BILL NUMBER: AB 3092 CHAPTERED 09/27/04 CHAPTER 822 FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2004 APPROVED BY GOVERNOR SEPTEMBER 27, 2004 PASSED THE SENATE AUGUST 28, 2004 PASSED THE ASSEMBLY AUGUST 28, 2004 AMENDED IN SENATE AUGUST 26, 2004 AMENDED IN SENATE AUGUST 23, 2004 AMENDED IN SENATE JUNE 16, 2004 AMENDED IN SENATE JUNE 2, 2004 AMENDED IN ASSEMBLY APRIL 14, 2004 INTRODUCED BY Assembly Member Jerome Horton MARCH 11, 2004 An act to amend Sections 22978.4 and 22980.1 of, and to add Section 22971.4 to, the Business and Professions Code, and to amend Section 308 of the Penal Code, relating to cigarettes, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 3092, Jerome Horton. Cigarettes. (1) The California Cigarette and Tobacco Products Licensing Act of 2003 provides for the licensure, by the State Board of Equalization, of manufacturers, distributors, wholesalers, importers, and retailers of cigarette or tobacco products that are engaged in business in California and prohibits retailers, manufacturers, distributors, and wholesalers from distributing or selling those cigarette and tobacco products unless they are in compliance with these licensure requirements. This bill would exempt from licensure requirements any person or entity that is exempt from regulation under the Cigarette and Tobacco Products Licensing Act of 2003 by the United States Constitution, federal law, or the California Constitution. This bill would also require a distributor or wholesaler that is subject to that act to specify in each invoice for the sale of tobacco products that all taxes on cigarette and tobacco products are included in the total amount of the invoice. (2) The Cigarette and Tobacco Products Tax Law requires that an appropriate stamp be affixed to, or that an appropriate meter impression be made upon, each package of cigarettes prior to distribution. Existing law requires the State Board of Equalization, effective January 1, 2005, to replace the existing stamps and meter impressions with a stamp or meter impression that can be read by a scanning or similar device, and encrypted with specified information. Existing law authorizes the State Board of Equalization to prescribe, by regulation, the method and manner by which the stamps and meter impressions are to be affixed to each package of cigarettes. This bill states the intent of the Legislature that the State Board of Equalization has the authority to implement these changes by regulation in a manner that does not affect commerce within this state. (3) Existing law provides that every person, firm, or corporation that sells, or deals in tobacco or any preparation thereof, shall post conspicuously and keep so posted in his, her, or their place of business at each point of purchase a required notice, and any person failing to do so shall, upon conviction, be punished by a fine of $10 for the first offense and $50 for each succeeding violation of this provision, or by imprisonment for not more than 30 days. This bill would increase the amounts of those fines to $50 for the first offense, $100 for the 2nd offense, $250 for the 3rd offense, and $500 for the 4th and each subsequent offense. (4) This bill would incorporate additional changes made by this act to Section 308 of the Penal Code, as proposed to be made by AB 384, to be operative only if AB 384 and this bill are both enacted and take effect, and this bill is enacted last. (5) This bill would declare that it is to take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 22971.4 is added to the Business and Professions Code, to read: 22971.4. No person is subject to the requirements of this division if that person is exempt from regulation under the United States Constitution, the laws of the United States, or the California Constitution. SEC. 2. Section 22978.4 of the Business and Professions Code is amended to read: 22978.4. (a) Each distributor and each wholesaler shall include the following information on each invoice for the sale of cigarettes or tobacco products: (1) The name, address, and telephone number of the distributor or wholesaler. (2) The license number of the distributor or the wholesaler as provided by the board. (3) The following statement: "All California cigarette and tobacco product taxes are included in the total amount of this invoice." (4) The name, address, and license number of the retailer, distributor, or wholesaler to whom cigarettes or tobacco products are sold. (5) An itemized listing of the cigarettes or tobacco products sold. (b) Each invoice for the sale of cigarettes or tobacco products shall be legible and readable. (c) Failure to comply with the requirements of this section shall be a misdemeanor subject to penalties pursuant to Section 22981. SEC. 3. Section 22980.1 of the Business and Professions Code is amended to read: 22980.1. (a) No manufacturer shall sell cigarettes to a distributor, wholesaler, importer, retailer, or any other person who is not licensed pursuant to this division or whose license has been suspended or revoked. (b) (1) Except as provided in paragraph (2), no distributor, wholesaler, or importer shall sell cigarettes or tobacco products to a retailer, wholesaler, distributor, or any other person who is not licensed pursuant to this division or whose license has been suspended or revoked. (2) This subdivision does not apply to any sale of cigarettes or tobacco products by a distributor, wholesaler, importer, or any other person to a retailer, wholesaler, distributor, or any other person that the state, pursuant to the United States Constitution, the laws of the United States, or the California Constitution, is prohibited from regulating. (c) No retailer, distributor, wholesaler, or importer shall purchase packages of cigarettes from a manufacturer who is not licensed pursuant to this division or whose license has been suspended or revoked. (d) No retailer, distributor, wholesaler, or importer shall purchase cigarettes or tobacco products from any person who is required to be licensed pursuant to this division but who is not licensed or whose license has been suspended or revoked. (e) Each separate sale to, or by, a retailer, wholesaler, distributor, importer, manufacturer, or any other person who is not licensed pursuant to this division shall constitute a separate violation. (f) No manufacturer, distributor, wholesaler, or importer may sell cigarette or tobacco products to any retailer or wholesaler whose license has been suspended or revoked unless all outstanding debts of that retailer or wholesaler that are owed to a wholesaler or distributor for cigarette or tobacco products are paid and the license of that retailer or wholesaler has been reinstated by the board. Any payment received from a retailer or wholesaler shall be credited first to the outstanding debt for cigarettes or tobacco products and must be immediately reported to the board. The board shall determine the debt status of a suspended retailer or wholesaler licensee 25 days prior to the reinstatement of the license. (g) No importer, distributor, or wholesaler, or distributor functioning as a wholesaler, or retailer, shall purchase, obtain, or otherwise acquire any package of cigarettes to which a stamp or meter impression may not be affixed in accordance with subdivision (b) of Section 30163 of the Revenue and Taxation Code, or any cigarettes obtained from a manufacturer or importer that cannot demonstrate full compliance with all requirements of the federal Cigarette Labeling and Advertising Act (15 U.S.C. Sec. 13335a et seq.) for the reporting of ingredients added to cigarettes. (h) Failure to comply with the provisions of this section shall be a misdemeanor subject to penalties pursuant to Section 22981. SEC. 4. Section 308 of the Penal Code is amended to read: 308. (a) Every person, firm, or corporation which knowingly or under circumstances in which it has knowledge, or should otherwise have grounds for knowledge, sells, gives, or in any way furnishes to another person who is under the age of 18 years any tobacco, cigarette, or cigarette papers, or any other preparation of tobacco, or any other instrument or paraphernalia that is designed for the smoking or ingestion of tobacco, products prepared from tobacco, or any controlled substance, is subject to either a criminal action for a misdemeanor or to a civil action brought by a city attorney, a county counsel, or a district attorney, punishable by a fine of two hundred dollars ($200) for the first offense, five hundred dollars ($500) for the second offense, and one thousand dollars ($1,000) for the third offense. Notwithstanding Section 1464 or any other provision of law, 25 percent of each civil and criminal penalty collected pursuant to this subdivision shall be paid to the office of the city attorney, county counsel, or district attorney, whoever is responsible for bringing the successful action, and 25 percent of each civil and criminal penalty collected pursuant to this subdivision shall be paid to the city or county for the administration and cost of the community service work component provided in subdivision (b). Proof that a defendant, or his or her employee or agent, demanded, was shown, and reasonably relied upon evidence of majority shall be defense to any action brought pursuant to this subdivision. Evidence of majority of a person is a facsimile of or a reasonable likeness of a document issued by a federal, state, county, or municipal government, or subdivision or agency thereof, including, but not limited to, a motor vehicle operator's license, a registration certificate issued under the federal Selective Service Act, or an identification card issued to a member of the Armed Forces. For purposes of this section, the person liable for selling or furnishing tobacco products to minors by a tobacco vending machine shall be the person authorizing the installation or placement of the tobacco vending machine upon premises he or she manages or otherwise controls and under circumstances in which he or she has knowledge, or should otherwise have grounds for knowledge, that the tobacco vending machine will be utilized by minors. (b) Every person under the age of 18 years who purchases, receives, or possesses any tobacco, cigarette, or cigarette papers, or any other preparation of tobacco, or any other instrument or paraphernalia that is designed for the smoking of tobacco, products prepared from tobacco, or any controlled substance shall, upon conviction, be punished by a fine of seventy-five dollars ($75) or 30 hours of community service work. (c) Every person, firm, or corporation that sells, or deals in tobacco or any preparation thereof, shall post conspicuously and keep so posted in his, her, or their place of business at each point of purchase the notice required pursuant to subdivision (b) of Section 22952 of the Business and Professions Code, and any person failing to do so shall, upon conviction, be punished by a fine of fifty dollars ($50) for the first offense, one hundred dollars ($100) for the second offense, two hundred fifty dollars ($250) for the third offense, and five hundred dollars ($500) for the fourth offense and each subsequent violation of this provision, or by imprisonment in a county jail not exceeding 30 days. (d) For purposes of determining the liability of persons, firms, or corporations controlling franchises or business operations in multiple locations for the second and subsequent violations of this section, each individual franchise or business location shall be deemed a separate entity. (e) It is the Legislature's intent to regulate the subject matter of this section. As a result, no city, county, or city and county shall adopt any ordinance or regulation inconsistent with this section. (f) Notwithstanding any other provision of this section, the Director of Corrections may sell or supply tobacco and tobacco products, including cigarettes and cigarette papers, to any person confined in any institution or facility under his or her jurisdiction who has attained the age of 16 years, if the parent or guardian of the person consents thereto, and may permit smoking by the person in any institution or facility. No officer or employee of the Department of Corrections shall be considered to have violated this section by any act authorized by this subdivision. SEC. 5. Section 308 of the Penal Code is amended to read: 308. (a) Every person, firm, or corporation that knowingly or under circumstances in which it has knowledge, or should otherwise have grounds for knowledge, sells, gives, or in any way furnishes to another person who is under the age of 18 years any tobacco, cigarette, or cigarette papers, or any other preparation of tobacco, or any other instrument or paraphernalia that is designed for the smoking or ingestion of tobacco, products prepared from tobacco, or any controlled substance, is subject to either a criminal action for a misdemeanor or to a civil action brought by a city attorney, a county counsel, or a district attorney, punishable by a fine of two hundred dollars ($200) for the first offense, five hundred dollars ($500) for the second offense, and one thousand dollars ($1,000) for the third offense. Notwithstanding Section 1464 or any other provision of law, 25 percent of each civil and criminal penalty collected pursuant to this subdivision shall be paid to the office of the city attorney, county counsel, or district attorney, whoever is responsible for bringing the successful action, and 25 percent of each civil and criminal penalty collected pursuant to this subdivision shall be paid to the city or county for the administration and cost of the community service work component provided in subdivision (b). Proof that a defendant, or his or her employee or agent, demanded, was shown, and reasonably relied upon evidence of majority shall be defense to any action brought pursuant to this subdivision. Evidence of majority of a person is a facsimile of or a reasonable likeness of a document issued by a federal, state, county, or municipal government, or subdivision or agency thereof, including, but not limited to, a motor vehicle operator's license, a registration certificate issued under the federal Selective Service Act, or an identification card issued to a member of the Armed Forces. For purposes of this section, the person liable for selling or furnishing tobacco products to minors by a tobacco vending machine shall be the person authorizing the installation or placement of the tobacco vending machine upon premises he or she manages or otherwise controls and under circumstances in which he or she has knowledge, or should otherwise have grounds for knowledge, that the tobacco vending machine will be utilized by minors. (b) Every person under the age of 18 years who purchases, receives, or possesses any tobacco, cigarette, or cigarette papers, or any other preparation of tobacco, or any other instrument or paraphernalia that is designed for the smoking of tobacco, products prepared from tobacco, or any controlled substance shall, upon conviction, be punished by a fine of seventy-five dollars ($75) or 30 hours of community service work. (c) Every person, firm, or corporation that sells, or deals in tobacco or any preparation thereof, shall post conspicuously and keep so posted in his, her, or their place of business at each point of purchase the notice required pursuant to subdivision (b) of Section 22952 of the Business and Professions Code, and any person failing to do so shall, upon conviction, be punished by a fine of fifty dollars ($50) for the first offense, one hundred dollars ($100) for the second offense, two hundred fifty dollars ($250) for the third offense, and five hundred dollars ($500) for the fourth offense and each subsequent violation of this provision, or by imprisonment in a county jail not exceeding 30 days. (d) For purposes of determining the liability of persons, firms, or corporations controlling franchises or business operations in multiple locations for the second and subsequent violations of this section, each individual franchise or business location shall be deemed a separate entity. (e) It is the Legislature's intent to regulate the subject matter of this section. As a result, no city, county, or city and county shall adopt any ordinance or regulation inconsistent with this section. SEC. 6. It is the intent of the Legislature that the State Board of Equalization is authorized to exercise its authority, as set forth in subdivision (a) of Section 30162 of the Revenue and Taxation Code, as amended by Section 1 of Chapter 881 of the Statutes of 2002, and as set forth in subdivision (b) of Section 30162 of the Revenue and Taxation Code, as added by Section 2 of Chapter 881 of the Statutes of 2002, with regard to cigarette stamps and meter impressions in a manner that does not affect commerce within this state. SEC. 7. Section 5 of this bill incorporates amendments to Section 308 of the Penal Code proposed by both this bill and AB 384. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2005, (2) each bill amends Section 308 of the Penal Code, and (3) this bill is enacted after AB 384, in which case Section 4 of this bill shall not become operative. SEC. 8. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to take measures to curtail sales of tobacco products to minors in this state, to make the necessary statutory changes to address the economic losses associated with black-market sales of cigarettes and tobacco products, and to avoid any interference with commerce within this state, it is necessary that this act take effect immediately.