HB130 HD1

Report Title:

Tobacco Product Licensure

Description:

Creates statewide licensure mechanism for retail tobacco sales that provides for licensing retail tobacco vendors, inspections and enforcement, adjudication of fines and penalties, training and education for retail merchants and public awareness of the State's statute governing the sale of tobacco to minors. Establishes a tobacco commission within the department of health. (HB130 HD1)

HOUSE OF REPRESENTATIVES	H.B. NO.	130
TWENTY-FIRST LEGISLATURE, 2001		H.D. 1
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TOBACCO PRODUCTS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The use of tobacco products by Hawaii's youth is a public health problem of significant magnitude and concern. The legislature finds that tobacco use by minors in Hawaii is widespread and increasing. The present law prohibiting the sale of tobacco products to minors is not effective by itself in reducing illegal sales to minors.

The legislature further finds that tobacco industry advertising targets children in order to replace the over eleven hundred Hawaii residents who die each year as a result of tobacco-related illness. Of today's smokers, ninety per cent began their addictive habit before the age of eighteen. The economic loss created by tobacco use in Hawaii represents an ongoing and escalating financial burden borne by every business, large and small, and every person, smoker and nonsmoker. These figures also represent a health and economic drain created by each new generation of children that begins using tobacco products and becomes addicted to nicotine.

The purpose of this bill is to promote, protect, and preserve the health of Hawaii's children by:

(1) Reducing youth access to tobacco products;

(2) Reducing the illegal sale of tobacco products to minors;

(3) Increasing compliance with existing laws prohibiting the sale of tobacco products to minors; and

(4) Creating a tobacco commission within the department of health to issue licenses for the importation or sale of tobacco products as defined in this Act and chapter 245.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

TOBACCO PRODUCTS

§ -1 Definitions. As used in this chapter:

"Cigarettes" means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape and regardless of whether the tobacco is flavored, adulterated, or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco.

"Cigarette vending machine" means a self-service device that dispenses cigarettes, cigars, tobacco, or any other product containing tobacco.

"Commission" means the tobacco commission as defined under this chapter.

"Minor" means any person below the age of twenty-one years; provided that, where applicable to tobacco as provided in this chapter, minor means any person under the age of eighteen.

"Retail licensee" means any licensee holding a class license under this chapter, related to its retail operation.

"Sell" or "to sell" includes: to solicit and receive an order for; to have or keep or offer or expose for sale; to deliver for value or in any other way than purely gratuitously; to peddle; to keep with intent to sell; to traffic in; and the word "sale" includes every act of selling as defined in this chapter. Notwithstanding the provisions above, the delivery of tobacco by a licensee's vehicle or the vehicle of a licensee's agent shall be deemed delivery for value.

"Seller" includes the agents and employees of a seller; provided that any person shall be deemed to be a seller, who in the State, whether acting as agent or representative of a nonresident principal or otherwise, solicits the placing of or takes, receives, or forwards orders for tobacco to be shipped into the State from any place without the State to be delivered to customers, by direct shipment or otherwise.

"Tobacco" or "tobacco products" means products made from tobacco leaves in any form that are prepared or intended for consumption by, or the personal use of, humans, including cigarettes, cigars, and any other substitutes bearing the semblance thereof; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff or snuff flour; cavendish; plug and twist tobacco; fine cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings, and sweepings of tobacco, and other kinds and forms of tobacco, prepared in a manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking.

§ -2 Tobacco commission. (a) There is established a tobacco commission within the department of health for administrative purposes. The commission shall consist of five members, who shall be appointed by the governor without regard to section 26-34, Hawaii Revised Statutes. The governor shall designate the chair of the commission from among the appointed members. The members shall not receive compensation for their services but shall be reimbursed for necessary expenses, including travel expenses, incurred in the performance of their duties under this chapter.

(b) The commission shall have the jurisdiction, power, authority, and discretion, subject only to this chapter:

(1) To grant, refuse, suspend, and revoke any licenses for the importation and sale of tobacco;

(2) To take appropriate action against a person who, directly or indirectly, imports or sells tobacco without being authorized pursuant to this chapter; provided that the commission shall have the jurisdiction, power, authority, and discretion to hear and determine administrative complaints of the director regarding violations of the tobacco laws of the State or of the rules of the commission, and impose penalties for violations thereof as may be provided by law;

(3) To control, supervise, and regulate the importation and sale of tobacco by investigation, enforcement, and education; provided that:

(A) Any educational program shall be coordinated with the department of health, the commission's staff, licensees, and their employees;

(B) Tobacco education programs shall be financed through the money collected from the assessment of fines against tobacco licensees; and

(C) Tobacco education programs shall be financed through the money collected from the assessment of fines against tobacco licensees under this chapter.

(4) From time to time to make, amend, and repeal rules not inconsistent with this chapter, as in the judgment of the commission seem appropriate for carrying out this chapter and for the efficient administration thereof, and the proper conduct of the business of all licensees, including every matter or thing required to be done or which may be done with the approval or consent or by order or under the direction or supervision of or as prescribed by the commission; which rules, when adopted as provided in chapter 91, shall have the force and effect of law;

(5) Subject to chapter 76, to appoint and remove an administrator, who may also be appointed an investigator and who shall be responsible for the operations and activities of the staff. The administrator may hire and remove hearing officers, investigators, and clerical or other assistants as its business may from time to time require, to prescribe their duties, and fix their compensation; to engage the services of experts and persons engaged in the practice of a profession, if deemed expedient. Every investigator, within the scope of the investigator's duties, shall have the powers of a police officer. No employee of any commission, aside from exercising the right to vote, shall support, advocate, or aid in the election or defeat of any candidate for public office, and upon satisfactory proof of such prohibited activity the offender shall be summarily dismissed;

(6) To limit the number of licenses of any class or kind within the county, or the number of licenses of any class or kind to do business in any given locality, when in the judgment of the commission such limitations are in the public interest;

(7) To prescribe the nature of the proof to be furnished, the notices to be given, and the conditions to be met or observed in case of the issuance of a duplicate license in place of one alleged to have been lost or destroyed, including a requirement of any indemnity deemed appropriate to the case;

(8) To fix the hours between which licensed premises of any class or classes may regularly be open for the transaction of business, which shall be uniform throughout the county as to each class respectively;

(9) To prescribe all forms to be used for the purposes of this chapter not otherwise provided for in this chapter, and the character and manner of keeping of books, records, and accounts to be kept by licensees in any matter pertaining to their business;

(10) To investigate violations of this chapter and chapter 245, through its investigators or otherwise, to include covert operations, and to report violations to the prosecuting officer for prosecution and, where appropriate, the director of taxation to hear and determine complaints against any licensee;

(11) To prescribe, by rule, the terms, conditions, and circumstances under which persons or any class of persons may be employed by holders of licenses;

(12) To prescribe, by rule, the term of any license or solicitor's and representative's permit authorized by this chapter, the annual or prorated amount, the manner of payment of fees for the licenses and permits, and the amount of filing fees; and

(13) To prescribe, by rule, the circumstances and penalty for the unauthorized importation or sale of any tobacco.

(c) Subject only to this chapter, the commission and each member thereof shall have the same powers respecting the administering of oaths, compelling the attendance of witnesses and the production of documentary evidence, and examining the witnesses as are possessed by a circuit court, except that the commission and each member thereof shall not be bound by the strict legal rules of evidence. In addition, the commission shall have the power to require the production of, and to examine any books, papers, and records of any licensee that may pertain to the licensee's business under the license or that may pertain to a matter at a hearing before the commission or to an investigation by the commission.

(d) The exercise by the commission of the power, authority, and discretion vested in it pursuant to this chapter shall be final and shall not be reviewable by or appealable to any court or tribunal, except as otherwise provided in this chapter or chapter 91.

(e) The legislature declares its intent not to preempt the field of regulation of the use and sale of tobacco products. Counties may regulate smoking or tobacco use in a manner consistent with this chapter.

(f) The commission shall adopt rules for the purposes of this chapter.

§ -3 Tobacco licenses, classes. (a) A tobacco license may be granted by the commission under the department of health as provided in this section. For purposes of this section, a tobacco license authorizes the importation or sale of tobacco products as defined in this chapter and chapter 245.

(b) Class 1. Wholesale tobacco dealer. A license for the sale of tobacco at wholesale authorizes the licensee to import and sell only to retail tobacco dealer licensees or others who are authorized by law to resell, but are not required to hold a license by law. Nothing in this subsection shall prevent a wholesaler from selling tobacco to post exchanges, ships' service stores, Army or Navy officers' clubs, or like organizations located on Army or Navy reservations, or to any vessel performing a regular water transportation service between any two or more ports in the State.

(c) Class 2. Retail tobacco dealer. A license under this class authorizes the dealer to sell tobacco products at retail. The retail tobacco dealer licensee shall be responsible for providing a training program to all employees that shall include training in the laws governing the sale of tobacco, methods for recognizing and handling underage customers, and procedures for proper identification to verify that customers are not underage.

(d) It shall be unlawful for any retail tobacco dealer licensee to purchase or acquire tobacco from any person other than a wholesale tobacco dealer licensed pursuant to this chapter. It shall be unlawful for any retail tobacco dealer to offer or sell tobacco products from vending machines, except that the sale of tobacco products from vending machines may be permitted in an on-premises tobacco licensed establishment pursuant to section 328K-7.

§ -4 Application; tobacco licenses. (a) Every application for a tobacco license or the renewal of a tobacco license shall be in writing and signed by the applicant, by the proper officer or officers of a corporation or unincorporated association, or by a general partner of a partnership, or other official of a legal entity responsible for the application. The application shall be addressed to the commission and shall include:

(1) (A) For an individual, the full name, age, and place of residence of the applicant;

(B) For a corporation or joint-stock company, its full name and the names of its officers and directors;

(D) For any other association of individuals or other legal entity, the names, ages, and respective places of residence of its officers or members;

(2) A particular description of the place or premises where the proposed license is to be exercised, so that the exact location and extent thereof may be clearly and definitely determined therefrom; provided that if the applicant has or intends to have more than one place of business dealing with cigarettes or tobacco, a separate application shall be made for each place of business; and provided further that no application for a retail tobacco dealer license shall be accepted from a person who conducts business from a vehicle;

(3) The class of license applied for; and

(4) Any other information pertinent to the subject matter that may be required by the rules of the commission.

(b) An application for a tobacco license may be granted without notice or hearing by the commission pursuant to commission rules. The license shall be posted on the premises of the place identified in the application in a conspicuous place for public viewing.

(c) A tobacco license shall be valid for a term beginning July 1 through June 30 of the following year and shall be subject to renewal pursuant to commission rules; provided that no license shall be transferable.

§ -5 Prohibitions; tobacco licensee. (a) At no time under any circumstances shall any tobacco licensee or its employees sell or furnish any tobacco to:

(1) A minor; or

(2) Any person over the age of eighteen for distribution to or use by a minor.

(b) Any person who violates this section or any rule adopted by the commission pursuant to this part shall be guilty of a violation for each separate offense. Each occurrence of violation shall constitute a separate offense.

§ -6 Prohibitions involving minors, cigarettes, tobacco; commission; penalty. (a) No minor shall purchase tobacco.

(b) Subsection (a) shall not apply if a person under the age of eighteen, with parental authorization, is participating in a controlled purchase as part of a law enforcement activity or a study authorized by the department of health to determine the level of incidence of tobacco sales to minors.

(d) No minor shall possess cigarettes or tobacco under a retail tobacco dealer's license except that custody of cigarettes or tobacco by the minor may be permitted in the course of delivery pursuant to the direction of the minor's employer lawfully engaged in business necessitating the delivery.

(e) No minor shall falsify any identification or use any false identification or identification of another person or of a fictitious person for the purpose of buying or attempting to buy cigarettes or tobacco.

(f) No minor shall be permitted to sell cigarettes or tobacco.

(g) A minor who violates this section shall be subject to the jurisdiction of the commission who shall be authorized to issue citations to those persons for referral and disposition by the family court.

§ -7 Prohibitions involving minors, cigarettes, tobacco; public places; penalty. (a) No person age eighteen or older shall purchase cigarettes or tobacco for use by, or offer or distribute cigarettes or tobacco to, a minor.

(b) Any person age eighteen or older who violates subsection (a) shall be guilty of a petty misdemeanor.

§ -8 Fines collected. (a) One half of all the fines collected pursuant to this part shall be transferred to the commission.

(b) The moneys transferred pursuant to subsection (a) shall be allocated for the purpose of education and training of retail tobacco merchants pursuant to section 281-17(a)(3).

§ -9 Illegal manufacture, importation, or sale of tobacco. (a) It shall be unlawful for any person who does not have a valid retail tobacco dealer license to sell any tobacco product at retail except as provided in this chapter.

(b) It shall be unlawful for any person who does not have a valid wholesale tobacco dealer license to import any tobacco product from without the State, and sell to retail tobacco dealer licensees except as provided in this chapter.

(c) A license shall constitute authority for the licensee to sell only the tobacco thereby authorized to be sold by the licensee.

(d) The commission shall establish minimum standards by rule under which the commission shall suspend or revoke a license.

§ -10 Fees; justified, method of change, limitation. (a) Any tobacco license fee or any increase in an existing tobacco license fee sought to be implemented by the commission shall have, as its justification, a direct and proportionate relationship to costs and expenses of the commission in its control, supervision, or regulation of the importation and sale of cigarettes or tobacco, or otherwise directly relate to actual costs and expenses of the administration of the commission as is set forth in this chapter.

(b) Any such license fees or any moneys collected or received by the commission under this chapter may only be used for costs and expenses directly relating to operational and administrative costs actually incurred by the commission collecting or receiving license fees or moneys. The fees or moneys shall not be used for any costs or expenses other than those directly relating to its operation and administration.

(c) The commission seeking a change in tobacco license fee structure shall notify all licensees under this chapter affected by the proposed change and shall notify each licensee of the outcome and resolution of the change.

(e) If the commission receives a license fee from a licensee in excess of the amount prescribed by this section, the commission shall immediately revise its tobacco license fee structure to conform with the requirements of this section. All tobacco license fees shall be maintained in a separate account. Any funds in excess of twenty per cent of the commission's current budget shall be returned or credited annually to existing licensees.

§ -11 General right of inspection. Any investigator, at all times, without notice and without any search warrant or other legal process, may visit and have immediate access to every part of the premises of every tobacco licensee, for the purpose of making any examination or inspection thereof or inquiry into the books and records therein, to ascertain whether all of the conditions of the license and all provisions of this chapter and chapter 245 are being complied with by the licensee.

§ -12 Entry for examination; obstructing commission operations; penalty. (a) Every investigator shall, and any officer having police power may, at all reasonable times, and at any time whatsoever if there is any reasonable ground for suspicion that the conditions of any tobacco license are being violated, without warrant, enter into and upon any licensed premises and inspect the premises and every part thereof, and any books or records therein, to ascertain whether all conditions of the license and all provisions of this chapter and chapter 245 are being complied with by the licensee.

(b) If any investigator or officer, or any person called by the investigator or officer to the investigator's or officer's aid, is threatened with the use of violence, force, or physical interference or obstacle, or is hindered, obstructed, or prevented by any licensee, the licensee's employees, or any other person from entering into the premises, or whenever any investigator or officer is obstructed or molested in the performance of the officer's duty in any respect by any licensee, the licensee's employees, or any other person, the licensee, the licensee's employee, or any other person shall be fined not more than $2,000 or imprisoned not more than one year, or both.

(c) Whenever any investigator or officer, having demanded admittance into any licensed premises and declared the investigator's or officer's name and office, is not admitted by the licensee or the person in charge of the premises, it shall be lawful for the investigator or officer to forcibly and in any manner to break into and enter the premises.

§ -13 When sale without license authorized. (a) In case a tobacco license is revoked, canceled, or not renewed, the licensee, with the permission of and upon the conditions set by the commission, may sell tobacco then in the licensee's possession within sixty days, or within such additional time allowed by the commission, unless under this chapter the same are seized or forfeited.

(b) Any bank, trust company, or financial institution owning or possessing tobacco that was acquired by the bank, trust company, or financial institution in the ordinary course of its business, may sell the tobacco with the permission of and upon conditions set by the commission.

(c) Any person acting as personal representative or guardian of a licensee's estate, or any receiver, assignee for benefit of creditors, or trustee in bankruptcy, may sell the stock of tobacco with the permission of and upon conditions set by the commission, except as otherwise provided in this chapter.

(d) Any insurance company, or any common carrier acting as an insurer for losses to persons shipping tobacco, may take possession of and sell the tobacco, the containers of which have been damaged by fire or otherwise, with the permission of and upon conditions set by the commission.

(e) Any person in possession of a stock of lawfully acquired tobacco under a foreclosure proceeding, proceedings for enforcement of a lien, civil execution, or under any other proceeding or process, may sell tobacco with the permission of and upon conditions set by the commission.

§ -14 Manufacture or sale without license; penalty. If any person, acting in person or by or through any agent, servant, or employee, manufactures or sells any tobacco, either directly or indirectly, or upon any pretense or by any subterfuge, except as authorized pursuant to this chapter, the person shall be fined not more than $2,000 or imprisoned not more than one year, or both."

§ -15 Hearing, illegal manufacture, importation, or sale of tobacco. (a) The commission may assess and collect a penalty, or reprimand a person for not having a valid license to sell any tobacco in violation of this chapter or of any rule applicable thereto.

(b) In every case where the administrator elects to conduct proceedings under this section where it is proposed to assess and collect a penalty from a person for not having a valid license to sell any tobacco in violation of this chapter or of any rule applicable thereto, that person shall be entitled to notice and hearing in conformity with chapter 91.

(c) At the hearing, before final action is taken by the commission, the person shall be entitled to be heard in person or through counsel and shall be given a full and fair opportunity to present facts showing that the alleged cause or causes for the proposed action do not exist, or any reason why no penalty should be imposed. The testimony taken at the hearing shall be under oath and recorded stenographically, or by machine, but the parties shall not be bound by the strict rules of evidence; certified copies of any transcript and of any other record made of or at the hearing shall be furnished to a person upon that person's request and at that person's expense.

(d) Any order, reprimand, or penalty imposed by the commission upon a person for not having a valid license to sell any tobacco in violation of this chapter or of any rule applicable thereto shall be in addition to any penalty that might be imposed upon that person's conviction in a court of law for any violation of this chapter. The amount of penalty assessed and collected by the commission from any person under this section for not having a valid license to sell any tobacco shall not exceed the sum of $2,000 for each charge.

(e) Whenever the service of any order or notice is required by this section the service shall be made in the following manner. If a violation is based upon the personal observation of any investigator, a written notice of the violation shall be given to the person charged with a violation within a reasonable period of time after the alleged violation occurred. The person charged shall be requested to acknowledge receipt of the notice of alleged violation, or, if the person cannot be found after diligent search, by leaving a certified copy thereof at the person's dwelling house or usual place of abode with some person of suitable age and discretion residing therein. If the person cannot be found after diligent search, and service cannot be made, then service may be made by depositing another certified copy thereof in the certified mail of the United States post office, postage prepaid, addressed to the person at the person's last known residence address; provided that in the case of a partnership, corporation, unincorporated association, or limited liability company, service may be made upon any partner, officer, or member thereof."

SECTION 3. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 4. New statutory material is underscored.

SECTION 5. This Act shall take effect on July 1, 2005.