DLL commissioner says moving wholesale tobacco licensing to Liquor and Lottery will strengthen enforcement

Wendy Knight, commissioner of the Department of Liquor and Lottery, told the Housing Services Committee that a pending bill to transfer wholesale tobacco licensing from the tax department to DLL would allow better enforcement across the supply chain and strengthen penalties for retailers who sell to minors.

Knight said the current split — wholesale licensing at the tax department and retail licensing at DLL — leaves regulators without a complete, public view of wholesalers, which complicates compliance work. "We don't even actually know who is a wholesale license," she said, and argued that placing wholesale licensing under DLL would make wholesaler records public and streamline investigations.

The bill would also raise the retail tobacco license fee from about $100 to $150 and the tobacco-substitute endorsement from $50 to $75, changes Knight described as roughly inflation-adjusted. The draft sets an annual wholesale fee at $1,245 for wholesalers. Knight said DLL supports those increases but would not back substantially higher fees that could burden small businesses.

Knight gave lawmakers several enforcement metrics. She said DLL conducted 679 retail compliance checks in 2025 with 59 failures — an 8.6% failure rate — and that the agency performed 119 online compliance checks in 2025 with 29 violations (about 24%). For 2026 to date, DLL reported 66 online checks and five referrals to the Attorney General's Office (about a 7.5% referral rate so far). "We have about a 92% compliance rate," she added.

Committee members questioned how the bill differentiates administrative penalties issued by the Board of Liquor and Lottery from civil penalties handled under Title 7 and the judicial bureau. Representative John East raised a drafting concern about language that refers to buyers "between 17 and 20," saying the phrasing might be read as applying only to 18- and 19-year-olds and could weaken the intent of the 90% compliance target. Knight and members said they would consider clarifying the statutory language in markup.

Members also pressed Knight on whether DLL has the staffing to take on wholesale oversight and additional investigative work. Knight said DLL already runs retail enforcement with an online licensing portal and 14 sworn investigators and that licensing wholesalers would not be a significant lift for the department. She suggested that a separate investigator position some witnesses have requested should come through the Attorney General's Office budget if the AG is the primary user of that role; Knight cautioned, "you're funding this position with penalties, and I think you can understand that that's a real, perverse incentive." She offered to work with the AG's office and provide written follow-up on staffing and fine-collection figures.

On product tracking, committee members asked whether tax stamps or carton-stamping systems used elsewhere could help trace product origins and tax compliance. Knight said the tax department had advocated for a study and that the Attorney General's Office might lead feasibility work; DLL will follow up with details.

Knight also emphasized the bill's ban on deceptive vaping devices and the codification of minimum administrative penalties and consecutive license suspensions for repeat violators. She said the changes would give DLL clearer tools to remove unlicensed or deceptive products from store shelves.

The committee did not vote on the bill at this hearing. Representative Dan Noyes volunteered to serve as the committee's reporter on S198. Knight said she would provide written testimony with requested follow-ups, including fee-history and enforcement-collection numbers.

What happens next: lawmakers indicated they would review the statutory language in markup, request written follow-up from DLL and the tax department on stamps and collections, and consider whether budget requests for investigative staff should come from the Attorney General's Office.