Assigned to APPROP                                                                                                             FOR COMMITTEE

 


 

 

 


ARIZONA STATE SENATE

Fifty-Fifth Legislature, Second Regular Session

 

FACT SHEET FOR s.b. 1245

 

tobacco; vapor; alternative nicotine; regulation

Purpose

Effective January 1, 2023, establishes licensure for retail sales of tobacco, alternative nicotine or vapor products under the Department of Liquor Licenses and Control (DLLC) and establishes the Tobacco Retail Sales Licensing Fund (Tobacco Licensing Fund). Preempts local regulation of sales and marketing with exceptions and modifies penalties relating to underage possession and sales. 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 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 (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).

S.B. 1245 directs 10 percent of tobacco retail license fees to the state General Fund (state GF). If the collection of licensure fees results in a change in revenues, there may be a fiscal impact to the state GF associated with this legislation.

 

 

Provisions

Licensure

1.   Prohibits, beginning January 1, 2024, a retail tobacco vendor from distributing tobacco, alternative nicotine or vapor products in Arizona without a valid tobacco retail sales license.

2.   Requires a retail tobacco vendor to secure and display a DLLC-issued tobacco retail sales license for each location before engaging or continuing to engage in the business of distributing tobacco, alternative nicotine or vapor products.

3.   Prohibits a tobacco retail sales license from being issued or renewed for a retail tobacco vendor licensee until the retail tobacco vendor signs a form stating that the vendor has:

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

b)   provided training to all employees on the sale of tobacco, alternative nicotine or vapor products to underaged persons.

4.   Deems a tobacco retail sales license to be nontransferable and valid for one year, unless the license is suspended or revoked by DLLC or DLLC's designee.

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

6.   Allows DLLC to receive and review tobacco retail sales 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 Licensing Fund administered by DLLC and consisting of licensing fees.

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

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.  Allows DLLC to:

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

b)   collaborate with and use findings of other entities, including the Attorney General's Office and law enforcement agencies, to carry out the obligations relating to licensing and sale of tobacco, alternative nicotine and vapor products and to ensure that complaints are forwarded to DLLC for timely investigation and action.

12.  Requires DLLC or its designee to conduct:

a)   unannounced compliance checks of a retail tobacco vendor at least once annually by engaging persons who are at least 18 years old but under 21 years old; and

b)   unannounced follow-up compliance checks of all noncompliant retail tobacco vendors within three months after a violation of tobacco sale regulations.

13.  Requires a law enforcement or local entity that conducts a compliance check to assess a retail tobacco vendor's compliance with the minimum legal sales age to report the results to DLLC.

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

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

16.  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, alternative nicotine or vapor products by underaged persons; and

b) enforcing statutory tobacco, alternative nicotine or vapor sale and distribution laws.

17.  Authorizes the Director to:

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

b)   issue and enforce cease and desist orders against a person or entity that sells tobacco, alternative nicotine or vapor 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 repercussions of use by underage individuals of tobacco, alternative nicotine or vapor products.

18.  Subjects a business selling tobacco, alternative nicotine or vapor products without a license to a civil penalty of $500 to $1,000 for a first or second violation within a 36-month period.

19.  Requires DLLC to issue to a business that receives a second violation within a 36-month period a cease and desist order:

a)   prohibiting the sale of tobacco, alternative nicotine and vapor products; and

b)   notifying the business owner that the business is ineligible to receive a tobacco retail sales license for a period of three years after the date of the second violation.

20.  Directs DLLC to adopt rules to carry out Licensing and Sale of tobacco, alternative nicotine and vapor products statutes.

Unlawful Furnishing of Tobacco, Alternative Nicotine or Vapor Products

21.  Raises, from 18 years old to 21 years old, the minimum legal age for tobacco, alternative nicotine and vapor products and beedies or bidis.

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 underaged person.

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

24.  Deems it unlawful for a retail tobacco vendor or a vendor's representative, agent or employee to sell, furnish, give or provide a tobacco, alternative nicotine or vapor product to a person who is under 21 years old.

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

26.  Excludes, from the photo identification check requirement, a purchaser who is at least 30 years old.

27.  Declares the fact that a purchaser appears to be 30 years old or older does not constitute a defense to a violation of the underage sale prohibition.

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

a)   for a 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 a 36-month period, a civil penalty of $750 to $1,000 and the Director may prohibit the vendor from distributing tobacco, alternative nicotine or vapor products for up to 14 days;

c)   for a third violation within a 36-month period, a civil penalty of $1,000 to $1,500 and the Director must prohibit the vendor from distributing tobacco, alternative nicotine or vapor products for between 15 to 30 days, at the Director's discretion; and

d)   for the fourth violation within a 36-month period, a civil penalty of $1,500 to $3,000 and the Director must prohibit the vendor from distributing tobacco, alternative nicotine or vapor products for at least one year.

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

30.  Deems a person guilty of a petty offense, if the person:

a)   is under 21 years old and misrepresents the person's age by means of a written instrument of identification with the intent to induce another person to sell, give or furnish a tobacco, alternative nicotine or vapor product to the underaged person;

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

c)   is under 21years old and uses a fraudulent or false written instrument of identification or valid license or idetification of another person to purchase or attempt to purchase a tobacco, alternative nicotine or vapor product;

d)   knowingly influences the purchase of a tobacco, alternative nicotine or vapor product to a person under 21 years old by misrepresenting the person's age; and

e)   orders, requests, receives or procures a tobacco, alternative nicotine or vapor product with the intent to sell or give it to a person under 21 years old.

31.  Requires the DLLC investigation unit to investigate licensees alleged to have sold tobacco products to an underaged person.

Local Preemption

32.  Declares the regulation of the sale and marketing of tobacco, alternative nicotine or vapor products to be a matter of statewide concern and not subject to further regulation by a city, town or county.

33.  Preempts any city, town or county rule, regulation, code or ordinance regarding the sale or marketing of tobacco, alternative nicotine or vapor products that is:

a)   adopted or modified after January 1, 2022; and

b)   in conflict with, or more restrictive than, state law or rule.

34.  Prohibits a city, town or county from limiting any right granted by the Tobacco Sales statute or rules relating to Tobacco Sales statutes or Licensing and Sale of Alternative Nicotine, Tobacco and Vapor Products statutes.

35.  Allows a city, town or county to adopt and enforce:

a)   lawful zoning requirements that limit the location of retail tobacco vendors; and

b)   any rule, regulation, code or ordinance regulating the outdoor advertisement of tobacco, alternative nicotine and vapor products, except advertising on a retail tobacco vendor premise.

36.  Specifies that zoning requirements may not prohibit the continuation of a retail tobacco vendor if the business:

a)   was already operating as a retail tobacco vendor on January 1, 2023, or the date a distance provision is adopted; and

b)   has continued to operate since that date.

37.  Allows a city, town or county to adopt a rule, regulation, code or ordinance that regulates the sale of tobacco, alternative nicotine or vapor products within 300 feet of:

a)   a public or private school providing primary or secondary education; or

b)   a fenced playground adjacent to a school.

38.  Allows a city, town or county to adopt a rule, regulation, code or ordinance that regulates the sale of tobacco, alternative nicotine and vapor products at a retail tobacco vendor within 1,000 feet of:

a)   a public or private school providing primary or secondary education; or

b)   a fenced playground adjacent to a school.

39.  Exempts a retail tobacco vendor from city, town or county rules, regulations, codes or ordinances regulating the sale of tobacco, alternative nicotine and vapor products if the business was already operating as a retail tobacco vendor on the date:

a)   the rule, regulation, code or ordinance is adopted; or

b)   a school providing primary or secondary education or a fenced playground adjacent to a school is established.

40.  Allows a city, town or county to prospectively enforce a rule, regulation, code or ordinance that regulates the sale of tobacco, alternative nicotine and vapor products if the retail tobacco vendor is convicted of a fourth violation of a compliance check within 36 months.

41.  Specifies that, if a retail tobacco vendor sells the business, compliance check violations that occurred at a location within 36 months immediately before the sale are attributable to the new owner.

42.  Specifies that the preemption does not prohibit a city, town, county school district, charter school, community college district, stadium district or the Arizona Board of Regents from regulating the sale, marketing or use of tobacco, alternative nicotine and vapor products on property the entity owns, leases or operates.

Regulation of Sale

43.  Applies the prohibition on selling tobacco products through a vending machine to alternative nicotine and vapor products.

44.  Prohibits a person from selling or distributing tobacco, alternative nicotine or vapor products:

a) at a retail establishment by any means other than vendor-assisted sales in which the customer has no direct access to the product; or

b) from self-service displays.

45.  Exempts, from the prohibition on sales other than vendor-assisted sales, retail establishments in which underage persons are not allowed and the prohibition is posted clearly on all entrances.

46.  Requires the sign that must be affixed to the front of a vending machine to include in the required statement that it is illegal for a person under 21 years of age to purchase alternative nicotine or vapor products.

47.  Expands, to apply to alternative nicotine and vapor products, the prohibition on the unsolicited delivery of tobacco products.

Smoke-Free Arizona Act

48.  Includes the use of vapor products in the prohibition on smoking in all public places and places of employment, except as otherwise provided (Proposition 105).

49.  Applies the prohibited use of vapor products to the no smoking sign and ashtray removal requirements (Proposition 105).

50.  Requires an owner, manager, operator or employee of a place where smoking and use of vapor products are prohibited to:

a)   inform a person using a vapor product that use of vapor products are illegal; and

b)   request the use of the vapor product immediately stop (Proposition 105).

51.  Deems a person who uses vapor products where vapor products are prohibited to be guilty of a petty offense with a fine of $50 to $300 (Proposition 105).

Definitions

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

53.  Applies the Arizona Criminal Code definitions of vapor product and shisha to tobacco sale regulations.

54.  Applies the Arizona Criminal Code definitions of tobacco products and vapor products to the Arizona Smoke-free Act (Proposition 105).

55.  Eliminates from the definition of vapor product, the criteria that:

a)   the product be tobacco-derived; and

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

56.  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 product, tobacco product, shisha or a product regulated by the Food and Drug Administration under subchapter V of the Federal Food, Drug and Cosmetic Act.

57.  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:

a)   sells shisha, tobacco, alternative nicotine or vapor products; and

b)   is in the business of selling, distributing or conveying the products to the public or a user of the product.

58.  Excludes from the definition of retail tobacco vendor:

a)   a tobacco retail establishment's nonmanagement employees; and

b)   a wholesaler of any tobacco, alterative nicotine or vapor product or shisha with respect to selling, distributing or conveying these products in business-to-business transactions.

Miscellaneous

59.  Includes alternative nicotine and vapor products in the prohibition on tobacco products at school or school-related areas.

60.  Allows school-sanctioned tobacco prevention and cessation programs to include instruction on alternative nicotine and vapor products.

61.  Allows a school district governing board, a charter school governing body or private school to adopt policies prohibiting, restricting and regulating tobacco, alternative nicotine and vapor products at school-sanctioned activities.

62.  Contains a severability clause.

 

63.  Makes technical and conforming changes.

64.  Becomes effective on January 1, 2023.

Prepared by Senate Research

February 4, 2022

JT/sr