STAND. COM. REP. NO. 2540

Honolulu, Hawaii

RE:    S.B. No. 2689

       S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committee on Judiciary and Labor, to which was referred S.B. No. 2689, S.D. 1, 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)  Allow 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;

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

     (5)  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 Department of Health, American Heart Association, Hawai‘i Public Health Institute, and American Cancer Society Cancer Action Network.  Your Committee received testimony in opposition to this measure from VOLCANO Fine Electronic Cigarettes, Hawaii Vapers United, Smokeless Hawaii, and six individuals.  Your Committee received comments on this measure from the Department of Taxation, Tax Foundation of Hawaii, and one individual.

     Your Committee finds that the public health rationale for the regulation of cigarettes and tobacco products is well developed, as tobacco use is the most preventable cause of disease, disability, and death in the United States.  In addition to governing specific aspects of tobacco production, sales, and use, Hawaii law also 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)  Inserting an effective date of January 7, 2059, to encourage further discussion; 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 Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2689, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2689, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,

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GILBERT S.C. KEITH-AGARAN, Chair