Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.B. No. 682, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to require businesses engaged in the retail sale of cigarettes and other tobacco products upon which a tax must be paid to obtain a retail tobacco permit from the Department of Taxation.

This measure also makes it a crime for the retailer to sell, possess, keep, acquire, distribute, or transport cigarettes, or other taxable tobacco products without a permit, requires the retailer to keep records of cigarette and tobacco product inventory, adds definitions to section 245-1, Hawaii Revised Statutes, and appropriates funds to establish and administer the licensing and permitting of tobacco and cigarette sales.

Your Committee finds that, under current law, it is not possible to know which or how many retail vendors are selling tobacco products. The retail tobacco permit will facilitate enforcement of the requirements of current law by providing a known and measurable list of entities engaged in the retail sale of cigarettes and other tobacco products.

Your Committee further finds that knowing who is licensed to sell tobacco products will greatly enhance and support efforts to reduce youth access to tobacco and keep the rates of illegal sale of tobacco to minors at one of the lowest in the nation. The record-keeping requirement of this measure also provides a tool to deal with the issue of counterfeit stamped products and counterfeit cigarettes and facilitates diligent enforcement of the Master Settlement Agreement and Cigarette Tax Law.

Your Committee has amended this measure by making technical nonsubstantive amendments for clarity and style.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 682, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 682, S.D. 2.