SB1016 SD2

SECTION 1. The legislature finds that the density of tobacco retailers around schools has a significant impact on the prevalence of youth tobacco use. A study published in the American Journal of Public Health showed that experimental smoking among high school-aged minors increases when tobacco retailers are closer to schools and densely populate those locations. Similarly, the incidence of smoking was significantly higher among students in schools with the highest density of surrounding tobacco retailers compared with students in schools without any tobacco retailers nearby. Another study found that tobacco retailers were more concentrated in school areas and more likely to be frequented by youth.

The legislature further finds that electronic smoking devices are especially popular among youth, surpassing cigarettes as the most commonly used tobacco product. The 2015 Hawaii Youth Risk Behaviors Survey found that twenty-five per cent of high school students and fifteen per cent of middle school students reported using electronic vapor products in the thirty days preceding the survey. The popularity of these devices is concerning, as electronic smoking devices are not safe alternatives to other tobacco products, and exposure to nicotine increases the risk of addiction and may disrupt critical brain development.

The legislature recognizes that tobacco advertising and retailers suggest that smoking is acceptable, and youth and children are particularly susceptible to these cues. Tobacco and electronic smoking device manufacturers employ tactics that appeal to youth, such as child-friendly flavors, celebrity endorsements, and high-tech design. The tobacco industry spends $24,300,000 on marketing per year in Hawaii. In addition, the electronic smoking device industry spent an estimated $115,000,000 on marketing in 2014, a nearly 1,700 per cent increase from 2011. Youth who walk or take public transportation to school may be exposed to advertising of tobacco products and electronic smoking devices at locations such as convenience stores, grocery stores, and gas stations.

The legislature notes its constitutional obligation to protect the public health and safety of state residents. In particular, article IX, section 1, of the Hawaii State Constitution directs that "[t]he State shall provide for the protection and promotion of the public health." The legislature finds that tobacco retail buffer zones encourage responsible tobacco retailing, reduce tobacco-related health disparities, and most importantly, reduce youth tobacco use, especially the use of electronic smoking devices. Many cities in California and New York have already implemented tobacco retail buffer zones, ranging from three hundred to fifteen hundred feet, around schools, parks, libraries, and other youth-oriented areas, within which sales of tobacco products and permits for tobacco retailers are prohibited.

The purpose of this Act is to:

(1) Reduce the use of, access to, and exposure to tobacco products by youth by prohibiting the issuance and renewal of retail tobacco permits for, and the sale of a tobacco product or an electronic smoking device at, a place of business within seven hundred fifty feet of preschools, schools, and public playgrounds; and

(2) Codify the department of taxation's administrative rule specifying when the department may suspend, revoke, or decline to renew a retail tobacco permit.

SECTION 2. Chapter 245, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§245- Good cause to suspend, revoke, or decline to renew a retail tobacco permit. (a) In addition to any other acts or conditions provided by law, the department may suspend or, after hearing, revoke or decline to renew any retail tobacco permit issued under this chapter whenever the department finds that the applicant or permittee has failed to comply with this chapter or any rule adopted under this chapter, or for any other good cause. Good cause includes but is not limited to instances where an applicant or permittee has:

(1) Submitted a false or fraudulent application or provided a false statement in an application;

(2) Possessed or displayed a false or fraudulent retail tobacco permit;

(3) Failed to meet or maintain the conditions and requirements necessary to qualify for the granting of a retail tobacco permit;

(4) Procured a retail tobacco permit through fraud, misrepresentation, or deceit;

(5) Aided and abetted a person or entity that does not possess a retail tobacco permit to directly or indirectly perform activities requiring a retail tobacco permit;

(6) Instances of noncompliance, violation, or conviction of any law directly pertaining to the sale, importation, acquisition, possession, stamping, distribution, transportation, or smuggling of cigarettes, counterfeit cigarettes, counterfeit tax stamps, or other tobacco products in violation of county, state, or federal law;

(7) Intentionally failed to make accessible for inspection any records of the permittee for the purpose of determining compliance with this chapter to any representative of the department or the attorney general; or

(8) Failed to comply with applicable tax obligations.

Upon suspending or revoking any retail tobacco permit, the department shall request that the permittee immediately surrender any retail tobacco permit or duplicate issued to the permittee, and the permittee shall surrender the permit or duplicate promptly to the department as requested.

(b) In assessing whether good cause exists when considering a revocation, suspension, or declination to renew a retail tobacco permit based upon a person's or entity's employee's violations of section 712-1258, the department may consider whether the sale of the tobacco product to the person under twenty-one years of age was an isolated incident, and if not, the extent to which the person or entity acted in reckless disregard of the risk that tobacco products would be sold to persons under twenty-one years of age.

(1) The nature, circumstances, extent, and gravity of the violation;

(2) With respect to the permittee, the degree of culpability and any history of prior compliance or prior violations; and

(3) Such other matters as justice may require or as the department deems relevant.

(d) Revocation, suspension, or declination to renew a retail tobacco permit shall have no effect on liability for payment of taxes, fees, penalties, or interest incurred or imposed."

SECTION 3. Chapter 328J, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§328J- Sale of tobacco products and electronic smoking devices; prohibited locations. (a) It shall be unlawful to sell a tobacco product or an electronic smoking device at a place of business located within seven hundred fifty feet of a public or private preschool; a public or private elementary, intermediate, or high school; or public playground. The distance of seven hundred fifty feet shall be measured from the boundary of the preschool, school, or playground to the boundary of the place of business' premises.

(b) Any person who violates this section shall be fined $500 for the first offense and no less than $500 and no more than $2,000 for each subsequent offense. Each day a violation continues shall constitute a separate offense.

"Public playground" means an area of land that is used for outdoor play or recreation, especially by children, maintained by county or state government, that contains one or more of the following:

(1) Pieces of recreational equipment such as a slide or a swing;

(2) Facilities for playing informal games such as a baseball diamond or tennis court; or

(3) Fields for playing of sports such as soccer or football.

Public or private beaches shall not be deemed public playgrounds.

"To sell" shall have the same meaning as in section 712‑1257."

SECTION 4. Section 245-2.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§245-2.5[]] Retail tobacco permit. (a) Beginning December 1, 2006, every retailer engaged in the retail sale of cigarettes and other tobacco products upon which a tax is required to be paid under this chapter shall obtain a retail tobacco permit. No place of business within seven hundred fifty feet of a public or private preschool; public or private elementary, intermediate, or high school; or public playground shall seek a permit under this section.

(b) Beginning March 1, 2007, it shall be unlawful for any retailer engaged in the retail sale of cigarettes and other tobacco products upon which a tax is required to be paid under this chapter to sell, possess, keep, acquire, distribute, or transport cigarettes or other tobacco products for retail sale unless a retail tobacco permit has been issued to the retailer under this section and the retail tobacco permit is in full force and effect.

(c) The retail tobacco permit shall be issued by the department upon application by the retailer in the form and manner prescribed by the department, and the payment of a fee of $20[.]; provided that the place of business for which the permit is sought shall not be within seven hundred fifty feet of a public or private preschool; a public or private elementary, intermediate, or high school; or a public playground. Permits shall be valid for one year, from December 1 to November 30, and renewable annually[.]; provided that a permit issued for a place of business that is located within seven hundred fifty feet of a public or private preschool; a public or private elementary, intermediate, or high school; or a public playground shall not be renewed.

The distance of seven hundred fifty feet shall be measured from the boundary of the preschool, school, or public playground to the boundary of the place of business' premises. Public or private beaches, public or private day care centers located in or adjacent to commercial areas, and vocational or licensing schools, or other schools attended primarily by adults, shall not be deemed schools or public playgrounds for purposes of subsection (a) and this subsection.

Whenever a retail tobacco permit is defaced, destroyed, or lost, or the permittee relocates the permittee's business, the department may issue a duplicate retail tobacco permit to the permittee for a fee of $5 per copy.

(d) A separate retail tobacco permit shall be obtained for each place of business owned, controlled, or operated by a retailer. A retailer that owns or controls more than one place of business may submit a single application for more than one retail tobacco permit. Each retail tobacco permit issued shall clearly describe the place of business where the operation of the business is conducted.

(e) Any entity that operates as a dealer or wholesaler and also sells cigarettes or other tobacco products to consumers at retail shall acquire a separate retail tobacco permit.

(f) A retail tobacco permit shall be nonassignable and nontransferable from one entity to another entity. A retail tobacco permit may be transferred from one business location to another business location after an application has been filed with the department requesting that transfer and approval has been obtained from the department.

(g) A retail tobacco permit issued under this section shall be displayed at all times in a conspicuous place at the place of business requiring the retail tobacco permit.

(h) Any sales of cigarettes or tobacco products made through a cigarette or tobacco product vending machine are subject to the terms, conditions, and penalties of this chapter. A retail tobacco permit need not be displayed on cigarette or tobacco product vending machines if the retail tobacco permit holder is the owner of the cigarette or tobacco product vending machines and the cigarette or tobacco product vending machines are operated at the location described in the retail tobacco permit.

(i) No retailer shall purchase any pack of cigarettes without the appropriate tax stamp being affixed to the bottom of the pack as required by this chapter.

(j) A vehicle from which cigarettes or tobacco products are sold is considered a place of business and requires a retail tobacco permit. Retail tobacco permits for a vehicle shall be issued bearing a specific motor vehicle identification number and are valid only when physically carried in the vehicle having the corresponding motor vehicle identification number. Retail tobacco permits for vehicles shall not be moved from one vehicle to another.

(k) A permittee shall be subject to the inspection and investigation requirements of this chapter and shall provide the department or the attorney general with any information deemed necessary to verify compliance with the requirements of this chapter.

(l) A permittee shall keep a complete and accurate record of the permittee's cigarette or tobacco product inventory. The records shall:

(1) Include:

(A) A written statement containing the name and address of the permittee's source of its cigarettes and tobacco products;

(B) The date of delivery, quantity, trade name or brand, and price of the cigarettes and tobacco products; and

(C) Documentation in the form of any purchase orders, invoices, bills of lading, other written statements, books, papers, or records in whatever format, including electronic format, which substantiate the purchase or acquisition of the cigarettes and tobacco products stored or offered for sale; and

(2) Be offered for inspection and examination within twenty-four hours of demand by the department or the attorney general, and shall be preserved for a period of three years; provided that:

(A) Specified records may be destroyed if the department and the attorney general both consent to their destruction within the three-year period; and

(B) Either the department or the attorney general may adopt rules pursuant to chapter 91 that require specified records to be kept longer than a period of three years.

[(m) The department may suspend or, after hearing, revoke or decline to renew any retail tobacco permit issued under this chapter whenever the department finds that the applicant or permittee has failed to comply with this chapter or any rule adopted under this chapter, or for any other good cause. Good cause includes but is not limited to instances where an applicant or permittee has:

~~(1)~~ ~~Submitted a false or fraudulent application or provided a false statement in an application; or~~

~~(2)~~ ~~Possessed or displayed a false or fraudulent retail tobacco permit.~~

~~(n)~~] (m) Whenever the department suspends, revokes, or declines to renew a retail tobacco permit[,] pursuant to section 245- , the department shall notify the applicant or permittee immediately and afford the applicant or permittee a hearing, if requested and if a hearing has not already been afforded. After the hearing, the department shall:

(1) Rescind its order of suspension;

(2) Continue the suspension;

(3) Revoke the retail tobacco permit;

(4) Rescind its order of revocation;

(5) Decline to renew the retail tobacco permit; or

(6) Renew the retail tobacco permit.

[~~(o)~~] (n) Any cigarette, package of cigarettes, carton of cigarettes, container of cigarettes, tobacco product, package of tobacco products, or any container of tobacco products unlawfully sold, possessed, kept, stored, acquired, distributed, or transported in violation of this section may be seized and ordered forfeited pursuant to chapter 712A."

SECTION 5. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2050; provided that section 3 shall take effect on January 1, 2020.

THE SENATE	S.B. NO.	1016
THIRTIETH LEGISLATURE, 2019		S.D. 2
STATE OF HAWAII