STAND. COM. REP. NO. 2260

Honolulu, Hawaii

RE:    S.B. No. 2689

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2689 entitled:

"A BILL FOR AN ACT RELATING TO CHAPTER 245, HAWAII REVISED STATUTES,"

begs leave to report as follows:

     The purpose and intent of this measure is to:

     (1)  Establish definitions for "disposable electronic smoking device", "electronic smoking device", "e‑liquid", and "reusable electronic smoking device";

     (2)  Amend the definitions of "dealer", "retailer", "sale" or "sold", "wholesale price", and "wholesaler" to include electronic smoking devices and e-liquid;

     (3)  Increase the license fee for wholesalers and dealers of cigarettes, tobacco products, electronic smoking devices, and e-liquid; and

     (4)  Increase the retail tobacco permit fee for retailers of cigarettes, tobacco products, electronic smoking devices, and e-liquid.

     Your Committee received testimony in support of this measure from the American Cancer Society Cancer Action Network and Coalition for a Tobacco-Free Hawai‘i.  Your Committee received testimony in opposition to this measure from the Hawaii Food Industry Association, Hawaii Smokers Alliance, VOLCANO Fine Electronic Cigarettes, PC Gamerz, and twelve individuals.  Your Committee received comments on this measure from the Department of Taxation and Tax Foundation of Hawaii.

     Your Committee finds that the public health rationale for the regulation of cigarettes and tobacco products is well developed, as tobacco use is the single most preventable cause of disease, disability, and death in the United States.  In addition to substantive state laws governing specific aspects of tobacco production, sales, and use, Hawaii law requires retailers, wholesalers, and dealers of cigarettes or tobacco products to obtain a special license or permit.  These licenses and permits facilitate the enforcement of the cigarette tax and tobacco tax law under chapter 245, Hawaii Revised Statutes.  However, the current license fee for wholesalers and dealers is only $2.50 a year, while retail tobacco permit fees cost only $20 a year.  These fees should be increased and the law updated to include electronic smoking devices and e-liquid.

     Your Committee has amended this measure by:

     (1)  Allowing electronic smoking devices, packages of electronic smoking devices, containers of electronic smoking devices, e-liquid, packages of e-liquid, and containers of e-liquid to be seized and forfeited if unlawfully sold, possessed, kept, stored, acquired, distributed, or transported; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2689, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2689, S.D. 1, and be referred to your Committee on Judiciary and Labor.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Health,

________________________________

ROSALYN H. BAKER, Chair