BILL NUMBER: AB 1749 CHAPTERED
BILL TEXT
CHAPTER 501
FILED WITH SECRETARY OF STATE SEPTEMBER 27, 2006
APPROVED BY GOVERNOR SEPTEMBER 27, 2006
PASSED THE SENATE AUGUST 31, 2006
PASSED THE ASSEMBLY AUGUST 31, 2006
AMENDED IN SENATE AUGUST 23, 2006
AMENDED IN SENATE JUNE 26, 2006
AMENDED IN SENATE JUNE 1, 2006
AMENDED IN SENATE JUNE 27, 2005
INTRODUCED BY Assembly Member Jerome Horton
(Principal coauthor: Senator Ortiz)
MARCH 9, 2005
An act to amend Sections 22962, 22971, and 22980.1 of, to add
Sections 22979.21, 22979.22, 22979.23, and 22979.24 to, and to repeal
Chapter 7 (commencing with Section 22995) of Division 8.6 of, the
Business and Professions Code, to amend Section 308 of, to amend
Section 14950 of the Health and Safety Code, to amend and repeal
Section 830.11 of, the Penal Code, and to amend Sections 30019,
30142, 30168, 30435, 30473, 30474, 30474.1, and 30475 of, and to
repeal Sections 30216 and 30359 of, the Revenue and Taxation Code,
relating to cigarettes and tobacco products.
LEGISLATIVE COUNSEL'S DIGEST
AB 1749, Jerome Horton Cigarettes and tobacco products.
(1) The California Cigarette and Tobacco Products Licensing Act of
2003 provides, until January 1, 2010, for the licensure by the State
Board of Equalization of manufacturers, distributors, wholesalers,
importers, and retailers of cigarettes or tobacco products that are
engaged in business in California.
This bill would require manufacturers and importers of specified
tobacco products engaged in business in this state to obtain and
maintain a license. This bill would require that the provisions
related to obtaining and maintaining a manufacturers and importers
license become operative May 1, 2007. This bill would require these
manufacturers or importers to provide the board with specified
information, submit a license application to the board, as described,
pay a one-time license fee of $2,000 or $10,000, as specified, and
submit a monthly report to the board providing information regarding
sales of tobacco products, including the wholesale cost of the
tobacco products, subject to suspension or revocation of the license,
as provided. This bill would provide that the information provided
to the board is confidential and shall not be disclosed to the
public, except in specified situations. Additionally, this bill would
provide that the information and records provided to the board are
not a public record, and makes findings demonstrating the interest
protected by that limitation and the need for protecting that
interest. This bill would require an applicant to verify the accuracy
of the application and to affirm that the applicant has not been
convicted of a felony and has not and will not violate or cause or
permit to be violated the licensing requirement, subject to the
imposition of criminal penalties as a misdemeanor, thus imposing a
state-mandated local program.
(2) Existing law defines an "importer" as any purchaser in the
United States of cigarettes manufactured outside of the United
States.
This bill would also redefine "importer" to be any purchaser for
resale in the United States of cigarettes or tobacco products
manufactured outside of the United States for the purpose of making a
first sale or distributing within the United States.
(3) The California Cigarette and Tobacco Products Licensing Act of
2003 prohibits manufacturers from selling cigarettes to
distributors, wholesalers, importers, retailers, or any other person
who is not licensed, as specified. The act further prohibits
retailers, distributors, wholesalers, or importers from purchasing
packages of cigarettes from any person unless he or she is in
compliance with these licensure requirements, as specified. A
violation of any of these provisions is a misdemeanor.
This bill would expand the above prohibitions by also providing
that a manufacturer or importer shall not sell tobacco products to
retailers, distributors, wholesalers, or any other person who is not
licensed, as provided, and would prohibit a retailer, distributor, or
wholesaler from purchasing packages of cigarettes or tobacco
products from any person who is not licensed or whose license has
been suspended or revoked. This bill would provide that a
manufacturer or importer who uses the information provided on the
board's Web site to determine a person's licensing status is presumed
to be in compliance with these provisions. This bill would provide
that these provisions shall become operative May 1, 2007.
By expanding the scope of an existing crime, this bill imposes a
state-mandated local program.
(4) The act, in addition to providing for the licensing and
regulation of manufacturers, distributors, wholesalers, importers,
and retailers of cigarettes or tobacco products that are engaged in
business in California, prohibits a manufacturer, distributor,
wholesaler, importer, retailer, or any other person from selling
counterfeit cigarette and tobacco products and provides that a
violation of that prohibition is a crime. The act imposes specified
fines or imprisonment for possessing, selling, or buying false or
fraudulent cigarette tax stamps. The act also requires manufacturers
and importers of cigarette products that provide those products to
distributors or wholesalers to pay the board a fee for cigarettes
sold in this state. Under existing law, the act is repealed, by its
own terms, January 1, 2010.
This bill would delete the repeal date specified in current law,
extending indefinitely the operation of the California Cigarette and
Tobacco Products Licensing Act of 2003.
(5) The California Cigarette Fire Safety and Firefighter
Protection Act prohibits the sale of cigarettes, as defined, unless
the manufacturer of those cigarettes certifies to the State Fire
Marshal that the cigarettes they manufacture comply with specified
provisions.
This bill would provide that, for the purposes of the California
Cigarette Fire Safety and Firefighter Protection Act, the definition
of a cigarette does not include a little cigar, as defined.
(6) Existing law regulates the distribution and sales of various
types of tobacco products in the state, and specifies civil and
criminal sanctions for violations of that regulatory scheme. Existing
law prohibits any person from selling, giving, a furnishing
specified tobacco products to a person under the age of 18 years, as
provided. Existing law makes a violation of this prohibition a
misdemeanor or makes that person subject to civil action.
This bill would expand this prohibition to include tobacco
products commonly referred to as "blunt wraps," as defined, and thus
impose a state-mandated local program by changing the definition of
an existing crime. This bill would clarify that persons who violate
this prohibition are subject to both criminal and civil liability.
(7) Existing law prohibits specific types of displays of tobacco
paraphernalia and products, subject to specified civil penalties.
Existing law also requires specified labels on retail packages of
cigars.
This bill would additionally prohibit the self-service display of
blunt wraps, as provided. This bill states the intent of the
Legislature that all manufacturers or importers of blunt wraps place,
or cause to be placed, a specified label on retail packages of blunt
wraps, as required by federal law.
(8) Existing law requires the State Board of Equalization to
administer various taxes and fees, including taxes with respect to
cigarettes and tobacco products, alcoholic beverages, motor vehicle
fuel, and diesel fuel, among others. Existing law authorizes, until
January 1, 2010, persons designated by the Executive Director of the
State Board of Equalization to exercise the arrest powers of a peace
officer in the enforcement of the taxes and fees administered by the
State Board of Equalization.
This bill would delete the repeal date specified in existing law,
extending the ability of designated persons to exercise the specified
arrest powers indefinitely.
(9) Existing law establishes procedures under the Cigarette and
Tobacco Products Tax Law for imposing taxes on sellers of
black-market cigarettes and tobacco products, and procedures for the
seizure and sale of property secured by liens for delinquencies under
the Cigarette and Tobacco Products Tax Law. Existing law repeals
these provisions, effective January 1, 2010.
This bill would delete the repeal date specified in current law,
extending the authorization for these procedures indefinitely.
(10) The Cigarette and Tobacco Products Tax Law authorizes, until
January 1, 2010, employees of the State Board of Equalization, under
specified conditions, to enter and inspect a building, facility,
site, or place, as described, where cigarettes or tobacco products
are sold, produced, or stored, where there is evidence of tax
evasion, or where there is failure to comply with the Master
Settlement Agreement, a settlement entered into by states' attorneys
general and various tobacco product manufacturers that provides for
the allocation of moneys to the states and certain territories.
Refusal of the inspection is subject to penalty.
This bill would delete the repeal date of this authorization,
thereby extending the ability of specified board employees to enter
and inspect the locations under the specific circumstances
indefinitely.
(11) The Cigarette and Tobacco Products Tax Law requires
distributors and wholesalers of cigarette and tobacco products to be
licensed by the State Board of Equalization. That law requires a tax
imposed by that law, with respect to distributions of cigarettes, to
be paid by distributors through the use of stamps or meter register
settings, and requires that these stamps or meter register settings
be affixed to each package of cigarettes sold. That law prohibits the
false or fraudulent making, altering, reuse, or counterfeiting of
cigarette tax stamps or meter impressions by providing that a
violation of that prohibition is a felony subject to imprisonment as
specified, or to a fine of not less than $1,000 and not more than
$10,000, or to both fine and imprisonment. That law prohibits the
sale of unstamped or unmetered cigarettes, as specified, the
violation of which is punishable by a fine of up to $1,000,
imprisonment in a county jail for not more than one year, or by both
fine and imprisonment. That law authorizes, until January 1, 2010,
the seizure and destruction of counterfeit cigarettes or tobacco
products, as defined, and imposes misdemeanor punishment on the sale
or possession thereof. That law imposes specified fines or
imprisonment, or both, on a transporter who transports 40,000 or more
cigarettes or tobacco products with a value of $5,000 or more with
the intent to defeat or evade the taxes imposed by that law under
described conditions.
This bill would delete the repeal date and extend authorization
for the seizure and destruction of counterfeit cigarettes or tobacco
products and for the imposition of a misdemeanor for the sale and
possession thereof. This bill would increase the fine for the sale of
unstamped or unmetered cigarettes to $25,000. This bill would also
increase the fine imposed for falsely or fraudulently making a
cigarette tax stamp or meter impression to $25,000, and would
increase the fine imposed on a transporter of cigarettes to $25,000,
for deposit into specified funds and accounts.
By increasing the penalties for existing crimes, this bill imposes
a state-mandated local program.
(12) Existing law requires all distributors of cigarette and
tobacco products that are required to be licensed by the State Board
of Equalization to furnish a $1,000 security deposit. Existing law,
beginning January 1, 2007, requires a distributor, that defers
payments for stamps or meter register settings and elects to make
those payments on a monthly or a twice-monthly basis, to furnish a
security deposit of at least 70% of, or 50% of, respectively, but not
more than twice the amount of, stamps and meter register settings,
for which payment is deferred.
This bill would provide that for a distributor who elects to make
payments on a weekly basis, as specified, the amount of the security
deposit would be 25% of the amount of, but not more than twice the
amount of, stamps and meter register settings for which the payment
is deferred. This bill would provide that distributors would not have
to make an additional security deposit if the distributor's average
monthly purchase of stamps or meter register settings for the
previous 12 months does not exceed 72,000 stamps or meter register
settings and if the distributor meets specified conditions.
(13) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature that all
manufacturers or importers of blunt wraps place, or cause to be
placed, appropriate labels for tobacco products as required by
federal law.
SEC. 2. Section 22962 of the Business and Professions Code is
amended to read:
22962. (a) For purposes of this section, the following terms have
the following meanings:
(1) "Self-service display" means the open display of tobacco
products or tobacco paraphernalia in a manner that is accessible to
the general public without the assistance of the retailer or employee
of the retailer.
(2) "Tobacco paraphernalia" means cigarette papers or wrappers,
blunt wraps as defined in Section 308 of the Penal Code, pipes,
holders of smoking materials of all types, cigarette rolling
machines, or other instruments or things designed for the smoking or
ingestion of tobacco products.
(3) "Tobacco product" means any product containing tobacco leaf,
including, but not limited to, cigarettes, cigars, pipe tobacco,
snuff, chewing tobacco, dipping tobacco, bidis, or any other
preparation of tobacco.
(4) "Tobacco store" means a retail business that meets all of the
following requirements:
(A) Primarily sells tobacco products.
(B) Generates more than 60 percent of its gross revenues annually
from the sale of tobacco products and tobacco paraphernalia.
(C) Does not permit any person under 18 years of age to be present
or enter the premises at any time, unless accompanied by the person'
s parent or legal guardian, as defined in Section 6903 of the Family
Code.
(D) Does not sell alcoholic beverages or food for consumption on
the premises.
(b) (1) (A) Except as permitted in subdivision (b) of Section
22960, it is unlawful for a person engaged in the retail sale of
tobacco products to sell, offer for sale, or display for sale any
tobacco product or tobacco paraphernalia by self-service display. A
person who violates this section is subject to those civil penalties
specified in the schedule in subdivision (a) of Section 22958.
(B) A person who violates this section is subject to those civil
penalties specified in the schedule in subdivision (a) of Section
22958.
(2) It is unlawful for a person engaged in the retail sale of
blunt wraps to place or maintain, or to cause to be placed or
maintained, any blunt wraps advertising display within two feet of
candy, snack, or nonalcoholic beverage displayed inside any store or
business.
(3) It is unlawful for any person or business to place or
maintain, or cause to be placed or maintained, any blunt wrap
advertising display that is less than four feet above the floor.
(c) Subdivision (b) shall not apply to the display in a tobacco
store of cigars, pipe tobacco, snuff, chewing tobacco, or dipping
tobacco, provided that in the case of cigars they are generally not
sold or offered for sale in a sealed package of the manufacturer or
importer containing less than six cigars. In any enforcement action
brought pursuant to this division, the retail business that displays
any of the items described in this subdivision in a self-service
display shall have the burden of proving that it qualifies for the
exemption established in this subdivision.
(d) The Attorney General, a city attorney, a county counsel, or a
district attorney may bring a civil action to enforce this section.
(e) This section does not preempt or otherwise prohibit the
adoption of a local standard that imposes greater restrictions on the
access to tobacco products than the restrictions imposed by this
section. To the extent that there is an inconsistency between this
section and a local standard that imposes greater restrictions on the
access to tobacco products, the greater restriction on the access to
tobacco products in the local standard shall prevail.
SEC. 3. Section 22971 of the Business and Professions Code is
amended to read:
22971. For purposes of this division, the following terms shall
have the following meanings:
(a) "Board" means the State Board of Equalization.
(b) "Importer" means an importer as defined in Section 30019 of
the Revenue and Taxation Code.
(c) "Distributor" means a distributor as defined in Section 30011
of the Revenue and Taxation Code.
(d) "Manufacturer" means a manufacturer of cigarettes or tobacco
products sold in this state.
(e) "Retailer" means a person who engages in this state in the
sale of cigarettes or tobacco products directly to the public from a
retail location. Retailer includes a person who operates vending
machines from which cigarettes or tobacco products are sold in this
state.
(f) "Retail location" means both of the following:
(1) Any building from which cigarettes or tobacco products are
sold at retail.
(2) A vending machine.
(g) "Wholesaler" means a wholesaler as defined in Section 30016 of
the Revenue and Taxation Code.
(h) "Cigarette" means a cigarette as defined in Section 30003 of
the Revenue and Taxation Code.
(i) "License" means a license issued by the board pursuant to this
division.
(j) "Licensee" means any person holding a license issued by the
board pursuant to this division.
(k) "Sale" or "sold" means a sale as defined in Section 30006 of
the Revenue and Taxation Code.
(l) "Tobacco products" means tobacco products as defined in
subdivision (b) of Section 30121 and subdivision (b) of Section
30131.1 of the Revenue and Taxation Code.
(m) "Unstamped package of cigarettes" means a package of
cigarettes that does not bear a tax stamp as required under Part 13
(commencing with Section 30001) of Division 2 of the Revenue and
Taxation Code, including a package of cigarettes that bears a tax
stamp of another state or taxing jurisdiction, a package of
cigarettes that bears a counterfeit tax stamp, or a stamped or
unstamped package of cigarettes that is marked "Not for sale in the
United States."
(n) "Person" means a person as defined in Section 30010 of the
Revenue and Taxation Code.
(o) "Package of cigarettes" means a package as defined in Section
30015 of the Revenue and Taxation Code.
(p) (1) "Control" or "controlling" means possession, direct or
indirect, of the power:
(A) To vote 25 percent or more of any class of the voting
securities issued by a person.
(B) To direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract (other than a commercial contract for goods
or nonmanagement services), or otherwise provided; however, no
individual shall be deemed to control a person solely on account of
being a director, officer, or employee of such person.
(2) For purposes of subparagraph (B) of this subdivision, a person
who, directly or indirectly, owns, controls, holds, with the power
to vote, or holds proxies representing 10 percent or more of the then
outstanding voting securities issued by another person, is presumed
to control such other person.
(3) For purposes of this division, the board may determine whether
a person in fact controls another person.
(q) "Law enforcement agency" means a sheriff, a police department,
or a city, county, or city and county agency or department
designated by the governing body of that agency to enforce this
chapter or to enforce local smoking and tobacco ordinances and
regulations.
(r) "Brand family" has the same meaning as that term is defined in
paragraph (2) of subdivision (a) of Section 30165.1 of the Revenue
and Taxation Code.
(s) The amendments made to this section by the act adding this
subdivision shall become operative May 1, 2007.
SEC. 4. Section 22979.21 is added to the Business and Professions
Code, to read:
22979.21. Every manufacturer or importer of tobacco products
shall obtain and maintain a license under this division to engage in
the sale of tobacco products. In order to be eligible for obtaining
and maintaining a license under this division, a manufacturer or
importer shall do all of the following in the manner specified by the
board:
(a) Submit to the board a list of all tobacco products they
manufacture or import.
(b) Update the list of all tobacco products brands they
manufacture or import whenever a new or additional brand is
manufactured or imported or a listed brand is no longer manufactured
or imported.
(c) Consent to jurisdiction of the California courts for the
purpose of enforcement of this division and appoint a registered
agent for service of process in this state and identify the
registered agent to the board.
(d) The Legislature finds that solely appointing a registered
agent for the purpose of service of process in this state pursuant to
this subdivision does not establish a nexus with this state for tax
purposes.
(e) This section shall become operative May 1, 2007.
SEC. 5. Section 22979.22 is added to the Business and Professions
Code, to read:
22979.22. (a) An application for a license by a manufacturer or
by an importer of tobacco products shall be on a form prescribed by
the board and shall include the following:
(1) The name, address, and telephone number of the applicant. For
applicants whose corporate offices are at a separate location, the
business name, address, and telephone number of the corporate office.
Citations issued to licensees shall be forwarded to all addressees
on the license.
(2) If any other licenses have been issued by the board to the
applicant, the license or permit numbers for each license or permit
then in effect.
(3) A statement by the applicant affirming that the applicant has
not been convicted of a felony and has not violated and will not
violate or cause or permit to be violated any of the provisions of
this division or any rule of the board applicable to the applicant or
pertaining to the manufacture, sale, or distribution of cigarettes
or tobacco products. If the applicant is unable to affirm this
statement, the application shall contain a statement by the applicant
of the nature of any violation or the reasons that will prevent the
applicant from complying with the requirements with respect to the
statement.
(4) A statement by the applicant that the contents of the
application are complete, true, and correct. Any person who signs a
statement pursuant to this subdivision that asserts the truth of any
material matter that he or she knows to be false is guilty of a
misdemeanor punishable by imprisonment of up to one year in the
county jail, or a fine of not more than one thousand dollars
($1,000), or both imprisonment and fine.
(5) Signature of the applicant.
(6) The name, address, and telephone number of the person
designated by the manufacturer or the importer as its agent for
receipt of service of process in this state.
(7) Any other information the board may require.
(b) The board may investigate to determine the truthfulness and
completeness of the information provided in the application.
(c) The board shall provide electronic means for applicants to
download and submit applications.
SEC. 6. Section 22979.23 is added to the Business and Professions
Code, to read:
22979.23. (a) Every manufacturer or importer of chewing tobacco
or snuff shall submit with each application a one-time license fee of
ten thousand dollars ($10,000).
(b) Every manufacturer or importer of tobacco products, excluding
chewing tobacco or snuff, shall submit with each application a
one-time license fee of two thousand dollars ($2,000).
(c) If a manufacturer or importer is required to submit an
application under, and to pay the fees required by, both subdivisions
(a) and (b), the total amount of fees required to be submitted under
this section shall not exceed ten thousand dollars ($10,000).
SEC. 7. Section 22979.24 is added to the Business and Professions
Code, to read:
22979.24. (a) Every manufacturer or importer holding a license
pursuant to Section 22979.21 shall file a monthly report to the
board, in a manner specified by the board, which may include, but is
not limited to, electronic media. The monthly report shall include,
but is not limited to, the following:
(1) A list of all distributors licensed pursuant to Section 22975
to which the manufacturer or importer shipped its tobacco products or
caused its tobacco products to be shipped.
(2) The total wholesale cost of the products.
(b) The board may suspend the license or revoke the license,
pursuant to the provisions applicable to the revocation of a license
set forth in Section 30148 of the Revenue and Taxation Code, of any
importer or any manufacturer that has failed to comply with the
requirements of this section.
(c) All information and records provided to the board pursuant to
subdivision (a) are confidential in nature and shall not be disclosed
by the board. Information required under subdivision (a) are not
public records under the California Public Records Act, as described
in Chapter 3.5 (commencing with Section 6250) of Division 7 of Title
1 of the Government Code and shall not be open to public inspection.
(d) The amendments made to this section by the act adding this
subdivision shall become operative May 1, 2007.
SEC. 8. Section 22980.1 of the Business and Professions Code is
amended to read:
22980.1. (a) No manufacturer or importer shall sell cigarettes or
tobacco products to a distributor, wholesaler, 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 or
wholesaler 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, 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, or wholesaler shall purchase
packages of cigarettes or tobacco products from a manufacturer or
importer who is not licensed pursuant to this division or whose
license has been suspended or revoked.
(d) (1) No retailer, or wholesaler shall purchase cigarettes or
tobacco products from any person who is not licensed pursuant to this
division or whose license has been suspended or revoked.
(2) Notwithstanding subdivision (c), no distributor 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) (1) Failure to comply with the provisions of this section
shall be a misdemeanor subject to penalties pursuant to Section
22981.
(2) Notwithstanding paragraph (1), a manufacturer or importer who
uses the most up-to-date licensing information provided by the board
on the board's Web site to determine a person's licensing status is
presumed to be in compliance with this section.
(i) The amendments that are made to this section by the act adding
this subdivision shall become operative May 1, 2007.
SEC. 9. Chapter 7 (commencing with Section 22995) of Division 8.6
of the Business and Professions Code is repealed.
SEC. 10. Section 14950 of the Health and Safety Code is amended to
read:
14950. (a) This part shall be known and may be cited as the
California Cigarette Fire Safety and Firefighter Protection Act.
(b) As used in this part, the following terms have the following
meanings:
(1) "Board" means the State Board of Equalization.
(2) "Cigarette" means a cigarette as defined in Section 30003 of
the Revenue and Taxation Code, but does not include a little cigar.
"Little cigar" means any roll of tobacco wrapped in a leaf of tobacco
or any substance containing tobacco and weighing not more than three
pounds per thousand.
(3) "Distributor" means a distributor as defined in Section 30011
of the Revenue and Taxation Code.
(4) "Manufacturer" means any of the following:
(A) An entity that manufactures or otherwise produces cigarettes
or causes cigarettes to be manufactured or produced anywhere that the
manufacturer intends to be sold in the state, including cigarettes
intended to be sold in the United States through an importer.
(B) The first purchaser anywhere that intends to resell in the
United States cigarettes manufactured anywhere that the original
manufacturer or maker does not intend to be sold in the United
States.
(C) An entity that becomes a successor of an entity described in
subparagraph (A) or (B).
(5) "Offer to sell" means to offer or agree to sell.
(6) "Package" means package as defined in Section 30015 of the
Revenue and Taxation Code.
(7) "Quality control and quality assurance program" means the
laboratory procedures implemented to ensure that operator bias,
systematic and nonsystematic methodological errors, and
equipment-related problems do not affect the results of the testing.
This program ensures that the testing repeatability remains within
the required repeatability values stated in paragraph (5) of
subdivision (a) of Section 14952 for all test trials used to certify
cigarettes in accordance with this part.
(8) "Repeatability" means the range of values within which the
repeat results of cigarette test trials from a single laboratory will
fall 95 percent of the time.
(9) "Retailer" means a person who engages in the sale of
cigarettes, but not for the purpose of resale.
(10) "Sale" or "sell" means any transfer, exchange, or barter, in
any manner or by any means whatever, or any agreement for these
purposes. The giving of cigarettes as samples, prizes, or gifts, and
the exchanging of cigarettes for any consideration other than money
are considered sales.
(11) "Stamp and meter impression" means stamp and meter impression
as defined in Section 30018 of the Revenue and Taxation Code.
(12) "Wholesaler" means a wholesaler as defined in Section 30016
of the Revenue and Taxation Code.
SEC. 11. Section 308 of the Penal Code is amended to read:
308. (a) (1) 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 blunts wraps, 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.
(2) For purposes of this section, "blunt wraps" means cigar papers
or cigar wrappers of all types that are designed for smoking or
ingestion of tobacco products and contain less than 50 percent
tobacco.
(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. 12. Section 830.11 of the Penal Code, as amended by Section
1 of Chapter 190 of the Statutes of 2005, is amended to read:
830.11. (a) The following persons are not peace officers but may
exercise the powers of arrest of a peace officer as specified in
Section 836 and the power to serve warrants as specified in Sections
1523 and 1530 during the course and within the scope of their
employment, if they receive a course in the exercise of those powers
pursuant to Section 832. The authority and powers of the persons
designated under this section shall extend to any place in the state:
(1) Persons employed by the Department of Financial Institutions
designated by the Commissioner of Financial Institutions, provided
that the primary duty of these persons shall be the enforcement of,
and investigations relating to, the provisions of law administered by
the Commissioner of Financial Institutions.
(2) Persons employed by the Department of Real Estate designated
by the Real Estate Commissioner, provided that the primary duty of
these persons shall be the enforcement of the laws set forth in Part
1 (commencing with Section 10000) and Part 2 (commencing with Section
11000) of Division 4 of the Business and Professions Code. The Real
Estate Commissioner may designate persons under this section, who at
the time of their designation, are assigned to the Special
Investigations Unit, internally known as the Crisis Response Team.
(3) Persons employed by the State Lands Commission designated by
the executive officer, provided that the primary duty of these
persons shall be the enforcement of the law relating to the duties of
the State Lands Commission.
(4) Persons employed as investigators of the Investigations Bureau
of the Department of Insurance, who are designated by the Chief of
the Investigations Bureau, provided that the primary duty of these
persons shall be the enforcement of the Insurance Code and other laws
relating to persons and businesses, licensed and unlicensed by the
Department of Insurance, who are engaged in the business of
insurance.
(5) Persons employed as investigators and investigator supervisors
of the Consumer Services Division or the Rail Safety and Carrier
Division of the Public Utilities Commission who are designated by the
commission's executive director and approved by the commission,
provided that the primary duty of these persons shall be the
enforcement of the law as that duty is set forth in Section 308.5 of
the Public Utilities Code.
(6) (A) Persons employed by the State Board of Equalization,
Investigations Division, who are designated by the board's executive
director, provided that
the primary duty of these persons shall be the enforcement of laws
administered by the State Board of Equalization.
(B) Persons designated pursuant to this paragraph are not entitled
to peace officer retirement benefits.
(7) Persons employed by the Department of Food and Agriculture and
designated by the Secretary of Food and Agriculture as
investigators, investigator supervisors, and investigator managers,
provided that the primary duty of these persons shall be enforcement
of, and investigations relating to, the Food and Agricultural Code or
Division 5 (commencing with Section 12001) of the Business and
Professions Code.
(b) Notwithstanding any other provision of law, persons designated
pursuant to this section may not carry firearms.
(c) Persons designated pursuant to this section shall be included
as "peace officers of the state" under paragraph (2) of subdivision
(c) of Section 11105 for the purpose of receiving state summary
criminal history information and shall be furnished that information
on the same basis as peace officers of the state designated in
paragraph (2) of subdivision (c) of Section 11105.
SEC. 13. Section 830.11 of the Penal Code, as amended by Section
2 of Chapter 190 of the Statutes of 2005, is repealed.
SEC. 14. Section 30019 of the Revenue and Taxation Code is
amended to read:
30019. "Importer" means any purchaser for resale in the United
States of cigarettes or tobacco products manufactured outside of the
United States for the purpose of making a first sale or distribution
within the United States.
SEC. 15. Section 30142 of the Revenue and Taxation Code, as
amended by Section 1 of Chapter 70 of the Statutes of 2006, is
amended to read:
30142. (a) The board shall fix the amount of the security
required of any distributor and may increase or reduce the amount at
any time. A minimum security in the amount of one thousand dollars
($1,000) shall be furnished by every distributor that is required to
be licensed.
(b) Except as provided in subdivision (d), if a distributor
desires to defer payments for stamps or meter register settings, as
provided in Article 2 (commencing with Section 30166) of Chapter 3.5,
the board shall require a security as follows:
(1) If a distributor elects, under Section 30168, to make payments
on a monthly basis, the board shall require a security equal to not
less than 70 percent of the amount and no more than twice the amount,
as fixed by the board, of the distributor's purchases of stamps and
meter register settings for which payment may be deferred.
(2) If a distributor elects, under Section 30168, to make payments
on a twice-monthly basis, the board shall require a security equal
to not less than 50 percent of the amount and no more than twice the
amount, as fixed by the board, of the distributor's purchases of
stamps and meter register settings for which payment may be deferred.
(3) If a distributor elects, under Section 30168, to make payments
on a weekly basis, the board shall require a security equal to not
less than 25 percent of the amount and no more than twice the amount,
as fixed by the board, of the distributor's purchases of stamps and
meter register settings for which payment may be deferred.
(c) The security required by the board pursuant to subdivision (b)
may be in the form of any of the following, in the amount required
by paragraph (1) or (2) of subdivision (b):
(1) Cash, or a cash equivalent.
(2) A surety bond.
(d) Upon authorization by the board, no additional security shall
be required for a distributor that desires to defer payments for
stamps or meter register settings, as provided in Article 2
(commencing with Section 30166) of Chapter 3.5, if the distributor's
average monthly purchase of stamps or meter register settings for the
previous 12 months does not exceed seventy-two thousand (72,000)
stamps or meter register settings and if the distributor meets all of
the following:
(1) Has been licensed under this part for a minimum of five years.
(2) Has not been delinquent in the filing of any reports or
returns required under this part for the preceding three consecutive
years.
(3) Has not been delinquent in the payment of any tax under this
part, or for any other tax or fee administered or collected by the
board, for the preceding three consecutive years.
(4) Provides to the board and updates, as necessary, an electronic
mail address for the purpose of receiving payment information,
including, but not limited to, amounts owing for stamps and meter
register settings purchased.
(5) Any other criteria the board may require.
SEC. 16. Section 30168 of the Revenue and Taxation Code, as
amended by Section 3 of Chapter 70 of the Statutes of 2006, is
amended to read:
30168. (a) Except as provided for in subdivision (c), amounts
owing for stamps and meter register settings purchased on the
deferred-payment basis shall be due and payable based on the
distributor's election to make the payment pursuant to subdivision
(b). Payment shall be made by a remittance payable to the board.
(b) A distributor shall elect to make the payment required by
subdivision (a) on either a monthly, a twice-monthly, or a weekly
basis. An election made pursuant to this subdivision shall remain in
effect for at least one year from the date the election is made. If
the board finds that good cause exists for a distributor's inability
to maintain the election for the full year, the board shall authorize
the distributor to make a new election, as otherwise authorized by
this subdivision, prior to the expiration of the one-year period
following the prior election.
(1) If a distributor elects to make the payment required by
subdivision (a) on a monthly basis, the distributor shall remit the
payment on or before the 25th day of the month following the month in
which the stamps and meter register settings were purchased.
(2) If a distributor elects to make the payment required by
subdivision (a) on a twice-monthly basis, the distributor shall make
two remittances during the month following the month in which the
stamps and meter register settings were purchased. The first monthly
remittance shall be made on or before the fifth day of the month and
shall be equal to either one-half of the total amount of those
purchases of stamps and meter register settings that were made during
the preceding month or the total amount of those purchases of stamps
and meter register settings that were made between the first day and
the 15th day of the preceding month, whichever is greater. The
second monthly remittance shall be made on or before the 25th day of
the month for the remainder of those purchases of stamps and meter
register settings that were made in the preceding month.
(3) If a distributor elects to make the payment required by
subdivision (a) on a weekly basis, the distributor shall remit the
payment on or before Wednesday following the week in which the stamps
and meter register settings were approved and released. Every
distributor electing to make payment on a weekly basis shall provide
to the board and update, as necessary, an electronic mail address for
the purpose of receiving payment information, including but not
limited to, amounts owing for stamps and meter register settings
purchased.
(c) Amounts owing for stamps and meter register settings purchased
on the deferred-payment basis without a security pursuant to
subdivision (d) of Section 30142 shall be due and payable on or
before Wednesday following the week in which the stamps and meter
register settings were purchased. Payment shall be made by a
remittance payable to the board.
SEC. 17. Section 30216 of the Revenue and Taxation Code is
repealed.
SEC. 18. Section 30359 of the Revenue and Taxation Code is
repealed.
SEC. 19. Section 30435 of the Revenue and Taxation Code is
amended to read:
30435. (a) An employee of the board, upon presentation of the
appropriate identification and credentials, is authorized to enter
into, and conduct an inspection of any building, facility, site, or
place described in subdivision (b).
(b) Any building, facility, site, or place at which cigarette or
tobacco products are sold, produced, or stored, or any building,
facility, site, or place for which there is evidence of either the
evasion of the taxes imposed under this part, or the failure to
comply with the requirements of the Master Settlement Agreement, as
defined in subdivision (e) of Section 104556 of the Health and Safety
Code, including, but not limited to, Section 30165.1.
(c) Any inspection performed under the authority of this section
shall be performed in a reasonable manner and at a reasonable time,
taking into consideration the normal business hours of the building,
facility, site, or place that is inspected.
(d) Any person that refuses to allow an inspection authorized
under this section is subject to the penalty imposed by Section
30471.
SEC. 20. Section 30473 of the Revenue and Taxation Code is
amended to read:
30473. Any person who falsely or fraudulently makes, forges,
alters, reuses or counterfeits any stamp or meter impression provided
for or authorized under this part, or tampers with any metering
machine authorized under this part, or causes or procures to be
falsely or fraudulently made, forged, altered, reused, or
counterfeited, any such stamp or meter impression or knowingly and
willfully utters, publishes, passes, or tenders as genuine any such
false, forged, altered, reused, or counterfeited stamp or meter
impression, for the purpose of evading the tax imposed by this part,
is guilty of a felony and subject to imprisonment for two, three, or
four years, or to a fine of not less than one thousand dollars
($1,000) and not more than twenty-five thousand dollars ($25,000), or
to both fine and imprisonment.
SEC. 21. Section 30474 of the Revenue and Taxation Code is
amended to read:
30474. (a) Any person who knowingly possesses, or keeps, stores,
or retains for the purpose of sale, or sells or offers to sell, any
package of cigarettes to which there is not affixed the stamp or
meter impression required to be affixed under this part, when those
cigarettes have been obtained from any source whatever, is guilty of
a misdemeanor and shall for each offense be fined an amount not to
exceed twenty-five thousand dollars ($25,000), or be imprisoned for a
period not to exceed one year in the county jail, or, at the
discretion of the court, be subject to both fine and imprisonment in
the county jail.
(b) In addition to the fine or sentence, or both, each person
convicted under this section shall pay one hundred dollars ($100) for
each carton of 200 cigarettes, or portion thereof, if that person
knowingly possessed, or kept, stored, or retained for the purpose of
sale, or sold or offered for sale in violation of this section, as
determined by the court. The court shall direct that 50 percent of
the penalty assessed be transmitted to the local prosecuting
jurisdiction, to be allocated for costs of prosecution, and 50
percent of the penalty assessed be transmitted to the State Board of
Equalization.
(c) This section does not apply to a licensed distributor that
possesses, keeps, stores, or retains cigarettes before the necessary
stamp or meter impression is affixed.
SEC. 22. Section 30474.1 of the Revenue and Taxation Code is
amended to read:
30474.1. (a) Notwithstanding any other provision of law, the sale
or possession for sale of counterfeit tobacco products, or the sale
or possession for sale of counterfeit cigarettes by a manufacturer,
importer, distributor, wholesaler, or retailer shall result in the
seizure of the product by the board or any law enforcement agency and
shall constitute a misdemeanor punishable as follows:
(1) A violation with a total quantity of less than two cartons of
cigarettes shall be a misdemeanor punishable by a fine not to exceed
five thousand dollars ($5,000), or imprisonment not to exceed one
year in a county jail, or both fine and imprisonment, and shall also
result in the revocation by the board of the manufacturer,
distributor, or wholesale license.
(2) A violation with a quantity of two cartons of cigarettes or
more shall be a misdemeanor punishable by a fine not to exceed fifty
thousand dollars ($50,000) or imprisonment not to exceed one year in
a county jail, or both fine and imprisonment, and shall also result
in the revocation by the board of the manufacturer, distributor, or
wholesaler license.
(b) A court shall consider a defendant's ability to pay when
imposing fines pursuant to this section.
(c) For the purposes of this section, counterfeit cigarette and
tobacco products include cigarette and tobacco products that have
false manufacturing labels, false or fraudulent stamps or meter
impressions, or a combination thereof.
(d) The board shall seize and destroy any cigarettes or other
tobacco products forfeited to the state under this section.
SEC. 23. Section 30475 of the Revenue and Taxation Code is
amended to read:
30475. (a) Any transporter who transports cigarettes or tobacco
products upon the highways, roads or streets of this state without
having obtained a permit or without having a permit in the
transporting vehicle as prescribed by Section 30431 or without having
in the transporting vehicle the invoices, bills of lading or
delivery tickets for the cigarettes or tobacco products as prescribed
by Section 30432 is guilty of a misdemeanor and upon conviction
thereof shall be fined not more than one thousand dollars ($1,000) or
be imprisoned for not more than one year in the county jail, or be
subject to both fine and imprisonment in the discretion of the court.
(b) Any transporter who, with intent to defeat or evade or with
intent to aid another to defeat or evade the taxes imposed by this
part, at any given time transports 40,000 or more cigarettes or
tobacco products with a value of five thousand dollars ($5,000) or
more upon the highways, roads or streets of this state without having
obtained a permit or without having a permit in the transporting
vehicle as prescribed by Section 30431 or without having in the
transporting vehicle the invoices, bills of lading or delivery
tickets for the cigarettes or tobacco products as prescribed by
Section 30432 shall be punished by imprisonment in the county jail
for not more than one year, or in the state prison, or by fine of not
more than twenty-five thousand dollars ($25,000), or be subject to
both fine and imprisonment in the discretion of the court.
SEC. 24. The Legislature finds and declares that Section 7 of this
act, which amends Section 22979.24 of the Business and Professions
Code, imposes a limitation on the public's right of access to the
meetings of public bodies or the writings of public officials and
agencies within the meaning of Section 3 of Article I of the
California Constitution. Pursuant to that constitutional provision,
the Legislature makes the following findings to demonstrate the
interest protected by this limitation and the need for protecting
that interest:
In order to allow for the State Board of Equalization to fully
accomplish its goals, it is imperative to protect the interests of
those persons submitting information to the board to ensure that any
business or trade secrets that are required to be submitted by those
persons by this act be protected as confidential information.
SEC. 25. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.