Report Title:

Tobacco Product Licensure

 

Description:

Establishes a statewide tobacco licensing program within the Department of Health to regulate the retail and wholesale sale of tobacco. (SD3)

 

THE SENATE

S.B. NO.

181

TWENTY-FIRST LEGISLATURE, 2001

S.D. 3

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

RELATING TO TOBACCO PRODUCTS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

TOBACCO PRODUCTS

§   -1 Legislative intent and purpose. The use of tobacco products by Hawaii's youth represents a public health problem of significant magnitude and concern. The legislature finds that tobacco use by minors in Hawaii is widespread and is increasing. The present law prohibiting the sale of tobacco products to minors is not effective by itself in reducing illegal sales to minors. Tobacco industry advertising targets children in order to replace the over eleven hundred Hawaii residents who die each year as a result of tobacco-related illness. Of today's smokers, ninety per cent began their addictive habit before the age of eighteen. The economic loss created by tobacco use in Hawaii represents an ongoing and escalating financial burden borne by every business, large and small, and every person, smoker and nonsmoker. These figures also represent a health and economic drain created by each new generation of children that begins using tobacco products and becomes addicted to nicotine. The purposes of this chapter are to promote, protect, and preserve the health of Hawaii's children by:

(1) Reducing youth access to tobacco products;

(2) Reducing the illegal sale of tobacco products to minors; and

(3) Increasing compliance with existing laws prohibiting the sale of tobacco products to minors.

§   -2 Definitions. As used in this chapter:

"Cigarettes" means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape and regardless of whether the tobacco is flavored, adulterated, or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco.

"Cigarette vending machine" means a self-service device that dispenses cigarettes, cigars, tobacco, or any other product containing tobacco.

"Department" means the department of health.

"Licensee" means the holder of a license granted under this chapter.

"Minor" means any person under the age of eighteen.

"Sell" or "to sell" includes to solicit and receive an order for; to have or keep or offer or expose for sale; to deliver for value or in any other way than purely gratuitously; to peddle; to keep with intent to sell; to traffic in; and the word "sale" includes every act of selling as defined in this chapter. Notwithstanding the provisions above, the delivery of tobacco by a licensee's vehicle or the vehicle of a licensee's agent shall be deemed delivery for value.

"Seller" includes the agents and employees of a seller; provided that any person shall be deemed to be a seller, who in the State, whether acting as agent or representative of a nonresident principal or otherwise, solicits the placing of or takes, receives, or forwards orders for tobacco to be shipped into the State from any place without the State to be delivered to customers, by direct shipment or otherwise.

"Tobacco" or "tobacco products" means products made from tobacco leaves in any form that are prepared or intended for consumption by, or the personal use of, humans, including cigarettes, cigars, and any other substitutes bearing the semblance thereof; cheroots; stogies; periques; granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco; snuff or snuff flour; cavendish; plug and twist tobacco; fine cut and other chewing tobaccos; shorts; refuse scraps, clippings, cuttings, and sweepings of tobacco, and other kinds and forms of tobacco, prepared in a manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking.

§   -3 Tobacco licenses, classes. (a) A tobacco license may be granted by the department as provided in this section. For purposes of this section, a tobacco license authorizes the importation or sale of tobacco products as defined in this chapter and chapter 245.

(b) Class 1. Wholesale tobacco dealer. A license for the sale of tobacco at wholesale authorizes the licensee to import and sell only to retail tobacco dealer licensees or others who are authorized by law to resell, but are not required to hold a license by law. Nothing in this subsection shall prevent a wholesaler from selling tobacco to post exchanges, ships' service stores, Army or Navy officers' clubs, or like organizations located on Army or Navy reservations, or to any vessel performing a regular water transportation service between any two or more ports in the State.

(c) Class 2. Retail tobacco dealer. A license under this class authorizes the dealer to sell tobacco products at retail. The retail tobacco dealer licensee shall be responsible for providing a training program to all employees that shall include training in the laws governing the sale of tobacco, methods for recognizing and handling underage customers, and procedures for proper identification to verify that customers are not underage.

(d) It shall be unlawful for any retail tobacco dealer licensee to purchase or acquire tobacco from any person other than a wholesale tobacco dealer licensed pursuant to this chapter. It shall be unlawful for any retail tobacco dealer to offer or sell tobacco products from vending machines, except that the sale of tobacco products from vending machines may be permitted in an on-premises liquor licensed establishment pursuant to section 328K-21.

§   -4 Application; tobacco licenses. (a) Every application for a tobacco license or the renewal of a tobacco license shall be in writing and signed by the applicant, by the proper officer or officers of a corporation or unincorporated association, or by a general partner of a partnership, or other official of a legal entity responsible for the application. The application shall be addressed to the department and shall include:

(1) (A) For an individual, the full name, age, and place of residence of the applicant;

(B) For a corporation or joint-stock company, its full name and the names of its officers and directors and street address of the corporation's registered office;

(C) For a partnership, the names, ages, and respective places of residence of all the partners; and

(D) For any other association of individuals or other legal entity, the names, ages, and respective places of residence of its officers or members;

(2) A particular description of the place or premises where the proposed license is to be exercised, so that the exact location and extent thereof may be clearly and definitely determined therefrom; provided that, if the applicant has or intends to have more than one place of business dealing with cigarettes or tobacco, a separate application shall be made for each place of business; and provided further that no application for a retail tobacco dealer license shall be accepted from a person who conducts business from a vehicle;

(3) The class of license applied for; and

(4) Any other information pertinent to the subject matter that may be required by the rules of the department.

(b) An application for a tobacco license may be granted without notice or hearing by the department pursuant to any applicable administrative rules. The license shall be posted on the premises of the place identified in the application in a conspicuous place for public viewing.

(c) A tobacco license shall be valid for a term beginning July 1 through June 30 of the following year and shall be subject to renewal pursuant to department rules; provided that no license shall be transferable.

§   -5 Prohibitions; tobacco licensee. (a) At no time under any circumstances shall any tobacco licensee or its employees sell or furnish any tobacco to:

(1) A minor; or

(2) Any person age eighteen or over for distribution to or use by a minor if the licensee or its employees knew or should have known that the tobacco was intended for distribution or use by a minor.

(b) Any person who violates this section or any rule adopted by the department pursuant to this chapter shall be guilty of a violation for each separate offense. Each occurrence of violation shall constitute a separate offense.

§   -6 Prohibitions involving minors, cigarettes, tobacco; penalty. (a) No minor shall purchase cigarettes or tobacco.

(b) Subsection (a) shall not apply if a person under the age of eighteen, with parental authorization, is participating in a controlled purchase as part of a law enforcement activity or a study authorized by the department to determine the level of incidence of tobacco sales to minors.

(c) Only a government-issued photo identification shall be considered as valid proof of age.

(d) No minor shall possess cigarettes or tobacco under a retail tobacco dealer's license except that custody of cigarettes or tobacco by the minor may be permitted in the course of delivery pursuant to the direction of the minor's employer lawfully engaged in business necessitating the delivery.

(e) No minor shall falsify any identification or use any false identification or identification of another person or of a fictitious person for the purpose of buying or attempting to buy cigarettes or tobacco.

(f) No minor shall be permitted to sell cigarettes or tobacco.

(g) A minor who violates this section shall be subject to the jurisdiction of the department which may issue citations to those persons for referral and disposition by the family court.

§   -7 Prohibitions involving minors, cigarettes, tobacco; penalty. (a) No person age eighteen or older shall purchase cigarettes or tobacco for use by, or offer or distribute cigarettes or tobacco to, a minor.

(b) Any person age eighteen or older who violates subsection (a) shall be guilty of a petty misdemeanor.

§   -8 Fines collected. (a) One half of all the fines collected pursuant to this chapter shall be transferred to the department.

(b) The moneys transferred pursuant to subsection (a) shall be allocated for the purpose of education and training of retail tobacco merchants.

§   -9 Illegal importation or sale of tobacco. (a) It shall be unlawful for any person who does not have a valid retail tobacco dealer license to sell any tobacco product at retail except as provided in this chapter.

(b) It shall be unlawful for any person who does not have a valid wholesale tobacco dealer license to import any tobacco product from without the State, and sell to retail tobacco dealer licensees except as provided in this chapter.

(c) A license shall constitute authority for the licensee to sell only the tobacco thereby authorized to be sold by the licensee.

§   -10 Fees; justified, method of change, limitation. (a) Any tobacco license fee or any increase in an existing tobacco license fee sought to be implemented shall have, as its justification, a direct and proportionate relationship to the costs and expenses of the department in its control, supervision, or regulation of the importation and sale of cigarettes or tobacco, or otherwise directly relate to actual costs and expenses of administration of the department as is set forth in this chapter.

(b) License fees or any moneys collected or received by the department under this chapter may only be used for costs and expenses directly relating to operational and administrative costs actually incurred by the department in collecting or receiving license fees or moneys. The fees or moneys shall not be used for any costs or expenses other than those directly relating to the department's operation and administration.

(c) If the department seeks a change in the license fee structure, the department shall notify all licensees under this chapter affected by the proposed change and shall notify each licensee of the outcome and resolution of the change.

(d) If the department receives a license fee from a licensee in excess of the amount prescribed by this section, the department shall immediately revise its tobacco license fee structure to conform with the requirements of this section. All tobacco license fees shall be maintained in a separate account. Any funds in excess of twenty per cent of the department's current budget shall be returned or credited annually to existing licensees.

§   -11 General right of inspection. Any investigator, at all times, without notice and without any search warrant or other legal process, may visit and have immediate access to every part of the premises of every tobacco licensee, for the purpose of making any examination or inspection thereof or inquiry into the books and records therein, to ascertain whether all of the conditions of the license and all provisions of this chapter and chapter 245 are being complied with by the licensee.

§   -12 Entry for examination; obstructing department operations; penalty. (a) Every investigator shall, and any officer having police power may, at all reasonable times, and at any time whatsoever if there is any reasonable ground for suspicion that the conditions of any tobacco license are being violated, without warrant, enter into and upon any licensed premises and inspect the premises and every part thereof, and any books or records therein, to ascertain whether all conditions of the license and all provisions of this chapter and chapter 245 are being complied with by the licensee.

(b) If any investigator or officer, or any person called by the investigator or officer to the investigator's or officer's aid, is threatened with the use of violence, force, or physical interference or obstacle, or is hindered, obstructed, or prevented by any licensee, the licensee's employees, or any other person from entering into the premises, or whenever any investigator or officer is obstructed or molested in the performance of the officer's duty in any respect by any licensee, the licensee's employees, or any other person, the licensee, the licensee's employee, or any other person shall be fined not more than $2,000 or imprisoned not more than one year, or both.

(c) Whenever any investigator or officer, having demanded admittance into any licensed premises and declared the investigator's or officer's name and office, is not admitted by the licensee or the person in charge of the premises, it shall be lawful for the investigator or officer to forcibly and in any manner to break into and enter the premises.

§   -13 When sale without license authorized. (a) In case a tobacco license is revoked, canceled, or not renewed, the licensee, with the permission of and upon the conditions set by the department, may sell tobacco then in the licensee's possession within sixty days, or within such additional time allowed by the department, unless under this chapter the same are seized or forfeited.

(b) Any bank, trust company, or financial institution owning or possessing tobacco that was acquired by the bank, trust company, or financial institution in the ordinary course of its business, may sell the tobacco with the permission of and upon conditions set by the department.

(c) Any person acting as personal representative or guardian of a licensee's estate, or any receiver, assignee for benefit of creditors, or trustee in bankruptcy, may sell the stock of tobacco with the permission of and upon conditions set by the department, except as otherwise provided in this chapter.

(d) Any insurance company, or any common carrier acting as an insurer for losses to persons shipping tobacco, may take possession of and sell the tobacco, the containers of which have been damaged by fire or otherwise, with the permission of and upon conditions set by the department.

(e) Any person in possession of a stock of lawfully acquired tobacco under a foreclosure proceeding, proceedings for enforcement of a lien, civil execution, or under any other proceeding or process, may sell such tobacco with the permission of and upon conditions set by the department.

§   -14 Manufacture or sale without license; penalty. If any person, acting in person or by or through any agent, servant, or employee, manufactures or sells any tobacco, either directly or indirectly, or upon any pretense or by any subterfuge, except as authorized pursuant to this chapter, the person shall be fined not more than $2,000 or imprisoned not more than one year, or both.

§   -15 Hearing, illegal manufacture, importation, or sale of tobacco. (a) The department may assess and collect a penalty, or reprimand a person for not having a valid license to sell any tobacco in violation of this chapter or of any rule applicable thereto.

(b) In every case where the department elects to conduct proceedings under this section where it is proposed to assess and collect a penalty from a person for not having a valid license to sell any tobacco in violation of this chapter or of any rule applicable thereto, that person shall be entitled to notice and hearing in conformity with chapter 91.

(c) At the hearing, before final action is taken by the department, the person shall be entitled to be heard in person or through counsel and shall be given a full and fair opportunity to present facts showing that the alleged cause or causes for the proposed action do not exist, or any reason why no penalty should be imposed. The testimony taken at the hearing shall be under oath and recorded stenographically, or by machine, but the parties shall not be bound by the strict rules of evidence. Certified copies of any transcript and of any other record made of or at the hearing shall be furnished to a person upon that person's request and at that person's expense.

(d) Any order, reprimand, or penalty imposed by the department upon a person for not having a valid license to manufacture or sell tobacco in violation of this chapter or of any rule applicable thereto shall be in addition to any penalty that might be imposed upon that person's conviction in a court of law for any violation of this chapter. The amount of penalty assessed and collected by the department from any person under this section for not having a valid license to sell any tobacco shall not exceed the sum of $2,000 for each charge.

(e) Whenever the service of any order or notice is required by this section the service shall be made as provided in this section. If a violation is based upon the personal observation of any investigator, a written notice of the violation shall be given to the person charged with a violation within a reasonable period of time after the alleged violation occurred. The person charged shall be requested to acknowledge receipt of the notice of alleged violation, or, if the person cannot be found after diligent search, by leaving a certified copy thereof at the person's dwelling house or usual place of abode with some person of suitable age and discretion residing therein. If the person cannot be found after diligent search, and service cannot be made, then service may be made by depositing another certified copy thereof in the certified mail of the United States post office, postage prepaid, addressed to the person at the person's last known residence address; provided that in the case of a partnership, corporation, unincorporated association, or limited liability company, service may be made upon any partner, officer, or member thereof."

SECTION 2. Section 321-11, Hawaii Revised Statutes, is amended to read as follows:

"§321-11 Subjects of health rules, generally. The department pursuant to chapter 91 may adopt rules that it deems necessary for the public health and safety respecting:

(1) Nuisances, foul or noxious odors, gases, vapors, waters in which mosquitoes breed or may breed, sources of filth, and causes of sickness or disease, within the respective districts of the State, and on board any vessel;

(2) Adulteration and misbranding of food or drugs;

(3) Location, air space, ventilation, sanitation, drainage, sewage disposal, and other health conditions of buildings, courts, construction projects, excavations, pools, watercourses, areas, and alleys;

(4) Privy vaults and cesspools;

(5) Fish and fishing;

(6) Interments and dead bodies;

(7) Disinterments of dead human bodies, including the exposing, disturbing, or removing of these bodies from their place of burial, or the opening, removing, or disturbing after due interment of any receptacle, coffin, or container holding human remains or a dead human body or a part thereof and the issuance and terms of permits for the aforesaid disinterments of dead human bodies;

(8) Cemeteries and burying grounds;

(9) Laundries, and the laundering, sanitation, and sterilization of articles including linen and uniforms used by or in the following businesses and professions: barber shops, manicure shops, beauty parlors, electrology shops, restaurants, soda fountains, hotels, rooming and boarding houses, bakeries, butcher shops, public bathhouses, midwives, masseurs, and others in similar calling, public or private hospitals, and canneries and bottling works where foods or beverages are canned or bottled for public consumption or sale; provided that nothing in this chapter shall be construed as authorizing the prohibiting of laundering, sanitation, and sterilization by those conducting any of these businesses or professions where the laundering or sterilization is done in an efficient and sanitary manner;

(10) Hospitals, freestanding surgical outpatient facilities, skilled nursing facilities, intermediate care facilities, adult residential care homes, adult foster homes, assisted living facilities, special treatment facilities and programs, home health agencies, hospices, freestanding birthing facilities, adult day health centers, independent group residences, and therapeutic living programs, but excluding youth shelter facilities unless clinical treatment of mental, emotional, or physical disease or handicap is a part of the routine program or constitutes the main purpose of the facility, as defined in section 346-16 under "child care institution". For the purpose of this paragraph, "adult foster home" has the same meaning as provided in section 321-11.2;

(11) Hotels, rooming houses, lodging houses, apartment houses, tenements, and residences for persons with developmental disabilities including, but not limited to, those built under federal funding;

(12) Laboratories;

(13) Any place or building where noisome or noxious trades or manufacturers are carried on, or intended to be carried on;

(14) Milk;

(15) Poisons and hazardous substances, the latter term including but not limited to any substance or mixture of substances which:

(A) Is corrosive;

(B) Is an irritant;

(C) Is a strong sensitizer;

(D) Is inflammable; or

(E) Generates pressure through decomposition, heat, or other means,

if the substance or mixture of substances may cause substantial personal injury or substantial illness during or as a proximate result of any customary or reasonably foreseeable handling or use, including reasonably foreseeable ingestion by children;

(16) Pig and duck ranches;

(17) Places of business, industry, employment, and commerce, and the processes, materials, tools, machinery, and methods of work done therein; and places of public gathering, recreation, or entertainment;

(18) Any restaurant, theater, market, stand, shop, store, factory, building, wagon, vehicle, or place where any food, drug, or cosmetic is manufactured, compounded, processed, extracted, prepared, stored, distributed, sold, offered for sale, or offered for human consumption or use;

(19) Foods, drugs, and cosmetics, and the manufacture, compounding, processing, extracting, preparing, storing, selling, and offering for sale, consumption, or use of any food, drug, or cosmetic;

(20) Devices as defined in section 328-1;

(21) Sources of ionizing radiation;

(22) Medical examination, vaccination, revaccination, and immunization of school children. No child shall be subjected to medical examination, vaccination, revaccination, or immunization, whose parent or guardian objects in writing thereto on grounds that the requirements are not in accordance with the religious tenets of an established church of which the parent or guardian is a member or adherent, but no objection shall be recognized when, in the opinion of the department, there is danger of an epidemic from any communicable disease;

(23) Disinsectization of aircraft entering or within the State as may be necessary to prevent the introduction, transmission, or spread of disease or the introduction or spread of any insect or other vector of significance to health;

(24) Fumigation, including the process by which substances emit or liberate gases, fumes, or vapors which may be used for the destruction or control of insects, vermin, rodents, or other pests, which, in the opinion of the department, may be lethal, poisonous, noxious, or dangerous to human life;

(25) Ambulances and ambulance equipment;

(26) Development, review, approval, or disapproval of management plans submitted pursuant to the Asbestos Hazard Emergency Response Act of 1986, Public Law 99-519; [and]

(27) Development, review, approval, or disapproval of an accreditation program for specially trained persons pursuant to the Residential Lead-Based Paint Hazard Reduction Act of 1992, Public Law 102-550[.]; and

(28) Any restaurant, market, stand, shop, store, wagon, vehicle, vending machine, or place where any cigarettes or tobacco products are stored, distributed, sold, peddled, or offered for sale.

The department may require any certificates, permits, or licenses that it may deem necessary to adequately regulate the conditions or businesses referred to in this section."

SECTION 3. Section 709-908, Hawaii Revised Statutes, is amended to read as follows:

"§709-908 Tobacco; minors. (1) It shall be unlawful to sell or furnish tobacco in any shape or form, including chewing tobacco and snuff, to a minor under eighteen years of age.

(2) Signs using the statement, "The sale of tobacco products to persons under eighteen is prohibited", shall be posted on or near any vending machine in letters at least one-half inch high and at or near the point of sale of any other location where tobacco products are sold in letters at least one-half inch high.

(3) It shall be unlawful for a minor under eighteen years of age to purchase any tobacco product, as described under subsection (1). This provision does not apply if a person under the age of eighteen, with parental authorization, is participating in a controlled purchase as part of a law enforcement activity or a study authorized by the department of health under the supervision of law enforcement to determine the level of incidence of tobacco sales to minors.

(4) Any person who violates subsection (1) or (2), or both, shall be fined $500 for the first offense. Any subsequent offenses shall subject the person to a fine not less than $500 nor more than $2,000. Any minor under eighteen years of age who violates subsection (3) shall be fined $10 for the first offense. Any subsequent offense shall subject the violator to a fine of $50, no part of which shall be suspended, or the person shall be required to perform not less than forty-eight hours nor more than seventy-two hours of community service during hours when the person is not employed and is not attending school.

(5) It shall be an affirmative defense to a charge against a licensee selling tobacco to a minor that the minor has a false photo identification that closely resembles an authentic photo identification."

SECTION 4. The department of health shall do research planning regarding tobacco licensure by looking at other states that have successful statewide tobacco licensing programs and shall submit a report containing their findings, recommendations, and proposed statutory language to the legislature no later than twenty days prior to the convening of the 2002 legislative session.

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, 2003.