SB1400 - 542R - Senate Fact Sheet

Purpose

Increases the minimum legal age for the sale of tobacco products to 21 years old. Expands prohibitions relating to tobacco products and modifies penalties. Expands the definition of smoking as regulated by the Smoke-Free Arizona Act. Prescribes requirements for licensure, regulation and enforcement of the sale of tobacco products, alternative nicotine products and electronic smoking devices. Contains requirements for enactment for initiatives and referendums (Proposition 105).

Background

A person who knowingly sells, gives or furnishes a tobacco product, vapor product or any instrument or paraphernalia that is designed for the smoking or ingestion of tobacco to a person who is under 18 years old (minor) and a minor who accepts any tobacco product, vapor product or any instrument or paraphernalia that is designed for smoking or ingestion of tobacco are guilty of a petty offense. A minor who misrepresents their age to induce any person to sell, give or furnish a tobacco product, vapor product or any instrument or paraphernalia that is designed for smoking or ingestion of tobacco is guilty of a petty offense and is required to 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).

In 2006, Arizona voters passed the Smoke-Free Arizona Act to establish smoking restrictions. The Act prohibits smoking in all public places and places of employment, with outlined exceptions. A person who smokes where smoking is prohibited is guilty of a petty offense (A.R.S. § 36-601.01).

The Department of Liquor Licenses and Control (DLLC) regulates the production, distribution and sale of alcoholic beverages through the State Liquor Board (Board) and the Office of the DLLC Director. The Board: 1) grants and denies liquor license applications; 2) adopts rules; and 3) hears appeals and holds hearings relating to liquor regulation. The duties of the Director of the DLLC (Director) include: 1) adopting rules to establish licensure requirements; 2) responding to a law enforcement agency investigative report relating to violations of liquor regulations; 3) coordinating with law enforcement agencies to enforce Arizona law against the consumption of spirituous liquor by underage persons; and 4) establishing an investigation unit. 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).

There is no anticipated fiscal impact to the state General Fund associated with this legislation.

Provisions

Arizona Criminal Code

1. Conforms the minimum legal age for the sale of tobacco products, alternative nicotine products or electronic smoking devices to the federal minimum age of sale for tobacco products.

2. Subjects, to a petty offense and a maximum fine of $100:

a) a person who sells, gives or furnishes an alternative nicotine product or electronic smoking device to an underage person; and

b) an underage person who uses an ID to misrepresent the person's age with the intent to induce the other person to sell, give or furnish an alternative nicotine product or electronic smoking device.

3. Removes the criteria, for classification as a petty offense, that a person sell, give or furnish a tobacco product to an underage person knowingly, and lowers the maximum fine from $500 to $100.

4. Removes the classification, as guilty of a petty offense, of a minor who buys, possesses or knowingly accepts or receives a tobacco product, vapor product or instrument designed for tobacco or shisha ingestion and the related minimum fine of $100 or 30 hours of community restitution for an offense involving an instrument or paraphernalia.

5. Expands, to apply to tobacco products or alternative nicotine products, the nonapplicability of criminal penalties relating to a person's religious use of outlined products.

6. Removes the nonapplicability of criminal penalties to a tobacco or shisha instrument or paraphernalia that is possessed by a minor as a gift or souvenir if the minor does not use or intend to use the instrument or paraphernalia for tobacco or shisha.

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

8. Defines electronic smoking device as any device used to deliver an aerosolized or vaporized substance to the person who inhales from the device, including:

a) an e-cigarette, e-cigar, e-pipe, vape pen or e-hookah; and

b) any component, part or accessory of the device, whether or not sold separately.

9. Excludes, from the definition of electronic smoking device:

a) any substance intended to be aerosolized or vaporized during use of the device; and

b) any battery or battery charger, when sold separately.

10. Expands the definition of tobacco product to:

a) mean a product containing, made of or derived from tobacco or nicotine that is intended for human consumption or likely to be consumed, whether inhaled, absorbed or ingested by any other means, including a cigarette, cigar, pipe tobacco, shisha, beedies, bidis, chewing tobacco, snuff or snus;

b) mean any substance that may be aerosolized or vaporized by the device, whether or not the substance contains nicotine; and

c) exclude an electronic smoking device.

11. Excludes, from the definitions of tobacco product, electronic smoking device and alternative nicotine product, drugs, devices or combination products authorized for sale by the U.S. Food and Drug Administration, as defined by the Federal Food, Drug and Cosmetic Act or related regulations.

12. Removes the definition of vapor product.

Smoke-Free Arizona Act (Proposition 105)

13. Expands the definition of smoking, as it relates to the Smoke-Free Arizona Act, to include using:

a) any heated tobacco or plant products intended for inhalation in any manner or form; and

b) an electronic smoking device that creates an aerosol or vapor or any oral smoking device to circumvent the smoking prohibition.

14. Removes, from the places exempt from the prohibition on smoking:

a) veterans and fraternal clubs when not open to the general public; and

b) a theatrical performance upon a stage or in the course of a film or television production if the smoking is part of the performance or production.

15. Expands the definition of enclosed area to mean a space between a floor and ceiling that is bound on at least two sides by walls, doorways or windows, rather than enclosed on all sides by permanent or temporary walls or windows.

16. Applies the Arizona Criminal Code definitions of tobacco product and electronic smoking device to the Smoke-Free Arizona Act.

License Application and License Renewal

17. Requires a person desiring a license to sell tobacco products, alternative nicotine products or electronic smoking devices (license) to apply to the Director on a form furnished by the Director.

18. Applies the Arizona Criminal Code definitions of tobacco product, alternative nicotine product and electronic smoking device (products or devices) to statutes relating to DLLC licensure and defines shisha.

19. Requires all applications for a new license to be filed with and determined by the Director.

20. Prescribes licenses to be valid for two years and states that a licensee who fails to renew the license by the expiration date may be subject to a penalty fee.

21. Requires the DLLC to issue a license only after the applicant satisfactorily shows its qualifications.

22. Requires a person who files a license application to file a copy of the application with the Director and:

a) for a license within a city or town, with the city or town clerk; and

b) for a license in an unincorporated area of a county, with the county clerk.

23. Authorizes the Director to charge a fee, in an amount determined by the Director, for applications for initial or renewal of license applications.

24. Requires the applicant to pay the fee at the time of initial or renewal license application.

25. Deems a license renewal to be filed and received by the DLLC on the date shown by a postmark of U.S. Postal Service official mark, if the license renewal is deposited, properly addressed and placed in an official depository of the U.S. mail by the license expiration date.

26. Considers, as timely, a renewal that expires on a Saturday, Sunday or legal holiday if received by the DLLC on the next business day.

27. Prohibits, from selling products or devices, a licensee who fails to renew the license by the expiration date.

28. Terminates a license that is not renewed within 60 days after the expiration date.

29. Allows the Director, if the licensee shows good cause, to waive a late penalty and renew a terminated license.

30. Allows the DLLC to issue licenses with staggered renewal date to distribute the renewal workload uniformly through the calendar year.

31. Stipulates that one half of an annual license fee must be charged if a license is issued less than six months before the scheduled renewal date as a result of a staggered renewal system.

32. Allows all licensing functions to be conducted electronically.

Location Regulation

33. Prohibits a city, town or county from adopting ordinances or regulations in conflict with this legislation, including pertaining to hours and days products or devices may be sold.

34. Prohibits a city, town or county from limiting any right granted by the license and this legislation.

35. Allows a city, town or county to enforce lawful zoning requirements and adopt lawful and reasonable billboard advertising restrictions within 300 feet of school zones.

36. Prohibits zoning from being a basis for protesting or denying a license.

37. Stipulates that a license authorizes the licensee to sell products or devices only at the location provided on the license.

38. Prohibits the sale of products or devices using a drive-through or physical feature of the premises that allows a customer to make the purchase without leaving the person's vehicle.

39. Prohibits the DLLC from issuing a license to sell products or devices for premises that are, at the time of application, within 300 horizontal feet of a:

a) church; or

b) school building, or adjacent fenced recreational area, with kindergarten programs of grades 1 through 12.

40. Specifies that the 300-foot restriction does not:

a) apply to a retailer that lawfully sells products or devices in Arizona on August 1, 2020; or

b) prohibit a license renewal for premises that were not within the 300 feet on the date of original license application.

Age Verification

41. Allows a retailer to employ a person who is at least 16 years of age to check out, package or carry products or devices if:

a) the employer primarily sells merchandise other than products or devices; and

b) the underage person is supervised by a person on the premises who is at least 18 years old.

42. Requires a licensee, licensee's employee or any other person who questions that a person ordering, purchasing or otherwise procuring the serving or delivery of products or devices to:

a) demand identification (ID);

b) examine the identification to determine that the ID appears to be valid, unaltered and not defaced;

c) examine the photograph on the ID and determine that the person appears to be the same person in the ID; and

d) determine that the date of birth in the ID indicates the person is not under the legal drinking age or legal tobacco and vapor use age.

43. Prescribes the following to be the only acceptable forms of ID for age verification:

a) an unexpired Arizona driver license, except for a license that is issued to a person who is under 21 years old if it is 30 days after the person reaches 21 years.

b) an unexpired driver license issued by any other state, the district of Columbia, any U.S. territory or Canada that includes a person's picture and date of birth;

c) an unexpired Arizona nonoperating ID license, except for a nonoperating license that is issued to a person who is under 21 years old if it is 30 days after the person reaches 21 years;

d) a form of ID issued by any other state, the district of Columbia, any U.S. territory or Canada that is substantially equivalent to an Arizona nonoperating license and includes a person's picture and date of birth;

e) an unexpired armed forces ID card that includes the person's picture and date of birth; and

f) a valid, unexpired passport or resident alien card that contains a person's photograph and date of birth.

44. States that a licensee or licensee's employee does not violate age verification requirements if the licensee or employee follows the age verification procedures and:

a) records and retains a record of the ID on the particular visit; or

b) uses a biometric identity verification device to verify a person is not under the legal drinking or tobacco and vapor use age.

45. Prescribes the following acceptable forms for recording a person's ID:

a) a writing containing the ID type, date of issuance, the name and date of birth on the ID and the person's signature;

b) an electronic file or printed document produced by a device that reads a person's age from the ID;

c) a dated and signed photocopy of the ID; and

d) a photograph of the ID.

46. Specifies the ID record or biometric identity verification defense applies to licensee and employee actions after the outlined age verification procedure is performed during the particular visit to the licensed premises.

47. Specifies that a licensee or employee is not required to demand and examine the ID of a person if the licensee or employee previously performed the age verification procedure.

48. Presumes that a licensee or employee who has not recorded and retained a record of an ID:

a) did not follow any of the age verification procedures;

b) for the purposes of State Liquor Board (Board) hearings on a license, knows the person attempting to purchase products or devices is under the legal tobacco and vapor use age.

49. Provides an affirmative defense, to a criminal charge relating to sales devices to a person who is under the legal tobacco or vapor use age, if there is proof that the licensee or employee followed the entire age verification procedure but did not retain a record.

50. Provides a defense, to a violation of the age verification requirements, if the person procuring or attempting to procure products or devices is not under the legal age.

Grounds for License Suspension, Revocation or Refusal to Renew

51. Authorizes the Director, after notice and a hearing, to suspend, revoke or refuse to renew any license to sell products or devices if:

a) a person buys for resale, sells or deals in products or devices in Arizona without first procuring a license;

b) a person is convicted of violating criminal code prohibitions relating to product or device sales based on a citation by the Attorney General's Office;

c) a person sells or deals in products or devices without complying without complying with statutory requirements;

d) a licensee or other person sells, furnishes, disposes of or gives products or devices to an underage person;

e) an underage person buys, receives has in possession or uses products or devices;

f) a person employs a person under 18 years old to sell or dispose of products or devices, with a specified exception;

g) a retailer employs a person under 18 years old in any capacity connected with the handling of products or devices;

h) a licensee or employee knowingly allows a person on the premises to furnish products or devices to an underage person;

i) a licensee or employee knowingly allows an underage person to possess products or devices on the premises;

j) a licensee uses a vending machine to dispense products or devices;

k) an employee of a licensee accepts a gratuity, compensation, remuneration or consideration to sell, furnish, dispose of or give products or devices to an underage person;

l) a licensee or employee sells products or devices to a person the licensee or employee knows intends to resell the products or devices;

m) the licensee or controlling person knowingly files an application or document that contains materially false or misleading information;

n) the licensee or controlling person knowingly files gives testimony under oath in an investigation or proceeding that is false or misleading;

o) the licensed business if delinquent in the payment of taxes, penalties or interest to the state or a political subdivision for over 100 days in an amount that exceeds $250;

p) the licensee or controlling person leases or subleases a license or obtains, assigns, transfers or sells a license without complying with statutory requirements;

q) the licensee fails to keep for two years, and make available to the DLLC on request, invoices, records, bills or other papers and documents relating to products or devices;

r) the licensee or controlling person is convicted of a felony;

s) the licensee or controlling person violates or fails to comply with statute or rule relating to tobacco or vapor in Arizona or any other state; and

t) the licensee violates an order of the Board.

52. Stipulates that the Director may only take action for a felony conviction of a corporation if the conduct was engaged in, authorized, solicited, commanded or recklessly tolerated by the directors of the corporation or by a high managerial agent acting in the scope of employment.

53. Prohibits the DLLC from issuing a license to a person that has had a license revoked within one year before application.

54. Specifies that a license expiration, cancellation, revocation, reversion, surrender, or any other termination does not prevent the initiation or completion of a disciplinary proceeding.

55. Specifies that a license revocation, suspension or refusal to renew for unpaid taxes, penalties or interest is a contested case with the Department of Revenue.

56. Defines high managerial agent.

DLLC Penalties

57. Allows the Director to impose a civil penalty between $500 and $3,000 for each violation to be paid in a single payment or installments.

58. Subjects, to noncriminal, nonmonetary penalties including education classes or community service, a person who violates criminal code prohibitions relating to the product or device sales or statute on vending machine sales while acting as a nonmanagement agent.

59. States that a person under the legal age is guilty of a petty offense if the person solicits another person to purchase, sell, give or furnish products or devices.

60. States that a person under the legal age is guilty of a petty offense if the person uses an ID of another person, whether fraudulent, false or valid, to purchase products or devices.

61. Subjects a person who uses a driver license or nonoperating license of another person to purchase products or devices to suspension of the driver license or nonoperating ID license.

62. States that a person is guilty of a petty offense, if the person:

a) knowingly influences the sale or giving of products or devices by misrepresenting the person's age; or

b) orders, requests, receives or procures products or devices with the intent to sell or give the product to a person under the legal age;

63. Allows a judge to suspend a driver license or driving privilege for up to 30 days for first conviction and up to six months for a second or subsequent conviction relating to the misrepresentation of a person's age or the intent to sell or give the products to a person under the legal age.

64. Requires a peace officer to forward or electronically transfer, to the Director of the Department of Transportation, the required affidavit if the peace officer:

a) arrests a person for an offense which may result in the suspension of a license or privilege to operate a motor vehicle; or

b) confiscates a false ID used by a person to purchase products or devices.

Complaints and Hearings

65. Requires the Director to receive complaints of alleged violations of Tobacco Products, Alternative Nicotine Products or Electronic Smoking Devices statutes.

66. Assigns, to the Director, responsibility to investigate all allegations of violations of statute, rule or any conditions imposed on the licensee.

67. Authorizes the Director to direct a complaint and hearing notice to a licensee on the initiation of an investigation.

68. Allows the Director to set a hearing on any of the grounds for license action before the Director or an administrative law judge.

69. Requires the complaint and hearing notice to state the alleged violations and direct the licensee, within 15 days after service of the complaint and hearing notice, to appear by filing an answer with the Director.

70. Allows failure to answer to a complaint to be deemed as a licensee's admission of commission of the act charged in the complaint and allows the Director to then vacate the hearing and impose any outlined sanction.

71. Allows the Director to waive any sanction for good cause, including excusable neglect.

72. Requires the Director, for violation of Alcoholic Beverages statutes, to consider mitigating evidence established by a preponderance of the evidence that the employee acted in violation of express direction or policy adopted by the licensee and communicated to the employee.

73. Allows a city or county law enforcement agency to initiate a complaint with the DLLC regarding statutory violations.

74. Requires the Director, if the Director receives three complaints from separate incidents from any law enforcement agency within 12 months, to transmit a written report to the Board that includes:

a) the complaints;

b) any investigation results relating to complaints; and

c) a history of all prior complaints against the licensee.

75. Requires the Board to review a report of complaints and authorizes the Board to direct the Director to conduct further investigation or serve a licensee with a complaint and notice of a hearing.

76. Allows the Director to provide for informal disposition by consent agreement or written warning, instead of issuing a complaint.

77. Requires a hearing before the Director or an administrative law judge to conform to the requirements of the statutory Uniform Administrative Hearing Procedures.

78. Allows an attorney, corporate officer or employee of a corporation to represent a corporation at a hearing.

Appeals

79. Determines, for the purposes of appeal to the superior court, a decision issued by the Director to be not final until the decision has been appealed to and ruled on by the Board.

80. Allows the Board to affirm, reverse or modify any decision issued by the Director.

81. Allows an aggrieved party to appeal to the Board a final decision of the Director regarding applicants or licensees based on contention that the decision was:

a) founded on or contained errors of law;

b) unsupported by competent evidence as disclosed by the entire record;

c) materially affected by unlawful procedures;

d) based on violation of a constitutional provision; or

e) arbitrary or capricious.

82. Requires the aggrieved party to file, with the DLLC, the appeal in writing within 15 days after notice of the Director's decision is served.

83. Suspends the Director's decision until determination of any appeal by the Board.

84. Requires State Liquor Board (Board) or an administrative law judge to conduct a hearing on an appeal according to the requirements of the statutory Uniform Administrative Hearing Procedures.

85. Allows the Board or ALJ to accept relevant and material evidence and testimony as outlined in statute.

86. Subjects final Board decisions to statutes relating to the judicial review of administrative decisions.

87. Allows the Director to require, in any judicial review of a DLLC decision, the posting of a bond with the court to reimburse the DLLC for reasonable costs in transcribing and preparing the DLLC record.

88. Considers the bond to be payable to the DLLC if the superior court awards

89. Requires the DLLC to prepare an official record of an appeal hearing including all testimony and exhibits.

90. States that the DLLC is not required to transcribe the record except according to a superior court appeal.

91. Allows the DLLC, on written request and receipt of a transcription fee, to transcribe the record or allow the requesting person to transcribe the record.

Enforcement Measures

92. Allows the Board or the Director to apply to the Superior Court for injunctive relief, if the Board or Director has reasonable ground to believe:

a) the person is selling products or devices without a valid license; or

b) violating the outline grounds for suspension, revocation or refusal to renew.

93. Allows law enforcement agencies to use persons under the legal age for the purchase of products or devices to test a licensee's compliance with age verification and sale requirements if:

a) the law enforcement agency has reasonable suspicion that the licensee is violating age verification and sale requirements;

b) the person is in between 15 and 19 years old;

c) the person is not employed on an incentive or quota basis;

d) the person's appearance is that of a person under the legal age;

e) a photograph of the person accurately depicting the person's appearance and attire is taken no more than 12 hours before the attempted purchase;

f) the person places, receives and pays for the order of products or devices; and

g) the person does not use any product or device.

94. Prohibits an adult from accompanying the underage person onto the licensee's premises.

95. Allows a licensee or employee cited for selling products or devices to an underage person to inspect the photograph taken of the person immediately after the citation.

96. Prohibits the person's appearance at a trial or administrative hearing resulting from a citation from being substantially different from the appearance at the time the citation was issued.

97. Immunizes, from prosecution, a person under the legal age who purchases or attempts to purchase products or devices under the direction of a law enforcement agency.

98. States that a person is not in violation of criminal code prohibitions relating to the product or device sales if acting under a Director-approved testing compliance program.

99. Adds, to the duties of the Director, enforcement of Tobacco Sales statutes relating to vending machine sales, delivery, schools, and the manufacture and sale of cigarettes and roll‑your‑own-tobacco.

100. Adds, to the responsibilities of the DLLC Investigations Division, investigating licensees alleged to have sold products or devices to persons under the legal tobacco and vapor use age.

101. Requires the Director to coordinate with the Department of Public Safety and local law enforcement agencies for enforcement of laws prohibits the use of products or devices by persons under the legal tobacco and vapor use age.

102. Authorizes the Director to:

a) remove, from the marketplace, products or devices that may be contaminated, illegal or adulterated;

b) issue and enforce cease and desist orders against a person that sells products or devices without an appropriate license or permit;

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 products or devices; and

d) adopt rules relating to enforcement of the sale of products or devices to or obtaining of products or devices by an underage person.

103. Specifies that the DLLC's enforcement authority does not limit the role of the Attorney General in enforcing Arizona laws regarding the sale or transfer of products or devices to persons under the legal age.

License Ownership

104. Stipulates that a license is not transferable and may not be leased or subleased.

105. Requires a licensee to report, to the Director, a change in ownership of the licensee's business, as defined by rule, within 30 days.

106. Requires a person who acquires control of a licensed corporation to file notice with the Director within 30 days and list the officers, directors or other controlling person.

107. States there is no acquisition of control if:

a) a new person is added to the ownership of a licensee's business and the controlling persons previously disclosed to the Director remain identical; or

b) there is no change in control or beneficial ownership and a licensee's business is restructured and all controlling persons of the new business and the licensee are identical.

108. Requires all officers, directors or other controlling persons to meet licensure qualification prescribed by rule.

109. Allows the Director to issue a temporary permit to a trustee in bankruptcy to acquire and dispose of a debtor's products or devices.

Department of Health Services Regulation

110. Expands, to apply to tobacco products, alternative nicotine products and electronic smoking devices, the prohibition on a retail tobacco vendor selling, furnishing, giving or providing beedies or bidies to a person who is underage.

111. Narrows the bar exemption on selling tobacco products through a vending machine to a bar that does not allow entry to persons who are underage.

112. Exempts, from the prohibition on sales through a vending machine, a person selling cigars or pipe tobacco if the person primarily engages in the business of:

a) selling cigars, pipe tobacco, cigar-related or pipe tobacco-related accessories; or

b) renting on-premises humidors or other storage units.

113. Applies the Arizona Criminal Code definitions of tobacco product, alternative nicotine product and electronic smoking device (products or devices) to statutes relating to DHS regulation of tobacco sales.

Miscellaneous

114. Makes technical and conforming changes.

115. Requires, for enactment of the Smoke-Free Arizona Act provisions, the affirmative vote of at least three-fourths of the members of each house of the Legislature (Proposition 105).

116. Becomes effective on January 1, 2022.