H.B. NO.



















     SECTION 1.  The legislature finds that there is a serious nationwide concern over the use of electronic smoking devices, also known as e-cigarettes, which are battery-operated products designed to deliver highly addictive nicotine, artificial flavor, and other chemicals to the user by turning those chemicals into an aerosol that is inhaled by the user.  Consumers may choose from varying strengths of e-liquid nicotine as well as liquids consisting of different flavors.  However, studies have raised concerns that product labels do not always provide accurate information about nicotine content.  Some electronic smoking device pods contain a concentrated form of nicotine called nicotine salt.  A pod containing five per cent nicotine salt may have as much as thirty to fifty milligrams of nicotine, the equivalent amount of nicotine delivered in one to three packs of cigarettes.

     The electronic smoking device industry, including the production of e-liquids, is growing rapidly.  On December 18, 2018, the United States Surgeon General made the unprecedented move of classifying the danger of youth usage of electronic smoking devices as an epidemic.  Since the Surgeon General first issued a warning in 2016 about the dangers of these products, data has shown a historic rise in their use by youth and young adults.  According to the 2016 report from the Surgeon General, e-cigarette use among the nation's youth and young adults has become a major public health concern.  The Surgeon General's report noted that e-cigarette use has increased considerably in recent years, growing an astounding nine hundred per cent among high school students from 2011 to 2015.  In a 2018 study conducted by the National Institute on Drug Abuse, the use of electronic smoking devices among high school seniors increased nationally from 27.8 per cent to 37.3 per cent in a twelve-month period.  The increase translates to 1,300,000 more teens using electronic smoking devices in a single year.  E-cigarette use among youth and young adults is also strongly associated with the use of other tobacco products, including combustible tobacco products.  Toxicologists have also warned that e-liquids pose significant risks to public health, particularly to children.  According to the Surgeon General's report, if the contents of refill cartridges or bottles are consumed, ingestion of e-liquids containing nicotine can cause acute toxicity and possibly death.  The Surgeon General's report also found that there are numerous policies and practices that can be implemented at the state and local levels to address electronic smoking device use among youth and young adults, including preventing access to e-cigarettes by youth, significant increases in taxes and the price of e-cigarettes, retail licensure, and regulation of e-cigarette marketing.

     The legislature additionally finds that the rapid growth of the electronic smoking device industry, including retail businesses selling electronic smoking devices or e-liquids, necessitates further regulation to protect consumers, such as requiring retailers of e-liquids to obtain retail tobacco permits.

     The legislature notes that there is currently no state tobacco tax applied to e-liquid, even though electronic smoking devices are now regulated as tobacco products.  Furthermore, tobacco products other than cigarettes are currently taxed at a lower rate than cigarettes, even though their use carries similar health risks.  Research has shown that increasing cigarette prices, such as through cigarette taxes, tends to reduce the rate of smoking by adult and youth smokers.  However, the legislature is concerned that as the price of cigarettes increases, smokers may purchase less-expensive tobacco products, such as electronic smoking devices or e-liquids.

     Finally, the legislature concludes that establishing a tax on e-liquids and electronic smoking devices containing e-liquid is necessary, and that taxing these products as other tobacco products is the most equitable way to do so.  Imposing a tax on e-liquids and electronic smoking devices containing e-liquid will also encourage users of e-liquids to quit, sustain cessation, prevent youth initiation, and reduce consumption among those who continue to use those products.

     Accordingly, the purpose of this Act is to:

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

          (A)  Subjecting e-liquid and electronic smoking devices to the excise tax on tobacco products;

          (B)  Requiring retailers of e-liquid to obtain a retail tobacco permit to sell, possess, keep, acquire, distribute, or transport e-liquid;

          (C)  Prohibiting persons from engaging in the business of a wholesaler or dealer of e-liquid without first obtaining a license from the department of taxation; and

          (D)  Applying other requirements of chapter 245, Hawaii Revised Statutes; and

     (2)  Repeal various statutory provisions relating to electronic smoking devices.

     SECTION 2.  Section 245-1, Hawaii Revised Statutes, is amended as follows:

     1.  By adding four new definitions to be appropriately inserted and to read:

     ""E-liquid" means any liquid or like substance, including heated tobacco products, which may or may not contain nicotine, that is designed or intended to be used in an electronic smoking device, whether or not packaged in a cartridge or other container.  "E-liquid" does not include prescription drugs; medical cannabis or manufactured cannabis products under chapter 329D; or medical devices used to aerosolize, inhale, or ingest prescription drugs, including manufactured cannabis products manufactured or distributed in accordance with section 329D-10(a).

     "Electronic smoking device" means any electronic product, or part thereof, that can be used by a person to simulate smoking in the delivery of nicotine or any other substance, intended for human consumption, through inhalation of vapor or aerosol from the product.  "Electronic smoking device" includes an electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, electronic hookah, heated tobacco product, vape pen or related product, and any cartridge or other component part of the device or product.

     "Heated tobacco product" means a product containing tobacco that produces an inhalable aerosol by:

     (1)  Heating the tobacco by means of an electronic device without combustion of the tobacco; or

     (2)  Heat generated from a combustion source that only or primarily heats rather than burns the tobacco.

     "Smoke" or "smoking" means inhaling, exhaling, burning, carrying, or possessing any lighted or heated tobacco product, or similar substance intended for human consumption, including the use of an electronic smoking device that creates an aerosol or vapor, in any manner or in any form."

     2.  By amending the definition of "tobacco products" to read:

     "Tobacco products" means [tobacco]:

     (1)  Tobacco in any form, other than cigarettes or little cigars[, that is prepared or intended for consumption or for personal use by humans, including large cigars and any substitutes thereof other than cigarettes that bear the semblance thereof, snuff, chewing or smokeless tobacco, and smoking or pipe tobacco.]; or

     (2)  E-liquid,

that is intended for human consumption, or is likely to be consumed, whether smoked, heated, chewed, absorbed, dissolved, inhaled, or ingested by other means.  "Tobacco products" include large cigars and any substitutes thereof other than cigarettes that bear the semblance thereof, pipe tobacco, chewing or smokeless tobacco, snuff, snus, heated tobacco product, e-liquid, electronic smoking devices containing e-liquid, component parts containing e‑liquid, and related products."

     SECTION 3.  Section 245-2.5, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  A separate retail tobacco permit shall be obtained for each place of business owned, controlled, or operated by a retailer.  In seeking a retail tobacco permit, the applicant shall specify whether each place of business sells e-liquid.  A retailer that owns or controls more than one place of business may submit a single application for more than one retail tobacco permit.  Each retail tobacco permit issued shall clearly describe the place of business where the operation of the business is conducted[.] and whether the place of business sells e-liquid."

     SECTION 4.  Chapter 28, part XII, Hawaii Revised Statutes, is repealed.

     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, 2021.








Report Title:

Tobacco Products; E‑liquid; Electronic Smoking Devices; Taxation



Includes e-liquid and electronic smoking devices within the definition of "tobacco products", as used in the cigarette tax and tobacco tax law.  Repeals certain provisions of the Hawaii Revised Statutes relating to electronic smoking devices.




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