No. 42870 (New Rule): Rule R384-324. Tobacco Retailer Permit Process

(New Rule)

DAR File No.: 42870
Filed: 05/01/2018 01:27:43 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule is to create a permitting process by which local health departments will issue permits to general tobacco retailers, and retail tobacco specialty businesses for the sale, marketing, or distribution of tobacco products.

Summary of the rule or change:

This proposed rule creates the process local health departments (LHDs) will use to issue permits to general tobacco retailers, as well as retail tobacco specialty businesses that wish to sell, market, or distribute tobacco products in the state of Utah. This process includes submitting an application with all pertinent business information and paying a permitting fee. Permits must be renewed every two years for general tobacco retailers and yearly for retail tobacco specialty businesses. Any retail tobacco specialty business that is applying for a permit for the first time, or a general tobacco retailer that has changed their business model to be a retail tobacco specialty business, must complete a plan review to accompany their application certifying that they meet the zoning requirements in place for a retail tobacco specialty business.

Statutory or constitutional authorization for this rule:

• Section 26-1-5
• Subsection 26-62-202(6)
• Subsection 26-1-30(4)

Anticipated cost or savings to:

the state budget:

There are no costs or savings to the state budget associated with this rule.

local governments:

There will be costs to local governments associated with this rule. Currently, LHDs do not permit general tobacco retailers or retail tobacco specialty businesses. There will be costs to LHDs to create the infrastructure necessary to issues permits and process payments. There will also be staff time associated with issuing permits, as well as review plan reviews submitted by retail tobacco specialty businesses. LHDs will collect nominal fees associated with the permit and the plan review which will help offset some of their costs. The state Department of Health (Department) does not expect that there will be a cost savings to local governments as a result of this rule as revenue generated from the permit fee will not offset the costs of enforcing the permit. It is estimated that LHDs will collect approximately $92,940 in fees in FY19 and approximately $3,060 in fees in FY20. FY19: These numbers are approximates based off of the following math: 1,630 General Tobacco Retailers x $30 permit fee in FY19 = $50,100. 153 Retail Tobacco Specialty Stores x $30 permit fee + a $250 plan review fee (153 x 250 = $38,250) = $42,840. Together it totals: $50,100 + $42,840 = $92,940. FY20: It is estimated that in FY20 LHDs will collect approximately $3,060 in fees. These numbers are approximates and based off of the following math: 1,603 General Tobacco Retailers x $0 = $0. 153 Retail Tobacco Specialty Stores x $20= $3,060. Together it totals: $0 + $3,060= $3,060. Because the LHDs vary so widely in their staffing resources, current infrastructure to issue permits and collect payments, etc., the cost to local governments from this rule is inestimable. It is unknown what infrastructure will need to be in place for each LHD to carry out their permitting processes. It is also unknown how much staff time and which staff will be overseeing this process, so the data to calculate exact costs is not available. The Department estimates there will be a cost savings to local municipalities that no longer have to issue permits to retail tobacco specialty businesses and municipalities that are no longer required to enforce zoning laws for retail tobacco specialty businesses.

small businesses:

The Department anticipates that there will be a cost to small businesses that are classified as retail tobacco specialty businesses. Currently, retail tobacco specialty businesses pay a $30 license renewal fee to the Utah State Tax Commission every 3 years for a license that allows them to sell tobacco in the state of Utah. They will still be required to obtain that license but it will no longer have a fee associated with it so this number ($1,020) has been subtracted from their total cost increase. Instead, they will be required to pay a one-time $250 plan review fee, a $30 permit fee for their original permit, and a $20 renewal fee to the LHD in which their business is located. The Department estimates the increase in costs to be approximately $41,820 for the first year and $3,060 per year every year after that. The Department anticipates that there will be a cost to general tobacco retailers of approximately $38,966 the first year and $33,400 every other year after that. Currently, every 3 years general tobacco retailers are required to pay a $30 license renewal fee to the Utah State Tax Commission for a license that allows them to sell tobacco in the state of Utah. They will still be required to obtain a license from the Tax Commission but it will no longer have a fee associated with it so this number ($11,133.33) has been subtracted from their total cost increase. Instead, they will be required to pay a $30 permit fee for their original permit and a $20 renewal fee every 2 years to the LHD in which their business is located. The Department estimates the increase in costs to be approximately $38,966.67 for the first year and $0 the year after that because they only renew their permit every other year.

persons other than small businesses, businesses, or local governmental entities:

There is no anticipated fiscal impact to persons other than small businesses, businesses, or local government entities resulting from this rule.

Compliance costs for affected persons:

The Department anticipates that the cost of compliance for a general tobacco retailer will be $30 for their initial permit and then $20 every 2 years to renew their permit. There are 1,670 general tobacco retailers for a total compliance cost of $33,400 every other year. The cost of compliance for a retail tobacco specialty business will be $30 annually for their permit, plus $250 for a one-time plan review fee. There are 153 retail tobacco specialty businesses for a total compliance cost of $3,060 every year.

Comments by the department head on the fiscal impact the rule may have on businesses:

This proposed rule establishes the permitting process by which LHDs will issue permits to general tobacco retailers and retail tobacco specialty businesses for the sale, marketing, and distribution of tobacco products. A general tobacco retailer will renew its permit every two years and a retail tobacco specialty business will renew its permit every year. Depending on the type of small business, the Department anticipates costs to small businesses ranging from $38,966 and $41,820 for the first year and between $3,060 and $33,400 for the second year. There will be a cost to small businesses classified as retail tobacco specialty business. The renewal fee for the current license, which is paid to the State Tax Commission, is $30 every 3 years. Permit holders will be required to maintain this license which will have no fee but also will be required to pay a one-time $250 plan review fee, a $30 permit fee for the original permit, and a $30 renewal fee to the LHD. General tobacco retailers currently pay $30 for a license renewal to the State Tax Commission. They will be required to maintain the license, without cost, but will be required to pay a $30 permit fee for the original permit, and $20 renewal fee every two years to the LHD.

Joseph K. Miner, MD, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Health
Disease Control and Prevention, Health Promotion
CANNON HEALTH BLDG
288 N 1460 W
SALT LAKE CITY, UT 84116-3231

Direct questions regarding this rule to:

• Karlee Adams at the above address, by phone at 801-538-6992, by FAX at , or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

06/14/2018

This rule may become effective on:

06/21/2018

Authorized by:

Joseph Miner, Executive Director

RULE TEXT

Appendix 1: Regulatory Impact Summary Table*

Fiscal Costs

FY 2018

FY 2019

FY 2020

State Government

$0

$0

$0

Local Government

$0

$0

$0

Small Businesses

$0

$80,786.67

$3,060

Non-Small Businesses

$0

$0

$0

Other Person

$0

$0

$0

Total Fiscal Costs:

$0

$80 , 786.67

$3 , 060

Fiscal Benefits

State Government

$0

$0

$0

Local Government

$0

$80,786.67

$3,060

Small Businesses

$0

$0

$0

Non-Small Businesses

$0

$0

$0

Other Persons

$0

$0

$0

Total Fiscal Benefits:

$0

$80,786.67

$3,060

Net Fiscal Benefits:

$0

$0

$0

 

*This table only includes fiscal impacts that could be measured. If there are inestimable fiscal impacts, they will not be included in this table. Inestimable impacts for State Government, Local Government, Small Businesses and Other Persons are described in the narrative. Inestimable impacts for Non - Small Businesses are described in Appendix 2.

 

Appendix 2: Regulatory Impact to Non - Small Businesses

This proposed rule is not expected to have any fiscal impacts on large businesses revenues or expenditures because none of the businesses impacted by this rule are considered large businesses.

 

The Executive Director, Joseph K. Miner, MD, has reviewed and approved this fiscal analysis.

 

 

R384. Health, Disease Control and Prevention, Health Promotion.

R384-324. Tobacco Retailer Permit Process.

R384-324-1. Authority and Purpose.

(1) This rule is authorized by Section 26-1-5 and Subsections 26-1-30(4) and 26-62-202(6).

(2) This rule establishes the process by which local health departments issue, suspend and revoke a tobacco retail permit.

 

R384-324-2. Definitions.

As used in this rule:

(1) "Community location" means the same as the term is defined in Section 17-50-333 and in Section 10-8-41.6.

(2) "Department" means the Utah Department of Health, created in Section 26-1-4.

(3) "General tobacco retailer" means a tobacco retailer that is not a retail tobacco specialty business.

(4) "Local health department" means the same as the term is defined in Section 26A-1-102.

(5) "Plan review" means the process by which the local health department will verify the accuracy of the information provided by retail tobacco specialty businesses through the permit application process.

(6) "Proprietor" means the owner of a retail establishment, or any other place of business which sells, markets, or distributes tobacco products.

(7) "Public retail floor space" means the total floor square feet of the business where a customer can see, retrieve, or purchase any item that is offered for sale by the general tobacco retailer, including all areas behind the purchase counter, and including appurtenant areas used for storage.

(8) "Retail tobacco specialty business" means a commercial establishment in which:

(a) The sale of tobacco products accounts for more than 35% of the total quarterly gross receipts for the establishment;

(b) 20% or more of the public retail floor space is allocated to the offer, display, or storage of tobacco products;

(c) 20% or more of the total shelf space is allocated to the offer, display, or storage of tobacco products; or

(d) The retail space features a self-service display for tobacco products.

(9) "Self-service display" means the same as that term defined in Section 76-10-105.1.

(10) "Shelf space" means the total cubic feet (length x depth x height) of shelf space contained within the retail space that is used for the offer, display, or storage of items that are offered for sale by the tobacco retailer. The shelf height is measured from the top of the tallest item on the top of the shelf. The shelf length is measured from the end of the longest item at the end of the shelf. Empty shelf space is not included in the total shelf space calculation.

(11) "Tobacco product" means the same as that term defined In Section 59-14-102.

(a) Tobacco paraphernalia, as that term is defined in Section 76-10-104.1.

(12) "Tobacco retailer" means a proprietor that is required to obtain a tax commission license and a local health department permit for the sale of tobacco.

(13) "Tobacco retail permit" means the permit issued by the local health department to general tobacco retailers and retail tobacco specialty businesses for the sale, marketing or distribution of tobacco products.

 

R384-324-3. Permit Process.

This permitting process is separate from and in addition to the requirement to have and maintain a valid tobacco license with the Utah State Tax Commission.

(1) Beginning July 1, 2018, a tobacco retailer shall hold a valid tobacco retail permit issued by the local health department with jurisdiction over the physical location where the tobacco retailer operates.

(a) A tobacco retailer that holds a tax commission license that was valid on July 1, 2018:

(i) May operate without a permit under this chapter until December 31, 2018; and

(ii) Shall obtain a permit from a local health department under this chapter before January 1, 2019.

(iii) Shall maintain a valid tax commission license.

(2) To receive a tobacco retail permit, an applicant shall:

(a) Submit an application provided by the local health department with jurisdiction over the physical location where the tobacco retailer operates or will operate;

(b) Pay all applicable fees.

(3) To submit an application for a tobacco retail permit, an applicant shall:

(a) Complete all required sections of the application and submit either online or a hard copy to the local health department.

(i) Provide information for each individual listed as a proprietor.

(1) If the proprietor is a corporation, corporate information suffices.

(a) A local individual to contact concerning the application and business must be included under business information on the application.

(ii) Provide information concerning the business, including business name, street address, mailing address, and telephone number.

(iii) Provide a copy of a valid tax commission license.

(iv) The individual completing the application must certify that the proposed retail tobacco location meets the requirements as defined in the application for a:

(1) General tobacco retailer; or

(2) Retail tobacco specialty business.

(v) Applications for a retail tobacco specialty business must include a map that demonstrates that the business is not located within:

(1) 1,000 feet of a community location; and,

(2) 600 feet of another retail tobacco specialty business; and,

(3) 600 feet of property used or zoned for agricultural or residential use.

(a) For purposes of subsection a.v., the proximity requirements shall be measured in a straight line from the nearest entrance of the retail tobacco specialty business to the nearest property boundary of the location identified as the business address, without regard for intervening structures or zoning districts.

(vi) Application for a retail tobacco specialty business must include a $250.00 plan review fee.

(1) Proprietor is responsible to notify the local health department if there is a change in their business operation requiring a change in their business license between tobacco retail specialty business and general tobacco retailer.

(2) If the information described in Subsection 26-62-202(3) changes, a tobacco retailer:

(a) may not renew the permit; and

(b) shall apply for a new permit no later than 15 days after the information in Subsection 26-62-202(3) changes.

(vii) Notwithstanding subsection a.v., a tobacco specialty business that received a business license from a municipality under Section 10-8-41.6, or from a county under Section 17-50-333, before December 31, 2015, is exempt from the proximity requirements.

(viii) A tobacco specialty business that received a business license from a municipality under Section 10-8-41.6, or from a county under Section 17-50-333, on or after December 31, 2015, may continue to operate until December 31, 2018 so long as the business maintains a current and valid business license and tobacco tax license.

(ix) A tobacco specialty business that received a business license from a municipality under Section 10-8-41.6, or from a county under Section 17-50-333, on or after December 31, 2015, that desires to continue to sell tobacco products on December 31, 2018, and beyond;

(1) Must complete the application described in this section and demonstrate that the location:

(a) Meets the proximity requirements for a tobacco specialty business in subsection a.v; or,

(b) Has a business model and business layout that meets the requirements for a general tobacco retailer.

(4) Local health departments will have 30 days to issue the permit beginning on the date the local health department receives the application and payment.

(a) Local health department will provide online or hard copy receipt of payment and application submission to the proprietor at the time the local health department receives the application and payment.

(i) The receipt provided by the local health department to the proprietor will serve as a temporary operating permit, which will be valid for 30 days.

(5) General tobacco retailers and retailer tobacco specialty businesses that hold a valid tax commission license may begin applying for a local health department tobacco permit on November 1, 2018.

(a) Permit length and terms

(i) A general tobacco retailer permit is valid for two years.

(ii) A retail tobacco specialty business permit is valid for one year.

(iii) A tobacco retailer may apply for a renewal of a permit no earlier than 30 days before the day on which the permit expires.

(iv) A tobacco retailer that fails to renew a permit before the permit expires may apply to reinstate the permit by submitting to the local health department:

(1) An application for either a general tobacco retailer or a retail tobacco specialty business as outlined above;

(2) The fee for the reinstatement of a permit; and

(3) A signed affidavit affirming that the tobacco retailer has not violated the prohibitions in Subsection 26-62-201(1)(b).

(a) Until an expired permit is reinstated, a tobacco retailer with an expired permit may not:

(i) Place tobacco in public view;

(ii) Display any advertisement related to tobacco products that promotes the sale, distribution, or use of those products; or

(iii) Sell, offer for sale, or offer to exchange for any form of consideration, tobacco or tobacco products.

(iv) The permit is non-transferrable.

 

R384-324-4. Permit Violations.

(1) A proprietor is in violation of the permit issued under this rule if the proprietor violates:

(a) any provision of Title 26,Chapter 62;

(b) any provision of licensing laws under Section 10-8-41.6 or Section 17-50-333;

(c) any provision of Title 76, Chapter 10, Part 1;

(d) any provision of Title 76,Chapter 10, Part 16;

(e) any regulation restricting the sale and distribution of cigarettes and smokeless tobacco issued by the United States Food and Drug Administration under 21 C.F.R. Part 1140; or

(f) any other provision of state law or local ordinance regarding the sale, marketing, or distribution of tobacco products.

 

R384-324-5. Enforcement.

In enforcing or seeking penalties of any violation as set forth in this rule or Section 26-62-301, the Department and local health departments shall comply with the enforcement provisions found in Title 26, Chapter 62, Part 3.

 

KEY: tobacco, permits, tobacco retailers

Date of Last Substantive Amendment: 2018

Authorizing, and Implemented and Interpreted Law: 26-1-5; 26-1-30(4); 26-62-202(6)

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