HB0195

HOUSE BILL 195

54th legislature - STATE OF NEW MEXICO - second session, 2020

INTRODUCED BY

Elizabeth "Liz" Thomson and Joanne J. Ferrary and

Jim R. Trujillo and Linda M. Lopez

AN ACT

RELATING TO PUBLIC HEALTH; ENACTING THE TOBACCO PRODUCTS ACT; RAISING THE AGE LIMIT FOR SALES OF TOBACCO PRODUCTS; PROVIDING LICENSURE REQUIREMENTS FOR TOBACCO PRODUCT RETAILERS, MANUFACTURERS AND DISTRIBUTORS; PRESCRIBING POWERS AND DUTIES TO THE ALCOHOLIC BEVERAGE CONTROL DIVISION OF THE REGULATION AND LICENSING DEPARTMENT; PROHIBITING CERTAIN ACTS PERTAINING TO THE MANUFACTURE, SALE OR DISTRIBUTION OF TOBACCO PRODUCTS; ESTABLISHING FEES; CREATING A FUND; PROVIDING ADMINISTRATIVE AND CRIMINAL PENALTIES; REPEALING THE TOBACCO PRODUCTS, E-CIGARETTE AND NICOTINE LIQUID CONTAINER ACT; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Tobacco Products Act".

SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Tobacco Products Act:

A. "child-resistant packaging" means packaging or a container that is designed or constructed to be significantly difficult for children under five years of age to open or obtain a toxic or harmful amount of the substance contained therein within a reasonable time and not difficult for a normal adult to use properly, but does not mean packaging or a container that all such children cannot open or obtain a toxic or harmful amount within a reasonable time;

B. "contraband tobacco products" means any tobacco products possessed, sold, bartered or given in violation of the Tobacco Products Act;

C. "delivery sale" means a sale of tobacco products to a consumer in New Mexico in which:

(1) the consumer submits an order for the sale by telephone, over the internet or through the mail or another delivery system; and

(2) the tobacco product is shipped through a delivery service;

D. "delivery service" means a person, including the United States postal service, that is engaged in the delivery of letters, packages or containers;

E. "director" means the director of the alcoholic beverage control division of the regulation and licensing department;

F. "distribute" means to purchase and store a product and to offer the product for resale to retailers or consumers;

G. "distributor" means a person that distributes tobacco products in New Mexico, but does not include:

(1) a retailer;

(2) a manufacturer; or

(3) a common or contract carrier;

H. "division" means the alcoholic beverage control division of the regulation and licensing department;

I. "e-cigarette":

(1) means any electronic oral device, whether composed of a heating element and battery or an electronic circuit, that provides a vapor of nicotine or any other substances the use or inhalation of which simulates smoking; and

(2) includes any such device, or any part thereof, whether manufactured, distributed, marketed or sold as an e-cigarette, e-cigar, e-pipe or any other product, name or descriptor; but

(3) does not include any product regulated as a drug or device by the United States food and drug administration under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 301 et seq.;

J. "electronic nicotine delivery system" means an electronic device, including e-cigarettes, whether composed of a heating element and battery or an electronic circuit, that provides a vapor or aerosol of nicotine, the use or inhalation of which simulates smoking;

K. "knowingly attractive to minors" means packaging or labeling that contains:

(1) a cartoon-like character that mimics characters primarily aimed at entertaining minors;

(2) an imitation or mimicry of trademarks or trade dress of products that are or have been primarily marketed toward minors; or

(3) a symbol or celebrity image that is primarily used to market products to minors;

L. "licensee" means a holder of a license issued by the division pursuant to the Tobacco Products Act;

M. "manufacturer" means a person that manufactures, fabricates, assembles, processes or labels tobacco products or imports from outside the United States, directly or indirectly, a tobacco product for sale or distribution in the United States;

N. "minor" means an individual who is younger than twenty-one years of age;

O. "nicotine liquid" means a liquid or other substance containing nicotine where the liquid or substance is sold, marketed or intended for use in an electronic nicotine delivery system;

P. "person" means an individual, corporation, firm, partnership, copartnership, association or other legal entity;

Q. "retailer" means a person, whether located within or outside of New Mexico, that sells tobacco products at retail to a consumer in New Mexico; provided that the sale is not for resale;

R. "self-service display" means a display to which the public has access without the assistance of a retailer or the retailer's employee; and

S. "tobacco product" means a product made or derived from tobacco or nicotine that is intended for human consumption, whether smoked, chewed, absorbed, dissolved, inhaled, snorted, sniffed or ingested by any other means, including cigars, cigarettes, chewing tobacco, pipe tobacco, snuff, e-cigarettes or electronic nicotine delivery systems.

SECTION 3. [NEW MATERIAL] PROHIBITED SALES-- MANUFACTURING--LABELING--MARKETING--SAFETY REQUIREMENTS.--

A. A person shall not knowingly, intentionally or negligently sell, offer to sell, barter or give a tobacco product to a minor.

B. A licensee shall not sell, offer to sell or deliver a tobacco product in a form other than an original manufacturer-sealed package.

C. A licensee shall not sell, offer to sell or deliver nicotine liquid in this state unless such liquid is in child-resistant packaging, except that for the purpose of this subsection, "nicotine liquid" does not include nicotine liquid in a cartridge that is pre-filled and sealed by the manufacturer and that is not intended to be opened by the consumer.

D. A manufacturer shall not produce and a distributor or retailer shall not sell tobacco products that are knowingly attractive to minors.

SECTION 4. [NEW MATERIAL] DIVISION--LICENSE ISSUANCE-- MANUFACTURE, DISTRIBUTION OR SALE OF TOBACCO PRODUCTS.--

A. Except as provided in Subsection C of this section, the division shall issue licenses for the manufacture, distribution or sale of tobacco products in New Mexico to applicants who meet the requirements of the Tobacco Products Act.

B. The division shall issue or renew a license for the:

(1) manufacture of tobacco products for a term of one year;

(2) distribution of tobacco products for a term of one year; and

(3) retail sale of tobacco products for a term of one year.

C. A license shall not be issued, retained, transferred or renewed pursuant to the Tobacco Products Act if any of the following conditions apply:

(1) the applicant has had a manufacturer, distributor or retailer license revoked by the division or by another state, unless it is determined by the director upon a showing by the applicant or licensee that issuing, retaining, transferring or renewing the license is in the best interest of the public;

(2) the applicant is not in compliance with Subsection G of Section 7-12-9.1 NMSA 1978;

(3) the location for the license or license transfer is within three hundred feet of a school; provided that this restriction does not apply to a location at which tobacco products have been lawfully manufactured, distributed or sold prior to July 1, 2020; or

(4) the location for the license would result in a violation of a zoning or other ordinance of a governing body in which the proposed location would exist.

SECTION 5. [NEW MATERIAL] MANUFACTURER LICENSE REQUIREMENTS--APPLICATION AND RENEWAL REQUIREMENTS--FEES.--

A. A person shall not manufacture tobacco products at any location in the state without first obtaining a manufacturer license issued by the division to that person for that location.

B. An application for a manufacturer license or manufacturer license renewal shall be submitted on a form prescribed by the division and shall include:

(1) the name, telephone number, mailing address and email address of the applicant and:

(a) if the applicant is a firm, partnership or association, the name and address of each of its members contributing ten percent or more of the total value of contributions made to the firm, partnership or association and each member entitled to ten percent or more of the profits earned by the firm, partnership or association; or

(b) if the applicant is a corporation, the name and address of its registered agent, the names and addresses of all officers and directors and those stockholders owning ten percent or more of the voting stock of the corporation; and

(c) any additional information the director may require to ensure full disclosure of the applicant's structure and financial responsibility;

(2) the address of the applicant's principal place of business and every location where the applicant manufactures tobacco products;

(3) documentation as required by the division affirming that the applicant will comply with applicable and proper tobacco products manufacturing practices as required pursuant to 21 USCA Section 387d(a) and will comply with any applicable health directives issued by the department of health pursuant to the Public Health Act;

(4) documentation as required by the division affirming that the applicant will submit the applicable ingredient listing to the federal secretary of health and human services as required pursuant to 21 USCA Section 387d(a)(1); and

(5) a nonrefundable license fee not to exceed one thousand dollars ($1,000) per location.

SECTION 6. [NEW MATERIAL] DISTRIBUTOR LICENSE REQUIREMENTS--APPLICATION AND RENEWAL REQUIREMENTS--FEES.--

A. A person shall not distribute tobacco products from any location in the state without first obtaining a distributor license issued by the division to that person for that location.

B. An application for a distributor license or distributor license renewal shall be submitted on a form prescribed by the division and shall include:

(1) the name, telephone number, mailing address and email address of the applicant and:

(c) any additional information the director may require to ensure full disclosure of the applicant's structure and financial responsibility;

(2) the address of the applicant's principal place of business and every location from which the applicant distributes tobacco products; and

(3) a nonrefundable application fee not to exceed one thousand dollars ($1,000) per location.

SECTION 7. [NEW MATERIAL] RETAILER LICENSE REQUIREMENTS-- APPLICATION AND RENEWAL REQUIREMENTS--FEES.--

A. A person shall not sell tobacco products at any location in the state without first obtaining a retailer license issued by the division to that person or that person's employer for that location.

B. An application for a retailer license or for a retailer license renewal shall be submitted on a form prescribed by the division and shall include:

(1) the name, telephone number, mailing address and email address of the applicant and:

(c) any additional information the director may require to ensure full disclosure of the applicant's structure and financial responsibility;

(2) the address of the applicant's principal place of business and every location where the applicant sells tobacco products; and

(3) a nonrefundable application fee not to exceed one thousand dollars ($1,000).

SECTION 8. [NEW MATERIAL] LICENSE APPLICATION INFORMATION CHANGES.--If the information submitted in an application pursuant to the Tobacco Products Act for a license or for a license renewal changes, the licensee shall notify the division within ten business days of the change. If a change in the information required for an application results in a violation of the Tobacco Products Act, the director may impose an administrative penalty as provided in that act.

SECTION 9. [NEW MATERIAL] ISSUANCE OF LICENSES--REASONS FOR DENIAL.--

A. The division shall grant or deny an application for a license or for a license renewal made pursuant to the Tobacco Products Act after the complete application is submitted to the division. The division shall approve the application for issuance of a license or for a license renewal if the division determines that the applicant meets the requirements of the Tobacco Products Act and the rules promulgated pursuant to that act.

B. If a complete application for a license or for a license renewal is denied, the division shall state the reasons for the denial. The applicant may reapply within thirty days after the date of the denial. The division shall not charge a fee for a reapplication made within that period.

SECTION 10. [NEW MATERIAL] LICENSE TRANSFER--NOTICE OF CHANGES.--

A. A license issued pursuant to the Tobacco Products Act shall not be transferred from the licensee to another person.

B. The transfer of a license from one location to another may be approved by the division, provided that the licensee shall submit an application for license location transfer to the division for review. The division shall allow the transfer unless any of the conditions provided in Sections 4 and 9 of the Tobacco Products Act apply.

SECTION 11. [NEW MATERIAL] TOBACCO PRODUCTS ADMINISTRATION FUND--CREATED--PURPOSE.--The "tobacco products administration fund" is created as a nonreverting fund in the state treasury. The fund consists of fees and administrative penalties collected by the division pursuant to the Tobacco Products Act, appropriations by the legislature, gifts, grants and donations. Money in the fund at the end of a fiscal year shall not revert to any other fund. The division shall administer the fund, and money in the fund is appropriated to the division for the administration of the Tobacco Products Act. Disbursements from the fund shall be made by warrant of the secretary of finance and administration pursuant to vouchers signed by the superintendent of regulation and licensing or the superintendent's authorized representative.

SECTION 12. [NEW MATERIAL] FEES AND ADMINISTRATIVE PENALTIES RETAINED BY THE DIVISION.--Application fees and administrative penalties collected by the division pursuant to the Tobacco Products Act shall be deposited into the tobacco products administration fund.

SECTION 13. [NEW MATERIAL] HEARING PROCEDURE.--If the division suspends or revokes a license or imposes an administrative penalty against a licensee, the licensee shall be entitled to a hearing pursuant to the rules promulgated by the division. The hearing shall be conducted by the director or a hearing officer appointed by the director and shall be held in the county in which the licensee is located. Hearings shall be open to the public. Subpoenas shall be issued and enforced in accordance with the provisions of Section 25 of the Tobacco Products Act.

SECTION 14. [NEW MATERIAL] DOCUMENTARY EVIDENCE OF AGE AND IDENTITY--DEFENSE.--

A. A retailer or an employee of a retailer shall not knowingly, intentionally or negligently fail to verify the age of a consumer purchasing tobacco products.

B. Except as provided in Subsection C of this section, evidence of the age and identity of a person attempting to procure tobacco products in person shall be shown by a valid document that contains a picture of that person and is issued by a federal, state, county, municipal or foreign government, including a motor vehicle driver's license or an identification card.

C. For each sale made through a delivery sales method, age verification shall be completed through an independent, third-party age verification service that establishes that a consumer is of legal age by comparing information available from public records to personal information entered by the consumer during the ordering process.

D. The following are defenses for a retailer or distributor accused of selling or distributing tobacco products to a person who is a minor:

(1) the consumer produced a driver's license or an identification card in accordance with Subsection B of this section indicating that the consumer was of legal age to make the purchase; and

(2) for a sale made through a delivery sales method, the retailer or distributor had an age verification completed in accordance with Subsection C of this section indicating that the consumer was of legal age to make the purchase.

SECTION 15. [NEW MATERIAL] VENDING MACHINES--RESTRICTIONS ON SALES OF TOBACCO PRODUCTS.--

A. Except as provided in Subsection B of this section, a retailer selling goods at a retail location in New Mexico shall not use a self-service display for tobacco products.

B. Tobacco products may be sold by vending machines only in age-controlled locations where minors are not permitted.

SECTION 16. [NEW MATERIAL] DISTRIBUTION OF TOBACCO PRODUCTS AS FREE SAMPLES PROHIBITED.--

A. A person shall not provide free samples of tobacco products without the express written approval of the director.

B. The provisions of Subsection A of this section shall not apply to an individual who provides free samples of tobacco products, e-cigarettes or nicotine liquid containers in connection with the practice of cultural or ceremonial activities in accordance with the federal American Indian Religious Freedom Act or its successor act.

SECTION 17. [NEW MATERIAL] SIGNS--POINT OF SALE.--A retailer shall prominently display in the place where tobacco products are sold and where a tobacco product vending machine is located a printed sign or decal that reads as follows:

"A PERSON WHO SELLS TOBACCO PRODUCTS TO A PERSON LESS THAN 21 YEARS OF AGE IS SUBJECT TO A FINE OF UP TO $1,000 AND IS GUILTY OF A CRIMINAL MISDEMEANOR.".

SECTION 18. [NEW MATERIAL] DELIVERY SALES.--

A. Before a retailer ships tobacco products for a delivery sale, the retailer shall receive full payment for the purchase and shall accept payment from the consumer by a:

(1) check drawn on an account in the consumer's name;

(2) credit card issued in the consumer's name; or

(3) debit card issued in the consumer's name.

B. A retailer may ship tobacco products only to a consumer whose age has been verified pursuant to Section 14 of the Tobacco Products Act.

C. A retailer taking a delivery sale order may request the email address of the consumer.

SECTION 19. [NEW MATERIAL] CRIMINAL PENALTIES.--In addition to any administrative penalties that may be imposed by the division, a person who violates Section 3 or Sections 16 through 18 of the Tobacco Products Act is guilty of a misdemeanor and shall be sentenced pursuant to the provisions of Section 31-19-1 NMSA 1978. Each violation is a separate and distinct offense.

SECTION 20. [NEW MATERIAL] CRIMINAL PENALTIES--UNLICENSED ACTIVITIES.--A person who manufactures, distributes or sells tobacco products without a license required pursuant to the Tobacco Products Act is guilty of a misdemeanor and shall be sentenced in accordance with the provisions of Section 31-19-1 NMSA 1978. Contraband tobacco products seized by the division or by a law enforcement agency as evidence of unlicensed activities shall be retained as evidence to the extent necessary. Contraband tobacco products no longer needed as evidence shall be destroyed.

SECTION 21. [NEW MATERIAL] MANUFACTURERS, DISTRIBUTORS AND RETAILERS--VIOLATIONS--LICENSE SUSPENSION OR REVOCATION-- ADMINISTRATIVE PENALTIES.--The division may suspend or revoke a license of a licensee, require the use of identification verification software for a designated period of time or impose an administrative penalty against a licensee in an amount not to exceed ten thousand dollars ($10,000), or any combination thereof, if the division finds that the licensee, an employee of the licensee or a contractor acting on behalf of the licensee has violated a provision of the Tobacco Products Act; provided, however, that upon a fourth violation for the sale of a tobacco product to a minor occurring at the same location within three years of the first such violation, the retailer's license issued for that location shall be permanently revoked.

SECTION 22. [NEW MATERIAL] MONITORED COMPLIANCE-- INSPECTIONS.--The alcoholic beverage control division of the regulation and licensing department, the department of public safety and the appropriate law enforcement authorities in each county and municipality may conduct random, unannounced inspections of facilities where tobacco products are sold, manufactured or distributed to ensure compliance with the provisions of the Tobacco Products Act.

SECTION 23. [NEW MATERIAL] AUTHORITY OF DEPARTMENT OF PUBLIC SAFETY.--

A. The department of public safety has authority over all investigations and enforcement activities required under the Tobacco Products Act, except for those provisions relating to the issuance, denial, suspension or revocation and administrative sanctions of licenses unless its assistance is requested by the director.

B. Following the issuance of a citation pursuant to the provisions of the Tobacco Products Act, the department of public safety or the law enforcement agency of a municipality or county shall report alleged violations of that act to the division.

C. The director may request the investigators from the department of public safety to investigate licensees or activities that the director has reasonable cause to believe are in violation of the Tobacco Products Act.

SECTION 24. [NEW MATERIAL] AUTHORITY OF THE DIVISION.-- The division has the authority over all matters relating to the issuance, denial, suspension, revocation and other administrative penalties or transfer of licenses under the Tobacco Products Act. The director may request the department of public safety to provide investigatory and enforcement support as deemed necessary.

SECTION 25. [NEW MATERIAL] ADMINISTRATIVE AUTHORITY AND POWERS.--

A. For the purpose of administering the licensing provisions of the Tobacco Products Act, the director is authorized to examine and to require the production of any pertinent records, books, information or evidence, to require the presence of any person and to require that person to testify under oath concerning the subject matter of the inquiry and to make a permanent record of the proceedings.

B. The director, through the legal counsel for the division, is vested with the power to issue subpoenas. In no case shall a subpoena be made returnable less than five days from the date of service.

C. A subpoena issued by the division shall state with reasonable certainty the nature of the evidence required to be produced, the time and place of the hearing, the nature of the inquiry or investigation and the consequences of failure to obey the subpoena and shall bear the seal of the division and be attested to by the director.

D. After service of a subpoena upon a person, if a person neglects or refuses to appear or produce records or other evidence in response to the subpoena or neglects or refuses to give testimony, as required, the director may invoke the aid of the district courts in the enforcement of the subpoena. In appropriate cases, the court shall issue its order requiring the person to appear and testify or produce the books or records and may, upon failure of the person to comply with the order, punish the person for contempt.

SECTION 26. [NEW MATERIAL] ADMINISTRATIVE RULES AND ORDERS--PRESUMPTION OF CORRECTNESS.--

A. The director shall issue and file as required by law all rules and orders necessary to perform the duties and to administer the applicable provisions of the Tobacco Products Act.

B. Directives issued by the director shall be in a form substantially as follows:

(1) rules are written statements of the director, of general application to licensees, interpreting and exemplifying the statutes to which the rules relate;

(2) rulings are written statements of the director interpreting the statutes to which the rulings relate and are of limited application to one or a small number of licensees; and

(3) orders are written statements of the director to implement the director's decision after a hearing.

C. To be effective, a rule shall first be issued as a proposed rule and filed for public inspection in the office of the director. Distribution of the rule shall be made to interested persons and their comments shall be invited. After the proposed rule has been on file for thirty days and a public hearing has been held, the director may issue the rule as a final rule by filing as required by law.

D. A rule or order issued by the director is presumed to be a proper implementation of the licensing provisions of the Tobacco Products Act.

E. All rules and orders shall be applied prospectively only.

SECTION 27. [NEW MATERIAL] EXPLICIT NONPREEMPTION.--Nothing in the Tobacco Products Act shall be construed to preempt or in any manner preclude specific provisions of a county or municipal ordinance; provided that the provisions of such county or municipal ordinance are inclusive of all minimum standards and provisions of the Tobacco Products Act.

SECTION 28. [NEW MATERIAL] APPLICABILITY.--The provisions of the Tobacco Products Act do not apply to the lawful purchase or use by a minor of a tobacco-cessation product approved by the federal food and drug administration.

SECTION 29. APPROPRIATION.--Three hundred fifty thousand dollars ($350,000) is appropriated from the general fund to the tobacco products administration fund for expenditure in fiscal year 2021 and subsequent fiscal years to administer the provisions of the Tobacco Products Act. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.

SECTION 30. REPEAL.--Sections 30-49-1 through 30-49-13 NMSA 1978 (being Laws 1993, Chapter 244, Sections 1 through 12 and Laws 2015, Chapter 98, Section 12, as amended) are repealed.

SECTION 31. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2020.

- 22 -