Smokefree exemptions for smoke shops – 8/25/10

Q: The Oregon Indoor Clean Air Act exempts smoke shops that meet certain requirements (see exemptions here). Hookah lounges have applied for the exemption and have met the requirements, and have therefore been certified as smoke shops. Oregon would like to know:

1. Do other states have exemptions in their smokefree workplace laws that are being used by hookah/cigar lounges to be able to legally operate? If so, please provide the exemption language.
    
2. Does any state have exemption language that has "worked?" In other words, is the exemption so specific that it has been able to prevent the unintended consequence of creating a new class of smoking lounges, hookah, cigar, or otherwise? If so, please share the exemption language.

A:

1. Arizona: The Smoke-Free Arizona Act has 7 exemptions (see them here), one of which is retail tobacco stores. Hookah and cigar lounges may qualify for the retail tobacco store exemption as long as they meet the exemption criteria. This would be the only exemption that they could potentially qualify for. The language of the retail tobacco store exemption does not exclude establishments that sell and serve liquor and/or food/beverages, so long as they meet the criteria below.
    
   The Smoke-Free Arizona Act, A.R.S. § 36-601.01, defines retail tobacco stores as “a retail store that derives the majority of its sales from tobacco products and accessories.” In addition, in order to qualify as a retail tobacco store in Arizona, the establishment must:
    
   • Be physically separated (“all space between a floor and ceiling which is enclosed on all sides by solid walls or windows (exclusive of door or passageway) and independently ventilated from smoke-free areas, so that air within permitted smoking areas does not drift or get vented into smoke-free areas) so that smoke from retail tobacco stores does not infiltrate into areas where smoking is prohibited
      
   • Derive at least 51% of its gross income from tobacco products and accessories
      
   • Have an affidavit and supporting documents that enable the Department to determine the percent of gross income derived from the sale of tobacco products and accessories
      
2. Iowa: Iowa’s Smokefree Act exempts a “retail tobacco store” where revenue from the sale of tobacco products makes up greater than 80% the retail store’s gross revenue. There is another requirement that smoke from these establishments not “infiltrate” into areas where smoking is prohibited.
    
   There are only three hookah bars in Iowa that we are aware of. All three are operating under the exemption. We haven’t seen a proliferation of other types of smoking lounges or cigar bars, though this would be possible under the law as long as they met the greater than 80% gross revenue requirement. Here is the language:
    
   Smokefree Air Act
   1 22 Sec. 2. NEW SECTION. 142D.2 DEFINITIONS.
   
   "Retail tobacco store" means a retail store utilized primarily for the sale of tobacco products and accessories and in which the sale of other products is incidental to the sale of tobacco products.
   
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   8 4 Sec. 4. NEW SECTION. 142D.4 AREAS WHERE SMOKING NOT REGULATED.
   
   

   Retail tobacco stores, provided that smoke from these locations does not infiltrate into areas in which smoking is otherwise prohibited under this chapter.
   
   Administrative Rules
   “Incidental to the sale of tobacco products” means that the gross revenue of a retail tobacco store derived from the sale of products other than tobacco products is not more than 20% of the retail tobacco store’s total gross revenue.
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   “Infiltrate” means to permeate an area where smoking is prohibited by passing through a wall, ceiling, floor, window, door, or ventilation system to the extent that an individual can smell secondhand smoke.
    

3. Massachusetts: The Massachusetts Smoke-Free Workplace Law provides an exemption for smoking bars. In order to be licensed as a smoking bar an establishment must obtain a Department of Revenue (DOR) smoking bar permit. To be eligible for the permit, the establishment must be able to prove on a quarterly basis that at least 51% of its total income comes from the sale of tobacco products. These conditions ensure that establishments that truly rely on on-premises tobacco smoking as a major part of their business can continue to do so.
    
4. Michigan: In Michigan, cigar bars and tobacco specialty retail stores are exempted. A hookah lounge may be exempt from the smoke free law as a tobacco specialty retail store.
    
   The exemption language for both cigar bars and tobacco specialty retail stores can be found in the same section of the law, albeit under different subsections. The language is as follows:
    
   Cigar Bars:
   Sec. 12606a. (1) A cigar bar in existence on the effective date of this section that meets all of the requirements of this section is exempt from the smoking prohibition of section 12603 and may allow smoking on its premises. To qualify for the exemption under this section, the person who owns or operates a cigar bar shall file an affidavit with the department on or before the expiration of 30 days after the effective date of this section and on January 31 of each year after the effective date of this section. The affidavit shall be signed by the owner or operator of the cigar bar and shall certify that the cigar bar was in existence on the effective date of this section and that it meets all of the following requirements:
   1. In the 30-day period immediately preceding the effective date of this section, the cigar bar generated 10% or more of its total gross annual income from the on-site sale of cigars and the rental of on-site humidors.
   2. For each calendar year after the calendar year in which the first affidavit is filed under this subsection, the cigar bar generates 10% or more of its total gross annual income from the on-site sale of cigars and the rental of on-site humidors.
   3. The cigar bar is located on premises that are physically separated from any areas of the same or adjacent establishment in which smoking is prohibited under this part or part 129 and where smoke does not infiltrate into those nonsmoking areas. As used in this subdivision, “physically separated” means an area that is enclosed on all sides by any combination of solid walls, windows, or doors that extend from the floor to ceiling.
   4. The cigar bar has installed on its premises an on-site humidor.
   5. The cigar bar prohibits entry to a person under the age of 18 during the time the cigar bar is open for business.
   6. The cigar bar allows only the smoking of cigars on the premises that retail for over $1.00 per cigar.
   7. The cigar bar prohibits the smoking of all other tobacco products.
    
   Tobacco Specialty Retail Stores:
   Sec. 12606(a)
   (2) A tobacco specialty retail store in existence on the effective date of this section that meets all of the requirements of this section is exempt from the smoking prohibition of section 12603 and may allow smoking on its premises. To qualify for the exemption under this section, the person who owns or operates a tobacco specialty retail store shall file an affidavit with the department on or before the expiration of 30 days after the effective date of this section and on January 31 of each year after the effective date of this section. The affidavit shall be signed by the owner or operator of the tobacco specialty retail store and shall certify that the tobacco specialty retail store was in existence on the effective date of this section and that it meets all of the following requirements:
    
   1. In the 30-day period immediately preceding the filing of the effective date of this section, the tobacco specialty retail store generated 75% or more of its total gross annual income from the on-site sale of tobacco products and smoking paraphernalia.
   2. For each calendar year after the calendar year in which the first affidavit is filed under this subsection, the tobacco specialty retail store generated 75% or more of its total gross annual income from the on-site sale of tobacco products and smoking paraphernalia.
   3. The tobacco specialty retail store is located on premises that are physically separated from any areas of the same or adjacent establishments in which smoking is prohibited under this part or part 129 and where smoke does not infiltrate into those nonsmoking areas. As used in this subdivision, “physically separated” means an area that is enclosed on all sides by any combination of solid walls, windows, or doors that extend from the floor to ceiling.
   4. The tobacco specialty retail store prohibits entry to a person under the age of 18 during the time the tobacco specialty retail store is open for business.
    
   (3) The department may request additional information from a cigar bar or tobacco specialty retail store to verify that the cigar bar or tobacco specialty retail store meets the requirements of this section. A cigar bar or tobacco specialty retail store shall comply with requests from the department under this section.
    
   (4) Except as otherwise provided in this subsection, a cigar bar or tobacco specialty retail store that does not meet the requirements of this section or violates this section is not exempt from the smoking prohibition of section 12603 and shall immediately prohibit smoking on its premises. A cigar bar or tobacco specialty retail store that meets all of the requirements of this section other than filing the affidavit as required under subsection (1) or (2), retains its exemption and may continue to allow smoking during the period beginning on the date the affidavit is due and ending on the expiration of 21 days after that date. However, if the affidavit remains unfiled after the 21-day grace period, the cigar bar or tobacco specialty retail store is not exempt from the smoking prohibition of section 12603 and shall immediately prohibit smoking on its premises. A cigar bar or tobacco specialty retail store that loses its exemption under this subsection is not exempt from the smoking prohibition of section 12603, shall immediately prohibit smoking on its premises, and may only again qualify for the exemption under this section by filing an affidavit and meeting all of the requirements of subsection (1) or (2), as applicable.
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   In order to be granted the exemption, cigar bars and tobacco specialty retail stores had to be in existence on the effective date of the law, May 1, 2010. Moreover, those establishments were required to show they met the requisite revenue requirements in the 30-day period immediately preceding the effective date of the law.
    
   We initially anticipated over one thousand applications for exemption, but received 307 total applications. Of those establishments that applied, 85 were granted cigar bar exemptions, and 173 were granted tobacco specialty retail store exemptions. Because of the language used in the statute, (“in existence on the effective date” of the law), no more tobacco specialty retail stores or cigar bars will be approved. Michigan has decided that these exemptions may be transferred, but only with approval by the state.
    
   It should also be noted that if the establishments fail to meet the requirements set forth by the statute, they may lose their exemption.
    
5. Minnesota: Hookah establishments are using the tobacco shop exemption in the revised Minnesota Clean Indoor Air Act to allow smoking. The way that the statute reads makes it nearly impossible to enforce against any smoking that takes place in an establishment that meets the specific criteria provided in the attached statute – subdivision 4.
    
6. Montana: Our law took care of this in the “definitions” section:

   "Smoking" or "to smoke" includes the act of lighting, smoking, or carrying a lighted cigar, cigarette, pipe, or any smokable product.

   When we receive calls about hookah bars, we simply point them to this language and tell them a hookah bar won’t be legal. The only exemption we have is for 30% of hotel rooms.
    
7. New Jersey: New Jersey's 2006 Smokefree Air Act has worked very well in preventing any new smoking bars/lounges (including hookah and cigar smoking) from opening. There are several requirements to be met in order to allow smoking bars/lounges. A key exemption requirement is that the law only allows a smoking bar/lounge exception if it existed prior to December 31, 2004, and that establishment cannot change location or increase in size. There are income requirements as well. See NJSA 26:3D-59 below, as well as a summary of the exemption requirements here.

   NJSA 26:3D-59 Exceptions.
   5. The provisions of this act shall not apply to:
   a. any cigar bar or cigar lounge that, in the calendar year ending December 31, 2004, generated 15% or more of its total annual gross income from the on-site sale of tobacco products and the rental of on-site humidors, not including any sales from vending machines, and is registered with the local board of health in the municipality in which the bar or lounge is located. The registration shall remain in effect for one year and shall be renewable only if:

   1. in the preceding calendar year, the cigar bar or lounge generated 15% or more if its total annual gross income from the on-site sale of tobacco products and the rental of on-site humidors, and
   2. the cigar bar or cigar lounge has not expanded its size or changed its location since December 31, 2004;

   In addition, the 2007 NJ regulations that help to implement the 2006 Act make it clear that tobacco retail establishments (TRE) cannot allow onsite smoking, except to sample a product if the intent is to consume more of that product off-premises (testing expensive cigar before purchasing a box). A TRE is a 'cash and carry' business according to the 2007 regulations, so evidence of tables and chairs, ashtrays, etc. may be an indication that the TRE is allowing onsite consumption of product. The regulations also discuss that a TRE with a smoking waiver can only sell 'incidental' non-tobacco items, with 'incidental' defined as 'minor or occasional'. The regulations state that serving any food or beverages for onsite consumption is 'not incidental', and therefore, their sale cannot allowed if an establishment obtains a TRE waiver. See links to the 2007 NJ regulations here.
    
8. Ohio: Ohio would fall into category 1 [states that have exemptions in their smokefree workplace laws that are being used by hookah/cigar lounges to be able to legally operate].  The language for Retail Tobacco Stores could be a possible exemption for someone wanting to start a business for hookah/cigar smoking. Please note, even though it says Private Clubs are exempt, this is not the case as of June 2008 through an Ohio Supreme Court ruling.
    
9. Rhode Island: In Rhode Island there are exemptions for retail establishments that fit the definition of smoking bar or retail tobacco store. Statute and definitions follow:
   
   RHODE ISLAND CHAPTER 23-20.10, Public Health and Workplace Safety Act
    
   SECTION 23-20.10-6
   § 23-20.10-6 Where smoking is not regulated. – (a) Notwithstanding any other provision of this chapter to the contrary, the following areas shall be exempt from the provisions of this chapter:
   (1) Private residences, except when used as a licensed child care, adult day care or health care facility;
   (2) Hotel and motel rooms that are rented to guests and are designated as smoking rooms; provided, however, that not more than fifty percent (50%) of rooms rented to guests in a hotel or motel may be so designated;
   (3) Retail tobacco stores; provided that smoke from these places does not infiltrate into areas where smoking is prohibited under the provisions of this chapter;
   (4) Private and semi-private rooms or designated areas in assisted living residences and nursing facilities as allowed by regulation of the department of health under chapters 17.4 and 17 of this title;
   (5) Outdoor areas of places of employment, except those covered by the provisions of § 23-20.10-5;
   (6) Any smoking bar as defined in § 23-20.10-2(15);
   (7) [Deleted by P.L. 2005, ch. 22, § 1 and P.L. 2005, ch. 23, § 1].
   (8) [Deleted by P.L. 2005, ch. 22, § 1 and P.L. 2005, ch. 23, § 1].
    (b) The provisions of this chapter shall not apply to any stage performance provided that smoking is part of a theatrical production
    
   SECTION 23-20.10-2
   § 23-20.10-2 Definitions. – The following words and phrases, whenever used in this chapter, shall be construed as defined in this section:
    
    "Retail tobacco store" means a retail store utilized primarily for the sale of tobacco products and accessories in which the total annual revenues generated by the sale of other products are no greater than twenty-five percent (25%) of the total revenue for the establishment. The division of taxation shall be responsible for the determination under this section and shall promulgate any rules or forms necessary for the implementation of this section.
    
   "Smoking bar" means an establishment whose business is primarily devoted to the serving of tobacco products for consumption on the premises, in which the annual revenues generated by tobacco sales are greater than fifty percent (50%) of the total revenue for the establishment and the serving of food or alcohol is only incidental to the consumption of such tobacco products. The establishment must annually demonstrate that revenue generated from the serving of tobacco products is greater than the total combined revenue generated by the serving of beverages and food. The division of taxation in the department of administration shall be responsible for the determination under this section and shall promulgate any rules or forms necessary for the implementation of this section. (b) Smoking bars shall only allow consumption of food and beverages sold by the establishment on the premises and the establishment shall have public access only from the street. (c) Any smoking bar as defined herein, is required to provide a proper ventilation system which will prevent the migration of smoke into the street.
    
10. Washington: Washington State’s Smoking in Public Places Law (RCW 70.160) bans smoking in public places and places of employment. The exemptions listed in the bill are for private clubs and residences:

    A public place does not include a private residence. This chapter is not intended to restrict smoking in private facilities which are occasionally open to the public except upon the occasions when the facility is open to the public.

    Hookah bars have sought to claim that they are private clubs and use volunteers rather than employees. Legal challenges on this issue are likely. Since local health departments are responsible for enforcing the law, those challenges would probably happen at that level.
    
    We would have concerns about any exemptions and would expect that such exemptions would weaken the public health impact of the law.

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Editor’s note: For further information on state regulations governing hookah use, please see the following archived Help Your Peers questions:

• State Hookah Regulations – 8/12/10
• Cigar and hookah bars – 1/19/09
• Regulation of hookah bars – 7/21/05

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