STAND. COM. REP. NO. 938

Honolulu, Hawaii

RE: S.B. No. 1147

S.D. 2

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2021

State of Hawaii

Sir:

Your Committees on Judiciary and Ways and Means, to which was referred S.B. No. 1147, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO PRODUCTS,"

beg leave to report as follows:

The purpose and intent of this measure is to:

(1) Make unlawful the sale of flavored tobacco products, mislabeling of e-liquid products containing nicotine, and sale of tobacco products other than through retail sales via in-person exchange;

(2) Establish the offense of unlawful shipment of tobacco products;

(3) Include e-liquid and electronic smoking devices within the definition of "tobacco products", as used in the cigarette tax and tobacco tax law;

(4) Increase the license fee for persons engaged as a wholesaler or dealer of cigarettes and tobacco products;

(5) Increase the retail tobacco permit fee for retailers engaged in the retail sale of cigarettes and tobacco products;

(6) Repeal certain provisions of the Hawaii Revised Statutes relating to electronic smoking devices; and

(7) Provide for the disposition of fines paid for the unlawful shipment of tobacco products into the Hawaii Tobacco Prevention and Control Trust Fund.

Your Committees received testimony in support of this measure from the Department of Taxation; Department of the Attorney General; Department of Health; Hawaii State Teachers Association; Blue Zones Project; Young Progressives Demanding Action; Americans for Democratic Action Hawai‘i; Hawai‘i Children's Action Network Speaks!; Hawaii COPD Coalition; University of Hawaii Student Health Advisory Council; We are One, Inc.; Hawaii Substance Abuse Coalition; Get Fit Kauai; Kamehameha Schools; Windward Nazarene Academy; Maui Preparatory Academy; St. Andrew's Schools; Waimea Country School; Malamalama Waldorf School; Roots School; Maryknoll School; Holy Nativity School; Mid-Pacific; Damien Memorial School; Hawai‘i Public Health Institute; Phocused; AlohaCare; and eighty-eight individuals. Your Committees received testimony in opposition to this measure from the American Heart Association; Hawaii Smokers Alliance; Cigar Association of America, Inc.; VOLCANO; Hawaiian Royal Trading Company and twelve individuals. Your Committees received comments on this measure from Tax Foundation of Hawaii, Hawaii Food Industry Association, Cancer Action Network, Campaign for Tobacco-Free Kids, Hawaii Petroleum Marketers Association, and one individual.

Your Committees find that Hawaii does not regulate electronic smoking devices, or e-cigarettes, through licensing or permitting, and because they are not taxed like other tobacco products, they often can be purchased at lower prices than regular cigarettes. E-cigarettes have become the most commonly used tobacco product among youth in Hawaii, with over thirty percent of high school students reporting to be current users. According to the U.S. Surgeon General and several studies, increasing the price of tobacco products is the single most effective way to reduce consumption, especially among youth, who are particularly price sensitive. Further, the imposition of an excise tax equal to seventy percent of the wholesale price of each e-liquid and electronic smoking device is consistent with the tax on other tobacco products. This measure is therefore an important comprehensive legislative approach to address the youth vaping epidemic and protect the health of Hawaii's residents.

Your Committees have amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the records of votes of the members of your Committees on Judiciary and Ways and Means that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1147, S.D. 1, as amended herein, and recommend that it pass Third Reading in the form attached hereto as S.B. No. 1147, S.D. 2.

Respectfully submitted on behalf of the members of the Committees on Judiciary and Ways and Means,

________________________________ DONOVAN M. DELA CRUZ, Chair

________________________________ KARL RHOADS, Chair