the legislature concludes that there needs to be a tax on e-liquids and taxing these products as other tobacco products is the most equitable way to do so. Imposing a tax on e-liquids will also encourage users of e-liquids to quit, sustain cessation, prevent youth initiation, and reduce consumption among those who continue to use them.
The purpose of this part is to:
(1) Make
unlawful the shipment of tobacco products to anyone other than a licensee;
(2) Make
unlawful the transport of tobacco products ordered through remote sale to
anyone other than a licensee;
(3) Include e-liquid within the definition of "tobacco products", as used in the cigarette tax and tobacco tax law, thereby:
(A) Subjecting e-liquid to the excise tax on tobacco products;
(B) Requiring retailers of e-liquid to obtain a retail tobacco permit to sell, possess, keep, acquire, distribute, or transport e-liquid;
(C) Prohibiting persons from engaging in the business of wholesaling or dealing e-liquid without first obtaining a license from the department of taxation; and
(D) Applying other requirements of chapter 245, Hawaii Revised Statutes;
(4) Increase the license fee for persons engaged as a wholesaler or dealer of cigarettes and tobacco products; and
(5) Increase the retail tobacco permit fee for retailers engaged in the retail sale of cigarettes and tobacco products.
SECTION 2. Chapter 245, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§245- Unlawful shipment of tobacco products; penalty; reports; liability for unpaid taxes. (a) A person or entity commits the offense of unlawful shipment of tobacco products if the person or entity is engaged in the business of selling tobacco products and ships or causes to be shipped, any tobacco products ordered or purchased through a remote sale, to a person or entity in the State that is not:
(1) A licensee
under this chapter; or
(2) A person or
entity transporting tobacco products, as defined in section 245-1, under
federal internal revenue bond or customs control that are non-tax-paid under
title 26 of the United States Code, or an operator of a customs bonded
warehouse pursuant to title 19 United States Code section 1311 or 1555.
(b) This section shall not apply to the shipment
of tobacco products if any of the following conditions are met:
(1) The tobacco
products are exempt from taxes as provided by section 245-3(b);
(2) The
person or entity engaged in the business of selling, advertising, or offering
tobacco products for sale and transfer or shipment includes on the outside of
the shipping container an externally visible and easily legible notice located
on the same side of the shipping container as the address to which the shipping
container is delivered stating as follows:
"HAWAII LAW PROHIBITS
THE SALE OF CIGARETTES OR TOBACCO PRODUCTS TO INDIVIDUALS UNDER TWENTY-ONE
YEARS OF AGE AND REQUIRES THE PAYMENT OF ALL APPLICABLE TAXES. YOU ARE LEGALLY RESPONSIBLE FOR ALL APPLICABLE
UNPAID TAXES ON THESE CIGARETTES AND TOBACCO PRODUCTS."; or
(3) All applicable
Hawaii taxes on the tobacco products are paid in accordance with the
requirements of this section.
(c) Any person or entity who knowingly violates
this section shall be guilty of a misdemeanor.
Each shipment that violates or fails to comply with this section shall
be a separate and distinct violation.
(d) For the purposes of this section:
"Internet sale" means
any internet website or electronically networked means that solicits or sells
cigarettes or tobacco products, including electronic smoking devices,
regardless of whether cash is actually paid for the product.
"Licensee"
means a person or entity that is on a list of authorized licensees published by
the department.
"Mail order" means any
means of soliciting cigarettes or tobacco products, including electronic
smoking devices, that are set forth in a catalog or other printed solicitation
of a business that is generally available to the public.
"Remote sale" means a sale that is conducted by mail order, telephone, computer, internet sale, or any means other than a physical storefront.
(e) Notwithstanding the existence of other
remedies at law, any person or entity that purchases, uses, controls, or
possesses any tobacco products for which the applicable taxes imposed under
title 14, Hawaii Revised Statutes, have not been paid, shall be liable for the
applicable taxes, plus any penalty and interest as provided for by law.
(f) In addition to, or in lieu of, any other
civil or criminal remedy provided by law, a person or entity who has violated
this section is subject to a civil penalty of up to $5,000 for each
violation. The attorney general may
initiate a civil action seeking recovery of the penalties."
SECTION 3. Section 245-1, Hawaii Revised Statutes, is amended as follows:
1. By
adding a new definition to be appropriately inserted and to read:
""E-liquid" means
any liquid or like substance which may or may not contain nicotine that is
designed or intended to be used in an electronic smoking device, as defined in
section 328J-1, whether or not packaged in a cartridge or other container. E-liquid shall not include prescription
drugs; medical cannabis or manufactured cannabis products; or medical devices
used to inhale or ingest prescription drugs, including devices sold at a
licensed medical cannabis dispensary."
2. By amending the definition of "tobacco products" to read:
""Tobacco products" means
tobacco in any form, other than cigarettes or little cigars, that is prepared
or intended for consumption or for personal use by humans, including large cigars
and any substitutes thereof other than cigarettes that bear the semblance
thereof, snuff, chewing or smokeless tobacco, [and] smoking or pipe
tobacco[.], and e-liquid."
SECTION 4. Section 245-2, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:
"(b) The license shall be issued by the department
upon application therefor, in [such] a form and manner as shall
be required by rule of the department, and the payment of a fee of [$2.50,]
$250, and shall be renewable annually on July 1 for the twelve months
ending the succeeding June 30."
SECTION 5. Section 245-2.5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:
"(c) The retail tobacco permit
shall be issued by the department upon application by the retailer in the form
and manner prescribed by the department, and the payment of a fee of [$20.]
$50. Permits shall be valid for
one year, from December 1 to November 30, and renewable annually. Whenever a retail tobacco permit is defaced,
destroyed, or lost, or the permittee relocates the permittee's business, the
department may issue a duplicate retail tobacco permit to the permittee for a
fee of $5 per copy."
PART
II
SECTION 6.
The purpose of this part is to reduce tobacco and cigarette consumption
in Hawaii by increasing the costs to sell and purchase tobacco and cigarette
products.
SECTION 7. Section 245-3, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
"(a) Every wholesaler or dealer, in addition to any other taxes provided by law, shall pay for the privilege of conducting business and other activities in the State:
(1) An excise tax equal to 5.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, 1998, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(2) An excise tax equal to 6.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after September 30, 2002, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(3) An excise tax equal to 6.50 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, 2003, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(4) An excise tax equal to 7.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer after June 30, 2004, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(5) An excise tax equal to 8.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2006, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(6) An excise tax equal to 9.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2007, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(7) An excise tax equal to 10.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after September 30, 2008, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(8) An excise tax equal to 13.00 cents for each cigarette sold, used, or possessed by a wholesaler or dealer on and after July 1, 2009, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(9) An
excise tax equal to 11.00 cents for each little cigar sold, used, or possessed
by a wholesaler or dealer on and after October 1, 2009, whether or not sold at
wholesale, or if not sold then at the same rate upon the use by the wholesaler
or dealer;
(10) An excise tax equal to 15.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after July 1, 2010, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(11) An excise tax equal to 16.00 cents for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer on and after July 1, 2011, whether or not sold at wholesale, or if not sold then at the same rate upon the use by the wholesaler or dealer;
(12) An excise tax
equal to cents for each cigarette or little cigar sold, used,
or possessed by a wholesaler or dealer on and after November 1, 2018, whether
or not sold at wholesale, or if not sold then at the same rate upon the use by
the wholesaler or dealer;
(13) An
excise tax equal to seventy per cent of
the wholesale price of each article or item of tobacco products, other than
large cigars, sold by the wholesaler or dealer on and after September 30, 2009,
whether or not sold at wholesale, or if not sold then at the same rate upon the
use by the wholesaler or dealer; [and
(13)] (14) An excise tax equal to
per cent of the wholesale price of each article or item of tobacco products,
other than large cigars, sold by the wholesaler or dealer on and after July 1,
2018, whether or not sold at wholesale, or if not sold then at the same rate
upon the use by the wholesaler or dealer; and
(15) An
excise tax equal to fifty per cent of the wholesale price of each large cigar
of any length, sold, used, or possessed by a wholesaler or dealer on and after
September 30, 2009, whether or not sold at wholesale, or if not sold then at the
same rate upon the use by the wholesaler or dealer.
Where the tax imposed has been paid on cigarettes, little cigars, or tobacco products that thereafter become the subject of a casualty loss deduction allowable under chapter 235, the tax paid shall be refunded or credited to the account of the wholesaler or dealer. The tax shall be applied to cigarettes through the use of stamps."
PART
III
SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 9. This Act shall take effect on July 1, 3000.
Report Title:
Unlawful Shipment and Transport of Tobacco Products; Electronic Smoking Devices; E-liquid; Tax; Permit; License; Excise Tax
Description:
Prohibits the shipment of tobacco products, and the transport of tobacco products ordered or purchased through a remote sale, to anyone other than a licensee. Makes all provisions of the cigarette tax and tobacco tax law that relate to tobacco products applicable to e-liquid. Increases the license fee for wholesalers or dealers and the retail tobacco permit fee. Amends the taxes on cigarettes and tobacco products. Increases the excise tax for each cigarette or little cigar sold, used, or possessed by a wholesaler or dealer. Increases the excise tax on the wholesale price of each article or item of tobacco products, other than large cigars, sold by the wholesaler or dealer. (SB2654 HD1)
The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.
