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Friday Fax – Legislative Update
It was a long, tough week for NCRMA, full of committee hearings and testimony on bills of great interest to retailers throughout North Carolina . The week was topped-off with an avalanche of proposed legislation due to the House Bill Filing Deadline being Wednesday. We are still in the process of reading through the 500-600 bills that were filed just this week and will have a full report on these bills for you next week.
April 22, 2005
1) Methamphetamines
2) Streamlined Sales Tax Update
3) ABC Permit Bill Discussion
4) Violent Video Games
5) Wine Tasting Update
6) Pharmacists Work the Phones/NCRMA Meets With Committee Chairs
7) Budget Update
8) Filed Bills of Interest to Retailers
9) Court of Appeals Hears Pharmacy Case on Mandatory Work Breaks
1) Methamphetamines
On Thursday, the Senate Judiciary II Committee held the second hearing on Senate Bill 686 – Methamphetamine Lab Prevention Act. Senate Bill 686 sponsored by Senator Walter Dalton (D-Rutherford) and Senator John Snow (D-Cherokee) would reclassify cold medicines containing pseudoephedrine as a Schedule V Controlled Substance meaning that these cold medicines (except for gel caps and liquids) would have to be sold to by a pharmacist from behind a pharmacy counter. Senator Walter Dalton focused on the success of Oklahoma and the recent actions by Target and the State of Tennessee as well as the availability of exempted gel caps and liquids as reasons why North Carolina should adopt the Oklahoma model.
Andy Ellen, NCRMA General Counsel, spoke on behalf of the retail industry and pushed for more reasonable regulations similar what Georgia has just enacted. Following NCRMA's testimony and some intense lobbying efforts by NCRMA and Schering-Plough, we seemed to be gaining some traction within the committee. At that point Senator Snow, a district court judge for twenty-seven years and a former prosecutor, stood-up in the committee room (which is unusual since he was seated with the other Judiciary II Committee members) and gave an impassioned five minute speech about the impact this dangerous drug was having on his community including babies born addicted to methamphetamines and that if people were inconvenienced some to try and wipe-out this terrible problem that was fine with him.
Mark Gregory of Kerr Drug was slated to speak next but we determined that there was no need to do so with the way the opinion of the committee was moving. Senator Tom Apodaca (R-Henderson) made a motion for a favorable report and the bill passed. The bill was slightly amended so that multi-state wholesalers of cold medicine that would now be labeled as a Schedule V Controlled Substance would be able to store this product in the same manner as before the effective date of the bill.
The bill now moves to Senate Appropriations because of increased criminal penalties for manufacturing methamphetamines in a dwelling that contains more than four people.
We had spoken with Senator Dalton earlier in the morning before the hearing about his plans for the bill. Senator Dalton asked that we not push for amendments at this time and let him get the bill out of the Senate before the crossover deadline of May 19. He understands that the bill may be changed in the House and we have asked him to not oppose any changes we are able to make in the House to make the bill more reasonable. Senator Dalton is still weighing this decision and pointed to the recent actions by Target and Tennessee . We explained to him that we would prefer something like the Georgia law and that South Carolina seemed to be moving that way. Florida , Virginia and Maryland have no sales restrictions in place at this time.
Obviously, this means that the true battle will take place in the House. We have received good signs from the House that they would like to do something more reasonable with the legislation. Representatives Phil Haire (D-Jackson) and Lorene Coates (D-Rowan) introduced House Bill 1345 yesterday, which is essentially the Georgia law, at NCRMA's request. http://www.ncga.state.nc.us/Sessions/2005/Bills/House/HTML/H1345v1.html
NCRMA has started a grassroots campaign for grocery stores on the website of the Carolinas Food Industry Council (http://www.cficweb.org/ ) and with its pharmacy members. We encourage you to call your Representative today and tell them that Senate Bill 686 goes too far and that you support reasonable restrictions on cold medicine products. These are products that are coming off your shelves – if you want to continue selling these products you need to tell your Representative.
2) Streamlined Sales Tax Update
NCRMA received a draft of the Senate's proposed Streamlined Sales Tax bill this week. It is expected that the bill will be heard in the Senate Finance Committee next Wednesday and NCRMA will testify in favor of the bill at this hearing. The Senate has not yet decided whether this bill will be heard separately or rolled into the Senate Budget. The bill would implement the remaining statutory changes for North Carolina to continue as a participating state in the Streamlined Sales Tax Project as we move towards leveling the playing field between brick and mortar stores and Internet vendors.
3) ABC Permit Discussion
On Tuesday, the House Alcoholic Beverage Control Committee held its first hearing on House Bill 1174. NCRMA has been working with Representative Ross for quite some time to help address the problem of bad actor alcohol permittees in Southeast Raleigh without hurting legitimate operators and put the issue of local alcohol control to rest. During Tuesday's hearing, Representative Paul Miller (D-Durham) stated that he would try and amend the bill to extend the record-keeping requirements and sale restrictions that apply in the North Carolina 's 13 Urban Redevelopment Zones to the approximately 70 economic development zones throughout the State. NCRMA testified on this legislation to the Committee by saying that it still had concerns with the legislation and would continue to work with Representative Ross to get the bill in an acceptable form.
By the end of the week, it appears that this hard work has paid off. Representative Ross called us late Thursday afternoon to come to her office to discuss two proposed NCRMA amendments that Representative Ross has now agreed to support. These two changes should meet Representative Ross's objectives and make the bill palatable for retailers. Just as important, this should put the push for local control of alcohol to rest for some time.
4) Violent Video Games
On Tuesday, the Senate Commerce Committee held its second hearing on Senate Bill 2 – No Violent Obscene Video Games Sold to Minors. NCRMA was told by Senate Leadership prior to the Committee Hearing that the bill would be passed that day and out of the Senate by the end of the week and that we should take up our fight in the House. After NCRMA testified in opposition to Senate Bill 2 in the Commerce Committee, there were a number of questions about the bill's constitutionality and how it would be enforced. Nevertheless, the bill passed out of the Committee and on the Senate floor unanimously. The fight against this legislation has resulted in some interesting allies with retailers, game makers, the Christian Action League and the ACLU all taking up a fight against the bill.
As passed by the Senate, Senate Bill 2 would make it a criminal offense for a retailer to sell a graphically violent video game to someone under the age of 18. Additionally, it would be an unfair and deceptive trade practice for a retailer to sell a video game that was not accurately labeled with the contents of the game. Retailers would also be required to build a separate area where graphically violent video games would not be accessible to minors.
NCRMA knew it might have a hard time halting the bill in the Senate and realized all along that the fight would probably take place in the House. The new battle begins there on Monday.
5) Wine Tasting Update
On Wednesday, Representatives Pryor Gibson (D-Montgomery) and Jim Harrell (D-Surry) introduced House Bill 15000 – Wine Tasting Changes. This language in House Bill 1500 has been agreed to by all three tiers of the alcohol distribution system – wineries, wine wholesalers and retailers. The bill was necessary because of an opinion that was issued by the ABC Commission in October that essentially shut down all wine tastings held in retail stores in North Carolina . This legislation would allow these wine tastings to begin again with certain parameters around the tastings.
6) Budget Update
The House and Senate Appropriations Committees split on Monday so that the Senate could finalize their Budget. It appears that the Senate's targeted deadline of completing their version of the Budget by April 28 th has been pushed back one week.
NCRMA learned this week that Senate leaders were disappointed with the most recent revenue numbers – except for sales tax which seems to be holding up the economy. This has sent Senate leaders back to the drawing board on how to plug the $1 billion deficit. This week two of the three Senate Appropriations Chairs who reside in RJ Reynolds and Lorillard's backyard – Linda Garrou (D-Forsyth) and Kay Hagan (D-Guilford) - backed off a large increase in the cigarette tax despite Dr. Leah Devlin's, the Director of Public Health, plea for a $0.75 increase in the tax.
There continues to be some talk of the Senate putting the Lottery in the Senate Budget along with am increased tobacco and alcohol tax. Some in Senate Leadership believe the only way they can get a lottery through the Senate is to pair it with “sin taxes” that will appeal to the far-left faction of their caucus. One of the questions that remains on the alcohol tax is just who the tax will be placed upon. Although, many have long thought that the tax would be in the form of an excise tax, there is now talk of a $0.02 point-of-sale tax. This would raise $44 million in 2005-06 and $49 million in 2006-07.
Also, look for the sales tax to remain at 7% (7.5% in Mecklenberg County ). In any event, everything is pointing towards grid-lock with a long, long hot summer on Jones Street .
7) Pharmacists Work the Phones/NCRMA Meets With Committee Chairs
As we told you last week, the Health and Human Services Appropriations Subcommittee has proposed reducing the reimbursement paid to pharmacies under Medicaid from AWP-10% to AWP-14%. This reduction would save the state $9.2 million in 2005-2006 and $15 million in 2006-2007. When federal matching dollars are added in it triples to $27 million in 2005-2006 and $45 million in 2006-2007. Independent pharmacists rang the phones of the Health and Human Services Appropriations Subcommittee Chairs Senator Vernon Malone (D-Wake), Senator Bill Purcell (D-Scotland), Representative Jeff Barnhart (R-Cabarrus) and Representative Verla Insko (D-Orange) off the hook late last week and into the weekend about the proposed cut. These calls resulted in an hour and a half meeting on Tuesday with Senator Malone and Senator Purcell to discuss the proposed cuts and plead our case. Both Senators left the meeting committed to fighting to remove the cut from pharmacists with the Chairmen of the Full Appropriations Committee.
8) Filed Bills of Interest to Retailers
As we said in the introduction, there was an avalanche of bills filled in the House this week due to the bill filing deadline. NCRMA will have a full report on these bills next week after we sift through the rubble. Of note we can tell you that the following bills were filed that will have some interest to you:
1) House Bill 1245 – Civil Actions Regarding Food Products – Representatives Dewey Hill (D-Columbus) Pryor Gibson (D-Montgomery), Arlie Culp (R-Randolph), Bill Daughtridge (R-Nash). This bill would prevent frivolous lawsuits against manufacturers, packers, distributors, carriers, holders, sellers, marketers, or advertisers of food products.
2) House Bill 1248 – Identity Theft Protection Act of 2005 – Representative Bruce Goforth (D-Buncombe). This is an omnibus identity theft bill including a requirement for file freezing of credit files stifling instant credit.
3) House Bill 1292 – LRC Study ABC Store Privatization – Representative Paul Miller (D-Durham). This bill would require the study of where private individuals rather than just the state could sell spirituous liquor.
4) House Bill 1313 – Increase the Bad Check Fee - Representative Thomas Wright (D-Wilmington) and Pryor Gibson (D-Montgomery). This bill, introduced at NCRMA's request, increases the bad check fee in North Carolina from $25 to $30.
5) House Bill 1345 – Methamphetamines – Representatives Phil Haire (D-Jackson) and Lorene Coates (D-Rowan). This was filed at NCRMA's request and would implement reasonable sales restrictions on the sale of over-the-counter cold medications.
6) House Bill 1358 – Health Care For All – Representatives Verla Insko (D-Orange), Martha Alexander (D-Mecklenburg) and Thomas Wright (D-New Hanover ). This legislation would place a constitutional amendment on the ballot in November 2006 to guarantee a constitutional right to health care and require the General Assembly to enact a plan to ensure such access by July 1, 2011.
7) House Bill 1518 – Alcoholic Beverage Control Licensees to Recycle Beverage Containers – Representative Joe Hackney. This legislation requires the ABC Commission to develop a model recycling program for businesses holding an on-premises permit to sale alcohol. Permittees would be required to adopt a recycling program meeting the minimum standards of the Commission's model. Containers that are subject to this recycling law would be banned from landfills effective October 1, 2005.
8) House Bill 1531 – Mercury Reduction and Education – Representative Pricey Harrison (D-Guilford). This legislation would prohibits retailers from selling items containing mercury such as thermometers and batteries.
9) Court of Appeals Hears Pharmacy Case On Mandatory Work Breaks
NCRMA staff attended the North Carolina Court of Appeals on Tuesday to hear the North Carolina Board of Pharmacy (Board) versus the North Carolina Rules Review Commission (RRC). Justices Sanford L. Steelman, Jr., Patricia Timmons-Goodson, and Wanda G. Bryant heard oral arguments from both sides. Denise Stanford and Carson Carmichael presented on behalf of the Board of Pharmacy and Will Plyer presented on behalf of the Rules Review Commission. The North Carolina Attorney General's office also presented an opinion issued by the North Carolina Attorney General which favored the Rules Review Commission.
The two primary arguments were regarding the constitutionality of the RRC and the statutory authority of the Board to mandate pharmacies to provide work-breaks. NCRMA has been in involved in this issue since its origin in 1998 and has a significant interest in the Rules Review Commission maintaining its constitutional power to reject administrative rules and in halting the Board of Pharmacy eagerness to regulate both pharmacists and pharmacies. NCRMA organized the writing and funding of amicus briefs with other interested business organizations.
We expect a decision in this case in three to six months and it is likely that the case would be appealed to the Supreme Court regardless of which side prevails at the Court of Appeals level.
‘TIL NEXT WEEK
Fran Preston
Andy Ellen
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