In this issue:
- Legislature on break until Jan. 8
- Whitmer signs marketplace facilitator bills
- Treasury opines that kombucha subject to deposit law as of May 1
- Michigan Supreme Court declines to issue an advisory opinion on min. wage, medical leave laws
- Federal government raises tobacco/vape purchase age to 21
- House committee discusses drug importation from Canada
- House and senate swap e-prescribing bills
- Regulatory round-up
Legislature on break until Jan. 8
The legislature adjourned for the year on Dec. 19 and will not return until Wednesday, Jan. 8. Accordingly, we’ll send updates on an as-needed basis until the legislature returns and regular business resumes. From all of us at MRA, we wish you a wonderful holiday season and hope the warmer than usual weather is having a positive impact on pre- and post-holiday sales!
Whitmer signs marketplace facilitator bills
On December 12, Gov. Gretchen Whitmer signed HB 4540-4543 into law, giving retailers an early Christmas present of sales tax fairness for most retail sales. Public Acts 143–144 of 2019 correct a loophole that currently allows marketplace sellers who sell on online retail platforms like Amazon and eBay to avoid collecting and remitting sales taxes. It brings us closer to true sales tax parity for in-state retailers who have collected taxes and had to compete at a great disadvantage against online, out-of-state companies. This legislation reflects important changes in the retail economy and ensures that all sales are treated the same way in regards to tax collection.
Public Acts 145–146 codify Treasury’s already implemented guidance on the U.S. Supreme Court’s Wayfair decision. They ensure that out-of-state retailers who sell more than $100,000 into Michigan or make 200 or more separate Michigan sales must collect and remit our sales tax.
MRA hopes these laws will mark the end of showrooming, where consumers visit Michigan stores but buy the product online for cheaper because no sales tax was charged. By capturing these facilitated sales, Michigan joins 38 states in asking for fair tax treatment of retail sales.
Treasury opines that kombucha subject to deposit law as of May 1
In a notice published on Dec. 11, the Michigan Department of Treasury stated it believes kombucha products should now be subject to the bottle deposit law. This change is due to the state adopting the federal definition of “non-alcoholic” and the inclusion of “non-alcoholic carbonated drinks” under the deposit law. To allow manufacturers and retailers time to comply with the new interpretation the state has said it will not enforce this change until May 1, 2020.
The FDA considers a beverage to be non-alcoholic if it contains less than 0.5% alcohol by volume. Commercially-sold kombucha must not exceed that threshold at all stages of the fermenting process in order to be sold as a regular beverage not subject to alcohol laws. Treasury previously used the interpretation that trace amounts of alcohol in a product meant it was not alcohol-free or non-alcoholic. MRA plans to submit a letter challenging the state’s interpretation.
In related news, Rep. Jon Hoadley (D-Kalamazoo) introduced House Bill 5306 to expand Michigan’s bottle deposit law, and Sen. Sean McCann (D-Kalamazoo) will introduce a similar bill in the Senate in January. The bills aim to expand the 10-cent refundable deposit to include all non-carbonated beverages while exempting milk containers. HB 5306 calls for universal redemption of all containers regardless of whether a retailer sells a particular brand and/or product. It also includes lower redemption thresholds for retailers under 5,000 square feet ($10/day max).
MRA has been in workgroup meetings on this subject; and while the sponsors heard our concerns, it has not changed their direction. It is unlikely the bills will receive serious consideration in either chamber, but there was a lot of support expressed in the workgroup meetings, so we aren’t taking this lightly. In the House, we requested the bill be sent to a committee other than Natural Resources (where the bills have typically been referred) since the chair supports the bottle deposit law. HB 5306 was referred to the House Regulatory Reform Committee instead.
MRA and the Michigan Recycling Partnership released statements to the media when the bills were first announced expressing our opposition to expansion and concerns with the proposed legislation.
MI Supreme Court declines to issue advisory opinion on min. wage, medical leave laws
Last week the Michigan Supreme Court in a 4-3 decision declined to issue an advisory opinion and review the legislature’s actions in adopting the amending ballot proposals to raise the minimum wage and require employers to offer paid medical leave. The court made its determination since no current controversy seems to exist and the majority of justices felt the court did not have proper jurisdiction to weigh in at this point.
Now that the request for opinion has been concluded, it is likely a matter of time before someone either challenges the law in court and/or the attorney general weighs in on the laws. While the future of the two laws is uncertain, for now, employers should continue following the amended laws that went into effect last March. Any legal action challenging the laws’ validity could take years to reach a final conclusion.
Federal government raises tobacco/vape purchase age to 21
Included as a provision in the federal spending bill signed into law by President Trump on Dec. 20, the legal age to buy tobacco or vaping products will increase to 21. The final spending bill added a section that amends the Federal Food, Drug and Cosmetic Act to formally raise the purchase age from 18 to 21 for tobacco and vaping products. The change requires the Secretary of Health and Human Services to publish a final rule updating the regulations within 180 days. Once filed with the Federal Register, the rule will take effect no later than 90 days.
However, the FDA published a notice on its website that it It is now illegal for a retailer to sell any tobacco product – including cigarettes, cigars and e-cigarettes – to anyone under 21. We’re requesting clarification on that interpretation but retailers should prepare for the age change and may want to consider implementing it earlier.
House committee discusses drug importation from Canada
The House Health Policy Committee took testimony on legislation last week that would allow the state to set up a system to import drugs from Canada at hypothetically cheaper prices. Under the proposed legislation, HB 4978 and HB 5107 (with similar legislation in the Senate introduced as SB 525), the imports would be handled directly by pharmacies who would then dispense the products to consumers. Testimony bemoaned the high prices on certain drugs with a highlight on insulin products. However, Canadian officials also spoke and warned that the Canadian drug supply was not sufficient to fulfill U.S. demands. In addition, the U.S. federal government does not allow imports of biologic products (insulin is a biologic). No immediate path forward was identified but we expect discussions will continue as legislators seek solutions to lower drug prices for consumers.
House and Senate swap e-prescribing bills
In addition to passing marketplace facilitator legislation, before leaving town the house and senate approved their respective versions of our e-prescribing legislation, HB 4217, SB 248, and SB 254. The bills will require most prescriptions be sent electronically to the pharmacy of the patient’s choice by 2021, the same timeline as a requirement for controlled substance prescriptions issued under Medicaid Part D. The bills include exemptions to provide reasonable care and allow for a waiver process for physicians who cannot meet the requirement due to technological or financial hardship. The bills have now been vetted by both chambers and should move quickly towards completion in 2020. There are several points of difference between the house and senate version and MRA has requested a meeting with the sponsors and health policy committee chairs early in the new year to settle on a final version. We’re optimistic that legislation will be sent to the governor in the first few months of the year.
Regulatory round-up:
- REMINDER: minimum wage increases to $9.65/hour on Jan. 1, 2020.
- The Dept. of Environment, Great Lakes and Energy (EGLE) recently announced grants of up to $70,000 for public or private entities that install direct current fast chargers for electric vehicles. Information on the grant application are available on EGLE’s website. EGLE will accept and process applications on a first come, first serve basis until funding is exhausted.
- The Michigan Health Endowment Fund commissioned Altarum to create resources to help clinicians, providers, payers and others navigate the laws surrounding PHI (protected health information) and when consent is necessary to share health information. These resources are intended to increase the flow of patient information from clinician to clinician, particularly with respect to behavioral health information, resulting in improved care coordination across the state of Michigan. MDHHS has made these resources available at www.michigan.gov/PHIConsentTool.
- The state is seeking residents feedback on the opioid epidemic through a series of local town halls.
- $1.5 million in community recycling program grants will be available in 2020 to municipalities, townships, counties or regional authorities who seek to improve material quality in residential curbside and drop-off recycling programs. Up to $150,000 in grant funding will be available per application.
- Proposed policy changes to Michigan’s Medicaid coverage of Active Pharmaceutical Ingredients (API) and Excipients on compound drug claims was announced by MDHHS in pharmacy bulletin 1933-Pharmacy. Comments are due by Jan. 21, 2020.
- $450,000 is available for clean diesel and alternative fuel engine and equipment replacement projects. Private businesses are eligible to apply. Applications will be accepted until 5 p.m. on Jan. 30, 2020, and projects must be completed by August 2021.
- Updated draft rule language available for changes to fireworks safety general rules. The draft rule changes would allow online applications, add homemade fireworks to the definition of fireworks, prohibit exterior storage within 20 feet of a permanent consumer fireworks retail store, require immediate removal of damaged products and modifies flame break requirements.
