SB 367 — AN ACT CONCERNING THE SALE OF ELECTRONIC NICOTINE DELIVERY SYSTEMS AND VAPOR PRODUCTS AND INCREASING PENALTIES FOR UNDERAGE SALES OF SUCH SYSTEMS AND PRODUCTS, CIGARETTES AND TOBACCO PRODUCTS.

663 four months after the date of the first violation, [said commissioner] the Commissioner of Revenue Services shall assess such business entity a civilpenalty of [one]two thousanddollarsandnotify theCommissioner of Consumer Protection that the dealer registration held by such business entity under this chapter shall be suspended for not less than thirty days.

(f) (1)Upon Ifreceipt theof Commissionernotice of Revenuedetermination Servicesfrom finds,the afterCommissioner aof hearingRevenue pursuantServices tomade under subsection (c)(e) of this section, thatthe (A)Commissioner anyof businessConsumer entityProtection issuedshall asuspend or revoke the dealer registration underof sectionthe 21a-415,business asentity amendedthat byis thisthe act,hassold,givenordeliveredanyflavoredelectronicnicotinedeliverysubject SB367of /said Filedetermination. No.

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316 system or vapor product, or (B) any such business entity does not possess documentation of nicotine content or nicotine content that indicatesa level ofnicotine that isgreaterthanthirty-five milligramsper milliliter for any electronic nicotine delivery system or vapor product sold, given or delivered within the retail establishment of the business entity, the commissioner shall, for the first violation, require the authorized owner of such business entity to successfully complete an online prevention education program administered by the Department of Mental Health and Addiction Services not later than thirty days after said commissioner's finding.

The Commissioner of Revenue Services shall assess any business entity issued a dealer registration, whose authorized owner fails to complete such program, a civil penalty of six hundred dollars for the first violation.

(2) The Commissioner of Revenue Services shall assess such business entity a civil penalty of one thousand five hundred dollars for a second violation on or before twenty-four months after the date of the first violation.

(3) For a third violation by such business entity on or before twenty- four months after the date of the first violation, the Commissioner of Revenue Services shall assess such business entity a civil penalty of two thousand dollars and notify the Commissioner of Consumer Protection that the dealer registration held by such business entity under this chapter shall be suspended for not less than thirty days.

(4) For a fourth violation on or before twenty-four months after the date of the first violation, the Commissioner of Revenue Services shall assess such business entity a civil penalty of two thousand dollars and notify the Commissioner of Consumer Protection that the dealer registration held by such business entity under this chapter shall be revoked.

The Commissioner of Revenue Services shall order such business entity to conspicuously post a notice in a public place stating that electronic nicotine delivery systems and vapor products cannot be sold during the period of suspension or revocation and the reasons for such suspension or revocation.

Any sale of an electronic nicotine SB367 / File No.

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316 delivery system or vapor product by such business entity during the period of such suspension or revocation shall be deemed an additional violation of this section.

[(f)] (g) Upon receipt of notice of determination from the Commissioner of Revenue Services made under subsection (e) or (f) of this section, the Commissioner of Consumer Protection shall suspend or revoke the dealer registration of the business entity that is the subject of said determination.

[(g)](g) (h) The Commissioner of Consumer Protection shall not issue a new dealer registration to a former registrant whose dealer registration was revoked unless the commissioner is satisfied that such business entity that holds a dealer registration will comply with the provisions of this chapter and any regulations related thereto, and section 53-344b, as amended by this act.

Sec.sSB367 / File No.

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663 Sec.

Said commissioner shall assess any person employed by a dealer or distributor a civil penalty of [two hundred fifty] five hundred dollars SB367for /a Filesecond No.or subsequent violation on or before twenty-four months after the date of the first violation.

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316 for a second or subsequent violation on or before twenty-four months after the date of the first violation.

[Said commissioner] (2) The Commissioner of Revenue Services shall assess [any] such dealersSB367 or/ distributorFile aNo. civil penalty of [seven hundred fifty] one thousand five hundred dollars for a second violation on or before twenty-four months after the date of the first violation.

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663 dealer or distributor a civil penalty of [seven hundred fifty] one thousand five hundred dollars for a second violation on or before twenty-four months after the date of the first violation.

Said commissioner shall order such distributor or dealer to conspicuously post a notice in a public place within such distributor's or dealer's establishment stating that cigarettesandtobaccoproductscannotbesoldduringtheperiodofsuch SB367suspension /or Filerevocation No.and the reasons for such suspension or revocation.

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316 suspension or revocation and the reasons for such suspension or revocation.

[Said commissioner] The Commissioner of RevenuesSB367 Services/ shallFile assessNo. any owner who fails to complete such program a civil penalty of [five hundred] one thousand dollars.

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663 Revenue Services shall assess any owner who fails to complete such program a civil penalty of [five hundred] one thousand dollars.

SB367Sec. / File No.

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316 Sec.

(b) Any person who sells, gives or delivers to any person under twenty-one years of age cigarettes or a tobacco product shall be fined not more than [three] six hundred dollars for the first offense, not more than [seven hundred fifty] one thousand five hundred dollars for a secondoffense onor before twenty-four monthsafter thedateofthefirst offense and not more than [one] two thousand dollars for each subsequent offense onor before twenty-fourmonthsafter thedate ofthe firstoffense.The provisionsofthissubsectionshallnotapplytoaperson under twenty-one years of age who is delivering or accepting delivery of cigarettes or a tobacco product (1) in such person's capacity as an employee, or (2) as part of a scientific study being conducted by an organization for the purpose of medical research to further efforts in cigarette and tobacco product use prevention and cessation, provided suchsSB367 medical/ researchFile hasNo. been approved by the organization's institutional review board, as defined in section 21a-408.

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663 such medical research has been approved by the organization's institutional review board, as defined in section 21a-408.

The provisions of this subsection shall not apply to a person under twenty-one years of age who isdelivering or accepting deliveryofanelectronicnicotine delivery system or vapor product (1) in such person's capacity as an employee, or (2) as part of a scientific study being conducted by an organization SB367for /the Filepurpose No.of medical research to further efforts in tobacco use prevention and cessation, provided such medical research has been approved by the organization's institutional review board, as defined in section 21a-408.

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316 for the purpose of medical research to further efforts in tobacco use prevention and cessation, provided such medical research has been approved by the organization's institutional review board, as defined in section 21a-408.

6 January 1, 2023 53-344b(b) PHFIN Joint Favorable SB367Subst. / File No.

316sSB367 13/ SB367 File No.

316663 The10 followingsSB367 FiscalFile ImpactNo. Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

663 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

Agency Affected Fund-Effect FY 23 $ FY 24 $ Resources of the General Fund GF - Revenue Serv.,See Dept.Below See Below Impact Note:

GF - Revenue 1.4 million 2.7 million Loss Mental Health & Addiction GF - Cost At least At least Serv., Dept.

32,960 65,901 State Comptroller - Fringe GF - Cost At least At least Benefits1 13,360 26,710 Revenue Serv., Dept.

GF - Revenue Potential Potential Gain Note:

None Explanation The bill,bill whichmakes bansvariouschanges certainregarding vapore-cigarettes productsresulting andinthe increasesrevenue variousimpact penaltiesdescribed associatedbelow. with the illegal sale of cigarettes, tobacco products, e-cigarettes, and vapor products, results in:

1)Sections a1 General Fund revenue loss of $1.4 million in FY 23 (partial year) and $2.72 millionprohibit inthe FYselling, 24,delivering, 2)or apossessing cost to the Department of Mentale- Healthcigarettes and Addictionvapor Servicesproducts (DMHAS)by ofbusinesses atother leastthan $46,320adult-only intobacco FYretail 23stores (partialresulting year) and at least $92,611 in FY 24, inclusive of fringe benefit costs, and 3) a potential revenue gainloss to the Generalstate. Fund from increased civil penalties and fines.

RevenueTo Impacttheextentthisrestrictionresultsinfewernicotinedeliverysystemdealer Theregistrations revenuethere lossis ofa $1.4potential millionrevenue inloss FYto 23 and $2.7 million in FY 24 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller.state.

TheIn estimatedFY active21 employeethere fringewere benefit1,698 costapplications associatedand withrenewals mostfor personnelthis changesdealer isregistration. 40.53% of payroll in FY 23.

SB367Sections /3 Fileto No.6 result in a potential General Fund revenue gain by raising the maximum fines and penalties that may be imposed on someone who sells, gives, or delivers tobacco or vapor products to someone under the legal age.

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316 assumes a 55% drop in vapor product tax revenue.

These estimates are based on information from the United States Department of Health and Human Services Centers for Disease Control and Prevention indicating that flavored products comprise just over half the vapor product market.

The bill also results in a potential General Fund revenue gain by raising the maximum fines and penalties that may be imposed on someone who sells, gives, or delivers tobacco or vapor products to someone under the legal age.

Cost Impact The costOut ofYears at1The leastannual $32,960fee infor FYa 23dealer andregistration $65,910 in FY 24 (with associated fringe benefit costs of $13,360 and $26,710, respectively) to DMHAS is to$800, supportunless atthat leastperson oneholds Specialanother Investigatordealer toregistration complythan with the unannouncedannual compliancefee checksis required$400. under the bill.

ItsSB367 is/ anticipatedFile thatNo. DRS and the Department of Consumer Protection can handle the enforcement and penalty provisions of thebill without the need for additional resources.

The663 Out11 YearssSB367 TheFile annualizedongoingNo. cost impact identifiedabove wouldcontinue into the future subject to inflation;

the663 The annualized ongoing revenuefiscal impactsimpact identified above would continue into the future subject to growthintheoverallvaporthe productnumber marketof andthenumbercigarette, ofcigarette, tobacco product, e-cigarette, and vapor product sales violations found.found and the number of dealer applications.

Sources:USsSB367 Department/ ofFile HealthNo. and Human Services Centers for Disease Control and Prevention Morbidity and Mortality Weekly Report 2Electronic cigarette products tax revenue totaled $5.2 million in FY 21.

SB367663 /12 sSB367 File No.

316663 15OLR SB367Bill FileAnalysis No.sSB 367 AN ACT CONCERNING THE SALE OF ELECTRONIC NICOTINE DELIVERY SYSTEMS AND VAPOR PRODUCTS AND INCREASING PENALTIES FOR UNDERAGE SALES OF SUCH SYSTEMS AND PRODUCTS, CIGARETTES AND TOBACCO PRODUCTS.

316SUMMARY OLRFrom BillJanuary Analysis1, SB2023, 367to ANJune ACT30, CONCERNING2026, ELECTRONICthis NICOTINEbill DELIVERYprohibits SYSTEMSselling, ANDdelivering, VAPORgiving, PRODUCTS.or possessing with the intent to sell, e-cigarettes and vapor products by businesses other than adult-only tobacco retail stores (i.e., stores that prohibit minors under age 21 from entering) or their principals, proprietors, agents, servants, or employees.

SUMMARYIn Startingdoing Januaryso, 1,the 2023, this bill prohibits anyone, including e- cigarette dealers, from selling, delivering, giving, or possessing with the intentsale toof sell, e-cigarettes and vapor products withduring athis (1)period nicotinein contentother greattypes thanof 35retail milligramsestablishments perallowed milliliterunder (mg/ml)current orlaw (2)(e.g., flavorconvenience otherstores, thangrocery tobacco.stores, and pharmacies).

(It is unclear what happens to these other retail establishments’ (1) existing inventory and (2) initial and renewal dealer registration fees paid prior to the ban.) Additionally, the bill:bill increases the penalties for (1) sales and transfers of cigarettes, tobacco products, e-cigarettes, and vapor products to individuals under age 21 and (2) owners of establishments with cigarette vending machines and restricted cigarette vending machines for sales to individuals under the legal age.

1.Lastly, the bill makes technical and conforming changes.

requires (a) e-cigarette manufacturers to provide documentation toe-cigarettedealersonthenicotine contentoftheirproductsand (b) dealers to maintain the documentation (§ 2);

2.

requires the Department of Mental Health and Addiction Services (DMHAS) to conduct unannounced compliance checks on e-cigarette dealers and refer non-compliant dealers to the Department of Revenue Services (DRS) commissioner who may impose civil penalties (§ 3);

3.

increases the penalties for sales and transfers of cigarettes, tobacco products, e-cigarettes, and vapor products to individuals under age 21 and extends the same increased penalties to e- cigarette dealers who violate the bill’s flavor ban and nicotine content requirements (§§ 3-6);

and 4.

increases the penalties on owners of establishments with cigarette vending machines and restricted cigarette vending machines for sales to individuals under the legal age (§ 4).

SB367 / File No.

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316 Lastly, the bill makes technical and conforming changes.

January 1, 2023 §§§ 1-31 — E-CIGARETTESDEFINITIONS ANDThe VAPORbill PRODUCTSdefines Definitionan of“adult-only Flavoredtobacco Productsretail (§store” 1)as Underthebill,flavorede-cigarettesandvaporproductsarethosethata impartretail aestablishment tastethat or(1) smell,has otheran thane-cigarette tobacco,and eithervapor beforeproduct ordealer duringsSB367 their/ use.File No.

It663 includes13 thesSB367 followingFile flavors:No.

fruit,663 menthol,registration mint,and wintergreen,(2) chocolate,prohibits cocoa,minors vanilla,under honey,age or21 anyfrom candy,entering dessert,the alcoholicestablishment. beverage, herb, or spice.

Flavor Ban and Nicotine Content Requirements (§ 2) The bill prohibits anyone, including e-cigarette dealers, from selling, giving, delivering, or possessing with the intent to sell in Connecticut e- cigarettes or vapor products that are flavored or have a nicotine content greater than 35 mg/ml.

It requires e-cigarette manufacturers to provide documentation to dealers on the nicotine content of these products (expressed as mg/ml) that the manufacturers sell to them.

Under the bill, dealers must maintain this documentation at their registered place of business for each product sold, delivered, or given to them by a manufacturer.

They must also provide the documentation to DMHAS upon request, during any unannounced compliance check the department conducts.

Compliance Checks (§ 3) The bill requires the DMHAS commissioner, or her designee, to conduct unannounced compliance checks on e-cigarette dealers to determine whether they are complying with the bill’s flavor ban and nicotine content requirements.Existing lawalready requiresDMHAS to SB367 / File No.

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316 conduct these checks for underage sales (i.e., sales to individuals under age 21).

The bill requires the department, after the initial compliance check, to refer to the DRS commissioner e-cigarette dealers who (1) do not produce documentation on the nicotine content of their products or (2) sell products that violate the nicotine threshold.

In the case of the flavor ban, the department must refer non-compliant dealers to DRS after completing an unannounced follow-up compliance check.

DRS may impose a penalty (see Table 1 below).

DCP and DRS Penalties (§§ 3 & 4) Existing law allows the DRSDepartment of Revenue Services (DRS) commissioner, after a hearing, to impose civil penalties on e-cigarette dealers, cigarette dealers and distributors, or their employees for sales and transfers (“sales”) to individuals under age 21.

The bill increasestheseincreases these penalties as showninthetableshown belowin and extends the sametable penaltiesbelow. to e-cigarette dealers who violate the bill’s SB367 / File No.

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316663 flavor14 bansSB367 andFile nicotineNo. content or documentation requirements.

663 Table 1:

Civil Penalties for Underage Sales Penalties on Cigarette Dealers and Distributors and E-Cigarette Dealers Current Law Under the Bill (applies to underage sales) (applies to underage sales, flavor ban, and nicotine content and documentation requirements) st violation $300, if they fail to complete an$600, if they fail to complete an online prevention education online prevention education program within 30 days program within 30 days nd violation $750 $1,500 violation $1,000, plus minimum 30-day $2,000, plus minimum 30-day license suspension license suspension violation $1,000, plus license revocation $2,000, plus license revocation Penalties on Their Employees Current Law Under the Bill (applies to underage sales) (applies to underage sales) violation $200, if the employee fails to $400, if the employee fails to complete an online prevention complete an online prevention education program within 30 education program within 30 days days nd or $250 $500 subsequent violation As under current law, the above fines for second and subsequent violations may be imposed for violations that occur within 24 months after the first violation.

UnderBy thebill,aslaw, underthe currentDRS law,theDRS commissioner may only imposetheabovefinesone-cigarettedealerswhoviolatethebill’sflavorimpose banthe andabove nicotinefines thresholdon e-cigarette dealers if they are referred to him by the DMHASDepartment of Mental Health and Addiction Services commissioner after completing unannounced follow-up compliance checks (seerequired above).under existing law.

For third and fourth violations, the DRS commissioner must direct the Department of Consumer Protection SB367(DCP) /commissioner Fileto No.suspend or revoke the e-cigarette dealer’s registration.

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316 (DCP) commissioner to suspend or revoke the e-cigarette dealer’s registration.

UndersSB367 the/ bill,File anyNo. dealer sales that occur during this period are considered an additional violation.

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663 Under the bill, any dealer sales that occur during this period are considered an additional violation.

§ 4 — VENDING MACHINE SALES Current law allows the DRS commissioner, after a hearing, to impose penalties on owners of establishments with cigarette vending machines and restricted cigarette vending machines (see BACKGROUND) for salestoindividualsunderthelegalage.Thebillsalestoindividualsunderthelegalage.Thebillincreasesthesepenalties increasesthesepenalties as follows:

st 1.

nd Asunder current law, thecommissioner may impose fines for 2 nd and 3rd violations that occur within 24 months after the date of the first violation.

Existing law, unchanged by the bill, requires an establishment owner SB367who /commits Filea No.third violation to immediately remove the vending machine from the establishment and prohibits any vending machine at the establishment for one year after the removal.

316BACKGROUND 20Cigarette SB367Vending Machines sSB367 / File No.

316663 who16 commitssSB367 aFile thirdNo. violation to immediately remove the vending machine from the establishment and prohibits any vending machine at the establishment for one year after the removal.

BACKGROUND663 Cigarette Vending Machines Existing law distinguishes between two types of machines that it authorizes to dispense cigarettes.

COMMITTEELegislative ACTIONHistory PublicThe HealthSenate Committeereferred Jointthe Favorablebill Yea(File 20316) Nayto 11the (03/23/2022)Finance, SB367Revenue /and FileBonding No.Committee, which reported a substitute that eliminates the provisions banning the sale of e-cigarettes and vapor products with a nicotine content greater than 35 milligrams per milliliter or flavor other than tobacco.

316COMMITTEE 21ACTION Public Health Committee Joint Favorable Yea 20 Nay 11 (03/23/2022) Finance, Revenue and Bonding Committee Joint Favorable Substitute Yea 33 Nay 15 (04/22/2022) sSB367 / File No.

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