H.B. 337 Nicotine Product Tax Amendments: transcript

Alright, Well, thank you. Thank you so much, committee for, for hearing us out. Um, my commitment, my commitment this year to every committee was to only bring very boring, non exciting bills that no one really cares about. So, I wanna just preface by saying this bill is about two, there's two puzzle pieces in this bill. The first is the fact that we have not adjusted our tobacco tax for cigarettes in 16 years, since 2010. And since then, we've, Utah has fallen behind in the pack when it comes to the 50 states. We're currently at 28th to compare a, our alcohol tax is six. And I, I would venture to say that this is because of, uh, the fact that this is a tough issue, but it's, but it's important. And so this bill does two things. It takes our cigarette tax. So you'll read in the le in the bill, the tax is a, is identified as a cent tax per stick, per cigarette. But the tax for, uh, consumers and for manufacturers, it would be presented as a $2 a pack increase. And so that's essentially the number that I imagine you're gonna hear most of the discussion about today. And it's what's reflected in the bill is per stick. So that's kind of a, a way, a frame of reference that would put us in parity with our alcohol tax, which we are also six. So that's a, a starting point. Obviously, I wanna work with members of the legislature, members of the, um, of the business community and those in the tobacco community and, and nicotine community to find something that works. But right now, that was, that was our starting point to make it, make it parody with our alcohol attacks. The second piece is about nicotine pouches. Nicotine pouches are, uh, what you'll hear today from the folks who oppose this bill, is that nicotine pouches are better than smoking. And I would wholeheartedly agree with that. And in fact, on most tobacco companies own, um, uh, illustrations will show essentially a scale of harm with cigarettes being the most harmful. Um, and then pouches being somewhere in the middle, all the way down to things like Nicorette or lozenges, things that are tobacco cessation products. And so you'll also hear that that's the goal for nicotine pouches to become like Nicorette or to become like lozenges. These are products that have a health benefit. You can almost think of it as for patients. So you're buying it at Costco. Um, you know, it's not, uh, a really a marketing campaign. Rather, it's saying this is a product that helps you quit something that's much more harmful. But as it stands today, um, nicotine pouches that are sell sold in our convenience stores and different stores across the, the state pouches are taxed via weight. It's taxed in the same structure as, uh, snuff or, uh, uh, you know, what you would think of as as chew. The difference is, and I'm gonna have, uh, my intern pass a, a nicker, uh, excuse me, a nicotine pouch out to each of you. The challenge is that these nicotine pouches are weightless. And so in this bill, it's not saying that nicotine pouches are the worst product in the world. It's not saying that nicotine uh, pouches are as bad as cigarettes. But what we are saying is that when you're marketing direct to consumer with dozens of different flavors, and on each box it says, warning, this product contains nicotine. Nicotine is an addictive chemical. That is the main difference between these nicotine pouches and other products that we would sell in the marketplace that don't have, it's not a, a free market, uh, economy when you're talking about chemicals that are built to addict your body to keep coming back for more and more and more. So, once again, on the rate, what we're trying to find, we've put this with other to the, essentially with other products that are similar. Um, I wanna find a rate that makes sense for Utah. I would, I would venture to say to this committee that the pouch, the current tax system for pouches does not make sense. And this bill is trying to make it make sense. I'm happy to work with any stakeholder. I'm happy to work with any group to find something that makes sense for Utah. But at this point, I haven't been able to have those conversations about what those appropriate numbers might be. And so we are just starting with a starting point. So with cigarettes to put it in parity with our alcohol taxes, and then with nicotine pouches, putting that into with our other, other products as well. Um, so we have two, I'll have two presenters that present with me briefly, Mr. Art Brown, and I'm gonna pull this up first. I have your slides here first. Well, okay. You can do these ones. And then, uh, former representative Paul Ray, who was here 16 years ago as well, who is also going to speak to the bill, I believe Mr. Ray is here too. Don't forget Dr. Forsyth and Dr. Forsyth from U daf.

Thank you very much. My name is, uh, art Brown, and I'm, uh, here today just to represent the kids that are involved in these kinds of discussions. And I think that's important for today. There's about 12,000 of our kids still vaping, uh, in, uh, K grades, uh, K six through 12. And that's quite a few kids. And, uh, the next slide, please. But I just wanna thank really very much the legislature to begin with because we have come a long way since the peak, as you see, uh, in the next slide. Is it the next one? Yeah, that slide, you can see the peak there of 9.7 that we, uh, hit when everybody all of a sudden got concerned about, uh, vaping, that, that represented about 28,000 kids. And now we're down to about 12,000 kids. And these numbers have really dropped. And if it was not for the legislatures appropriation and the interest, we would not be at this low number. So I wanna thank you on behalf of the kids, but 12,000 is a lot. But there's another couple things I want you to realize about that chart. And if Paul raised is here, he knows. You can see as the line wraps ramps up from 1.5 to 9.7, the biggest mistake I believe that we made, they were not taxed. E-cigarettes were not taxed. That represented a very cheap place for nicotine addicted kids to go. And, um, and that's, and the second thing is, they were loaded with all the flavors that were of interest to the kids. So that really does attract the kids. And so that's when we got involved with, uh, taxation. And there was a big, big debate on what it should be. But anyway, came out about 0.56. But anyway, somewhere the fiscal note was about $27 million, but the tax came in around 15 million. Now, to get from 9.7 down to where we are at 3.5, there's really, we followed really a research strategy. And we said, if you, that money was embargoed by the legislature for youth, uh, prevention and enforcement, and the tax came in around 15 million and we formed a a committee, because you have to organize in a very collective effort, and you really have to do a couple things. You gotta re, you have to reduce the demand. You're not gonna rest this way out of this. You have to cut down the supply. You have to get organized, financed, you have to be over research. You gotta deliver results, and you gotta account back. And that's the way this money is organized to be spent. And I think that's important for you to know, because in the fiscal note, there's $22 million earmarked for this and for the express purpose and in an organized manner, in a manner which is accountable back to the legislature every year in a written report where this money goes. Now, it's really important to realize that we reduce demand. Now, this, now let me tell you why this is important, and this is why I'm here for this, for this tax and this discussion. About 5 million of this goes to, uh, the school system. And why the school system, if you look at our, uh, data, there was a proposal out in that, uh, session by, uh, the edu, uh, representative Pulsifer, uh, to the kids of the community to get 'em connected. What you have to do to lower demand over all places is check on their mental health. You have to strengthen family relationships, and you have to get the kids connected. Well, we have about 20% of our kids that feel socially isolated by, by that they self-report in the student report. So if we have 315,000 kids from K six through 12, that means every morning 60,000 kids go to school and they feel socially isolated. And that means nobody pays attention to 'em. $5 million goes to this school system to help get these kids connected. They are very vulnerable. And as we went for this appropriation, I did have run the statistics are these, are these kids, these isolated kids, more adapt to, uh, this, uh, vaping and all these kind of products. And the, and the answer is yes, they are. And they're more liable to be using them. So part of our primary prevention is, is to get kids connected to reduce their risk of participating in these products. Another three, 3 million went out to, through the health department to local communities for grants that would be about 60, 50,000 grants spread out throughout all your communities in addition to the school money. And there's another 2 million that has gone to the committee that have launched a going to launch a campaign on how marijuana fixed the, uh, uh, the, uh, the brain. Now, what's important to this discussion, if you come down to the next bullet, down to the next, you'll see around 6%. It was at this time that we knew that if you go to the next slide, uh, that, um, if kids love flavors, we had to, we did a flavor ban. And as you can see on the right here, they love the juicy flavors. I don't know if you can enlarge that or not. And on the left, the, the next thing is they like mint and I might add, those flavors of vapes are outlawed in the United States today. Our, they're banned not only in Utah, but they're banned in the United States. And you can see we're left with the menthol and, and the tobacco flavor. Well, when we did that here in Utah, which there were a lot of these illegal vapes being sold, uh, they, uh, reduced that account by close to six to $7 million. So that account that we used for prevention and support is really down by half. And I've checked on it, nobody quite knows where it'll come up, but so that means it, it equates to what we cannot do for prevention. Just to illustrate, let's take the, uh, the kid that does not feel conducted, that that counts going from 5 million to two and a half million. We're gonna miss some kids. They're gonna be out there and they're gonna feel pretty lonely, and we will not be able to get 'em. And so will the grants. So will the enforcement. So, so really it's important when you come to the, uh, zantax, there's a couple things and, and, and realize that this is really what we want them the account to be, is that these, this product is flavors. The kids love flavors. Second of all, they're not taxed at the same as you would a cigarette. They're a pretty profitable way to get nicotine. And and that's where the kids are gonna go. And so currently there's about 3000 of our kids, six grade, six through 12, that, that are using, uh, the zen, the, the nicotine pouches. So, and then it looks like they may be going up. So that's an important fact to know that they're being, uh, attracted to the thing. There's one more thing on the de demand side that you should know, and that is that somebody asked me one time, what are you gonna do with all these kids? I'd like to take their license away. And I said, well, that's really great, but 83% of them are the 10th grade and lower. And we all need to understand that we gotta have a strategy that really works. You see it show up in the sixth grade. It is the eighth, and it's almost all over by the 10th. So our strategy that we've collectively decided to do is to really lower these numbers back the numbers without actually amping up the stuff on kids at back to the other numbers slide. And, and seeing how many class B misdemeanors we can get. And we've done it and you've been a part of it, and we thank you for it. There's one other thing on this chart that, um, I follow that you should know. And that is the number of suicide attempts. And that's alarming at 17,000 of our kids tried last year, one or more times commit suicide. And I'm not saying they're connected, but they are certainly three to five times more to be in the same population. And what I'm saying is, is that some of these strategies we need to get down because they float to these, uh, products that are really harmful to 'em. But we've really, really made great progress, but we really have to go even more. So let me just make, uh, one other thing. I want to talk about the supply side and then, uh, turn it back. The supply side has really, I'm telling you, the criminal elements have got more aggressive than ever before the vape people have contracted in the literature. You read the Mexican cartel to do the last mile. So what's coming into the state is everything, every product controlled substance you can think about, they've co-opted our tax, uh, tobacco licenses storefronts, and they can move all of these products and do to our kids. So part of this money is used too for enforcement and additional enforcement. 'cause there's a lot of very good people that run. But there's also a lot of people, enough people that are criminals. I'm talking about the criminal elements. And it's not just the products. To me, it is the fact that these people, the criminal elements, are in direct contact with our people and co-opted and into their schools and middle schools. So it's not just the product. We have criminals. And when you see these class two products. So I want to end on this one last slide and, and, uh, where's the, yeah, I wanna say that these are not, we all agree, we have all had to agree that these are not disposable kids. They are some of our most vulnerable kids. We know where a lot of 'em are coming from. And I just wanted to thank you for what you've done in, in the past to keep us fully funded and the intax they need to start carrying their weight. I've already got 3000 users and, uh, we need to have those accounts go back up, uh, to, to make sure that we keep the numbers going down. Because every kid, this is our goal. Every kid in Utah deserves to grow up to age 21 free from addiction and drugs and have a bright future so he can have the o options to choose where he wants to go. And we just can't leave these kids behind. And that's why, uh, I appreciate the opportunity to show you and thank you where we've been, and ask you for your serious consideration that the kids be in the middle of the mix while you decide. Thank you very much.

Thank you, Mr. Brown. We'll, we'll close with, uh, former representative Paul Ray, and while he's doing that, uh, Simon is just gonna hand you a nicotine pouch so you can feel the weight. And it, it essentially, it's a weightless product that's taxed by weight. That's the problem. We're trying to solve the number, we're open to whatever it is, but it doesn't make sense for this product to, to be in that regulatory realm.

Thank you, Representative Clancy and Mr. Chair committee. Uh, my name is Paul Ray. Uh, just to note, I'm here as a private citizen today, not representing anybody but myself and, uh, the interest that I have in, in stopping tobacco use. Um, I guess let me share a, a few of you have heard this in the past. I I've given many, uh, impassioned anti-tobacco speeches on the floor and, and I'll, I'll save you from that. But my, my background is I was born with a congenital heart effect caused, uh, by my mother smoking two packs a day while she was pregnant for me. So I spent my childhood growing up in children's hospitals. I had four open heart surgeries, uh, three of them before I was the age of 16. Uh, so I know personally the impact of tobacco, and not just on the user, but the secondhand smoke and, and the unborn, uh, when tobacco's being used. Um, so, you know, with that, uh, you know, let's just talk a little bit about, about the numbers and, and about what's, uh, you know, what's going on. In 2 20 10, we, we actually increased the tobacco tax by a dollar a pack. And that took us from being in the, uh, you know, back in the high thirties to low forties and the national average up to about 26. So it put us right in the middle of the pack. And we used that money for tobacco prevention programs. And they also used it to, at that point in time, uh, to plug some holes in, in, you know, other healthcare costs. And let, let me touch on healthcare costs real quick. These are numbers in Department of Health and Human Services, but it's important to realize that in Utah, 1300 utahns die each year from smoking the cost. And this is from the Department of Health and Human Services, the healthcare, annual healthcare cost in Utah, directly caused by smoking. This isn't factoring in secondhand smoke and other things. $630 million is what we are subsidizing smoking here in the state of Utah with taxpayer money. The annual smoking caused productivity losses in, in private industry, almost $1.3 billion, uh, from, from smoking. And then the annual cost to Utahans is about $1.9 billion. So we're not talking, you know, pocket change here. These are, you know, extreme costs that our taxpayers are subsidizing. And you're gonna hear from the industry today, and they're gonna come in and tell you why, you know, it's so important that we not tax. And, and you know, to me it never made sense. And, and, you know, I don't mean to disparage anybody speaking today that they're really good people, but their product really sucks. And that's what we're here to talk about today, is the product, which is tobacco. And, you know, there was a master settlement agreement back in the 1990s, and it showed that tobacco, um, hid the facts starting in about 1957, that they knew that their product was gonna kill people. And they hid that fact from us. And in, in internal, uh, messages that were received and put into court, it was shown that, uh, they purposely moved forward. And it was all about the money. And you're gonna hear, you know, you're gonna hear about taxes. You know, the, when you talk about taxes, the the, what you typically want to do is you wanna broaden the base and lower the tax. You know, that's a fair way to do it, but it doesn't work in tobacco. You do not wanna broaden the base. 'cause then you're gonna increase that $630 billion, you're gonna increase that $1.6 billion. So it's important to understand that the typical way you would look at a tax base is not affect, is not good for tobacco. You wanna go the opposite. You wanna spike it because we know that cigarettes and, and tobacco products are price point related. The higher the price point, the less people smoke. You know, my, my my dad finally, before he died of smoking, he did quit smoking because the price got too high for him. So he finally ended up, unfortunately it was too late. It was exactly nine years ago this week that I buried my mother. She had three different forms of cancer from smoking, and she finally quit when they put her on oxygen. And she realized that she could possibly blow herself up. So she figured it was time to quit. You know, the, the, that's the addiction that you get because of the nicotine that is placed in, in 1960, there was an internal memo from one of the tobacco companies that said, guess what? Nicotine is very addictive. Looks like we're nicotine dealers at this point. So the knowledge is there that they know they've hurt people. And, and you know, I know Alec just put out a, a thing against this bill and understand too, I was a member of Alec. I chaired a task force for six years. I chaired the Criminal Justice, Homeland Security and Elections Task force for them. But Altria and Reynolds sit on their board of directors. So of course they're gonna put out a thing against a tobacco tax increase. And then let, let me end with this. It's like I say, you're gonna hear from the industry, you're not gonna hear from a lot of people coming in that support the tax because the smokers and the people that have been affected by this, they're dead. You won't see them here. And so I'll leave you with that. Thank you representative.

Thank you, Representative Gricius and thank you committee. The last thing I'll just close by saying is this Bill really does three things. We'll have less kids smoking because kids are very impacted by cost, very cost prohibitive. We'll have more adults quit smoking, and we'll be able to make sure that when those, uh, when kids do get addicted and when adults do quit, we have the resources to help them. And I'll just sum by saying, uh, this is an internal memo from one of the tobacco companies that, uh, was about taxation. And I just wanna read this quote because I think it's indicative of what exactly what we're trying to accomplish here. It says, of all the concerns, there is one taxation that alarms us the most, while marketing restrictions and pa public and passive smoking restrictions due to press volume. In our experience, taxation depresses it much more severely. Our concern for taxation is therefore central to our thinking. Now that's exactly what we're trying to do. Once again, less kids smoking, more adults quitting, and making sure the resources are there when we need it. If the rate is the problem on this bill, tell me the rate that you'd like to see. And I would ask the folks that come up and oppose this bill, tell me the rate that we think makes sense. But I would urge you to vote yes on this bill because the status quo is not acceptable right now. And that's where I think we need to go with here. Thank you, Mr. Chair and thank you committee.

I had a question for Mr. Ray, If possible Yes, Paul?

I I just wanted to go back over the $1.3 billion figure. What was that for?

Let me pull up the chart here. Sure. Thank you. That's the annual smoking cost, productivity losses in Utah. That's from people missing work because of illnesses and, and those types of things.

And the 1.9 billion could just refresh me on what that

Was. That's the annual total cost. So I believe that would just be adding the six 30 and the 1.3 billion to get your 1.9. Okay,

Thank you. Okay. Thank you very much. Thank you.

Uh, thank you Mr. Chair. Uh, three part question. One is, we saw a chart that had marijuana vapes, alcohol usage on their even suicide. Uh, what's the rate of nicotine slash tobacco use amongst miners? Do we know that?

Four miners, um, with the sharp survey results, right? Um, I've got the nicotine pouches data here. The sharp survey is a, it's a big thick packet. I'm sure someone has it here. Uh, nicotine pouch is the number that, uh, we got was for 12th graders, about 4.8, uh, percent of all 12th graders in Utah, um, had used a nicotine pouch before. That was the, the top line number out of all high school students. And once again, this is from the sharp survey, so that's where like the, it's Utah data. Um, all the aggregate for sixth, eighth, 10th, and 12th was 3.1% of all youth who had used it at that point. The idea is that everyone was going to become a senior. And so that number will rise.

Okay. Uh, thank you. Second question. Uh, you did a good job of it doing the math for us on $2 a pack for, for the cigarettes. What does a 10 of Zs, what, what would the tax on that be?

Oh, uh, uh, if this passes as if I can, as written, If I can find my receipt. Okay. So I, I did some market research for you with members of the committee. Um, uh, hopefully my wife doesn't check my credit card statement, but, uh, so for, uh, a pack of a name brand nicotine pouch, the current cost is 5 75. So that's in, that includes the tax. Once again, the tax currently is de minimis. It's a couple cents if this pass today at this high high rate, um, that we've started up basically with, we're putting it with all the other products. Um, the numbers I've run that it would be about a dollar 30 addition to a nicotine pouch pack. Now there's obviously discounts if you buy in bulk and different things like that for cigarettes. Um, this, this pack of cigarettes, this is a, a name brand pack of cigarettes with that's filtered. Um, $8 a pack. This is a name brand pack of cigarettes that's more popular. This is about $10 a pack. This is including tax. And then, um, a very, another very popular, um, uh, pack of cigarettes that has menthol and, and filters. This is $12 a pack. So there's already I think, a cost discrepancy within there, um, in the range of nicotine pouches, in the range of cigarettes as well. So $2. And then once again, it's a math equation. So I can, I can only estimate the wholesaler price and the, and the manufacturer price, price for, I'm sure you'll hear from, um, folks that, that oppose the nicotine pouch, um, restructuring there. Um, but that's the math that I've done.

Okay, thank you. And Mr. Chair, last question. How are these products ending up in the hands of children? Like, is it, are they able to sneak into a store and it's not being enforced where they can buy it? Or is this another case where adults are buying the products for them?

Sir, if I may, Calvin, if I could pull up my slides real quick, I'll just show you. Um, there's a couple ways. Uh, the best way I could say it, representative Erland is, uh, diversion. And so this, these is from a recent, um, raid on a tobacco store, um, in the Salt Lake Valley. So a lot of times, you know, these types of products, once again, these are illegal products that are being sold in legal stores. Um, but things like these would be, you know, diverted from, uh, essentially legal sales being diverted to children. So the other, the other thing with, um, the other, the other piece there is obviously, um, you might have a, a 21-year-old who buys a significant amount of these products and then is gonna sell it to youth or a youth who's then gonna kind of go down the line there. But that's what I would say is diversion. So a legal supply that's being diverted for illegal purposes. So once again, this is back to our, uh, Mr. Brown's, uh, point, um, part of the, in the substitute one. Um, now that the flavored vapes have changed, we're changing one of the existing earmarks to make sure that we can continue the enforcement practices, um, that are outlined here.

Thank you, Mr. Chair. Just a couple questions and I appreciate you taking some time offline for me to ask you some questions, sir, but I feel like we need to ask some of those questions. So that is, yes, sir. In the public, uh, number one, define where these pouches fit in our code. Is it just nicotine product or what, what is going to be the definition of this new type of, of pouch?

That's right. So that, I think you've, you've nailed the exact question that I'm trying to get to the heart as, one of the other things I think that you'll hear industry talk about is you'll say, well, Utah would be an outlier because Utah would be the only state other than Colorado and only in our Intermountain West piece that has a specific tax for nicotine pouches. I would venture to say that that's not a policy decision where the state legislature is saying, let's not tax a product that has flavors. And on the box that says that it's addictive, I would say that this is a new entry into the market. So a nicotine pouch has many of you have held, um, and I've passed those out to a couple people. So if don't, don't, uh, don't use any of those 'cause a lot of people have touched those. But, um, you put it, uh, you put it directly in between your gum and your lip. And so it's a direct, essentially your mainlining nicotine right to your brain. And so there's different levels of these nicotine pouches. Um, so three six, I don't believe there's only one brand that I'm aware of that has a nine, which is a extremely high amount. And so people will use it. So, um, it's uh, something similar to vaping, right? You could do it at work. Um, it's not gonna be the same, uh, stigma or different challenges physically as smoking. So right now the challenge is representative, if you listen to your question, where does that fit under our code? And so, um, right now we've put it with, with essentially other, uh, ul uh, uh, uh, uh, other tobacco products. Um, and I, I think that there's definitely a conversation to be, had to say that maybe we could create some, a structure that makes sense for nicotine pouches. But right now I haven't had those, I haven't been able to have those conversations with industry to see what they would think is appropriate. I think right now they just wanna see the bill die and keep the status quo, which I think is understandable. But I hope that as we move through the process, um, with your support today, that we can find something that makes sense so we can, we can maintain the continuity in the Intermountain West, and at the same time we can protect consumers from a product that has multiple flavors and it's addictive product, not the end of, not the end of the world, not the worst product in the world, obviously. But once again, those two factors I think are pretty important.

Thank you. And, and just to follow up on that, 'cause you alluded to that. So the, the tax rate is, is one that's, uh, of concern to a lot of folks, and that is if we do have the tax rate super high, which then forces people to leave the state of Utah byproduct and come back into the state of Utah, we haven't solved the problem. And that is these products are still making their way to kids, right? So explain where you are with the rate in terms of would it be competitive with other states? Are we gonna be forcing people out of Utah? Is that gonna be an issue?

That's a great question. Representative Veelen. So if you look line, uh, one 18 on the original bill, this is essentially where I've tried to, to take a first stab at it to see where it would fit. It's under, uh, e-cigarettes, prefilled e-cigarettes and alternative nicotine products. So that's the rate. It's 0.86 multiplied by the manufacturer sales price. Um, I would say two things about, uh, about the dispersion of what you're describing, kind of the idea. So I, I went back and I listened to the, uh, the 2010 committee hearing on this same issue. And there was someone who said, this is the Wyoming stimulus package bill because everyone's gonna leave Wyoming. But realistically, if I'm in Provo and I wanna buy a pack of cigarettes before work, I'm not going to drive to Wyoming. I will either pay the increased price of cigarettes, or I'll try to find something else that, you know, maybe I'll start looking at the quit line if it is cost prohibitive there. So I think it's a little overstated. And that's where I would say as well, if you look at those numbers once again, and the smoking rates over time is, once again in 2010, everyone said the sky's gonna fall. You know, it was like, uh, the chicken little hearing, the sky's gonna fall, but the sky didn't fall. Smoking rates went down, youth smoking rates went down. And once again, 16 years later, I would submit to you that it's probably time to readdress it and have this same conversation.

Okay. So just, just real quick, just to make sure I understand on the tax, so you were saying, 'cause the tax is 86%, correct? Mm-hmm. Yes sir. So at 5 75 per can, that's 86% of that is $4 and 90 cents. So the, my understanding this, it would be

Of the, of the manufacturer's price

Of the manufacturer's. Okay. That's a distinction. Sorry

About that. That the five, the 5 75 includes the current tax, sales tax and point of sale. Okay. Like just buying it off the shelf.

Okay, perfect. So, okay. That's where you came up with that 1 38 thing. I,

I believe Philip Morris is here. I, I ventured to guess that they're gonna give you a number that they think that this would hit too. And once again, I, I think we should find something that makes sense. But right now, I, I would say that we need that, we need that collaboration to find something that makes sense for Utah consumers. Um, and I, I just haven't been able to have those conversations yet where, um, so right now I just kind of put it where I think you would, where it should fit rather than the weight-based tax, because I would say this is more similar to an alternative nicotine product rather than moist snuff or something like that.

Yeah. And so I think the concern with, you know, you're, you're right, a person on their way to work wouldn't most likely go to, you know, Wyoming. However, if the tax were large enough, I could see a person going to Wyoming, right? Buying a pickup load of cases of this stuff, bringing it back, and then just retailing it out the back of his truck to people that that does happen, right? Yes, sir. And so I do think that's a consideration. And then one last question on the dollar amounts that are going to the police, that two, was it 2 million? Yes, sir. Uh, explain to me why the first class, uh, county versus is, are they, is there only those, uh, police departments that are actually in the fighting of this? Or are there not any in second or third class counties? Can you explain that? Yes, sir.

So if you, uh, you heard, uh, good, uh, Mr. Brown talk about the reduction in, and essentially because we restructured our flavored vape market, then that existing earmark is changing. So what's currently becoming the biggest problem is a lot of these warehouses that are popping up in that regional area. And so this would be, um, essentially restructuring within that existing earmark to say this has become more of a problem than a, you know, b has become more of a problem than a, um, but once again, um, I'm happy to have any of those conversations. It was essentially more of what we saw because of our regulatory changes of the past two years. This became more of an issue in this regional area. Okay. So those are the slides that I, that I show as kind of that same regional area. Perfect.

Thank You. Yes, sir.

Thank you. Cherry listen. Cherry listen. I always just liked saying that. Yeah. Um, Yeah. Yeah. So, uh, no hearing on tobacco tax would be complete without former representative Paul Ray, so I appreciate him coming and being here. So, uh, uh, just a couple of things.

Dave Davis. Sorry. Uh, president of the Utah Retail Merchants Association. I think it's important to know who I represent, who I don't represent. I represent the retail stores. I don't represent any of the tobacco, uh, companies. We are the stores that are out there selling the product. Uh, Representative Clancy, we've had many discussions with him about that. We are very, very concerned about the rate. Um, vice chair Eliason, I think did a really good job. I think we're worried about, uh, cross border sales and staying in step, at least with where some of our neighboring states are. Just to put that in perspective for you, Idaho, currently at 57 cents, Wyoming at 60 cents Nevada at a dollar 80, Arizona, New Mexico at $2 and Colorado at $2 and 24 cents. This would, this proposal would take us to $3 and 70 cents a, a pac. And so I think it's important that we need to stay in step with where some of these other states around us are. The other thing is online sales. It's a thing, and I know that it's currently against the law, but it is very, very difficult for the tax commission to police. Uh, representative Ray brought up a couple of things, really good points about we want to drive down the use of these, uh, of these products. Well, if we're just driving people to a different channel, whether that be a cross border channel or an online channel, really all we're doing is we're hurting Utah based retailers. That's what we're doing. Um, there was also a lot of talk about youth access. All I can say is Amen. Let's hold hands on that particular issue and make sure that we're not allowing these products to get into the hands of youth. We stand united with Representative Clancy and anyone else that wants to work on that, uh, particular issue. And then finally, for the record, I think I may have been the overt stater 10 years ago, calling this the Wyoming stimulus package. So just let that settle in for a moment. Okay. Uh, thank you. And I'd be happy to be, I, I mean, we would love to see you hold the bill so that we can work on some of these, um, uh, you know, rate issues and see if we can work those out.

Thank you Mr. Chair. A couple of questions if I may. Uh, Dave, could you answer Representative Clancy's question? And if you don't, if you don't think this is the right, what is it?

It's such a good question. And I don't know what the exact rate is. Pick one. I can't just pick a number, but I, you,

You gave us some stats and you think we need to be more on par with neighboring states. Where would you fall in there?

I don't know. Can we range? I, but let me tell you this, I can answer the question. No, I can't. But let me tell you what I am committed to is having the discussion about that because I can't, my members have not said to me, Hey, this is the number. So it's not fair for me to say, this is the number without being able to go back to my members and, and get this, you know, this, you've run associations before and we're herding cats to a certain extent. And, and so I've got to be able to go back to my members and,

Okay. Um, I'll just, given the, given your statement that you had met with Representative Clancy many times, and that, that question has been posed, I, I would've, I would hope that somebody would be able to begin to answer the question that he has posed in his presentation. So I'll look forward to hearing more on that to your comments about online sales. And I think everybody recognizes that that's an ongoing problem. But my, what I, a disconnect that I'm having a hard time reconciling is if online sales are so easy and so much of the problem, would, wouldn't that mean that you don't have sales of tobacco products at all in your state, in your stores?

No, I I think that there are people that know the law and honor the law. I mean, I think that Utahans generally are, are that way.

So it's, so the, so you're making an argument that the price pressure isn't that important after all.

So I think that there comes a point, and let me just put this in context for you. If we were to go to three 70 a pack, uh, and I think that this was based upon like a one pack a day smoker, you could save $1,500 a year by buying from Idaho. Now I picked Idaho because it was the lowest rate, right? $1,500 a year. We've talked about, you know, property taxes and giving people three and four and $600 a year relief in property taxes. It would be $1,500 a year difference at that point. I'm not saying we all have a point at which we'll push the button on an online sale or will make the, the trek up to Evanston or someplace in Wyoming and all of, for all of us, that may be a different number, but at some point, the larger that number gets, the more people are willing to push the button On, Whether it be an online sale and say, yeah, I know that this is technically, uh, against the law, but it's $1,500 a year. Okay.

Thank you, Mr. Chair.

Thank you, Mr. Chair and committee Billy Hesterman with the Utah Taxpayers Association. We oppose, uh, HB 3 37, uh, because it fails the core tax policy principles that we use to evaluate legislation. First, this bill is a tax increase. Uh, as we've analyzed it and looked at it and had the data run for us, we found that, you know, the average Utah smoker that smokes a pack a day, they'll be paying $793 more a year. Uh, if this tax, the, the way the bill is currently written were to go through, we've heard a lot of talk about we wanna make things more affordable for Utah families here in the state. And certainly this is a minority of Utah families probably, but that's, this is an additional cost to them. And so we're cognizant of that and wanna make sure that it's understood that this is an increase. Uh, second, uh, this bill weakens revenue stability. Uh, having us depend on cigarette taxes and, and nicotine taxes to fund our budgets is something that we do find, uh, to not be the best tax policy or the best budgeting policy because revenues often don't meet what the revenue projections are going to turn out to be. Uh, we make, uh, large estimates on what it might be, and then we see in many states that it ends up not being that rate or that that dollar amount. And so when we plan for it and don't have it, that becomes a problem and increases the pressure to raise taxes elsewhere to make up for those costs that we're, uh, planned for. Third, uh, Mr. Davis already hit on this, that we are concerned about how this puts Utah as an outlier regionally. And so we would ask that you consider that. And if there was a range to put us back into a more, uh, competitive, uh, state with the rest of our regional states, we would find that as a positive. And then last, I would say that, you know, if you look at the fiscal note of the bill, we're looking at a $45 million tax increase to fund into the general fund. When I go to cities and counties and school districts and talk to them about property taxes and have a truth in taxation hearing, I ask them, what are you doing with that money? And have them give a report back to me. We've yet to hear what, you know, the legislature plans to do with that $45 million that they're gonna have from this tax. And so because of that, we ask that you hold the bill at this time. Thank you. Thank

Thank you, Mr. Chair Philly, do you support lowering taxes on cigarettes, making them more affordable?

We, I wouldn't say we've, uh, had a proposal to take, uh, you know, an evaluation on that on, but we'd want them treated fairly as they are treated in other states.

Okay. And do you, what are your thoughts on the notion that a, a tax like this is designed specifically to be self decreasing? The higher you tax, the lower the, the fewer products you sell, therefore fewer people are smoking, smoking, it's supposed to have diminishing returns if it's working.

I would say sound tax policy usually isn't meant to drive behavior, but rather to in, to raise funds to pay for government services.

Would you say that addiction and nicotine would place, um, a tax policy discussion outside of the norm of what would be considered typical taxation?

Uh, can you ask that again?

Don't you think that something that is colloquially called a sin tax would not be subject to the same economic drivers and influences as a normal tax? And there should be cons, therefore should be considered differently.

I don't know if I have an, uh, a problem with it being treated differently, but I'd also don't know if I'm ready to say, let's, let's put 45 million more dollars into the budget without a plan on how to spend it. But

You just drew parallels to every other taxing structure we have. So you said that it shouldn't, it should be treated the same. And my question is to you, to you is why should something like this, given the nature of what we're taxing, why should it be compared to a property tax or a sales tax or any other tax? This is a fundamentally different market structure with completely different forces. We're talking about addiction and nicotine and a product that actually kills people and transfers the cost of that onto the rest of us. So why wouldn't we treat it differently?

I would say as, as far as where tax policy comes into play, we try to be agnostic as to one thing or another. When I start picking which, uh, you know, items I like one over another, that's where I get into problems. And so we'd rather see a uniform system across all taxation, even though I understand that's unrealistic.

And, and Billy, I would argue that I think that your organization should not be so agnostic when this is nothing that nothing should be agnostic for all products, and that you need to be a little more, think a little more critically about some of these things.

Ahead. Dr. Brandon Forsyth, director of the Specialized Products Division, as well as the Laboratory Services division at the Utah Department of Agriculture and Food. We support this bill specifically sub ones because it does allocate a portion of the tax that will be collected to go towards the e-cigarette fund. We are in these facilities that sell e-cigarettes, hemp products, and a wide variety of other products. And they are going to, our children and law enforcement and the department need additional funds to be able to effectively enforce the laws that are on the books so that we can make sure that these products aren't making it into the hands of children. And so that the future products that are in that stream can be regulated effectively and also be kept out of the hands of children. We have so many new drugs coming into the state and being sold through these same avenues, and they are targeting children. You saw all those colorful packages and all these flavors. They are designed to appeal to children to get them hooked young so that they can basically milk them for money for the rest of their lives. And we don't wanna see that happen. Thank you.

Thank you, chair E Lyon, excuse me, and members of the committee. My name is James Curry. Uh, I'm here on behalf of PMI, US Corporate Services Inc. And really appreciate the opportunity to comment on house Bill 3 37 with the chair's permission. Uh, we do have a more, uh, comprehensive written testimony and another handout that we would like to provide to the committee. But PMI US' mission is to reduce smoking and replace combustible cigarettes with less harmful alternatives for the nearly 30 million American adults and 146,000 Utahans who currently smoke. We do not and have never sold combustible cigarettes in the US offering. Instead, a portfolio of FDA authorized smoke-free alternatives like the, the oral nicotine pouches in that you've heard about today, house bill 3, 3 7 would significantly both significantly raise the tax on alternative nicotine products and eliminate tax incentives for modified risk tobacco products or MTPs. Put simply this bill would make smoke-free alternatives significantly more expensive and therefore less, less affordable for Utahans who smoke disincentivizing smokers from switching to reduced risk products. In the case of products with an MRTP designation, which was specifically created by Congress to allow consumers to be better informed about relative risk, this would substantially increase the price of smoke-free options that have been proven to be not just appropriate for the protection of public health by the FDA, but also appropriate to promote the public health. Tobacco tax rates should reflect the relative risks of products and policies should encourage smokers to switch to reduced risk products. Deterring smokers from switching to modified risk tobacco products is not sound tax or public health policy for Utah. And I would urge you not to advance house Bill 3 37. We would be happy to answer any questions. Thank you for your time.

Uh, thank you for being here and again for, uh, having to stay over, but you got to enjoy Utah, right? You bet. That's right. Sure did. So the question was that manufacturing price, can you give us kind of a, what that means? Sure. So that we can get an idea what that tax would look like under the current, current proposed bill.

You bet. Uh, the current, uh, wholesale price for a can of X is $4 and 10 cents. So at the 86% of wholesale rate, uh, that's about $3 and 50 cents a can under current statute, the alternative nicotine product tax of a dollar 83 per ounce. Um, to us that is, uh, about a 40 cent per can, um, rate. So you're looking at a 10 x increase, um, for a can of, um, a can of X.

Thank you, Mr. Chair. Um, can you tell me, in the state of Utah, how many, what percentage of children use your products?

Uh, we use the, uh, representative and Mr. Chair. We use the, what we believe is the most reliable national statistics out of the CDC and the National Youth Tobacco Surveys. Most recent data shows a less than 2% youth usage rate. Um, that was actually part of the FDA authorization that we received in 2025, focused specifically on that, that youth access is low. And with that authorization comes additional scrutiny for our product in terms of marketing materials, uh, sales data, and ongoing monitoring of youth access. We think the numbers should be zero, and we fully support the Federal 21 and over law. Um, we think that's been the most significant, uh, driver of, uh, decreasing tobacco use amongst youth. We fully support, um, no youth access.

Can I follow up? Sure. Thank you. So, um, correct me if I'm wrong, if I'm wrong, I've seen your products advertised on billboards in the Wasatch Front.

Uh, representative, I don't believe that our company advertises on billboards. There are a number of nicotine pouch products in the market right now. Zinn happens to be the recognizable brand and leading brand in the space. Um, because of our FDA authorization, we put strict marketing protocols in place. We do not have paid spokespeople. We do not have, uh, an online presence on social media, only on age gated websites. Um, and we focus our marketing at, uh, at the point of sale, um, for adult age nicotine Users. Okay. So

I can't speak to brand specifics, but I do know that there is a broad proliferation of the smokeless tobacco alternative products popping up on billboards. And I, I just at least wanna recognize that, um, them being on billboards means that they are advertised to children and that rates in the state of Utah of these products are going up. I would if I, if we, if we don't have an opportunity to have the, this statistics presented by someone here today. Um, Representative Clancy, I think that we need to get Utah specific data, because I guarantee you it's higher than 2% in the state of Utah. My last question is, um, and I know that there is data behind this as well. I don't have it off the top of my head. What percentage of children who start on alternative products eventually transition to combustible tobacco products?

Uh, Mr. Chair representative, I don't have statistics on that. Um, we know that it is illegal for children to purchase and have these products. Um, we think it's most important to focus on what happens to be the leading cause of preventable death and disease in this country. And that is the continued use of combustible cigarettes. And so our whole objective is to convert people to lower risk alternatives, and that's, that's really what we're focused On. And,

and I do appreciate that factor. But the reality is, regardless of what your focus is, children start on these alternative products and they're transitioning at an increasing rate to combustible products. This is their gateway product on nicotine. Thank you.

Hi, my name is Kelly Hoskins. I am thankful for the opportunity to speak today in support of House Bill 3 37. I'm here as a college student on campus. Nicotine pouches like X are everywhere. They're marketed as clean, modern, discreet. They're virtually harmless. But what I've seen firsthand on campuses tells a very different story. One of my good friends, Jack Drake, started using nicotine in tobacco products in college. It began casually first using a zen here and there, then using it more regularly, because it didn't involve smoke, it didn't smell like cigarettes. It felt less serious, less dangerous. Um, it escalated very quickly. Now, almost always, there's a Zinn in his mouth. If there isn't, there's a vape very nearby. He struggles to even go short periods of time through classes without nicotine. What started as something social became something very constant, and it's taken a toll. He's dealt with increased anxiety, difficult focusing without it disrupted sleep, noticeable dependency. He has tried to cut back, but the need to use this crutch is real. The irritability is real, and the dependence is real. That's not freedom. That's chemical addiction. And Jack isn't an outlier. He represents a growing number of students who were told these products were safe or alternative only to find themselves hooked. House Bill 3 37 addresses this issue responsibly and structurally, this bill raises a cigarette tax and modernizes how alternative nicotine products are taxed. Instead of relying on a weight-based tax system, it shifts to a percentage. And this change is pretty significant. A weight-based system creates distortions in the marketplace. It allows products to be engineered or packaged in ways that reduce tax liability. It opens the door to carve outs, loopholes, and uneven treatment. This is a structural reform that makes the system cleaner, more neutral and harder to manipulate beyond the structure. Here's the reality of the behavior. College students are highly price sensitive, and I say this as a highly price sensitive college student, and so when price increases, usage is short of follow. Um, my generation has seen what nicotine has done to our parents and our grandparents, and we don't want that for our generation or for future generation. So I ask that you consider this bill.

Okay, John Kennedy. Really grateful to be here. Also a student in Provo. And I wanna share my personal experience and why I'm in favor of this bill. I have a family member that has used nicotine products for the last 50 years of their life. And Benjamin Franklin famously said that an ounce of prevention is worth a pound of cure. In my opinion, this bill is an ounce of prevention that we can put forth to prevent pounds of cure in the future. For my generation, this is a policy that specifically impacts me, which is why I felt it was important to come up here and testify today. I can add, uh, back up Kelly in saying that students are very price sensitive. That is something that we care about. And putting money towards education, towards prevention is potentially the only thing that would've prevented, uh, my family member from starting using these products 50 years ago if she had more fully understood what would happen to her throughout the rest of her life and the, uh, potential negative impacts. And so I, I stand in favor of this bill because I think it is important that we think of my generation, uh, how we will be impacted, and specifically how we can better prevent people from purchasing these products. The best way to do that is through education, in my opinion. And that's what I see this bill doing. And so that's why I stand in favor of it.

My name's Walter Plum, um, president of Drug Safe, Utah. Zinn Velo and on plus nicotine pouches are now everywhere. In 2018, Altria bought a 35% steak and Juul the maker of the flavored vapes. Under the banner of harm reduction, Juul deliberately addicted millions of teens. Now, Altria owns on plus nicotine pouches with nicotine levels up to 12 milligrams per pouch, with kid appealing flavors under the same blanket of harm reduction. Sound familiar? The newest Utah Sharp student data should alarm every single one of us. Among eighth graders, 13 and 14-year-old kids, nicotine pouches as their first tobacco product have increased 600% in two years, 600% in middle school. This means thousands of Utah kids are now starting with cigarettes or even vapes anymore. They are starting with nicotine pouches. Does that sound like harm reduction to you? By the time they reach 12th grade? The trend continues. First use of nicotine pouches has increased roughly 400% in just two years among high school seniors. Recent data shows that six through 12th graders past 30 day nicotine pouch use has increased 300%. These percentages go beyond normal. Uh, one time child experimentation. They are children already addicted and set up for a life of addiction. The products are discreet, they're marked for convenience. They've been used in classrooms, church, school, buses at home. These companies are preying upon our children to the manufacturers that are here today. I ask you this, if these products are truly intended only for adults, why are you not welcoming? Policies that make them harder for kids to obtain the most proven method is to tax. When costs go up, youth usage goes down. Thank you. I urge you. Stand with Utah Kids. Vote yes for HB 3 37.

Thank you. Gail Ika with Utah Eagle Forum, and we certainly support this bill. And listening to all the things that were said today, I remember back when, when we were told that, uh, vaping was the answer, they actually advertised it that way. Told people that needed if they, if they wanted to quit smoking, they just needed to start vaping. Vaping wasn't as dangerous. All those things, and everybody was buying into that. Well, I can tell you, I know people who did exactly that. One friend that's very close to me said that, uh, she, uh, started vaping to try to quit smoking. And she ended up doing both. And she said vaping was actually the, the, the most addictive for, mainly because of the places that she could use it, and even the hand motion of, of vaping. But she bought into that lie. And, and there were several others that we actually brought up here to testify as we were dealing with that issue. Now, now we have the zen issue. And supposedly that's gonna make a difference with these children. You know, gee, they'll, they'll use zen and then they won't wanna smoke. No, that's not what the, the pattern is. They, they'll use the zen and they'll get addicted to nicotine, and they'll be using, you know, they'll be vaping, they'll be smoking, and, and it's so easy. This is an easy product for them to use. And how can we say that it's, uh, safer than smoking? What? Holding that in their mouth. The, the nicotine going so close to the brain. Right to the brain. And also, uh, you know, what about cancer mouth cancer? These kids think this is harmless. It's not harmless, and nicotine is a lifelong burden for them. The addiction is so great. Have you ever had family members or friends who try to quit smoking and watch what they go through and how they, then they end up hiding it, and then they think they've quit and they've announced everybody they quit, and a month later they're smoking again. Uh, nicotine is so addicting and what it does to the teenage brain. Think about it. What will these, this zen patches do to these kids and their brain? Please vote yes for this bill.

Great, thank you so much. Uh, my name is Brooke Carlisle. I'm the government relations director with the American Cancer Society Cancer Action Network, or a CS can, um, which is the advocacy affiliate of the American Cancer Society. Um, we strongly support HB 3 37. Um, we know significantly increasing tobacco taxes and investing in tobacco prevention, excuse me, and cessation programs that save lives, reduces healthcare costs, and generates revenue. In fact, it is one of the most effective ways to prevent youth from starting to use tobacco and to encourage those who already are addicted to quit. Um, here in Utah, 5.7% of adults smoke right now. That is the lowest smoking rate in the nation. And I think it is something that this state should be incredibly proud of. Um, however, uh, that number still has very real harms. Smoking, smoking harms nearly every organ in the body and increases the risk for many types of cancers. In 2026, it is estimated that approximately 15,170 Utah residents will be diagnosed with cancer, and almost 4,000 of them will die from the disease. Our internal analysis estimates 15.7% of cancer deaths in Utah are attributable to smoking. We have decades of data showing us, um, that tobacco taxes work, including the US Surgeon General's Report, um, entitled The Health Consequences of Smoking 50 Years of Progress, which concluded increases in the price of tobacco products, including those resulted from increased excise taxes, prevent initiation of tobacco use, promote cessation, and reduce the prevalence and intensity of tobacco use among youth and adults. We've had a lot of discussion about this, but I think it is important to note that, um, as currently drafted, HB 3 37 would also ensure that all other tobacco products are taxed as a percentage of price, which is how the majority of these products are already taxed. Our goal is to encourage people who use tobacco to quit rather than switching to lower co, lower taxed lower cost products. If all tobacco taxes are not taxed at an equivalent rate, Utah can't expect to see diminished positive outcomes for both revenue and for public health. Um, I'll wrap up in the, um, instant, uh, for time purposes, but I also think it's worth noting, um, almost 70% of smokers want to quit. Um, and the state has ample free resources available to help those individuals quit. Um, so we should be passing policies that help help people quit and urge them to use FDA approved devices designed for this purpose.

Yeah, sorry, it took me a second to get there. Uh, uh, members of the committee, my name is Jeff Willett. Uh, I am testifying on behalf of the Progressive Policy Institute based in Washington, DC and my di uh, capacity as Director of PPI's Project to end smoking. Uh, while we support increasing the tax on cigarettes, we are opposed to a repeal of the rate reduction for modified risk tobacco products, and opposed to a dramatic increase to the tax on nicotine pouches. Everyone testified today is concerned about youth nicotine use. And from 2018 to 2025, I was Vice President of the American Heart Association, where I helped lead national efforts to reduce youth nicotine use. Those efforts have made tremendous progress, and today, rates of youth nicotine use are at historic lows. We do need to consider the 150,000 adults in Utah who still smoke. Most of these adults started and want to quit. Uh, these are parents and grandparents who want to quit smoking for their kids and grandkids. These are working class folks, many working paycheck to paycheck, uh, and unfortunately, uh, the resources that are available, the traditional abstinence focused interventions don't meet their needs. Less than one in 10 people can quit successfully using traditional cessation strategies. Uh, and then, you know, in, in contrast to cigarette

Okay. You bet. Uh, thank you for the time today.

Hello, uh, I'm Doug Ball, uh, from Jackson's Food Stores Tobacco Category Manager. Um, we have 22 stores in Utah and 350 stores in the Western us. Um, I just wanted to talk about the tax rate on the nicotine pouches and, and just, uh, about nicotine patch a little bit. We've heard a lot, uh, about where we've heard a lot about cancer and wanting to improve health, this and that. I wanna stress that nicotine does not cause cancer. It's the carcinogenic items and cigarettes in the moist snuff. The Copenhagen Skulls products, that's what causes their cancers. Nicotine does not cause cancer. So if we truly want to see public health benefits, this is a better product to use than traditional combustible cigarettes or mo Chew. Um, we have stores in Washington recently, they changed the track structure there. Washington is the first state where nicotine pouches now cost more than your traditional Copenhagen Toll type products because they're taxed at the same percentage rate there. It's 95, it's proposed 86 here in Utah. Um, we don't think that's great policy. Um, we understand the youth access is a problem, but again, we need to also to keep in mind the health benefits to the adult consumers while keeping in balance, uh, the youth access. Thank you for your time.

Yes. Thank you so much. Good afternoon everyone. My name is Ella Oligo. I serve as the Student Body Vice President at BYU, and I'm officially here as a National Ambassador representing Campaign for Tobacco Free Kids. And I'm grateful for the opportunity to speak in support of House Bill 3, 3 7. I began advocating for tobacco prevention nearly seven years ago after watching nicotine addiction take hold of peers. I loved what started as experimentation quickly became dependent, and I saw how difficult and painful it was for them to quit once these products had a grip on their lives. Utah has a responsibility to protect youth and families, and research consistently shows the young people are especially sensitive to price. And I can be a testament to that which makes strong, consistent PO tax policy, one of the most effective prevention tools available to us. House Bill 3, 3 7 helps ensure that our policies match our priorities. It puts prevention first supports families, and gives young people a better chance to grow up free from nicotine dependence. I cannot support House Bill 3, 3, 7. Thank you so much for your time today.

You did. Representative. Thank you so much for your time today. Um, first I'd like to just say thank you to Representative Clancy. I think it's admirable what you're attempting to do here. With that said, I do support what Dave Davis, as well as the Zen Representative, said earlier today in, uh, this committee hearing. Um, having worked in the retail tobacco specialty business space for nearly a decade now, and having taken a look at state data from the Sharp Survey, um, and other pieces of information, without question products like Zinn, they've got to be the least harmful tobacco product on the market. I think it would be a mistake to consumer from going from a product like traditional cigarettes to a product like Zen if the state is looking for funding. There's other ways to find it in the tobacco product space. I think last year's Bill spoke to that quite well. And something I would also like to point out, you were asked about where kids are getting these products. I ask you a question, why did you not show this sharp survey data from 25, which clearly states children are getting these products through alternative, whether they're getting 'em some other way or bu them from somebody who's of legal age, et cetera. So, okay.

How about now? Yes. Today I want to talk briefly about one of the most significant public health and legal turning points in modern American history, the tobacco master settlement of 1998, and why it's lessons still matter as we shape public policy, including efforts like HB 3 37 in 1990s, the states across the country were facing skyrocketing costs. And I was in office when this was going on. The Attorney General from Mississippi brought together Tax ags, and the idea was to start a bipartisan coalition of attorneys, general leaders, and other policy makers. The result was the Tobacco Master Settlement Agreement, one of the largest civil agreements in the history of the country, hundreds of billions of dollars, Uintah states. Why does this matter now? Because the same principles apply to the work we're doing with HB 3 37. The bill reflects a commitment to stronger oversight, clear standards, better protections for vulnerable use in families. I know I'm out of time, but I just wanna say the lesson is simple. Meaningful reform doesn't happen by accident. It happens when leaders are willing to look at the hard truths, build broad coalitions, and put people, especially children and families in the center of policy decision. Please vote yes on HB 33 37. I'm with my grandchildren right now at a soccer tournament. They don't need Zen. And it says right on the Zen package, right on it. It contains nicotine, and this can be addictive. Thank you for your time.

Thank you. I'm Jeff Steyer. I'm a senior fellow at the Taxpayers Protection Alliance, and I'm testifying from here in Park City, Utah. One of the reasons I moved from the East coast to Utah was 'cause Utah is a state known for sensible acts policy. Uh, this bill, uh, needs a lot of work, uh, because I'm happy to hear Representative Clancy is open to sitting down with people like me who advance public health, who are anti-smoking, who want sound policy, and who share Representative Clancy's view that there is such a thing as tobacco harm reduction, that these products are far less harmful. So mistreating modified risk tobacco products by raising prices is not sensible tax policy. So I recognize my time is very limited here. Uh, but I'm happy to come from Park City, sit down with you. Uh, representative Provost is asking very good questions. I'd love to sit down with her and other members of the committee to hash out how we can have sensible tax policy related to tobacco, which yes, does have different situations because of its addictiveness. And take that into account. And, uh, I'd love to come and sit down and talk with all of you, because I think we all wanna prevent youth usage and reduce harm. And I think if you're going to try to change behavior through tax policy, we have some work to do in this bill. Thank you.

Thank you, Mr. Chair. I'd like to move first substitute house bill 3 37.

I will pitch it to the bill sponsor.

Thank you. Thank you, Mr. Chair. I would like to make a motion to pass out favorably for substitute house bill 3 37. I'll speak to it briefly, if I may. Yes, Thank you. I, uh, just wanted to follow up on some earlier questions, quick research, um, to a question that, um, I feel, feel was unanswered. And the answer is that yes, Zen utilizes outdoor public billboards and signs as part of its marketing strategy to promote its nicotine pouches. While Zen rely heavily relies on digital and social media, particularly with paid influencers, it also uses traditional outdoor advertising methods. These billboards are part of a broader marketing strategy aimed at both adult users, and according to critics, younger audiences appearing along highways and in public spaces. So, just wanted to put an exclamation point on that. I want to thank the bill sponsor for being incredibly diligent. He is well known among in the legislature, in the state, for being one of the most collaborative, hardworking policy makers in the body. Um, I know that he is sincere in continuing this discussion and, um, finding a way to thread the needle, as the last public speaker said, balancing public health harm reduction, but recognizing that youth use of these products is epidemic and it's getting worse, and we cannot do nothing. Um, I'm eager to hear, and to the greatest degree that it's helpful, be a part of those discussions with your representative. Um, but I think that it is critically important that we take a serious look at this policy and get it moving so that we can, so that people, the world takes seriously, that the state of Utah is, is sincere about finding the right policy for this. I am very enthusiastic, um, about this proposed legislation. I think that this is the best first step we've had to bend the needle on this in a long, long time. And, um, thank you for your diligence and hard work. And I would, um, ask for the committee support of the motion.

I, I appreciate the motion. And I'll just, uh, som on, on the, the discussion that we had. Um, I've been in the legislature since my fourth year. I've, uh, I've been the friend of the taxpayer the past three years. Something tells me I might, I might not get it this year, but, uh, I, I certainly agree that good tax policy, we broaden the base and lower the rate. But for a product that on the box that says it's gonna kill you, I would say we actually need to make that the inverse to increase the rate and lower the base. And so that's where I say too, as well. I've also been approached, as you might imagine, if you have a bill with a positive fiscal note, you will hear from people you've never met before because they're gonna want to fund their pet project. I have had proposals everything from the DSPD wait list to disability services to Medicaid, to you name it every good cause in the world. But the reason that it's in front of you today, and, and, and the reason, the reason I point that out is to say, I want this money to disappear. I want this money to decrease. So I, I agree. I don't want to tack this to some necessary services that we are gonna fund our state or plug a budget hole, but that's the reason that there's no special interest earmarks on this bill, because I say, I hope that this, this money runs out. And so that's what's reflected in front of you today. Um, and finally, I would just, I would just say with, with the numbers that you heard today, I think the one that resonates with me the most, 15% of can cancer deaths in Utah being attributed to smoking, that's a different product. And it merits a different tax structure. If there were number two pencils for sale at Walmart or wherever you buy your number two pencils and it's set on the box, if you keep writing with these pencils, it'll eventually kill you. I think the state legislature would be interested in making sure that we have a tax structure that doesn't tax it the same way as a number two pencil. That doesn't kill you. Right? And so that's, I think, the most simple way I could put it to say, and, and I, and I'll just say, if, if we hold this bill, I would say, I don't think that the, everyone's gonna come to the table and get to where we need to be. But if we pass this bill, you all know my character well enough to know that I will work my tail off to get this into a, a, a good place that makes sense for everyone, and hit and recognizes that continuum of harm. Um, and that's what I wanna do. So I appreciate the time. I know it's been a long one, but, but thank you, Mr. Chair and thank you committee.

Thank you, Mr. Chair. I'd like to make a substitute motion that we hold the bill.

like to speak to that? I would, I appreciate this sponsor and what you're trying to do, and I appreciate that you're willing to work on this. Um, one thing that's been said over and over is that we need to do the work in committee. And, and I think that the tax that you're proposing is simply too high. I don't think it's in line with other states, um, or our neighboring states. And I'd like to see it back before this committee so that we can discuss the policy. Um, there were a number of people that asked to be at the table, and it sounds like that hasn't happened yet. So while I appreciate the need to keep this pro, these products away from kids, I'm a hundred percent on board with that. I think that we need to be very intent in how we proceed, and very thoughtful in how we proceed, because there is the reality that nicotine patches do help adults who are trying not to smoke. And I think it's also fair to say, yes, cigarettes are very harmful, nicotine is addicting, but nicotine, I don't know that there are direct correlations between nicotine and cancer that's very different. So, so I just wanna be really open and transparent there. I I appreciate what you're trying to do. I appreciate the testimony for, from our youth, and I appreciate the harms that this has done. I get it. Um, my, at my son's school, the vaping in his high school was out of control. Vaping is so incredibly dangerous. I get that. But I just don't think this bill is ready. And I personally would like to see it come back to the committee so we know that it's in a place where it should move forward.

Uh, thank you, Mr. Chair. Um, as I stated in my comments, my concern about simply holding it is that it signals to people in opposition that they don't need to take seriously this bill. And, um, I am opposed to the motion, but obviously it is to the will of the committee

Um, thank you. And, and I, I hear, I, I can tell everyone in this committee cares deeply about the future of our state and of our kids. I mean, I, I, I work with all of you, and I see that. And so I would resist emotion for that same reason in terms that if we move it forward, I will continue to work. But right now, I would say, um, even some of the people online, I've never heard from them before. Um, and I think that that's essentially that they'd like to see this, this die and, and timeout. And by moving this forward, I think we'll invite more collaboration, more eyes, more people to the table. And I will continue to do that.

Yeah. So I have a question to Representative Koford. So would, would you say that most of the concern is around the rate? Um, because what I'm hearing is, and, and I could be wrong, everybody's on board with obviously the end objective, right? Is that we don't allow kids to get hooked onto products that shouldn't be having access to these products. So if it's a rate issue, is that something we all feel like we can have a conversation here and say, Hey, let's come to a rate that we feel comfortable with to pass this out as a committee because, and, and maybe the sponsor can speak to it. I don't know if there's been collaboration with other interest parties to say, would a different rate so that we are in line with other states. Is that kind of part of your thought?

I, I was actually trying to be sensitive since it's a holiday weekend and a Friday. And yes, I would love to have that discussion about the rate and also the additional $2 per pack tax on, on cigarettes. I think that's really high. I just think that there's more that needs to be discussed and put into the bill. I appreciate that the sponsor is willing to do that. Um, again, I go back to, we have always said, let's do the working committee and let's not pass bills that we think are are not ready out. And I don't think this is ready. I think it has work to do.

Yeah, because because I do agree with you. I, I personally, I feel like the tax is too high. I think that's kind of the issue. I would, I I do wanna see this bill move forward. I do wanna see there be some work, but that's where I'm wondering is can we find that number so that we can move forward?

Yeah, thank you, Mr. Chair. I, I oppose the motion. I think that we need to keep moving forward. That's what brings people to the table and makes, uh, you know, that they're serious about it. I think the sponsors agree to, uh, look at those rates, and I'm sure that will happen as we negotiate more. But I'd like to see it keep moving forward.

Yeah, I, I also have some concerns about the rate. And when I heard you come in here and first give your presentation, it sounded like the numbers that you'd put forward were a placeholder with some flexibility if somebody came and worked with you on a, on a proposal. And then I heard other people act like they were willing to play ball there too. So I am concerned that the rate where it is now is so high above neighboring states that it might not, it, it's outside the Goldilocks zone where it would actually influence the, the behavior the way that you are hoping to do, which I support. And I think it's the best part of this bill, is that we can, we can find a spot in that Fairweather zone where we influence the type of behavior that we're trying to influence while also funding the types of programs that we want to fund with this. But I don't think we're there. But I will tell you, if you come back and you tell me that other parties are, and stakeholders are not willing to negotiate with you in good faith, that will certainly influence mine. And I think our colleagues, um, in the way that we vote in the future on this. So thank you.

Thank you. Like, who doesn't wanna talk about this? Hey, go ahead. Might as well join in. I, I'll parrot a a couple of things. The rate is a concern. Uh, we're talking mostly about Zen today, it feels like, but we have a $2 per pack increase on the tobacco. That's huge. And we know that that is gonna be a tax primarily on people with lower incomes. Ran some things in chat. GPT, kind of show me where those are going. It's a significant tax, this is a significant tax increase, and it's a general fund tax increase. Uh, I might even be warm to the idea of, of looking at the rates, of course. But okay, let's put this money to, you know, put your money where your mouth is. Let's make some of this go to, you know, helping drop the number of people that do it rather than just a, a basic general fund number. So I'm, I'm supportive of the hold, but whether it holds or not, I'm definitely supportive of addressing some of these things. And, and I'd love to get behind the bill, sir. Yeah. Okay.

Light, go ahead. Thank You. I appreciate that. Um, I, I do not wanna hold this bill. I feel like the representative has done a lot of work on this one. I wanna see this go forward. I'd like to put it to the body as it is, and then we'll know where we are.

Sorry. All, all I would say is if you think about the politics of a, a legislation like this, I'm gonna speak very candidly. If industry comes to me and they say, we're okay with this rate, then they can't go to you and say, don't vote for the bill.

Thank you so much, Mr. Chair.

Thank you. Um, thank you, Mr. Chair. If it's appropriate, I'd like to pass out, uh, two handouts, um, and, uh, committee and Mr. Chair, house Bill 3 37 is taking a, a tough look at trying to make sure that our nicotine and tobacco taxes make sense. And you'll see from Simon, uh, my good intern here, um, with our substitute three, which is what we'll be speaking to, uh, in front of you today. This afternoon. We believe that we've got a good path forward. And so I just want to hit on some of the high level overview. The three most important things that this bill does is make sure that less kids are smoking, more adults quit, and that we have revenue to fund the health and prevention programs that are already outlined in existing in, um, in the tobacco tax and nicotine tax legislation. Um, the cost to our state of addiction, particularly with tobacco, is not, uh, is not small. 15% of all cancer deaths in Utah are attributed to smoking. We spend about 135 million according to the Department of Health and Human Services and Medicaid costs each year from the cost of smoking. Medicaid is our number one budget item in the state. And so by adjusting the tax on tobacco, there's an opportunity that we can actually bring a cost savings to the state. Um, good tax policy, as I see members of the, uh, revenue, Senate Revenue and Taxation Committee are in here. Good tax policy for most things is you want to lower the, lower the rate and broaden the base. But for a product like tobacco or nicotine, you would actually wanna do the opposite. You'd want to invert that to make sure that we increase the rate and lower the base, particularly for tobacco as it is, uh, cancerous. And as, as mentioned before, and I, I'll take that real quick. And as mentioned before,

Yes, Mr. Chair. Thank you. Thank you. Thank you so much. And I'll, and I'll just go over it briefly with the handout that's in front of you. So the discussions that we've had, particularly with members of, of the, of the Senate is wanting to make sure that our structure makes sense in terms of harm. And so you can look at, uh, substitute three, which is the colorful document in front of you, that this is what we've tried to identify. So under substitute three, this would be a a dollar 30 increase per pack of cigarettes, where it would be $3 per pack with the, those being the most harmful, along with cigars, which are 86% of the manufacturer's price cigars are not, uh, amended in by this legislation. Um, speaking with members of the Senate, we wanted to make sure that we identified the correct harms of vapes and e-cigarettes, and that is reflected with a 71% of the manufacturer's price. And finally, the one that's caused the most discussion is nicotine pouches, which I plan to share with you more information about today. At 56% of the manufacturer's price, the 56% number was actually adopted for vapes in SB 37 in 2020. And, um, and I'll get to that in just a minute. And then finally, I want to clear the record on, uh, cessation products, tobacco, or tobacco and nicotine cessation products are a specific identified product from the FDA. This is a medical product that you could buy at Costco or CVS, it's not marketed to or bull drug or Absolutely, absolutely. Sorry, I was looking at my Walgreens picture here. And this, uh, there's no excise tax on cessation products because they're designated by the FDA. So you'll hear today that particularly companies that sell nicotine pouches want to become a cessation product at some point. But I would just make sure that I emphasize that it is not a cessation product, and if they get that designation from the FDA, then this bill will not apply. And so finally, I just wanna take you through just a couple for your reference, if it's okay, Mr. Chair, I'd just like to plug this plugs in. Zoe, is, am I possible to share my screen here? So I show my entire email to the State of Utah. Um, so you're gonna hear today from, uh, the companies who sell nicotine pouches, that this is a harm reduction product, that this is really just for smokers who are trying to quit. But I would emphasize that if you look at their own marketing material that's not mentioned anywhere. So this is, these are some advertisements for a zen bin. This is a black diamond, uh, case pouch. This, uh, product here is sold by Tucker Carlson. This brand is called alp. And once again, if you look at the marketing materials on the website, there's nothing that mentions tobacco cessation. It's direct to consumer marketing, uh, talking about everything from the UFC to flavors and different pieces like that. The other piece that is important to mention is that when we're talking about why this product needs to fit within our other nicotine products, is that they're marketing to consumers directly about productivity, about, um, flavor and about, uh, the, the vibes, if you will. And so this is just an example of a marketing from a tobacco pouch company. So it says, my boss, how do you stay so focused during work hours? And then it says me every hour. And then here's a gal showing you how to use nicotine pouches. And so if this was a harm reduction product that was made to help people quit smoking, you would think that it would show up somewhere in the marketing of, of these different pieces here. Um, and then finally, before I turn it over to my co-presenters, I just wanna emphasize again, it was mentioned, Senator Weiler brought this up to me, why such a dramatic, uh, IM impact here. And if I could, Zoe, is it okay if I could still share my screen? Is that okay? Um, SB 37 in 2020 is another example of this where vapes had essentially no tax or de minimis tax. And it wasn't until 2020 when we started to see the emergence of the addiction to e-cigarettes and vapes is that when it went from essentially zero to the 56% rate. And so I think that just to show you, I think, where we are as a, as a country with this new product that's on the market that's taking our kids by, by storm. Finally, I just wanna identify, um, and you should have a, a copy of this in front of you as well. It says, these are the only nicotine pouch products that may be lawfully sold in the United States. And you'll see that it has specific, uh, uh, companies and it has specific flavors. And one of the, one of the arguments is that if we regulate this too much, or if we do, uh, if we regulate these pieces, then there we will create a black market. But just today, if you can look at this flavor in front of me, this is a cool watermelon flavor of nicotine pouch. Uh, the, the good folks from, um, who are the, who are here today, they have stated that this is, this is any, this is not a legitimate product, that this is being sold at a tobacco store right here in Salt Lake City, that it's explicitly unlawful to be sold in the United States. And these are the different flavors that we're seeing. And so that's where I say it's really important that the state of Utah get our hand around this before, uh, before it's overtaken. And finally, if Simon's gonna bring this around to you, as our co-presenters are speaking, the current tax rate is taxed like snuff. And that's why it doesn't make sense. And that's why you're seeing the jump is that these pouches are taxed by weight similar to snuff or chew, but there's no weight to it. It's essentially weightless. And so that's why we're, we're in front of this today. So with with me today, I've, uh, three brief co-presenters. This is Mr. Art Brown, who will begin. And, uh, I've got the slides here to, to

Oh, thank you very much. I'm Art Brown. I represent myself, but in reference, I do serve on the, uh, state's, uh, e-cigarette, uh, youth, uh, prevention committee. Uh, I just, uh, wanna share a couple things. Um, um, go ahead. A couple of things. Um, first of all, about the kids, there's about 12,000 of our kids today that, uh, vape. And, um, I think this chart is probably the most important one here to reference at the height of around, uh, uh, 2019 is the height of when the vaping, um, really had 9.7, which is about 28,000 students at that point, grade six through 12. At that point, we did not tax this by the state at all. At that point, we started to tax the vapes. And I think that's a very important thing that, uh, kids are, are sensitive to tax. It isn't the only thing that made it go down, but what it did do was we put revenue from the tax. And I think this is important into a special restricted account to pay for our, uh, prevention, our enforcement, our education, and, uh, to really go after lowering the demand, not just the supply, but the demand. And that's a big part of, you see where those lines, uh, drift down and the, and, and they have drifted down, uh, in all areas. Now, the reason that's important, when we decided to ban the, um, uh, uh, vapes, um, that was cut in half, the actual appropriation from the reduction, uh, cut that, uh, that appropriation in half. So today we have really money flowing to half our programs. And, uh, those, a lot of those go out to the local people. They go out to the schools, they go out to enforcement. So this has become a very important bill for us because this will allow us to, uh, restore our ability to do our prevention work, especially by lowering the demand. So I'd encourage you to really, uh, look at closely what we do with the money, because without this, our, our efforts will really be cut in half and our ability to reach, uh, the marginal kids will really be diminished. So this is a very important part of this bill is just not taxing, but the proceeds we need to, uh, again, make our account that's in half back again to be robust so we can continue the downward decline. Decline. Thank you very much. Thank

You. And then we will have, uh, Paul, if it's okay, we could maybe just speak on public comment for sake of brevity. Is that appropriate? Sure. Excellent. Thank you. Kelly.

Ms. Kelly, Kelly Hoskins. Okay.

Members of the committee. Hi, my name is Kelly Hoskins and I'm here tonight as a college student on campus. Nicotine pouches like Zi are everywhere. They're marketed as clean, modern, discreet, they're virtually harmless. But what I have seen firsthand tells a very different story. One of my good friends, Jack Drake, started using nicotine in Tabasco products in college. It began casually first using a ZI here and there, and then using it more regularly, but Vernal quickly, it escalated. Now, almost always, there was a zen in his mouth. If not, there was a vape very nearby. What became, what sort something social became very constant. And it's taken a very real toll. He has tried to cut back, but the need to use this as a crutch is real, and the dependency is real. That's not freedom. That's chemical addiction. This bill addresses this issue responsibly and structurally. Await based system creates distortions in the marketplace. It opens the door to carve outs, loopholes, and uneven treatment. College students are highly price sensitive, and I say this as a highly price sensitive college student. When price increase usage, usage, usage declines, that is one of the most evidence-based prevention tools available. If we want fewer young adults developing long-term nicotine dependency pricing policy matters. My generation has already seen what nicotine addiction did to our parents and our grandparents. And I respectfully urge you to support this bill and in turn, support my generation and generations to come. Thank you. Thank you, Mr. Chair.

And, and we'll go ahead and conclude our presentation because I want to be responsive. We have a lot of people that, that want to support it. I would just close by saying this, uh, substitute three is supported by Congresswoman Celeste Malloy, drug Free, Utah Eagle Forum, American Heart Association, American Lung Association, American Cancer Society, and, and many more. And with that, Mr. Chair, I'm happy to answer any questions as it would be helpful. Thank

Yeah, thank you. I'm just, um, curious, um, Representative Clancy, if the on on your chart that shows the Walgreens nicotine mini lozenges, what's the difference in the ingredients between those and the zen products?

I would say the biggest difference is the flavors and then the, um, the, the amount.

So are we just taxing the flavors in,

Uh, no, this is, uh, the, it's the, it's also the amount of nicotine. So a three, so there comes in different, uh, amounts. So a six milligram is about, um, a three quarters of a cigarette. Three milligrams is about a little less than a half of a cigarette. And so that's the, it's the nexus between the, the profit incentive, the flavors, the direct consumer marketing to make sure that we're being really judicious about how we have an excise tax on an addictive product. So it's a fair to say that it's the same ingredients with, uh, unless there's a flavor that's been added in, I would say it's probably similar ingredients. The f the FDA specifically has ha say they do not approve. They're not FDA approved. There's only a limited amount of nicotine pouches that are authorized to be sold by the FDA, whereas the lozenges and the, um, patches have specific FDA authorization. And if the, if any of these nicotine pouch companies became authorized by the FDA to be a cessation product, then this bill wouldn't impact them at all. Right? Now, um, that's where we're seeing the significant uptick in youth usage. And then it's also just similar to vapes, it's bringing in a non-smoker, uh, customer base. So it's not Juab, for example, a nicotine mini lozenge. You wouldn't, uh, that would be specifically marketed and built for smokers who are trying to quit this, uh, specifically, uh, is not that it's bringing in other, other individuals as well and addicting them to nicotine. So

I mean, Mr. Chair, my, my issue is I think some of the Zen packets are three milligrams, some are six, some are eight. But if I had a three milligram packet of Zen and I just popped in two lozenges, those are two milligrams, I, I could actually get a, a bigger, uh, impact off of the two lozenges than I would off of a three milligram X. So I'm, I'm just curious. I I, I, I understand the FDA's involved and, and we can't control that. But I also understand that a lot of these nicotine lozenges, uh, are sold over the counter and a lot of retailers don't even, uh, ask for IDs on those. So I'm just, I'm just a little bit perplexed. I I, I was saying last week I didn't wanna vote for a 605% increase on Zen. And if I've done my math correctly with this third sub, I think it's now an 831% tax increase on the Zen products. That just doesn't seem equitable to me. But thank you, Mr. Chair.

Yeah, thank you. And to clarify, um, on the FDA approved products, they're we're not required to for aid. There's not an age restriction on that, so we're not required, but Well,

That's my point is you can walk into most stores and, and buy That's correct. The same product without flavoring, uh, and pay no excise tax. That, I'm just struggling with that.

Yeah. I will say from a retailer's perspective, that we, you know, we've sold those. Number one, it's not a big market and we, there has not been a big run on it

By Yeah. But if we, if we increase the taxes by 131%,

I just wanna make sure I got the structure right and I apologize for repeating this. So just to outta clarity, so the third sub, we pulled out all the, the $2 million DPS appropriation, that's all gone. Yes, sir. So we're not worried about that anymore. Yes, sir. Um, and the tax on cigarettes is going from 17.25 to 15, or did it 15?

Yes, it's, that's per stick. The consumer would see it and the manufacturer would see it per pack. That's just, that's why it's usually a little bit easier, but yes, you're exactly correct. Okay.

Per stick being cigarette, the, what's that? Mm-hmm. Per cigarette. It's not like A smoker, terminally, what is that stick? Alright. And then vape, the vape tag is going, the vape tax's going up from second to third, 56 to 71?

Yes. Yes, Senator. Okay.

Alright. And then the, the, what are we calling the other one?

Nicotine pouches. Pouches. Pouches.

And that's staying the same as it was from second to

Third. Right? That's going well in the original bill that, uh, Senator Weiler referenced, we put it with OTP, other tobacco products added 86%. We've taken that down. And the, what's in front of you today to what vape originally existed Under, which is 56%.

Okay. How does that translate to pouch or package or whatever?

So we, we've got a couple numbers. Um, I can actually email a chart to show you the, the change over over time. Um, I'll just pull this up for you. So for a a 56% it would be about, uh, currently the price for, uh, can, uh, canavin at, uh, Maverick and, uh, Zi, there's multiple pouches. This is a, just a popular one. Uh, it's $5 and 45 cents. Under the 56%. We estimate that it would be about $6 and 57 cents. So, uh, be

It's gonna go up about a dollar a pack. Yes. How many are in,

Um, in this one there is 15. In others there's 20. And then at the tobacco retail stores, they have, uh, all sorts of, of different products.

Okay. All right. Thanks.

Yeah, so I don't know if that particular name brand produces, uh, a alternative tobacco product that is not, that doesn't have nicotine in it, but let's say they did. Would that not be, that would not be, would that be isolated from this stack? So you have the exact same thing that's, let's say a natural true, true product, but it's not tobacco doesn't have nicotine tax. No tax, Like a caffeine. I, there's actually, because they have, I've just seen these alternative chewing tobacco to get you off chewing tobacco. It's just like chew, but it's not tobacco. I don't know what they make it of

It. This is only for nicotine, alternative nicotine products. It's how it says it in code. Okay. So it would have to have that addictive, uh, chemical in, in order to, um, be fall under this, uh, category. Okay,

Thank you. Yes,

Thank you very much. Um, I should know the answer to this. I do not remind me why we're at, we're at a percentage of manufacturer's price as opposed to retail calculation.

We actually have the sponsor of the legislation from 2020. Uh, if it's okay, Mr. Chair, representative Paul Ray,

You just lost my vote.

Alright, uh, Paul Rave, uh, representing myself, not representing any company or, or any organization, uh, I was the sponsor of the 2010 tobacco tax increase. And the reason that that's just how it's done nationally. It's just kind of a standard that's used that they look at the wholesale manufacturer price versus, versus the retail price it gives you, um, when you're budgeting, for instance. It just gives you a more solid base to budget off of, um, versus different states, different retails. So that's just how it's always been done. I even if you look, they used to have heavy cigarettes and light cigarettes and I think we still use the terminology even though the heavy cigarettes aren't manufactured as frequently as the light cigarettes are now. So it's just what's traditionally always been done.

So It'd be a lot more if you went off the retail price than if you went off the manufacturing price. Yeah. So that's that. I mean, that's part of it to me. Um, you know, one of the things that is nice for the consumer is when there's a tax, they can see, they can look at the price of something, they can multiply at times the rate. It's extremely transparent, fair, you know, that kind of component. Uh, when it's not those things and it's based off some other number, uh, you know, anyway, that's my, if we were gonna fix something in this bill that made me like it more, is that we would get away from this manufacturer's price thing and make it based on, you know, whatever the re like every other sales tax, you know, component is. And I've always argued that cigarettes should be the same way that it should be a percentage of whatever the, you know, whatever the cigarette, uh, you know, retail price is. So I just, you know, it thoughts about making that consideration?

Um, the, the only for, in terms of the category itself, the, when vapes really hit the scene, it was a lot of the same thing. They were basically saying, this is better than cigarettes because it's just nicotine and, and water vapor, essentially. But then what we saw was not only was it har harming individuals who were shifting over is bringing in a large portion of non-smokers that were now vaping. And so for the 56% piece, that's why we chose to, to put it there in this third substitute to, for essentially the same factors of flavors, mark direct, uh, to consumer marketing. And then, um, the addictive quality that's, uh, intersecting there.

Okay. Again, I, anyway, uh, I guess I haven't heard a great, this is why we do it other than that's the way we've always done it. If there's a, anyway, uh, I would love to see us get away from things we've already done or always done things and maybe, you know, set it based on our retail price. So it's at least a transparent tax component and, and people can predictably do it. 'cause the manufacturer's price. I don't know. That doesn't, that doesn't tell me anything. That's what I look at the cigarettes. That tells me something. I know I can look at the cessation projects and I, I can, I understand that. And then the other ones, I have no idea what those numbers equal and don't, even if I went online and tried to look it up, I still can't, I still wouldn't know. 'cause I don't know what the manufacturer's price is. Right. Should Be less than the retail. Anyway. What am I missing? You know what I mean? Like, I'm just trying to figure out, so we're increasing, you know, the percent on, on vapes, we're increasing the pouches consideration. I just don't know. The tax nerd in me can't help the fact that we ought to have this be about retail and not about, about a manufacturer's component.

Senator, the, the discussion in the past has come up and I'm really what it comes down to. I think that tobacco companies prefer the wholesale versus the retail. Because quite honestly, if you tax this tax rate off of the retail, it's gonna be really hard to addict kids because the price point's gonna be way up here now, and they're not gonna be able to get more smokers to replace the ones that are dying from smoking. I mean, that's really what it comes down to.

You're selling it to me though now. I, it's like

I would've loved to done it on a retail side. Yeah. That's where you really get the fight.

Okay. Well, they don't like anything about this bill, I don't think. No. And as a result, I'm not sure why we try and make them happy on any part of it. I mean, if they've, if they're gonna hate a bill, they might as well hate it all the way instead of like 99.

I think I've accomplished that, that latter part. Yeah.

Yeah. Well, I'm, I'm just trying to give you an idea to make it worse there. Thanks. Thank you.

Motion that we adopt the substitute.

I'll waive. Thank you. Senator

Thank you. Mr. Chairman Committee. Uh, again, Paul Ray, uh, private citizen, just here for myself, also as the former legislator. Um, that, that did the last one. And, you know, just real quickly, a lot, if you don't know my, my background as I was born with, uh, uh, congenital heart defect, I had through open heart surgeries before I was 16, uh, because my mom smoked two packs a day while she was pregnant for me at the time. They told her it was healthy, it was okay to do this is back in the sixties. Um, and, and I paid the price for that. And so, so I've obviously extremely opposed to tobacco and, and especially what they're trying to do, which is a dead kids. And that's where we are right now. We're talking about products. So tobacco, they pretty much killed off the generational smokers. They had to find new, they Uintah vaping. So we, we tax vaping. We did a good job. We started seeing the numbers come down. Now they have to have a different product because that's starting to decline also. So they come out with like the zen, those types of things. That's to get a new generation because the people that use these products with the zen, what we're seeing is, is they're becoming smokers down the road. So it's not an alternative. It's marketed towards kids. And that's the difference between the, the nicotine, um, you know, replacement therapy versus the actual Zen. Zen is marketed towards kids. It's given flavors. If you go to holiday gas where I go, you, you actually get the commercial while you're pumping your gas and you see the billboards and all the advertising. So, uh, you know, please, uh, support this. The 600% tax increase is not really, because there's not a tax already. So you're starting off the same argument they tried to give us when we did vapes. Thank you. Thank

Good afternoon, chair Wickers and members of the committee. My name is Dr. Pika Kumar, and I'm a public health scientist and a director of scientific engagement for PMI US Corporate Services, Inc. PMI does not sell combusted cigarettes in the United States. Rather, our mission in the US is to make cigarettes a thing of the past by offering a portfolio of smoke free FDA authorized nicotine alternatives. These products have met the FDA's very high authorization standard of being appropriate for the protection of public health. However, 146,000 Utahans still smoke and HB 3 37 would both significantly raise the tax on alternative nicotine products such as nicotine PO pouches and eliminate tax incentives for modified risk. Tobacco products making smoke-free alternatives significantly less affordable. Tobacco taxes should reflect the relative risks of the products and tax policy should encourage smokers to switch to lower risk products. Deterring smokers from switching to modified risk tobacco products or other FDA authorized smoke-free alternatives is not sound tax or public health policy for Utah. I urge you not to advance HB 3, 3 7. Thank you. And I'm happy to answer any questions.

So the, the primary objection is, if I were to summarize your comments, Dr. Kumar, is that, that because the bottom line pouches and vapes are still better than the alternatives increasing the tax on these may decrease the number of people that use those products as a cessation device? Is that what I understand? Well,

These products are not meant for cessation. Uh, but yes, they, they can be used for transitioning smokers to these reduced risk products and, and FDA places all tobacco nicotine products on a continuum of risk, on a continuum of relative risk. Combusted cigarettes being the most harmful and the least harmful being no use of tobacco nicotine products at all. But right next to that, uh, next to that is nicotine replacement therapies, which are cessation products, but right next to those are non-combustible authorized reduced risk products. And if you see the drop in risk from combusted cigarettes to these FD authorized nicotine pouches, which is ours, um, though that drop is so significant that it no longer remains a risk continuum, it becomes a risk cliff.

Hmm. What, what do you mean by that? Gimme a

So, so the risk that really comes from tobacco is combustion. That is the driver of death and disease attributable to, uh, to smoking. Right. Uh, nicotine, while it is addictive, it's not risk free. It is addictive. It is not a carcinogen. So it's not driving the burden of death and disease that combusted cigarettes do.

Caffeine versus nicotine. Which one is worse?

I will not comment on that.

Come on. You've got a degree. You can tell me things I don't know. Okay.

You made combustion. The point does, doesn't chewing tobacco cause cancer. You said combustion. I'm so sorry, but can I, I, You said I said chewing, you said combustion was the point of which the, the, the, the, to concentrate on. But chewing tobacco is still cancerous. Right? So it's not com combustion's not the point there, the Ingredients in a, so yes. So the in, so it's a container. I'm trying to figure out why you use the term combustion. When chewing tobacco clearly

Is the most, most harmful, uh, form of tobacco use. Uh, combusted cigarettes are the most harmful form if you look at FDA's continuum of risk. Um, right next to combusted cigarettes would be the traditional oral products. Okay. Which are also harmful. And then down that continuum would be no, no risk comes from no use. And next to that would be the NRTs. And then next to that would be authorized reduced risk products such as nicotine pouches.

But clearly there's, there is, you, you, you, you made the, the argument for to going from tobacco to non-tobacco, um,

Uh, combustible to non-combustible. Oh,

Okay. From, I'm gonna use my terminology. So you going from tobacco to non-tobacco products that are just nicotine products, you made the argument that, um, that, that that's a possible way for them to get off the product. But isn't it also a possible argument that that is a way for teens to get onto the product?

That's a, that's a great question and I'm really happy to answer that. So the, the a regulatory pathway that FDA uses for a product to get a license to enter the market, that's called the pre-market Tobacco Product authorization. And it's a population level public health standard, where they balance, um, the benefit to a smoker by transitioning to this reduced risk product should outweigh the risk to non-users for uptaking these products up. And if the risk was higher than the benefit, FDA would not authorize these products. And so the FDA has determined that the benefit to the smokers is far higher by transitioning to this product than the risk to non-users, including youth. Also, I, I would love to add another data point here is that youth use in Utah is extremely low in all substances, including tobacco use, and the lowest is in nicotine pouches.

Okay. Thank you. Thank you. Uh, just one quick question. What what's your medical specialty? Did I, and maybe you mentioned that I didn't catch it.

Yes, I'm, so I'm a trained psychologist and I have a PhD in public health from Johns Hopkins University. Thank you. And I did my postdoc at NYU in tobacco research.

Hi, I'm Mike Mauer, um, senior Advisor to Utah Governor Spencer Cox. We're here, uh, with some, some brief comments in support of this bill. We've focused this session on this item right here, cell phones and youth, and preventing kids from having them all day every day in school. Why? Because it's highly addictive. And as I look here on the back of the Zenin pouch, it says, despite what people are saying about the FDA warning, this product contains nicotine. Nicotine is an addictive chemical. We were just told, uh, by, uh, the nice person who was sitting next to me that these products are not meant for cessation. And I think Senator Mus burden brings up a good, good point when they can. Are, you know, are they a gateway or an exit? We don't know. These are not benign products for nicotine naive youth or young adults. There are risks and consequences for their health. Since young people's brains are still developing, there are greater consequences for nicotine, um, use. There are real concerns. We're focused on harm reduction. We're focused on reducing that harm, uh, at the price point. And, um, again, we just heard that we have an extremely low rate of nicotine and tobacco use in Utah. That's what we wanna have continue. And we do that by passing this law, not by defeating this law. You saw the advertisements, you saw their focus, you saw their enticements to young people. It's a real concern. So we would urge your strong support of this bill. Thank you.

Mr. Chair. Uh, Senator Vickers. I'm Gary Thorpe. I'm here representing the Utah Petroleum Marketers and Retailers Association. And, uh, our members are comprised of traditional tobacco retailers, not specialty tobacco retailers. We're not smoke shops, we're not vape shops. We're just, um, basic retailers. Um, to the extent that a tax increase is appropriate, we would suggest that you carefully consider that we not increase the tax so much that it creates incentive and encourages people to cross border and make purchases across the borders. Particularly our two northern neighbors, Wyoming and Idaho have, uh, tax rates that are, um, distinctly lower than the state of Utah. And remember that every purchase that is made across the border denies the, uh, our retailers the opportunity to sell a product and denies the state of Utah the tax on that product. So whatever you decide to do, it should be taken into account that, uh, we could be creating cross border sales and black market sales. Thank you.

Thank you, um, chair and members of the committee. My name is Hannah Randall, and I'm the State Government Relations Director for the American Heart Association here in Utah. Um, as you are likely aware, combustible cigarettes have long been linked to negative health outcomes and increased risk of cardiovascular disease and stroke. Utah has made great progress in reducing cigarette smoking, but we still have a long way to go around 1300 Utah still die each year due to cigarette smoking alone, and that is 1300 people too many. Increasing the excise tax on cigarettes is a proven way to drive down smoking prevalence and carries immense public health benefits because of that. According to the Utah to Tobacco Prevention and Control Program, almost 70% of cigarette smokers would like to quit in the next year. And attacks increase, like the one proposed in this bill provides an incentive for individuals who would already like to quit smoking to do so. This increase will also deter youth from starting, potentially preventing a lifetime addict of addiction. Nicotine pouches also pose a serious risk to health, increasing risk for heart disease and stroke. Nicotine pouches deliver similar amounts of nicotine as combustible cigarettes. Nicotine, even in pouch form, raises the risk of cardiovascular disease, including heart attack and stroke, and can elevate blood pressure and heart rate, forcing the heart to work harder, eventually leading to heart attack, stroke, and heart failure. I urge you members of the committee to support this bill, which will greatly improve the health of utahns and protect youth from a lifetime of addiction. Thank you.

Thank you. Thank you, Mr. Chair and committee Billy Hesterman with the Utah Taxpayers Association. And we do appreciate the legislation brought forward and appreciate the concern for public health. And we do believe that things within public health can be addressed, but should be addressed through general fund and not through targeting one area of our population and putting an excessive burden on them to have to cover those costs. And so because of that, I, I feel like I should put my hand on my heart and say, this violates our, our principle of a broad base and a low rate that it, uh, goes the wrong way of how we want to do taxes in our state. That we wanna make sure the taxes remain fair, spread across, across an equal and broad base, and making sure that it's something that's done in a way that, uh, enables everyone to be able to benefit from the government services they receive. And also being able to make sure that the services that are provided are properly funded. Uh, I would note that I've, uh, the, uh, change within the substitute. I do believe it might put us a little out of sync with our bordering states and our competing competing states on the other tobacco products. And we'd like an opportunity to work with the sponsor and others involved to make sure that we get that in a, a more adjusted, uh, rate and a more fair rate that we see. And also just being concerned about raising taxes. We're always concerned about taking more money out of the pockets of our families here in Utah. And while they might be doing an activity that most people don't prefer, this is hundreds of dollars out of their pocket if we move forward with this. Thank you for the time today.

Good afternoon, chair and members of the committee. My name's Doug Ball, and I serve as the tobacco category Manager at Jackson's Food Stores. A family owned convenience store chain with 22 locations across Utah at Jackson's, we're deeply committed to responsible. Where

Oh, I, I live in Meridian, Idaho. Okay, thank you. Um, we regularly, we, we train our employees to ensure tobacco products are not sold to minors. We take pride in our strong FDA compliance record. Out of 110 inspections for 2025, we sold zero underage sales of cigarettes. Um, today I respectfully urge you to oppose House Bill 3, 3 7. Um, raising these taxes will place an undue burden and respond responsible businesses like ours and may lead to several unintended consequences. Many family run stores across Utah are already struggling with rising expenses, increased theft and tighter profit margins and other tax increase could force many to close causing communities to lose more than just a place to shop. They lose trusted local neighbors and gathering places. Increasing these taxes. Taxes drives, uh, risks, driving sales outta state, harming local businesses and reducing tax state revenues. Higher taxes often encourage illicit activity, including illegal sales and smuggling, which undermine public health goals and create enforcement challenges taxing nicotine pouches. A smoke-free alternative for adult consumers may discourage harm reduction and push consumers towards less regulated products. Both youth and adult tobacco usage are on historic lows. Given these advancements focusing on education enforcement and compliance strategies, offers more a, offers a more reliable path to maintaining these results than further tax increases. Thank

Hello, Mr. Chair. Thank you. And thank you committee, and thanks you to the sponsor for, uh, his effort here, uh, as we work to improve public safety in Salt Lake

I apologize. Brian Red, uh, Salt Lake City Chief of Police. Thank you. Uh, as we work to improve public safety in Salt Lake City, we see the ravages of addiction in our city. Uh, we also, uh, wanna stop the, the, the flow of individuals into addiction and, uh, particularly around our youth. We know they're getting caught up in, in vaping. It's leading to truancy, it's leading to additional addiction in the future. Um, and I would just add, it's not only, uh, our youth in Salt Lake City, but adjacent cities and adjacent counties. We know they're coming down here to Salt Lake City. So we appreciate the sponsor. This bill with a couple other bills this session are, uh, an effort to reduce, uh, access to the youth and hold individuals accountable who are marketing this to our youth on social media in other ways. Thank you.

So I'm just, I, generally speaking, I think that you're going in the right direction, but it seems like awfully big swings try to help me out with the 56 to 71% increase from second to third on the, on the vape

That, um, that was not from the house that was directly, uh, from the Senate. Senate. Don't

Blame it on us. What? Okay. Alright.

Well, and well, I think to, to the folks who commented on both sides, really what, what we're wanting to see is a continuum of, of harm here. And so making sure that we're identify, uh, correctly identifying where that system of harm files, that's, that's essentially in between the 56 and the 86, uh, 86% for the OTP or the current vapes. That was where, that's where that number came from.

Okay. You know, there's been a lot of chatter about this and, and just trying to figure out, I think if you're, I think the just kinda reality setting in and where if you're Blanding in the right spot on, the percentage increases. This isn't about, well, maybe it's still about for some, about, about, you know, accepting the reality. The increases are probably coming, but is the, is the numbers right here, um, policy wise and otherwise 56% on the, um, otherwise, I'm just gonna call it the, the tablets, whatever. Um, seems like a just a big, it's a big swing in comparison to what it was before, but you actually went backwards on the tobacco one portion,

Uh, backwards from where our Original bill was.

Oh, I see. Yeah. Not backwards in terms of the total, But you went from second, from second to third, you went down on tobacco and up in the vape and the other products. Y Yes, sir. So just help me out the reasoning on that.

Just trying to find the numbers that make sense at every step of the way, ensuring that cigarettes are taxed at the highest, uh, rate. Um, and then moving with, and essentially what, when we had conversations with, um, uh, the good folks who are selling the nicotine pouches is they wanted to differentiate themselves from vape. As we had conversations with the Senate, that was the, specifically, that piece was brought up. So that way you can see with the diagram that I, you know, professionally graphic design last night at midnight, to try and show each step of the way, all the way from cessation products to a product that on the box it says it will kill you and addict you. And so, recognizing that we're trying to find the steps that make sense, the 56% number that comes directly from Utah code for smokeless, uh, nicotine products, IE e-cigarettes and vape. And so we felt that this, this would make more sense in that category.

All right. I, I think the, you know, maybe a good swing of the ax is appropriate, but this may be too hard of a swing. I'm, I'm trying to balance that out in my head, but, uh, I'll leave it for the committee to consider the rest.

Thank you, Mr. Chair. Uh, motion appropriate. It is, Thank you. I would move that we, uh, favorably recommend HB second substitute HB three Three. Actually we're on the third substitute. Oh, I apologize. Yeah. Third substitute house bill 3 37 to the Senate floor.

Um, I'm supportive of the motion, but I gotta tell you, I've got sticker shock with the, with the numbers. Um, so I would hope that we can have some more discussion about that even across the board, um, and see where we can land with that. But I, and you know, in particular, I literally the, I, I, I guess I do, I just have sticker shock. I I'm supportive of taking a pretty good swing like, or Senator Musselman talked about, but I would hope that we can temper the swing a little bit before we get to a final passage.

Thank you, Mr. Chairman. I'm, I'm a little like the chairman and Senator Musselman. I, I would hope we'd circle up and maybe there's some kind of compromise on the fee. I think we're a little excessive too.

Thank you so much. I appreciate the committee's consideration. And, and I, I think you're exactly right. We're, we're t we're tackling a big problem here, which is what should our, what should our tax structure look like for addictive products? These are products that on, on every box it says, warning, this is an addictive product. So when you have that profit incentive connected to a product that is chemically addictive, that's where I think we, we need to be really judicious about where we seek there. And so the numbers that are in front of you today is essentially just what exists in Utah code and trying to make a piece work. But to Senator Epson's point and to Senator Vickers point, I'm absolutely willing to work with anyone to find, find something that makes sense, because I'll tell you, I, I don't think 38 cents per can makes sense for a, for an addictive product with a multitude of flavors. But if this is, if this is too, uh, high, I absolutely am absolutely open to that. I just wanna make sure that we're getting our tax structure into place where our kids, in particular, our youth, are not going to now get tapped into nicotine addiction early on. Like Senator Mussman said, I just briefly sum by just saying that I, I generally agree that a low rate and a broad base is usually the optimal, but particularly for harmful products, we don't want a broad base of, of, uh, users. Um, in 2010, as you saw, the good representative from from Davis County, former representative talked about the same arguments were made about that this will cause spillage to other states. This will be someone called it the Wyoming Stimulus package bill. Um, and that, that didn't play out. But what did play out was reduced usage and making Utah a leader in terms of anti, anti vaping and making sure that we didn't let vaping get ahead of our, of our kids. And that's what I'm seeking to do here. The final piece too, that I want to address is the black market concern. This is a product that you have a paper in front of you that says, this is patently unlawful to be sold in the United States. And I don't know the, the, the folks who, uh, sell this product, they said that this is a false product. And so that's where I would come in to say, is that this deserves a really hard look from our legislature to say, w if we don't have to wait for a black market, apparently it's already at our doorstep and apparently it's already coming after our kids. And so, as someone who worked, uh, at the, in law enforcement with a lot of people who used nicotine pouches, they weren't smokers who were quitting smoking and then using nicotine pouches. This was something that, as you saw explicitly in the marketing on Instagram, they're saying, this enhances your focus. I'm taking one of these every hour. And so that intense usage is really where I think we need to be judicious. But at the end of the day, I will work with, with anyone to find a, to find a, a way forward. That makes sense. So thank you so much for the consideration, Mr. Chair.

I'll waive. Thank you. Thank you.

Oh, sure. Sorry. Senator McKay. Uh, to avoid this being unanimous, bill, I'm gonna vote no, but the, I it's not that I disagree with the policy and I actually agree with the theory of, you know, lowering the base and increasing the rate. I, I'm there. I'm not convinced the rates are right. And so I'm putting a pin in that conversation so that we can, you know, avoids the unanimous feeling of those. And let's see if we can figure out a place to land this. There's plenty of time. Friday at midnight is not here yet. So it's a world away. It feels like we've got plenty of time. So there you go. Yes, sir.

Thank you Mr. Speaker Pro Tim. Motion to circle

We are working hard to find a, find a better compromise.

Thank you Mr. Speaker. Motion to encircle. First substitute HB 3 37.

Yes, we have a second substitute online that, uh, is a, a work a, a work product from, uh, the conversations we've had with stakeholders.

Thank you Mr. Speaker. Motion to adopt second substitute HB 3 37. That motion is in order. We'd like speak to it. Yes, Mr. Speaker. And, uh, this bill is very simple but important. There's two puzzle pieces to this bill. The first is the tax on cigarettes, and the second is nicotine pouches. In the original iteration of the bill that's in front of us, currently, the first substitute, the, uh, tax increase on a pack of cigarettes is $2 per pack. That will, in the second substitute, that will be a dollar 75 in the first substitute. Uh, the nicotine pouches, and I'll speak more to this in the presentation about why this is of a challenging issue, is that an 86% tax rate and under substitute two, we'd be moving it with e-cigarettes under 56%. Mr. Speaker,

Thank you Mr. Speaker. To end cap on my previous presentation. This is a simple but important bill. Uh, colleagues, many of you last week on Friday may have got to attend the not so sweet 16 birthday party for the tobacco tax. And the reason for that is that it's been 16 years since we adjusted the tax on tobacco products in Utah. So just to put it in perspective for you, currently our state sits at, sits at number six for taxes on alcohol. The rate for tobacco is 28 outta 50 states. So I would venture to say that it's it's time that we adjust that tobacco, tobacco tax rate. And I want to tell you why. There's a couple numbers that stand out in this presentation. The first is that 15% of all cancer deaths in the state of Utah are from smoking. $115 million in annual Medicaid spending is caused by smoking. And so when you think about from a tax policy perspective, and I got the same flyer that many of you had about lowering the rate and broadening the base, I would, I would agree that that is good tax policy when we're talking about normal products or we're talking about the economy as a whole. But for a product that on the box says that it will addict you and it will kill you, I would say that we should not broaden the base and not lower the rate. I would actually say that we need to make that inverse and make sure that we have a higher rate and a lower base. Um, there's a couple things in this bill as well that I want to address. Um, many of you have asked, where is the money in this? Where is the money generated by this going for? There's three pieces to stop children from starting to smoke to help adults quit and make sure that when people do quit, they have the resources necessary. So there's an existing earmark when the tobacco tax was originally created, that, uh, has a number of items that are highlighted in this legislation. This is things that fund the quit line, uh, youth prevention, making sure that youth don't start smoking. And if they do that, they have the resources needed to quit. A statistic that should stand out in all of our minds is that about 70% of smokers want to quit. This legislation helps that make that a reality. So once again, um, we are moving from, from where the bill previously was. We're moving down. The tobacco companies don't wanna see any increase or a marginal increase. And I think as, as policy makers, we should take a hard look at this to see what that increase should be. Um, one more number that I wanna highlight, $38 million is what tobacco companies in our state currently spend on advertising across the state. So when we talk about a powerful industry, a powerful business, this is it. Finally, I want to talk about the nicotine pouches. Um, I I like you, uh, remember when vapes were starting to hit the market, the idea was that vaping was better than smoking. And so this should be a natural alternative that we should put, uh, money into, into vaping as a prevention piece. But what we saw because of flavors and its addictive and high nicotine content, we saw that it was actually taking in a significant market share of people who weren't smoking. So it wasn't smokers and, uh, vapers, excuse me, individuals who are vaping, but rather they're taking in people who never were smoking. But now they're starting to vape. Well, a new product has hit the scene. It's called nicotine pouches. They're very popular, um, product that are sold in gas stations, retail stores. And on the box it says, warning, this is an addictive product. Currently, these nicotine pouches don't ha really have a place in our tax code because we're trying to figure out where it would be. The tobacco companies and the nicotine companies that sell these products would like you to believe that this is a cessation product, that this is what people use to quit. I would say that most of us would agree that it's better to not smoke and to maybe use a nicotine pouch. But when you're thinking about a product that has significant amount of flavors direct to consumer marketing, and on the box it says, warning, this is an addictive product that the state of Utah should recognize. We need to regulate this product in a different way than other products. And so where with the second substitute, what we've done is we've taken nicotine pouches and put them in with e-cigarettes, which is tax at 56%. So with that, Mr. Speaker, I'm happy to answer any questions. I also just wanna highlight this bill is supported by Utah Eagle Forum, drug Free, Utah, um, the American Cancer Society, the American Heart Association, um, and many other organizations across our state that want to see the following outcomes, less children starting to smoke, more adults quitting, and making sure we have the resources to help people when they make the decision to quit. Thank you, Mr. Speaker. Happy to take any questions.

Thank you, Mr. Speaker. Uh, I support this bill and for a couple reasons. Uh, first of all, when somebody, um, takes substances that affect their health, uh, it's not just them that suffers from it. Society always intervenes, and we have programs and things like that to take care of them and help them. And you can see it in all of the homeless bills that we've had, all the money that we're spending for, for other programs. And so I don't think it's unreasonable to say, if you want to do this, then you can help pay for those who are gonna be affected by this. And I think this is a reasonable approach to, to use that money to, um, to, to take care of those problems that are generated by these of these substances. So I think this is a, a, a good, uh, build to, to, uh, take care of that problem. Thank you.

Uh, thank you, Mr. Speaker. I rise and supported this bill, and I wanna comment on, uh, the bill from both a kind of economic and fiscal conservative perspective. The famous, uh, economist, Milton Friedman, said, if you want less of something, tax it. If you want more of something, subsidize it, uh, this bill would create, uh, uh, incentives so there would be less purchase of tobacco. And to the extent that, uh, the, some of the funding goes to prevention, that's subsidizing it, we get more of that. Now, let me share some really interesting statistics. Uh, if you look at national rates of individuals enrolled in Medicaid, on average, according to the na, national Cancer Action Network, approximately 22.7 to 23.9% of adults enrolled in Medicaid smoke. That is compared to individuals with private insurance, which is around 9.2 to 10.5%. So generally, individuals enrolled in Medicaid smoke at two times the rate of individuals, uh, with private insurance who pays for peop the tobacco related illnesses, which is the number one preventable cause of death in America. If they're enrolled on Medicaid taxpayers, do they pay for it at the federal level and they pay for it at the state level? I submit if this bill had a dynamic fiscal note, it would be potentially in the tens or hundreds of millions in terms of savings to Utah taxpayers and to the, the federal budget. So from a fiscal perspective and a public health per health perspective, I believe this bill is very good policy. Thank you, Mr. Speaker.

Yes, thank you, Mr. Speaker. Um, I rise in support of this bill. I am appreciative of the good sponsor and the work that he has done. Um, and as the good representative from Sandy indicated, um, that it is good policy, it is estimated that up to 6,000 Utahans would quit if there was a $2 increase tax on cigarettes. How do we know this? They implemented a similar policy in Indiana and 40% of smokers quit, and then 40 per, there was an increase 40% of the smoking cessation programs. Um, so we know that this is great impetus for helping those who would like to quit. We also know that, um, cigarettes and nicotine products are unfairly marketed toward, um, socioeconomic levels that are below, um, the national average. And it really puts people with income disparities, um, at a disadvantage. Um, and again, as my good colleague from Sandy indicated, that is a price that we are picking up as a government. So I believe it is good policy and it'll pay dividends and also save lives. Thank you.

Thank you, Mr. Speaker. Um, colleagues, at the beginning of this session, both the House majority and the House minority Caucus identified their number one priority, and it was affordability. I would submit to you that that priority didn't come with an asterisk. Rather, it came with a focus to look for ways to lower taxes and to lower the burden on our families. Mr. Speaker, this bill unfairly targets a very small minority of people in our state. I'm not a fan of smoking, and I I would love to see everybody in the state quit, but the reality is, is that our smoking rates have been declining over the last several years. In fact, since ni since 2022, they've dropped 22%. Um, people, the, the rates of people taking up smoking are flat in the state of Utah. What we do know is that other, in other states like New York who have increased taxes significantly on cigarettes, is that they've driven people out of state and they have a thriving black market in their state for nicotine products. Um, I made a commitment to the people in my district that I would fight for tax breaks for all of them, not just some of them. And for that reason, I am opposed to this legislation.

Thank you, Mr. Speaker, and I appreciate the good discussion that we've had here today. I want to just emphasize once again that in a, in a, when speaking about broad economic policy to broaden the base and lower the rate, absolutely makes sense. But can you imagine colleagues and Mr. Speaker if there was a new product, a new number two pencil that hit the market, and on the box of the number two pencil that just hit the market, it said, warning, if you continue to write what these pencils, this will kill you. We as policymakers would immediately look at this number two pencil and say, at the very least, if we're gonna allow it on our shelves, we need to regulate this in a very thoughtful way, particularly when this is marketed at those, uh, individuals who live below the, the poverty line. And so finally, with, with a 630 million annual healthcare costs to the state of Utah, I would say that it behooves us to celebrate the not so sweet 16 that was mentioned before, and make sure that we adjust our tobacco tax rate to make sure that we're in parity with other structures that we look at here. Once again, this is not about, uh, this is not about broad tax policy. This is about specifically a product that is not like any other product. It is an addictive product and it says so on the label. It is a harmful product. It says so on the label. And for that, Mr. Speaker, I would ask for your Yes, vote.

Thank you Mr. Speaker. Motion to adopt second substitute HB 3 37. That motion is in order. We'd like speak to it. Yes, Mr. Speaker. And, uh, this bill is very simple but important. There's two puzzle pieces to this bill. The first is the tax on cigarettes, and the second is nicotine pouches. In the original iteration of the bill that's in front of us, currently, the first substitute, the, uh, tax increase on a pack of cigarettes is $2 per pack. That will, in the second substitute, that will be a dollar 75 in the first substitute. Uh, the nicotine pouches, and I'll speak more to this in the presentation about why this is of a challenging issue, is that an 86% tax rate and under substitute two, we'd be moving it with e-cigarettes under 56%. Mr. Speaker,

Thank you Mr. Speaker. To end cap on my previous presentation. This is a simple but important bill. Uh, colleagues, many of you last week on Friday may have got to attend the not so sweet 16 birthday party for the tobacco tax. And the reason for that is that it's been 16 years since we adjusted the tax on tobacco products in Utah. So just to put it in perspective for you, currently our state sits at, sits at number six for taxes on alcohol. The rate for tobacco is 28 outta 50 states. So I would venture to say that it's it's time that we adjust that tobacco, tobacco tax rate. And I want to tell you why. There's a couple numbers that stand out in this presentation. The first is that 15% of all cancer deaths in the state of Utah are from smoking. $115 million in annual Medicaid spending is caused by smoking. And so when you think about from a tax policy perspective, and I got the same flyer that many of you had about lowering the rate and broadening the base, I would, I would agree that that is good tax policy when we're talking about normal products or we're talking about the economy as a whole. But for a product that on the box says that it will addict you and it will kill you, I would say that we should not broaden the base and not lower the rate. I would actually say that we need to make that inverse and make sure that we have a higher rate and a lower base. Um, there's a couple things in this bill as well that I want to address. Um, many of you have asked, where is the money in this? Where is the money generated by this going for? There's three pieces to stop children from starting to smoke to help adults quit and make sure that when people do quit, they have the resources necessary. So there's an existing earmark when the tobacco tax was originally created, that, uh, has a number of items that are highlighted in this legislation. This is things that fund the quit line, uh, youth prevention, making sure that youth don't start smoking. And if they do that, they have the resources needed to quit. A statistic that should stand out in all of our minds is that about 70% of smokers want to quit. This legislation helps that make that a reality. So once again, um, we are moving from, from where the bill previously was. We're moving down. The tobacco companies don't wanna see any increase or a marginal increase. And I think as, as policy makers, we should take a hard look at this to see what that increase should be. Um, one more number that I wanna highlight, $38 million is what tobacco companies in our state currently spend on advertising across the state. So when we talk about a powerful industry, a powerful business, this is it. Finally, I want to talk about the nicotine pouches. Um, I I like you, uh, remember when vapes were starting to hit the market, the idea was that vaping was better than smoking. And so this should be a natural alternative that we should put, uh, money into, into vaping as a prevention piece. But what we saw because of flavors and its addictive and high nicotine content, we saw that it was actually taking in a significant market share of people who weren't smoking. So it wasn't smokers and, uh, vapers, excuse me, individuals who are vaping, but rather they're taking in people who never were smoking. But now they're starting to vape. Well, a new product has hit the scene. It's called nicotine pouches. They're very popular, um, product that are sold in gas stations, retail stores. And on the box it says, warning, this is an addictive product. Currently, these nicotine pouches don't ha really have a place in our tax code because we're trying to figure out where it would be. The tobacco companies and the nicotine companies that sell these products would like you to believe that this is a cessation product, that this is what people use to quit. I would say that most of us would agree that it's better to not smoke and to maybe use a nicotine pouch. But when you're thinking about a product that has significant amount of flavors direct to consumer marketing, and on the box it says, warning, this is an addictive product that the state of Utah should recognize. We need to regulate this product in a different way than other products. And so where with the second substitute, what we've done is we've taken nicotine pouches and put them in with e-cigarettes, which is tax at 56%. So with that, Mr. Speaker, I'm happy to answer any questions. I also just wanna highlight this bill is supported by Utah Eagle Forum, drug Free, Utah, um, the American Cancer Society, the American Heart Association, um, and many other organizations across our state that want to see the following outcomes, less children starting to smoke, more adults quitting, and making sure we have the resources to help people when they make the decision to quit. Thank you, Mr. Speaker. Happy to take any questions.

Thank you, Mr. Speaker. Uh, I support this bill and for a couple reasons. Uh, first of all, when somebody, um, takes substances that affect their health, uh, it's not just them that suffers from it. Society always intervenes, and we have programs and things like that to take care of them and help them. And you can see it in all of the homeless bills that we've had, all the money that we're spending for, for other programs. And so I don't think it's unreasonable to say, if you want to do this, then you can help pay for those who are gonna be affected by this. And I think this is a reasonable approach to, to use that money to, um, to, to take care of those problems that are generated by these of these substances. So I think this is a, a, a good, uh, build to, to, uh, take care of that problem. Thank you.

Uh, thank you, Mr. Speaker. I rise and supported this bill, and I wanna comment on, uh, the bill from both a kind of economic and fiscal conservative perspective. The famous, uh, economist, Milton Friedman, said, if you want less of something, tax it. If you want more of something, subsidize it, uh, this bill would create, uh, uh, incentives so there would be less purchase of tobacco. And to the extent that, uh, the, some of the funding goes to prevention, that's subsidizing it, we get more of that. Now, let me share some really interesting statistics. Uh, if you look at national rates of individuals enrolled in Medicaid, on average, according to the na, national Cancer Action Network, approximately 22.7 to 23.9% of adults enrolled in Medicaid smoke. That is compared to individuals with private insurance, which is around 9.2 to 10.5%. So generally, individuals enrolled in Medicaid smoke at two times the rate of individuals, uh, with private insurance who pays for peop the tobacco related illnesses, which is the number one preventable cause of death in America. If they're enrolled on Medicaid taxpayers, do they pay for it at the federal level and they pay for it at the state level? I submit if this bill had a dynamic fiscal note, it would be potentially in the tens or hundreds of millions in terms of savings to Utah taxpayers and to the, the federal budget. So from a fiscal perspective and a public health per health perspective, I believe this bill is very good policy. Thank you, Mr. Speaker.

Yes, thank you, Mr. Speaker. Um, I rise in support of this bill. I am appreciative of the good sponsor and the work that he has done. Um, and as the good representative from Sandy indicated, um, that it is good policy, it is estimated that up to 6,000 Utahans would quit if there was a $2 increase tax on cigarettes. How do we know this? They implemented a similar policy in Indiana and 40% of smokers quit, and then 40 per, there was an increase 40% of the smoking cessation programs. Um, so we know that this is great impetus for helping those who would like to quit. We also know that, um, cigarettes and nicotine products are unfairly marketed toward, um, socioeconomic levels that are below, um, the national average. And it really puts people with income disparities, um, at a disadvantage. Um, and again, as my good colleague from Sandy indicated, that is a price that we are picking up as a government. So I believe it is good policy and it'll pay dividends and also save lives. Thank you.

Thank you, Mr. Speaker. Um, colleagues, at the beginning of this session, both the House majority and the House minority Caucus identified their number one priority, and it was affordability. I would submit to you that that priority didn't come with an asterisk. Rather, it came with a focus to look for ways to lower taxes and to lower the burden on our families. Mr. Speaker, this bill unfairly targets a very small minority of people in our state. I'm not a fan of smoking, and I I would love to see everybody in the state quit, but the reality is, is that our smoking rates have been declining over the last several years. In fact, since ni since 2022, they've dropped 22%. Um, people, the, the rates of people taking up smoking are flat in the state of Utah. What we do know is that other, in other states like New York who have increased taxes significantly on cigarettes, is that they've driven people out of state and they have a thriving black market in their state for nicotine products. Um, I made a commitment to the people in my district that I would fight for tax breaks for all of them, not just some of them. And for that reason, I am opposed to this legislation.

Thank you, Mr. Speaker, and I appreciate the good discussion that we've had here today. I want to just emphasize once again that in a, in a, when speaking about broad economic policy to broaden the base and lower the rate, absolutely makes sense. But can you imagine colleagues and Mr. Speaker if there was a new product, a new number two pencil that hit the market, and on the box of the number two pencil that just hit the market, it said, warning, if you continue to write what these pencils, this will kill you. We as policymakers would immediately look at this number two pencil and say, at the very least, if we're gonna allow it on our shelves, we need to regulate this in a very thoughtful way, particularly when this is marketed at those, uh, individuals who live below the, the poverty line. And so finally, with, with a 630 million annual healthcare costs to the state of Utah, I would say that it behooves us to celebrate the not so sweet 16 that was mentioned before, and make sure that we adjust our tobacco tax rate to make sure that we're in parity with other structures that we look at here. Once again, this is not about, uh, this is not about broad tax policy. This is about specifically a product that is not like any other product. It is an addictive product and it says so on the label. It is a harmful product. It says so on the label. And for that, Mr. Speaker, I would ask for your Yes, vote.

Uh, what this is, is this, uh, is a nicotine tax modification and, uh, as is in the naming of the bill, nicotine has been used for centuries for as an insecticide, uh, in the 16th century is used to wash hair, to take, to take lice out of hair. Um, we now use it, uh, it used to be used as insecticide and to kill flies and dairy barns, uh, spraying gardens and spraying different farm crops. I can remember when it was used to kill an, uh, what they call a th rip in onions in West Laden. Um, and it's been taken off the market because of, uh, first of all substitutes and others because it's deemed not, not a very safe in the environment. As a result, now that we're using it, we seem to think it should be ingested. Um, what I would, uh, what I'm going to propose is that we've come up with a completely new way of delivering nicotine into the body. That is, we can tuck it in our lip and it absorb it rather than smoke it like the cigarettes have been declining for years. Uh, however, this, this bill does, uh, add a additional tax on cigarettes. There's been a new wave of nicotine products, uh, especially to our young people legally categorized as alternative nicotine products. They're predominantly small. They come in flavored pouches, uh, of nicotine that is used to stick in their lip that, uh, absorbs. And, uh, it's also used by adults. Some not as a product to, uh, bring cessation to cigarette use, but as an alternative to cigarette use. So, young users describe it as a healthier, uh, healthier, it's much healthier on the lungs, but it gives them the buzz and the add and the addiction, uh, like vape cigarettes or vape and cigarettes. And one said that it's just the same drug delivered with a new delivery system. Uh, I find this very interesting that we've what we've, what's been going on and we haven't had a change in these laws since 2016. In 2025, the sharp survey, uh, for Utahans by D-D-D-D-H-H-S gives a, the, give us some insight on what's going on. It's a self, uh, reported student data from teens. Uh, it found that the number of Utah youth who used nicotine pouch to try tobacco for the first time increased by 300% for all grades from 1.6 in 2023 to a short, two years later to 6.4% of our youth. All other tobacco products are, uh, are on declines. It's not popular to smoke, it's not popular to smell of smoke. But the alternative nicotine products are the only increase, are only increasing in usage. Consequentially consequentially, we are updating our nicotine product taxes in the following ways. Cigarettes will go to 11 cents per cigarette, two 20 a pack or, or four 20 cigarettes has been at about a dollar 70 for the past 16 years. Uh, so it's a 50 cent increase in a pack or from eight and a half cents to, to 11 or to 11 cents. Most snuff products, they're not changing. This is the stuff we, we've all walked down the sidewalk and saw round cans in, in kids in some adults' pockets.

There is a, uh, there is some discussion on moist snuff. Uh, apparently the bill got drafted and it is, it has changed. And so there's questions about that. So I've just been, uh, just, uh, Senator Cullimore has just talked with me and we need to possibly, we should circle this and finish the, uh, Yeah. On the moist.

Thank you, Mr. President. Uh, having voted in the prevailing side, um, I would like, uh, I'd like to move to reconsider our actions on the most precious bill of this session. Uh, first substitute house bill 1 95. Okay. And Comore wants two. Two, so we'll rule that back and forth.

Yes. So, under suspension of the rules, I'd like to move that we having voted in the prevailing side, that we reconsider our actions on the most precious bill of the session. First substitute house bill 1 95. Yeah, The, the question is, shall we reconsider action on first substitute house bill 1 95 Precious medal amendments.

I'm, I'm rather than explain to you about, uh, thrips and hair washing and those kind of things. I'm going to skip all that. I talked about it a few minutes ago. We're gonna just gonna go and talk directly about the tax that changes here. So cigarettes, we move to 11 cents from 8.50 cents. Uh, that's about, uh, about 50 cents. Well, it is 50 cents a pack puts us in a, a high range of most states around us, but we are in the range. Uh, then we go to the, uh, e-cigarettes and the vapes. We have a 71%, uh, of the sale price from the manufacturer. This is up from 56 cents. And then the alternative tobacco products, which are the pouches that we've talked about, will charge a dollar a can as long as, uh, up to a dollar a can, up to 20 pouches or less. And then for cans, which are more than 20 pouches, they will add an extra 5 cents per pouch above 20. And for non, uh, uh, non pouch products will be 73% of the manufacturer sales price. Uh, that's pretty wide. And then there would be no tax on any of the, what we call the nicotine cessation products. That would be like Nicorette gum. Uh, there are a few mints and so forth that, uh, are available. And those, uh, those would, we would not have a tax on a cessation product, only an alternative product. Uh, I really believe this is a, um, a good move. And, uh, I I will also mention that there's been a lot of rumor going around as to what this bill does. This money all goes into the general fund. It is not earmarked for any, any problem or any situation we have. So that's where we are right now with it. And, uh, be more than happy to take questions.

Yeah, I, uh, I really appreciate this bill. I'm usually not one that wants to raise taxes, but I have some problems with people that pedal in addiction and, um, you know, this, some of the products that are being taxed here, uh, you know, they're oftentimes the business model has been as one form of addiction becomes more regulated or PE or people get wise to the fact that it's bad for them or addictive in a negative way in their life. What happens is the same group behind that finds another product and they say, this will help you get off the last product and you can go over to this one and I promise it's better for you. And so they just replace the addiction. And we saw that with vaping. They first marketed it as a replacement to get people off of cigarettes, you know, and that's the same with a lot of these products. They, you know, the, the people who use these pouches, um, one time, 73% of those people are still using these pouches that, uh, let, let me repeat that use of these patches. One time you have a 73% chance that you will continue using those pouches. That is an insane addiction rate. And they're passing this off as if it is a smoking cessation. It simply isn't. These are adic addictive and terrible products that just in snare people. And, and so I think it's appropriate to adjust the tax. I I would vote for more. I'd probably vote to get rid of 'em. I'm not a fan of these things, but I think this is a step in the right direction and I support the bill. Thank you. Uh,

Thank you. I just wanted to compliment the sponsor for working with stakeholders. I appreciate some of the compromises that were made in the bill and I'll be supporting that. Thank you.

Thank you Mr. President. I rise in support of this bill. I think if we're gonna tax something, it should be something that is harming us and our kids. And, um, I have a sibling who started smoking when they were in middle school and if it was more expensive and harder for them to access, maybe they wouldn't have been smoking for 20 years by now. And, um, I worry about my own young children and their ability to, um, stay away from these harmful substances and I think we should continue to make access to them more difficult for our young people. Thank you.

Uh, thank you. I will, uh, waive, but I would, uh, I and I would move that six substitute house bill. 3, 3 7 nicotine tax modifications under, I said under suspension. Rules pass.

Senator Vickers Baldy Bwin Brammer Bus Cullimore Escamia Fillmore Grover Harper Hins Ipson Johnson. Kwan McKay. Mikel Milner Musselman Owens Boundary pitcher Plum Rebe Aye. Sandal Stevenson. Aye. Stratton Vickers. Weiler. Yes. Wilson. Aye. Winterton President Adams Aye. Six. Substitute house bill 3 37. Having received 26 yay votes, zero nay votes. Three being absent passes this body and will be returned to the house for further consideration.

Thank you Mr. President. Uh, this is a very simple bill.

and body, uh, house bill, uh, or yeah, house bill six. Substitute house bill 3 37. And replace it with seven substitute house bill 3 37. And again, I need to place it on the top of the calendar and I, I forgot to do that. So wait for the circle for a minute and I'll get it done here. So we need to get the sixth substitute on the, I'm gonna place it on the top of the second reading calendar. Are we there? There we go. I've got it. So I'm gonna go ahead and call it, make sure we do this right. So, uh, six substitute house bill, 3 37 6. Substitute house bill 3 37.

Thank you. Now I need, I need to delete title and body, the six substitute house bill 3 37 and adopt seven. Substitute house bill 3 37. Thank you.

The only difference is, the only thing this does is when we passed this bill earlier, we put the money in the wrong account. It went into an account called, uh, uh, electronic cigarette and, uh, uh, a nicotine product records account and or proceeds account. And it's, uh, needs to go into the general fund. I think I stated at the general fund, but that's where it needs to be. And, uh, as a result, uh, we've, we're just correcting that action.

Senator? No. It, the money just went into the wrong account.

I would waive summation and I would move that, uh, we pass under suspension rules. Uh, house bill 3 37 7 substitute

Uh, we need to replace this bill. So I would've moved that we, uh, delete Title and Body House bill, uh, 5 45 and replace it with four substitute house Bill 5 45.

All, all the, all the, uh, four substitute does, it allows money in the Department of Public Safety restricted account to be appropriated to pay the costs associated with law enforcement training facilities.

This bill, uh, tightens fiscal provisions across state government through the following ways. It changes names of funds and accounts to align with Gatsby requirements. It repeals, uh, five obsolete accounts.

Thank you Mr. Speaker. Motion to concur with the Senate amendments.

Mr. Speaker. Colleagues, this legislation is the end result of a lot of hard work that went into ensuring that addictive products that are sold to consumers in Utah have appropriate taxation. Um, the final, uh, negotiation and agreement that's in front of you today is the following will increase the tax on cigarettes to $2 and 20 cents per pack of cigarettes. The, uh, vaping products will be at 71% for nicotine pouches. It will be $1 per pouch. And the pages are passing out, uh, this graphic in front of you. Nicotine pouches that are hitting the market and hitting our young people hard. This is the number one growth in product in these addictive products being used by our youth. These will now be taxed at a dollar per can plus 5 cents per pouch after 20 pouches. And finally, Mr. Speaker, what I'm most proud of is that we've created a provision in this legislation to make Utah a national leader in protecting our youth by ensuring that if new products hit the market that have these addictive substances, that they will go into a category of a 71 percentage, uh, manufacturer's price, which is the same as, uh, of vaping and other, uh, nicotine products. The reason for this is because we need to make sure that if there's a profit incentive that's connected to harm, that's connected to addiction and that's marketed to directly to the consumers, we've gotta make sure that we stand up for our Utahans, Mr. Speaker. And with that, uh, motion to concur.