STAND. COM. REP. NO.  1370

Honolulu, Hawaii

                , 2017

RE:   S.B. No. 404

      S.D. 2

      H.D. 1

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Ninth State Legislature

Regular Session of 2017

State of Hawaii

Sir:

     Your Committees on Health and Consumer Protection & Commerce, to which was referred S.B. No. 404, S.D. 2, entitled:

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

beg leave to report as follows:

The purpose of this measure is to apply to the sale of electronic smoking devices and e-liquid the same permit and license requirements and excise tax that applies to the sale of cigarettes and tobacco products.  This measure also increases the retail tobacco permit fee and the tobacco wholesale or dealer license fee.

Your Committees received testimony in support of this measure from the Hawaii Public Health Association and several individuals.  Your Committees received testimony in opposition to this measure from VOLCANO Fine Electronic Cigarettes, ABC Stores, and numerous individuals.  The Department of the Attorney General, Department of Taxation, Coalition for a Tobacco-Free Hawai‘i, American Heart Association, and Tax Foundation of Hawaii submitted comments.

     Your Committees have amended this measure by:

     (1)  Inserting language to clarify that penalties for the retail sale of cigarettes or tobacco products without a retail tobacco permit apply to the unpermitted sale of electronic smoking devices or e-liquid;

     (2)  Changing the excise tax amount applicable to the sale of electronic smoking devices and e-liquid to an unspecified percentage of the wholesale price; and

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

     Your Committees note that several testifiers at the public hearing held on this measure requested that a portion of the revenue from the excise tax on electronic smoking devices and e-liquid established by this measure be applied to community programs or activities for tobacco education, prevention, and control.  Your Committees find that this request merits consideration and urge that discussion of such programs be included in continuing discussions on this measure.

     As affirmed by the records of votes of the members of your Committees on Health and Consumer Protection & Commerce that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 404, S.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 404, S.D. 2, H.D. 1, and be referred to your Committee on Finance.

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

____________________________ ROY M. TAKUMI, Chair

____________________________ DELLA AU BELATTI, Chair