House Finance, 5/16/26, 6pm

Okay, I am going to go ahead and call this meeting of the House Finance Committee to order. Let the record reflect that the time is currently 7:33 PM on Saturday, May 16th, 2026. And present, we currently have Representative Bynum, Representative Co-Chair Josephson, Representative Allard, Representative Stapp, Representative Galvin, Representative Tomaszewski, Representative Moore, Representative Hannan, myself, Co-Chair Foster, and just wanted to make a few announcements. The first one is we're not going to go any later than an hour, so that'll put us at 8:30. So we'll keep it to 8:30, just so folks know.

The other item that I wanted to also mention is one of the bills that really needs to move is the extension of some of the boards. That's SB 211, and it was scheduled for today. I'm going to take it up first thing tomorrow. We do have public testimony. We also have just review of the fiscal notes, and we're hoping that if folks have amendments They can have them in by tomorrow morning, by that meeting, the 9:00 a.m. meeting.

I suspect that there are no other amendments. I believe that there is one amendment, and again, this is for SB 211, the extend occupational licensing boards. We're hoping to take that up first thing tomorrow morning at our 9:00 a.m. meeting. So with that, We do have one bill that we're planning on taking up, trying to get through as much of the amendment process tonight as possible. And so before us we have Senate Bill 24, that is the tobacco e-cigarette tax bill.

And I'd also like to note that we do have with us Representative Jimmy as well as Representative Kocher-Schraggy. And so we left off with amendment number 1. And Representative Bynum had conceptual amendment number 2 to amendment number 1. And there should have been a distribution of the conceptual amendment. Representative Bynum?

Thank you, Co-Chair Foster. I'm going to withdraw conceptual amendment 2 to number 1, and we will address it later. Okay. So the conceptual amendment number 2 to amendment number 1 has been withdrawn. That takes us back to amendment number 1.

Is there anything further to discuss? And so as it stands, just as a refresher, conceptual amendment number 1 was not passed and conceptual amendment number 2 has been withdrawn. So that takes us back to the original amendment number 1, which is to change the number from 300 to 100. Any further discussion?

Wrap up. Representative Hannan. Thank you, Co-Chair Foster. I just urge your support. It still keeps it an offense that requires some accountability, that being a $100 fine, up to a $100 fine, but isn't so substantial.

Okay. With that, Representative Stepp, do you maintain your objection to Amendment Number 1? I don't think I had the objection. This is Amendment Number 1. I have the objection.

I'll remove it. OK, you remove your objection to Amendment Number 1. OK, any further? Yes, I'll object. OK, we have an objection.

Would you like to speak to your objection? Yes, I think $100 is de minimis and not meaningful, and it's up to $300. That's apparently what the other body wanted. We don't work for the other body, but I'm comfortable with what they've given us, unless this was a House amendment. But in any case, I'm comfortable where it is.

Okay. And just in case I didn't state it, that is Representative Josephson who had the objection. Representative Moore. Yes, thank you, Co-Chair Foster. I—.

It's been a long day. I cannot remember the sponsor's intent. I'm—. If he was— is this a friendly amendment or not? So maybe we can Mr. Lampkin, if you'd like to come up, put yourself on the record.

And we are on Amendment Number 2, which has not been amended by any conceptual amendments. Sorry, I did— I said 2, I meant Amendment Number 1, the original Amendment Number 1. Thank you, Mr. Chairman. For the record, Tim Lampkin, staff to Senator Stevens.

As I stated previously, uh, the, the latest iteration of this bill some time ago compromise down to 150. However, given the hour and the true focus of this bill is T21 and protecting our youth, I don't think, in my opinion, that this subject matter in particular should hold up the bill any further and withdraw any— we're neutral on this. Neutral. Representative Moore. Okay.

Thank you. I appreciate that. Further discussion on Amendment Number 1? Hearing none, the objection is maintained. Representative Josephs?

Yes. Okay, the objection is maintained. And so with that, Madam Clerk, will you please call the roll for Amendment Number 1? Representative Jimmy? Pass.

Representative Allard? Yes. Representative Stapp? Yes. Representative Gelvin?

Yes. Representative Moore? Yes. Representative Hannan? Yes.

Representative Tomaszewski. Yes. Representative Bynum. Yes.

Representative Jimmy. Yes. Representative Josephson. No. Representative Schraggy.

Yes. Representative Foster. Yes. 10 Yay, 1 nay. So on a vote of 10 yay to 1 nay, Amendment Number 1 to Senate Bill 24 has been adopted.

Takes us to Amendment Number 2. Representative Hannan. I move Amendment 2.

Hearing no objection. I'll object. Okay. Oh, I do not object. Um, object just to put it on the record.

Okay, thank you, uh, Coach Foster. Amendment number 2 eliminates the mandatory court appearance for minors. That language appears in Section 4 on page 3. Adopting this amendment would allow minors accused of possession of tobacco to dispose of their citation without having to go to court. I don't want kids being immediately funneled into the court system for minor infractions.

Not all children have parents or guardians that are able to take time off work to attend a court proceeding that they are mandated to as a minor. Not all communities have court for kids to go to. So adopting this amendment could— without adopting this amendment, it would— could mean that a violation resulted in expensive travel costs to a hub community for a court appearance. We should instead focus on the industry that's targeting our kids. It's not their fault that they become addicted.

And I don't want to— minors can already dispose of other offenses like minor consuming of alcohol underage citations. In this manner. They are no longer mandated to a court infraction. So I don't want it treated more severely. And I would like to remove a mandatory court appearance for tobacco violation.

Representative Ballard. Thank you. And through the co-chair, may I ask you if through the chief of staff, Tim, can the kids go through— and maybe Nancy can ask this— can they go through the Alaska Youth Court? On this. Mr. Lampkin, through the chair, Representative Allard, this provision is— takes them out of the juvenile justice system.

It would— it's a violation that they would be treated as an adult in this manner. I would like to clarify, however, that— and I'm happy to call Ms. Mead up to confirm this— but that in this modern day and age, Mandatory court appearance does not mean to literally physically appear in court. We—. These matters, particularly at this level of being a violation, is done telephonically for starters. And I also mentioned that this type of recognition is a tool for parents.

Anyone that is a parent may want to have this, this leverage, this consequence to be first of all notified of the activity and, and secondly to scare them straight, so to speak. With that being said, we are relatively agnostic to this amendment. As a parent, personally, I kind of like the idea of these kind of consequences. However, again, in the interest of moving the bill forward, we remain neutral. May I call— I don't— I think they go to Alaska Youth Court.

Can I have Ms. Mead up here, please? Ms. Mead.

For the record, Nancy Mead, General Counsel to the Alaska Court System. Through the Chair to Representative Allard, I must say I'm not 100% certain, but my understanding is that youth court is for crimes, and these are minor offenses. Just like a speeding ticket wouldn't go to youth court, the statute in Title 47 says that these are— you are treated as an adult for a speeding ticket, and this would be just like that, a violation. So youth court deals with low-level crimes but not minor offenses, to my knowledge. May I?

Thank you, Madam Chair. So, Miss Mead, so you're saying that a 12-year-old could potentially be dragged into court to be scared straight? Uh, through the chair to Representative Allard. Currently, uh, the default for any offense that the legislature has on the books, crimes or minor offense, the default is you have to go to a judge and work it out. There is this special mechanism that's discussed in this bill where the legislature tells the court to make what's called a bail schedule.

We make it and it has a dollar amount on it. We make a traffic bail schedule and you disseminate it to law enforcement, and then they can write a citation with that amount on it, and the person can We used to call it mail-in bail. They can just pay online for that amount. So that means you don't have to come to court. But the default is yes.

Currently there's no bail schedule for these offenses. So for those under 19 who get a smoking citation, there is a mandatory court appearance. And we do get some of those. They're, they're quite— they are not very commonly issued, but they are mandatory now. Can I ask a follow-up?

Representative Ballard. So I don't know the answer to this. I probably should. Can you please tell me through the co-chair, could you please tell me what the age is to smoke marijuana again? Is it 21?

Ms. Beattie. Through the chair to Representative Allard. Generally, that's the right answer. The voters in 2015 changed it so that you could have up to an ounce and 6 plants if you are over 21. So those under 21 are still cited.

For marijuana and it is still a crime for those individuals and we do get some of those cases. They are also few and far between and they are mandatory court appearances. Representative Ballard. So you can basically get— I'm just going to say it, be candid through the co-chair. So you can get totally stoned, not be able to function, and it's the same type of punishment being brought in the court if you have some tobacco?

Ms. Mead, through the chair to Representative Allard, possession of marijuana by somebody under 21 is not a violation. It's a, it's a B misdemeanor. So they— that's a criminal offense. It's a low-level criminal offense, but it's criminal. And just for order of magnitude, there were 20 of those last year.

It is not very common. This— these are violations And so you don't have a criminal record. It is like a speeding ticket, but you do have to come to court and pay a fine if you're found guilty. Okay. Thank you, Coach.

Okay. And also like to recognize that we have in the audience with us Representative Garrett Nelson. Thank you for joining us. And I've got 2 questions. I remove my objection.

Okay. The objection is removed. Any further objection? Seeing none. Amendment number 2 has been adopted.

So that takes us to amendment number 3. Representative Stepp. Thank you. I move amendment 3. Okay.

Objected. Representative Stepp. Thank you, Co-Chair Foster. Well, you know, this amendment is pretty near and dear to my heart. Basically what this would do, it would exempt members of the military, active duty military, from the fine section of the bill in the event that they are under the age of 21.

19, 20-Year-old soldiers, airmen, Marines, members of the Coast Guard, etc. I represent the second largest military base in the state. If you go on that military base, you will find hundreds of 19 and 20-year-old kids who use vapes. Most of them come from out of state. Uh, myself, I did my first deployment to Iraq When I was 19 years old and the thought that I could come back from a deployment after getting wounded for over a year fighting for the country and be fined for smoking by some state police person drives me absolutely nuts.

So I don't think it's a big ask to put an exemption from the fines to the active duty folks who can go to war for the country, get wounded by the country, but will get fined by the police in the event that they smoke.

Representative Bynum, Allard-Hannon. Representative Bynum. Thank you, Co-Chair Foster. I'll make it real quick. I don't like the idea that we're dealing with adding the extension of violations that may require this court issue, but ultimately I will support the amendment because I don't believe in the concept that we need to be dealing with the criminal aspect of making expansion there.

I don't know that this amendment will ultimately solve that problem. Police officers will still be able to stop people, then they'll need to ask for ID. And so I will support the amendment, but I still have the objection to the other issue. Representative Ballard. Uh, thank you.

And we could get this passed out. This is a memorandum for secretaries of the military departments, and we can make copies and get this put out to everybody, but On this, it clearly states that the military doesn't support our soldiers or Marines or sailors to have addictions. And there is one quote I would like to state, and it says that Admiral Fuller, who is against soldiers, Marines, whatever, armed forces individuals, says, I've heard this argument by some shipmates against cracking down on tobacco. If someone is young enough to die for their country, they should be free to be allowed to smoke. And then he goes on to say, with him turning basically the argument on its head, he says, if someone is young enough to fight for their country, they should be free from addiction to a deadly drug?

Then he goes on to say, is one of the best things Our Fuller included that being tobacco-free is one of the best things we can do to improve fitness and readiness. And I am all about our armed forces being ready. And so I will not be supporting the amendment. And then I will make sure she gets this to all the committee members. Okay.

Thank you. Representative Hannon. Thank you, Co-Chair Foster. I'm going to start with the amendment would create equal protection issue potentially.

The bill includes the provisions that are known as T-21, raising Alaska's smoking age to, to 21. Thus, 19- and 20-year-olds would be captured in it. They already, by federal law and Department of Defense, are excluded and banned from smoking or possessing tobacco on military installations.

I appreciate the veteran and member staff's concern, but he— also, many of those soldiers could be in another country on deployment, say in Germany, and legal to drink. But that does not mean when they return to the U.S. that that drinking age of 18 or 16 or wherever you were applies here. The opposite is also true. You could have been deployed to a country where drinking was not allowed. But as an American on American soil, the laws of our state and our country apply.

And so I won't support an exemption for military that the U.S. military doesn't allow or encourage. Mr. Co-chairman. Representative Stapp is sick. I just. Good.

I appreciate what the member from Juneau said. It's just fundamentally inaccurate. This amendment is not out of compliance with T-21. There's no legal memo with this amendment. This amendment does not have an equal protection clause.

All this amendment does is exempts active duty military from the state fining section. That's not against the law. The military bans the sale of tobacco.

And I mean, I don't— I could bring up Nancy Mead. I mean, I could bring up folks to say that. Like, this is— T21 applies to the purchase of tobacco and nicotine products. It is not criminal to use tobacco products under the age of 21 in the military. Like, if you go on Fort Wainwright or JBear or Eielson or Elmendorf, you will find hundreds of people that are not age 21 that are actively using tobacco products.

And that's— I want to put that clarification. And I should have actually— first, I wanted to go to the sponsor just to get your thoughts on the amendment. Then we'll come to Representative Josephson and Allard. Mr. Lampkin. Thank you, Mr. Chairman.

Tim Lampkin, staff to Senator Stevens. I really appreciate this discussion. I would agree that my information is that let's use an anecdotal circumstance where we're off base. We're at a picnic, let's say, and there's 3 folks that are having a smoke, and a cop does come along and he cites 2 of them because they're not military, but the 3rd one he can't because they have an ID. That is the core of an equal protection issue.

But with that being said, it proposes to make it the law of the land, and whether that land is at the picnic or on base is consistent that it be 21. Uh, with that, I would certainly invite Ms. Mead to, to, uh, make a comment while we're here. Ms. Mead, you're welcome to stay up at the table if you'd like. There might be more questions.

Uh, to the chair, I'm not certain what the question is for me. Representative Stepp. Well, we've addressed it already, but I want to clarify it again through the chair to Ms. Mead. And I know Mr. Lampert said that T21 is silent on the use of tobacco under the age of 21. It's criminal— it criminalizes the sale but not the use.

Correct? Through the chair. Ms. Mead. Through the chair to Representative Stepp. Correct.

That is my understanding as well. And just a clarification, what this amendment in front of you does, co-chair, is it just exempts active duty military from being punished if they are under the age of 21 by the state statute in the terms of finding.

Ms. Mead. To the chair, that is how I read the amendment as well, that it that those individuals, if they have a certain ID, would not be able to be cited and other individuals would be, as, as the example Mr. Lampkin gave. Thank you. I've got Representative Josephson and then Allard. Representative Josephson.

So, yes, through the chair, Mr. Lampkin, this has sort of already been clarified, but T-21 is about distribution from presumably a retailer to people under 21. And it's— and Congress is saying we don't want anyone doing that in the country. Is that right, Mr. Lampkin? The federal government, Congress, has been silent on use, purchase, and possession. T-21 specifically refers to the age at which you may buy, use, possess.

The states, however, I should clarify that the federal government has definitely delegated the question of possession penalties to the states. And so that's what we have before us. That's what's been on the book for quite some time. So this would, as I've said before, make conforming changes to existing statute for alcohol, tobacco, other tobacco products, cigars, pouches, chew, and so forth. Would extend those same restrictions to vaping.

Ms. Mead, did you have a comment? Uh, to the chair, through the chair to Rep. Josephson, I think I would just agree with you on your original comment that T21 is about sale, delivery, vending machines, etc. Those are the individuals, those licensees who, who vend, who are targeted by T21 and told not to sell them to people under 21. And as Mr. Lampkin said, in terms of possession by the person under 21, it doesn't deal with that directly. All right.

I think that's as clear as it can be. Thank you. Representative Ballard. Thank you. So with a little bit of the clarification on what's been said, it's true.

The military says we're not going to sell it. They're going to try to do maybe a little bit of a deterrent. But I also know, being in the military, everybody knows serving that the standard words they say is smoke 'em if you got 'em. So if the military truly wanted to ban our soldiers and our military members from smoking, they would. I mean, they absolutely would like that.

So I'm going to go ahead and support my colleague's amendment. Wrap up, I believe, unless anyone's got anything else. Yeah, I—. Representative Josephson. Representative Ballard had me at Admiral Fuller.

Admiral Fuller wants us to help. He clearly had an internal debate that could— you read two parts, and he concluded that the military needs help effectively to make its service members as healthy as possible. And I want to help Admiral Fuller, so I'm going to oppose the amendment. Admiral Fuller, if I'm mistaken. Representative Ballard.

Oh, I apologize. I don't even think he's active anymore. But my point about that is he does. And if he had the caliber and the rest of the military absolutely wanted this to happen to our soldiers and our armed forces, they would implement it. So I hope I have your support to support our military.

Representative, Representative Stepp, wrap up. Yeah, you know, Thank you, Mr. Co-chair Foster. Look, I don't know who Admiral Fuller is. I don't care. All I know is he probably wasn't kicking in doors in Fallujah.

He was probably sitting behind a cozy desk in his little Navy job. All right. This type of stuff, Mr. Co-chair, this type of stuff, this is crazy, folks. You're going to have hundreds of thousands of kids who come to this state. Some are going to go off to war.

You know what's bad for your health, co-chair? War. That's bad for your health, right? How are you going to send a 19-year-old kid to go fight in Iraq or Iran or Afghanistan?

They pick up smoking. They come back to Alaska after 14 months and some state trooper or some Municipal of Anchorage cop says, you know what, kid, you're bad. Here's a fine for using tobacco or a vape.

Guys, I don't— it's okay if this committee wants to punish Alaska kids for using tobacco, using, using vapes. But I'm just asking folks like, look, there are thousands and thousands of soldiers who are going to come to this state who are not going to know our laws. No one's going to tell them. And it's going to be a very negative experience if they were ever to get fined. For tobacco or vape use.

And if the military wanted to ban smoking for people under the age of 21, they would do that in a heartbeat under UCMJ. But clearly they don't, because this law in T-21 was passed 8 years ago and they still use tobacco on the basis. Please vote yes. Briefings. Briefings.

Okay, House Finance back on record. The time is currently 8:06 PM and we are currently on Senate Bill 24. We're on amendment number 3 by Representative Staff. And I don't think there's any other discussion other than wrap up. Representative Staff?

I did wrap up already, co-chair. Representative Hannan, do you maintain your objection to Amendment Number 3? The objection is maintained. So with that, Madam Clerk, will you please call the roll on Amendment Number 3? Representative Hannan?

No. Representative Tomaszewski? Yes. Representative Moore? No.

Representative Allard? No. Representative Stapp? Yes. Representative Galvin?

No. Representative Jimmy? Yes. Representative Bynum? Yes.

Representative Josephson? No. Representative Schraggy? No. Representative Foster?

No. 4 Yea, 7 nay. On a vote of 4 yea to 7 nay, Amendment Number 3 has not been adopted. That takes us to Amendment Amendment number 4. Representative Jostensen.

I move amendment 4. Okay. Object. Representative Jostensen. Mr. Chairman, I would ask that I be invited to bring my staff, Mr. Alpert, up to explain.

But the essence of this is there is a new product commonly called Zyn. I bet that's one of many names that is grown grown, that is manufactured in essentially in a lab. It's a synthetic. Mr. Alper will explain further. Mr. Alper, if you can put yourself on the record.

Thank you, Mr. Chairman. For the record, Ken Alper, staff to Representative Josephson. And for the committee's sort of background on this, the current tobacco tax law— and now we're in the tax portions of the bill, of course— is really two different taxes, Mr. Chairman. There's a, there's a cigarette tax, which is $0.10 per cigarette. That's a administered one way, and then there's a tax on what are called other tobacco products, which is a wholesale tax.

What the underlying bill is doing is adding a third tax, which is a retail tax, essentially a sales tax on vape products. So, uh, Rep. Amendment Number 4 is a change to the current other tobacco tax product. And if members will look at page 4 of the amendment, that's really the guts of it. That's the list of what is currently subject to the other tobacco tax, and it's The usual suspects, Mr. Chairman, what you might expect to see: cigars, chewing tobacco, snuff, pipe tobacco. Some sort of archaic words indicating the decades-old nature of this statute.

I don't know what a charut or a perique is, but they're basically a form of a cigar. What Representative Josephson said earlier, there are new products on the market that are not made of actual tobacco, but they're synthetics. They're lab-grown, but they're used like tobacco products, like these pouches under the brand name Zyn is the most popular one. And they're currently falling through basically a loophole in statute. They are not currently subject to the tobacco tax because they're not defined in this list here in what would be Section 22 of the bill or the amendment to pass.

So Amendment Number 4 simply looks to add synthetic tobacco products to that list. The rest of the amendment, which is somewhat lengthy, makes a lot of conforming changes elsewhere in the bill where tobacco is referenced, that also these synthetic products would also be mentioned. I think that about covers it, Mr. Chairman. Okay, Mr. Lampkin.

Thank you, Mr. Chairman. For the record, Tim Lampkin, staff to Senator Stevens. I would agree with Mr. Alper and want to again reiterate that the focus of this bill is trying to reduce our young people in this state from exposure to initiation and addiction to nicotine, and this would fall within that category, notwithstanding the focus of being on vaping. It's documented, data-driven that this particular type of product is a leading contributor to such addictions, right up there with vaping. And it may come to your surprise, cigars as well.

Okay. Representative Josephson, did you have anything to add? I don't. I suspect if I— I'll ask Mr. Lampkin. My sense is that this is a friendly amendment to the sponsor.

Mr. Lampkin. Mr. Chairman, from recent, recent experience observing this committee, I'm hesitant to call it a friendly amendment. However, I won't disagree. Okay. Representative Galvin.

Very quickly, if I could understand, is this something that's in the stores right now and is it marketed toward kids like all these other things? Mr. Alpert. Through the chair to Representative Galvin, it is in the store. You'll see them in round tins similar to where you'll like Copenhagen, which is actual tobacco product. Copenhagen and other snuff products are also sold in pouches that are kind of a cloth filled with it, so you get the same product but that doesn't get stuck in your teeth.

These other products are simply not made of tobacco. They are sold. They are not taxed because of the definition. I don't know if they're actively marketed at youth, but I'll tell you my 22-year-old consumes them. Thank you.

Further discussion? Seeing none, I'm going to remove my objection unless you have a wrap-up. I'm going to remove my objection. Any further objection? Hearing none, Amendment Number 4 has been adopted.

Takes us to Amendment Number 5. Representative Josephson. Uh, I will move Amendment 5. Okay. Object?

Representative Josephson. I would turn to Mr. Alpert to explain Amendment 5. Mr. Alpert. Sure. Uh, thank you, Mr. Chairman.

Uh, The record again, Ken Alpers, staff to Representative Josephson. So this has to do with purchases through the mail of cigars and pipe tobacco. And under the section being deleted here on the first part of the amendment is the exception from who needs to get a license with the State Department of Revenue. If—. And what it says is if you sell these tobacco products and deliver them in Alaska to people for their personal use, you don't have to have a license.

And effectively what that means is these online or through-the-mail cigar and pipe tobacco sales become tax-free because there's no practical way to find the person who's delivering the product into the state. By eliminating that, it would force anyone in the business of selling these products in Alaska to get a license with the Department of Revenue. That is not an onerous process, it's a $50 license. It's not complicated. And once they had their name in the record, the department could then make sure that they're out there paying their taxes properly.

And also, Mr. Chairman, if you think about it, if you go to the cigar store, you're paying the state's tax one way or the other. Having this exemption on through-the-mail sales really is a disadvantage for local Alaska businesses selling the same products. Mr. Lemkin.

Thank you, Mr. Chairman. This—. Tim Lampkin, for the record. This amendment was the result of coming out of a prior committee in the other body. We at that time negotiated to accept this amendment, and I am obliged to stand by that commitment and therefore at this time cannot support.

Okay. Representative Josephson. Yeah. Question for my staff, Mr. Alper. Is what you're saying that right now one must obtain a $50 license, but then for some reason, inadvertence, policy call, this bill as written would remove that requirement?

Is that what you've just said? Mr. Elber.

Mr. Chairman, I believe what you're saying is correct, yes. And the problem is everyone— if you'll remember, Mr. Chairman, We talked about the vehicle rental tax and the so-called Turo bill for many years before it finally passed. The tax is always owed by someone. The problem is how hard it is to find the person who owes the tax. If someone brings in an untaxed tobacco product to the state, theoretically they're required to pay it themselves.

It's just really hard to find them. The mechanism in this amendment is to make it easier to access the person who is importing the product into the state in these relatively small volumes. But yes, it is my understanding that the tax obligation falls on the importer. It's just almost impossible to, to enforce. Representative Josephson.

And I apologize to the committee for asking these questions about my own amendment. Is the focus of this amendment just on cigar-related products? Mr. Helper. Through the chair to my boss, the, the— it says the specific exemption from the licensing requirement is for people who are purchasing cigar or pipe tobacco. So it's a little bit broader than just cigars, but it's not fully expansive to the entire universe of tobacco products.

Last question, if I may. Rep. Josephson. To perfect this concept about the mailing in of products that aren't taxed or caught, if you will, by— and get a preference in that respect. There would be other non-cigarette-related products that also could be flown in or shipped in. Is that right, Mr. Alpert?

Through the Chair, that is correct. In fact, if we started taxing Zyn, I imagine the business of mail-order Zyn might ramp up in Alaska. Mr. Chairman, uh, Co-Chairman, it sounds like there is something that needs— I won't be here— but needs a bill filed in early January. Um, and at this time I'll withdraw the bill, but I appreciate that we've educated the 11 of us on this issue. Okay, I would urge Representative Hannon—.

I would urge my colleague to not withdraw amendment. Representative Josephson.

I appreciate— I never know who's passionate about what. I appreciate that. I don't like what's happening. But it just seems that it needs a broader brush. Representative Pannin.

Currently our law is really clear And if you are selling tobacco in Alaska— now, vape's not covered in that— but if you're buying cigarettes through the mail, you are paying a tax. Cigarettes actually are tracked by the federal government from grow to manufacture to distribution. So if you're ordering them from a wholesaler to your location anywhere in Alaska, that tax is being collected and they're easy to track because the feds track cigarettes. But other tobacco products, it becomes less— the tracking is less. So, sort of niche for very high-end specialty tobaccos has developed for connoisseurs.

So if you go downtown and buy a cigar, you're paying a tax on it. If you go buy tobacco downtown. But if you are buying it from a specialty cigar store somewhere down south and it's shipped to your home, there's no one checking that that delivery to you was, one, to someone of age, and two, that the tobacco taxes due on it in Alaska have been paid. The original bill introduced in the Senate did not include this carve-out. In the bill working its way through the Senate, this carve-out for cigar and tobacco being delivered to individuals, mailed to them, came up.

And I would say it's a distinct disadvantage to Alaskan businesses. And it's going to be only people who are buying higher-end tobacco, not just a cheap can of Red Man loose leaf for rolling. It's going to be expensive tobacco and expensive cigars because otherwise you're just buying it at the neighborhood smoke shop.

And I don't think in expanding and clarifying us that we should be carving out and disadvantaging Alaskan businesses because I think it will drive more people to buy online and avoid our tax on tobacco in this specific area. Rep. Josephson. I may have overeducated the committee and myself. I think that if we can pass this bill, which I'm sure to move— agree to move out of this committee room, that would be a massive achievement. And this topic is something to be built on in the 35th Legislature.

Representative Ballard, thank you. So I do withdraw the amendment. Okay. Are you withdrawing it? I am.

I mean, I—. Yes, I am. So I was going to thank you, Representative Josephson, because my concern was we've got something pretty good going. And if we keep doing this, I don't know that it's going to actually pass throughout. And I really want to see this go forward.

So thank you for withdrawing. Okay, Amendment Number 5 has been withdrawn. And as I mentioned earlier, we're going to go till 8:30, so about another 10 more minutes. So we'll take up Amendment Number 6 next. Representative Josephson.

Because of our passage of a senator merit bill several days ago, this is— we hope that this is now moot. I will not offer Amendment 6. Okay, Amendment Number 6 is not being offered, and it takes us to Amendment Number 7. Representative Josephson. Mr. Johnson.

We— just so this— I'm not going to offer Amendment 7. If the members are curious, we were looking at concept of taxing by the milliliter and it's done in other states but we're not going to offer that amendment. Okay. Amendment 7 not being offered. Amendment 8, Representative Johnson.

Very quickly, I'm not going to offer this. We were looking at the milligram contents, because sometimes it's not the liquid, it's what's in the liquid. Won't offer Amendment 8. OK, Amendment 8 is not being offered. Representative Bynum, Amendment 9.

Move Amendment 9. OK, OK, Representative Bynum. Thank you, Co-Chair Foster. I will describe Amendment 9 and then I will have a conceptual amendment for Amendment 9. This amendment would replace replace the bill's current retail point-of-sale tax on electronic smoking products with a traditional tobacco-style excise tax imposed at the distributor and wholesale level.

The amendment establishes a 45% excise tax on the wholesale price of electronic smoking products, applying that tax upon the first wholesale transfer, importation, distribution, acquisition, or possession of the product within the state. The amendment shifts responsibility for collecting and remittance of the tax from the retail seller to licensed distributors, wholesalers, and importers consistent with Alaska's existing tax— tobacco excise tax framework. The intent is to align the taxation, enforcement, and administration of electronic smoking products with the structure already used for other tobacco products while maintaining a roughly comparable overall tax burden. This amendment also establishes licensing fees— correction— establishes licensing, filing, remittance, and reporting requirements, grants the Department of Revenue the authority to administer and enforce the tax, and authorizes the necessary regulations, clarifies applicability standards for remote sellers and marketplace facilitators, making conforming statutory changes needed to integrate the new excise tax structure into existing law. If you look on the sheet that I handed out, the question was, is how is this level decide, or why did I pick 45% in the amendment?

It was based off of this list that we had here. It was somewhere in the middle. I'm open to a conceptual amendment to move that to the existing state law, which is 75%, but this was just to be more in alignment with kind of the middle road of other states. So I'll wait to offer any kind of conceptual until we've actually talked about this. Okay, so we are on just the main motion right now, which is Amendment Number 9.

Representative Josephson? Yes, question for Mr. Lambkin. Mr. Lambkin, in the previous model in the 33rd legislature of your courageous attempt to comply with T21.

Did Senator Stevens' bill, when it reached the House floor, was it set at 25% of the wholesale? Mr. Lambkin. Through the Chair, Representative Josephson, thank you. Now that we begin to wade into the waters of the tax model itself, to directly answer your question, and I would like to explain a little bit deeper on this subject generally. I have to— the latest number that I recall at that, during that timeframe, was 25%.

Sounds right. That was an agreed-upon level. Since that time, and having done extensive more research, I have come to the conclusion, based heavily off of famed Dr. Frank Chaloupka out of University of Chicago, who is, I believe, perhaps the singularly the most laureled, recognized economist on tobacco taxes in our country. And given the nature of these products that are not homogeneous, and that is to say, and I think when many other localities and other states when they started trying to tax these products and the rapid evolution of these products, they simply and literally copied and pasted from their cigarette tax model over to vaping. And in the meantime, it's become increasingly apparent that these products are not homogeneous at all.

And what I mean is, if you take, for example, an ink pen and imagine this is a cigarette, they are consistent. They're homogeneous in that they have a filter, they have a certain amount of tobacco, they're wrapped in a piece of paper, they're put in packets of 20, and they are a unit that are easily identifiable. The vaping products are a wide variety of components and, and solutions and methods in which to deliver the nicotine. They're not homogeneous whatsoever. And without going deeply into tax models, I've come to the conclusion and solidly believe that the best, simplest way to tax these products is at the retail level and let the market sort itself out upstream from there.

That is a very quick summary in the interest of time, that this, this summary, this comments would apply from Amendment Number 7 through 13 and Numbers 16 and 17. Great. Follow-up, Representative Josephson. Did you select your retail tax rate for vapes?

With—.

Is it the equivalent of a tobacco tax at $0.10 a cigarette? Roughly. Is that— is that what was in your mind? Mr. Chair, Representative Josephson, Dr. Chalupka's model, which this latest report was December of '22.

He, uh, in Alaska rated parity retail tax level for vaping products at 23.65%. And that is a dated model. So 25% would adjust for that inflation perhaps. Retail price, by the way, also on its own adjusts for inflation. So the whole wholesale model does not adjust for that inflation.

Our cigarette tax models are way out of date, but that's a different conversation. We'll take that up at another time. With cigars and tobacco and so forth. We'll keep our folks gainfully employed to fight against that. But in the meantime, retail tax at 23.65% in 2022 was parity with Alaska tobacco taxes.

Sorry, Representative Josephson. Saying the quiet part out loud, there's some evidence that the governor will support a tax when it's not a tax. Increase. He seems to be somewhat receptive to parity, given the Turo example, or something close to parity. It sounds like that's what you've tried to achieve with this amendment.

This amendment is not parity, is what I think you're saying. It's, it's simply too high. Mr. Lampkin.

Considering again the vast variety of the products, it's difficult to pinpoint what is the right number. But I can say that a little bottle like this was 99 cents at a local convenience shop. This is roughly, I don't know, 20 milliliters. But I'm certain with my experience in small business and retail chain distribution, the wholesale level, this surely this was pennies. And so for taxing this at 25, 45, 55% of wholesale that's pennies.

By the time it gets retail, it's keystoning, if you're familiar with the keystoning concept. Buy it for a dollar, you sell it for two. If this is selling for a dollar, it's nothing. So I would argue that wholesale is very much too low.

All right. I have nothing further. Okay. Further discussion? Representative Bynum?

Yes, thank you. Oh, sorry. We've got Representative Stout. Yeah, I think, Co-Chair Foster, I mean, I don't— why wouldn't you just put the wholesale rate at 75% like the tobacco rate? I guess I'm reading AS 5300 statute, 75%.

Is that for Representative Bynum? Yeah. I mean, if you're looking at the argument is we should have parity in the wholesale tax rate, then the tobacco one's 75%. So why wouldn't you do 75% on the vapes? Representative Bynum.

Thank you, Co-Chair Foster. I, I'm not opposed to changing that to 75%, so it's the same as existing statute. But we have to remember that we're talking about nicotine delivery products. And, you know, when we say homogeneous, I mean, we just added a bunch of things into the statute that aren't homogeneous at all. When you go look at all the different products we have, from pouches, dips, chews, cigars, cigarettes, you name the list of all the different types of products that we have, they're not, they're not the same at all.

And so when we talk about the, these, like, the e-cigarette type products, yes, we're looking at the smoking juice or whatever you want to put in there, the nicotine product, but you also have the nicotine delivery product. And those aren't, those aren't necessarily 2 cents on wholesale or $5 at retail. Those things can be $25, $30 depending on what the product is, sometimes even hundreds depending on what kind of delivery method you're using. And those are all regulated under this. So I'm— we want to use 75.

I'm happy with that. If you would like to make a conceptual amendment, I wouldn't be opposed to it. Further, Representative Ballard? I have a question. If we move to make it 75, are you making it zero for retail?

So it's fair, square—. Sorry. So it's fair, square across the board. Representative Bynum. Thank you for that.

Through the chair to Representative Allard. I am not doing a retail tax with this. I am aligning these products with the current— we're requiring the license— the wholesalers to be licensed. All these products have to go through the wholesalers. I'm just aligning with what we currently do in law and not trying to create a new taxing structure.

Representative Ballard. Thank you. I could get on board with the 75% or 65%, whichever we're going to do, as long as it's zeroed out on the retail side. Representative—. Wholesale side is fair across the board to both because retail would be taxed twice.

Representative Bynum. Thank you, uh, Co-Chair Foster. This is eliminating the retail tax, and so this is only the wholesaler. If you'd like to make a conceptual amendment to make it 75%, I'd happily support it. Okay.

I'm making a conceptual amendment. May I? Representative Ballard? Okay. I'd like to move to make a conceptual amendment to 75%.

Any objection? Objection. Representative Josephson, would you like to speak to it?

First of all, I object to the concept of a wholesale tax. We tried that and here we are. That's point number 1. Point number 2 is I think the tax is too high. I'd love to hear Mr. Lampkins' Mr. Lampkin.

Through the chair, Representative Josephson, my point again is that taxing of vaping products is most squarely appropriately put at the retail level. Copying and pasting this from, from our cigarette taxes over to vaping is an easy way to evade the tax because of the nature of the distribution system. With cigarettes structure, which is a long, well-established model, you have clearly have a fine line between the manufacturer to the distributor to the retailer. Those lines are blurred with vaping. Sometimes the manufacturer is also the retailer, sometimes the— or manufacturer is a distributor.

They bounce between. So the point at which you apply the tax, depending on what manner of business operation you're running, uh, can make it very easy to evade that tax. And so therefore— and I, I will happily distribute this report, uh, but it was very conclusive to me in my research that the best, easiest, cleanest way to approach vaping products is to set aside the wholesale applied to cigarettes and apply a retail point of sale tax on these products. Further discussion on conceptual amendment number 1? Representative Staff.

Yeah, I think I'm fairly confused here, Mr. Co-Chair. I thought we wanted to tax the tobacco vape people, and then I heard the co-chair say the taxes are too high, and then I heard the sponsors say the retail tax is more efficient. So I have no idea what to do here, so maybe somebody explain to me. I guess my thought is if you had a tax on a wholesaler, I mean, at some point that is always incorporated at the end use sale. Right now you basically have a sales tax on one thing, the way the bill works, right?

You're taking one product and applying a sales tax to it, and I don't know why you wouldn't be able to capture the taxes in the wholesaler, because at some point there is a wholesaler, right? Unless we think that some person is manufacturing vape juice in their basement and then selling it out the front door. Representative Hannon. I'm sorry, Allard. And then Hannon.

Yeah. So I actually spoke to like quite a few owners of the Chevron gas stations that sell the cigarettes, and they said it to be fair, since they have to buy their products with wholesale too, if we were to own— to, to bump up their retail tax, that it would— it would be detrimental to their business. And then they said that it would be more fair if they just did wholesale across the board. That's why I went to what Bynum was— Representative Bynum was speaking of, zero out the retail tax and just make it a 75% wholesale tax across the board. So I like my amendment.

Representative Hannan. Thank you. I'm not going to support the amendment. And I will tell you that for the 8 years I've worked on the vape tax, I had been at the initiation an advocate for retail taxes because most of the vapes I had been exposed to by being around high school kids were contained devices. But there's a whole— so the convenience stores, they're selling manufactured that they bought from wholesale.

But there's a whole industry of vape stores that sometimes are called juice bars. And where they're mixing. And so that's where it becomes more challenging because they're buying tanks of material and then compounding them for sale at a much different scale. And those folks are frequently the wholesale distributor for the juice that they mix on site. So It's taken me a long time to come around to being willing to say, for this industry, it may be more appropriate to treat it differently.

Because by capturing vape, we're not just doing these uniform convenience store models of disposable vapes that teenagers are buying, but things that are sold in gallon tanks sometimes. I'm going to additionally say the politics around this bill, which has been around for even before I was elected, so 10 years, and I've been involved with it for 8 years, a wholesale tax that is tied to the cigarette level will result in it not passing. And so that's, that's why I'm willing to compromise. And although in my heart, I mean, There are a lot of things that if it was just me, I would do differently. And we all have that perspective many times in this sausage-making process.

But the practical reality of where the opposition is across this building— a wholesale tax at the same level of other tobacco products will result in this bill not being passed. And so I'm willing to go with a lower tax and it remaining a retail tax. Representative Moore. Thank you, Co-Chair Foster. I'd like to call the question.

Oh no. Withdraw my amendment. Just withdraw my conceptual amendment. Conceptual Amendment Number 2 is going to be withdrawn. Well, no, I just have a question, Co-Chair.

Representative Ballard. I think we could come to some agreement with everything that's sitting on the table right now, but—. Microphone. I think we could come to some agreement. I believe Representative Hannon is correct.

So why can't we just come to some agreement and I can amend my— well, I can change my numbers. You can't amend a conceptual amendment, so you'd have to do a conceptual amendment number 3. Okay. 2. So I will do it.

So you're going to withdraw conceptual amendment number 1? Withdraw. Conceptual Amendment Number 1. Okay, make a conceptual amendment would be to you. Move Conceptual Amendment Number 2.

Okay, to do— change it to what? Brief it is. Yeah, brief it is, please. Maybe we can pick it up. Brief it is.

Okay, um, House Finance back on record at 8:39 PM. So, uh, at— just to summarize, we had a, uh, call the question. However, the Concessional Amendment Number 1 was withdrawn, and Representative Ballard, I wanted to make an amendment, a conceptual amendment to, uh, to the amendment that we do wholesale at 65% and retail at 12.5%. Object. Okay, we have an objection.

Um, what we could do is— the plan was to go to 8:30. I think folks were wanting to take off. What we could do is, um, just allow folks to kind of sleep on it, think about it, if folks are interested in doing that. And so let's see, did I do— who did the objection on that? Is that Representative Hanna did the objection?

Or no, I'm sorry, Representative Bynum did the objection. I don't want to get into a debate if we're calling it a night, Representative Josephson. Are you going to create a rabbit hole here? Well, I think Representative Allard has a series of hybrid tax amendments, and she's talking about a hybrid amendment now. It could be that you could talk about it when you are offering your amendment.

That might be an alternative. Sure. So if you want I can withdraw it and we can come back so nobody has to think about it. Okay. Okay.

Sorry. Representative Ellard, go ahead. I'm going to go ahead and withdraw that conceptual amendment too and we can readdress it. It's fine. Okay.

Thank you. Okay. So I think folks are getting tired. Now is a good time. Time to go ahead and come back.

For the record, Alexi Moore. Should we finish this amendment first? I think folks were getting tired. Folks wanted to go home. I think level minds are not prevailing once folks start to get frustrated.

So I think we should probably just let folks kind of come back in the morning with a clear head. So, uh, with that, uh, I'm going to go ahead and, um, and bring us to adjournment. But I do want to make a few comments. So when we come back tomorrow, we'll still be on Amendment Number 9. We are coming back tomorrow at 9 AM.

When we do come back, uh, I had previously announced that we would take up the SB 211 first, which is the boards and commissions. However, I don't want to disrupt the flow here, so we'll come right back into this amendment process and then we'll take up the boards extension bill afterwards. And that may be all the time that we have.

And if there is more time, we still have SB 79, which is the payroll card, and SB 174, invasive species. And SB 167, PFD eligibility. So with that, tomorrow we are coming back at 9:00 AM. With regard to the board's bill, which is SB 211, I believe there is one amendment. We're hoping to just kick that bill out tomorrow morning.

It's a sunset bill. And so if anybody does have any amendments, if it's possible to bring those in by our meeting time tomorrow, that would be great. So if there is nothing else to come before the committee, let me just do a one final check here. Um, we'll go ahead and be adjourned. Oh, I'm sorry, we do also have daylight savings time on the docket for tomorrow, is that correct?

And that is, um, SB 26. Oh, and we also have SB 21 which is the Work and Save. Is that right? Okay, so, um, we'll figure out the ordering in the morning, but at this point we're going to be adjourned at 8:43 PM. Thank you.