by April Corbin Girnus, Nevada Current

Nevada retailers’ track record of selling tobacco products to underage customers is putting the state at risk of losing federal block grants — potentially up to $1.8 million annually.

In response, Attorney General Aaron Ford’s office is asking lawmakers to strengthen penalties against businesses that sell tobacco products to minors and other people under the legal age of 21 years old. Under the proposed penalty structure, businesses could lose their tobacco license for up to six months. The legislation is being supported by public health districts who point to Nevada’s high rates of youth smoking but faces resistance from convenience store owners and lawmakers who believe the state should wait to see the full impact of a new ID verification law that went into effect at the beginning of this year.

The federal government, as part of a master settlement agreement approved in 1998 with tobacco companies, requires states to check retailers for compliance with tobacco age laws. Any state whose violation rate exceeds 20% may be assessed a penalty of up to 10% of its Substance Abuse Treatment and Prevention Block Grants.

The violation rate nationally is less than 10%.

Nevada was the only state in the country with a violation rate above 20% in 2020, and more recently it has been one of around five states above that threshold. In the last three years, Nevada’s violation rate has been as high as 30%.

Nevada currently receives about $18 million in those block grants annually.

Penalties have yet to be assessed against Nevada, but only because the federal government approved a three-year waiver on penalties beginning in December 2019 when the federal legal age for purchasing tobacco was raised from 18 to 21.

Representatives from the attorney general’s office and supporters of the bill said they are concerned that Nevada’s violation rate at the end of the year when that waiver period ends will be greater than 20%.

“We can’t afford to lose those dollars,” said Joelle Gutman, a lobbyist for the Washoe County Health District, which is supporting the bill.

Gutman told lawmakers the grants currently support 27 different organizations — 17 substance abuse treatment centers and providers, and 10 nonprofit coalitions.

According to the Campaign for Tobacco-Free Kids, Nevada has high rates of teen smoking and e-cigarette use compared to the rest of the country. Nationwide, 2% of high school students smoke, while 3.6% of Nevada high schoolers do. Similarly, 14.1% of high school students nationwide use e-cigarettes while 24.1% of Nevada high schoolers do.

Full impact of new law unknown

Since Jan. 1, Nevada retailers have been required “to use scanning technology or an automated software-based system to verify the age of anyone under the age of 40 before making sales of tobacco products.” That change stems from legislation passed by the Legislature in 2021.

That new law correlates with a dramatic drop in Nevada’s violation rate — from 23% in December 2022 to 7% in January 2023.

But representatives from the attorney general’s office believe that improvement will be short lived. Compliance for the first half of February 2023 was 11%.

They also pointed to compliance and violation rates in the months that followed the federal age moving from 18 to 21.

In November 2019, the month before the age adjustment, Nevada’s violation rate was 19.6% — dangerously close to the federal threshold for noncompliance.

In January 2020, the violation rate improved to 7.6%, but it crept up to 10% in February 2020 and then to 17.6% in the first half of March 2020.

Compliance checks were halted at the onset of the covid pandemic but when they resumed in July 2021, the compliance rate was 27%. And they stayed above the 20% threshold until the beginning of this year.

Teresa Benitez-Thompson, the chief of staff at the attorney general’s office, argued that Nevada cannot wait until the next legislative session in 2025 to see whether the new tobacco age verification law keeps the violation rate low.

Not everyone was convinced.

Republican Assemblyman Gregory Hafen II, who sponsored the tobacco age verification legislation in 2021, said he believes Nevada will stay below the 20% violation rate and will not see a repeat of the trend seen in 2019.

“Stores are going above and beyond,” he said. “Everyone has to scan IDs. I’m not sure this level of change (to the penalty structure) is needed.”

Other lawmakers, including Republican Assemblyman PK O’Neill and Democratic Assemblywoman Venicia Considine expressed concern about the impact on businesses who might lose their tobacco license for violating state and federal tobacco age laws.

Consodine said she was looking “for more of a balance.”

Currently, Nevada state law applies a civil penalty of $100 to a person who sells tobacco to an underage customer and issues a warning to the licensee – the individual clerk at a convenience store would be fined, and the convenience store would be given a warning. Penalties increase for repeated violations — topping out at $500 for an individual on their third violation and $2,500 for businesses that are on their fifth violation.

The attorney general’s office is proposing fining the business licensee right away — $500 for the first violation, $1,000 for the second violation, and $2,500 for the third — and suspending the license for up to 180 days for licensees caught violating tobacco laws more than three times in a 24-month period.

Lobbyists for retailers pushed back on the proposed penalties, characterizing the loss of license as a potential death sentence for businesses.

Nevada Petroleum Marketers & Convenience Store Association lobbyist Mark Hackmann told lawmakers tobacco sales make up 33% of non-fuel revenue at convenience stores and that most businesses would not survive losing their tobacco license for even 30 days.

Hackmann noted that surveys show the majority of minors report getting their cigarettes and vape pens indirectly rather than purchasing them directly through retailers.