STAND. COM. REP. NO. 2780

Honolulu, Hawaii

RE:    S.B. No. 2495

       S.D. 2

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Ways and Means, to which was referred S.B. No. 2495, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO ELECTRONIC SMOKING DEVICES,"

begs leave to report as follows:

     The purpose and intent of this measure is to regulate the sale, marketing, and use of electronic smoking devices.

     More specifically, this measure:

     (1)  Includes electronic smoking devices within the definition of "tobacco products" under chapter 245, Hawaii Revised Statutes;

     (2)  Increases the license fee for persons engaged as a wholesaler or dealer of cigarettes or tobacco products, including electronic smoking devices;

     (3)  Increases the retail tobacco permit fee for retailers engaged in the retail sale of cigarettes or tobacco products, including electronic smoking devices;

     (4)  Establishes an excise tax on electronic smoking devices of an unspecified per cent of the wholesale price of each electronic smoking device kit, electronic smoking device nicotine cartridge, or electronic smoking device nicotine refill sold, used, or possessed by a wholesaler or dealer on or after October 1, 2014;

     (5)  Amends Hawaii's anti-smoking statute to prohibit the use of electronic smoking devices in places open to the public and places of employment; and

     (6)  Clarifies that the sale, distribution, or display of electronic smoking devices is restricted in the same manner as cigarettes and other tobacco products.

     Your Committee received written comments in support of this measure from the Department of Human Resources Development, American Cancer Society Cancer Action Network, Coalition for a Tobacco-Free Hawaii, University of Hawaii Student Health Advisory Council, and twenty-three individuals.  Written comments in opposition were received from Black Lava Vape, PC Gamerz, and twenty-one individuals.  The Department of Taxation, Hawaii Food Industry Association, Tax Foundation of Hawaii, and three individuals submitted written comments on the measure.

     Your Committee finds that the federal Food and Drug Administration has not yet exercised its regulatory authority over electronic smoking devices.  As a result, electronic smoking devices are manufactured without regulatory oversight or quality control.  Your Committee also finds that including electronic smoking devices under the existing definition of "tobacco products" in section 245-1, Hawaii Revised Statutes, makes the licensing and permitting requirements for tobacco products under chapter 245, Hawaii Revised Statutes, applicable to electronic smoking devices.  Your Committee further finds that when compared to other states, Hawaii's tobacco licensing fees are among the lowest in the country.

     Your Committee notes that this measure is a work in progress and further discussion is required.  Your Committee also notes that, according to the state Attorney General, the subject matter of this measure would be better suited to a vehicle with a different title, such as "Relating to Tobacco."

     Your Committee has amended this measure by:

     (1)  Changing to an unspecified amount the license fee for persons engaged as a wholesaler or dealer of cigarettes or tobacco products, retail tobacco permit fee for retailers engaged in the retail sale of cigarettes or tobacco products, and the fee for a duplicate retail tobacco permit; and

     (2)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

     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. 2495, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2495, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

____________________________

DAVID Y. IGE, Chair