AMENDED

ARIZONA STATE SENATE

RESEARCH STAFF

 

 

TO:                                   MEMBERS OF THE SENATE

DATE:                       February 24, 2021

SUBJECT:           Strike everything amendment to S.B. 1103, relating to tobacco; vapor products; licensing

Purpose

                      Establishes licensure for retail sales of tobacco products, vapor products or alternative nicotine products (tobacco, vapor or alternative nicotine products) under the Department of Liquor Licenses and Control (DLLC). Prescribes enforcement requirements and penalties relating to the furnishing of tobacco, vapor or alternative nicotine products to persons under 21 years old. Contains requirements for enactment for initiatives and referendums (Proposition 105).

Background

                      For the purposes of the Arizona Criminal Code, tobacco product means cigars, cigarettes, cigarette papers, smoking tobacco and chewing tobacco. Vapor product means a noncombustible tobacco-derived product containing nicotine that employs a mechanical heating element, battery or circuit, regardless of shape or size that can be used to heat a liquid nicotine solution contained in cartridges.

                      A person is guilty of a petty offense if the person: 1) knowingly sells, gives or furnishes a tobacco product, vapor product or any instrument or paraphernalia designed for smoking or ingesting tobacco to a person who is under 18 years old (minor); or 2) is a minor who buys, possesses, knowingly receives or misrepresents their age by written identification to induce a person to sell, give or furnish a tobacco product, vapor product or any instrument or paraphernalia designed for smoking or ingesting tobacco. A minor who misrepresents their age by written identification a must pay a fine up to $500 (A.R.S.   13-3622). In 2019, the Federal Food, Drug and Cosmetic Act was amended to raise the federal minimum age for the sale of tobacco products from 18 years old to 21 years old (legal age) (Further Consolidated Appropriations Act, 2020).

                      DLLC regulates the production, distribution and sale of alcoholic beverages through the State Liquor Board (Board) and the Office of the Director of DLLC (Director). Statute prescribes duties of the Board and Director relating to licensure, regulations, enforcement and disciplinary actions. The Director may suspend, revoke or refuse to renew a liquor license for outlined violations and impose a civil penalty between $200 and $3,000 (A.R.S. Title 4).

                      The strike-everything amendment to S.B. 1103 directs 10 percent of tobacco retail licensure fees to the state General Fund. If the collection of licensure fees results in a change in revenues, there may be a fiscal impact to the state General Fund associated with this legislation.

Provisions

Licensure

1.   Prohibits, beginning January 1, 2023, a retail tobacco vendor from distributing tobacco, vapor or alternative nicotine products in Arizona without a valid tobacco retail license.

2.   Requires a retail tobacco vendor to secure and display a DLLC-issued tobacco retail license for each location before engaging or continuing to engage in tobacco, vapor or alternative nicotine product distribution.

3.   Requires a retail tobacco vendor, before license issuance or renewal, to sign a form stating the vendor has:

a)   read tobacco, vapor or alternative nicotine product licensing and sales requirements; and

b)   provided training to all employees on tobacco, vapor or alternative nicotine product sales relating to identification requirements and the illegality of tobacco or vapor product sales to underage persons.

4.   Deems a tobacco retail license to be nontransferable and valid for one year, unless suspended or revoked.

5.   Prohibits a tobacco retail license from being renewed if the vendor has outstanding penalties.

6.   Allows DLLC to receive and review tobacco retail license applications electronically.

7.   Requires a retail tobacco vendor that discontinues, sells or transfers their business to notify DLLC in writing at the effective time of the vendor's discontinuance, sale or transfer.

Tobacco Retail Sales Licensing Fund

8.   Establishes the Tobacco Retail Sales Licensing Fund (Tobacco Licensing Fund) administered by DLLC and consisting of licensing fees.

9.   Requires DLLC to establish initial and renewal tobacco retail license fees and deposit 90 percent of collected fees in the Tobacco Licensing Fund and the remaining 10 percent in the state General Fund.

10.   Requires Tobacco Licensing Fund monies to be used to administer and enforce tobacco licensing regulations, subject to legislative appropriation.

DLLC Regulation and Enforcement

11.   Subjects a business selling tobacco or vapor products without a license to a civil penalty of $500 to $1,000 for a first or second violation within 36 months.

12.   Requires DLLC to issue to a business that receives a second violation within 36 months a cease and desist order prohibiting the sale of tobacco or vapor products and notifying the owner that the business is ineligible to receive a tobacco retail license for three years after the date of the second violation.

13.   Allows DLLC to:

a)   delegate enforcement and compliance inspections to a county that accepts the delegation; and

b)   collaborate with and use other agencies' findings to ensure that complaints are forwarded to DLLC for timely investigation and action.

14.   Requires DLLC or its designee to conduct:

a)   at least one annual unannounced compliance check by engaging persons between 18 and 21 years old to attempt tobacco product purchase; and

b)   unannounced follow-up compliance checks within three months after a violation of tobacco sales regulations.

15.   Requires a law enforcement or local entity that conducts compliance checks to report the results to DLLC.

16.   Deems any compliance check violation to be a violation of the vendor's tobacco license.

17.   Requires DLLC to publish the results of all compliance checks at least annually and make the results available to the public on request.

18.   Adds to the Director's duties:

a)   taking steps necessary to liaison with the Department of Public Safety and local law enforcement agencies to enforce laws against the use of tobacco products by underaged persons; and

b)   enforcing statutory tobacco sales regulations relating to beedies or bidis, vending machines, the unlawful manufacture, sale or distribution of cigarettes and roll-your-own tobacco and prohibitions against tobacco products at schools, delivery sales and unsolicited deliveries.

19.   Authorizes the Director to:

a)   remove, from the marketplace, tobacco, vapor or alternative nicotine products that may be contaminated, illegal or adulterated;

b)   issue and enforce cease and desist orders against a person that sells tobacco, vapor or alternative nicotine products without an appropriate license or permit; and

c)   accept and expend private grants of monies, gifts and devises for educational programs for parents and students on the use by underage individuals of tobacco, vapor or alternative nicotine products.

20.   Requires the DLLC investigations unit to include investigating licensees alleged to have sold tobacco products to an underaged person.

Unlawful Furnishing of Tobacco, Vapor or Nicotine Products

21.   Raises the minimum legal age for the sale of tobacco, vapor or alternative nicotine products to 21 years old.

22.   Removes the criteria that the violation be made knowingly for the petty offense classification of selling, giving or furnishing a tobacco or vapor product to an underage person.

23.   Applies Arizona Criminal Code penalties for the possession or furnishing of tobacco or vapor products to an underage person to alternative nicotine products to the possession or furnishing of alternative nicotine products to an underage person.

24.   Deems unlawful a retail tobacco vendor or representative, agent or employ selling, furnishing, giving or providing tobacco, vapor or alternative nicotine products to a person who is under 21 years old.

25.   Requires a vendor or vendor's representative, agent or employee to verify that a tobacco, vapor or alternative nicotine product purchaser is at least 21 years old by examining the purchaser's government-issued photo identification.

26.   Excludes, from the identification check requirement, a purchaser who is at least 30 years old but specifies that a purchaser appearing 30 years old or older does not constitute a defense to a violation of the underage sales prohibition.

27.   Subjects a vendor to the following penalties if the vendor or the vendor's representative, agent or employee fails a compliance check or is convicted of a violation of underage sales or furnishing of tobacco, vapor or alternative nicotine products based on an Attorney General citation:

a)   for the first violation, attendance of an education class or, if an education class is not available, a maximum civil penalty of $500;

b)   for a second violation within 36 months, a civil penalty of $750 to $1,000 and the Director may prohibit tobacco, vapor or alternative nicotine product distribution for up to 14 days;

c)   for a third violation within 36 months, a civil penalty of $1,000 to $1,500 and a prohibition on tobacco, vapor or alternative nicotine product distribution for between 15 to 30 days, at the Director's discretion; and

d)   for a fourth or subsequent violation within 36 months, a civil penalty of $1,500 to $3,000 and a prohibition on tobacco product distribution for at least one year.

28.   Subjects, to noncriminal, nonmonetary penalties, including education classes or community service, a person who violates underage tobacco, vapor or alternative nicotine product sales prohibitions while acting as a nonmanagement agent or employee.

29.   Deems a person to be guilty of a petty offense, if the person:

a)   is under 21 years old and solicits another person to purchase, sell, give or furnish tobacco, vapor or alternative nicotine products;

b)   is under 21 years old and uses a fraudulent or false written instrument of identification or another person's license or identification to purchase or attempt to purchase tobacco, vapor or alternative nicotine products;

c)   knowingly influences the sale or giving of tobacco, vapor or alternative nicotine products by misrepresenting the person's age; or

d)   orders, requests, receives or procures tobacco, vapor or alternative nicotine products with the intent to sell or give the product to a person under the legal age.

30.   Subjects, to suspension of their driver license or nonoperating identification license:

a)   a person under 21 years old who uses a fraudulent or false driver license or nonoperating identification license to purchase or attempt to purchase tobacco, vapor or alternative nicotine products; or

b)   a person's driver license or nonoperating identification license that is used to misrepresent the age of a person who is under 21 years old.

31.   Allows a judge to suspend the driver license or driving privilege for up to 30 days for a first conviction and up to six months for a second conviction of a person who:

a)   knowingly influences the sale or giving of tobacco, vapor or alternative nicotine products by misrepresenting the person's age; or

b)   orders, requests, receives or procures tobacco, vapor or alternative nicotine products with the intent to sell or give the product to a person under the legal age.

Definitions

32.   Applies the Arizona Criminal Code definitions of tobacco product, vapor product and shisha to tobacco retail license requirements.

33.   Removes, from the definition of vapor product, the qualifications that:

a)   the product be tobacco-derived; and

b)   the liquid nicotine solution the vapor product is used to heat be contained in cartridges.

34. Defines alternative nicotine product:

a)   as a noncombustible product that contains nicotine and is intended for human consumption, whether chewed, absorbed, dissolved, ingested or consumed by any other means; and

b)   to exclude an e-liquid, vapor or tobacco product, shish or a drug, device or combination product authorized for sale by the Food and Drug Administration, as defined by the Federal Food, Drug and Cosmetic Act.

35.   Defines retail tobacco vendor as a person, partnership, joint venture, society, club, trustee, true association, organization or corporation that owns, operates or manages any retail establishment that sells shisha, tobacco, vapor or alternative nicotine products.

36.   Excludes, from the definition of retail tobacco vendor, a tobacco retail establishment's nonmanagement employees.

Miscellaneous

37.   Conforms a statutory reference relating to the Smoke-Free Arizona Act (Proposition 105).

38.   Makes technical and conforming changes.

39.   Becomes effective on the general effective date.

Amendments Adopted by Committee

1.   Adopted the strike-everything amendment.

2.   Removes the preemption on a city, town or county regulating tobacco or vapor products.

3.   Establishes the Tobacco Licensing Fund.

4.   Subjects alternative nicotine products to the