BILL NUMBER: AB 2496 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Nava
FEBRUARY 19, 2010
An act to amend Sections 22979, 22980, and 22980.1 of the Business
and Professions Code, to add Section 104557.1 to the Health and
Safety Code, to amend Section 308.1 of the Penal Code, and to amend
Sections 30163, 30165.1, and 30436 of, and to add Section 30165.2 to,
the Revenue and Taxation Code, relating to tobacco products.
LEGISLATIVE COUNSEL'S DIGEST
AB 2496, as introduced, Nava. Cigarette and tobacco products.
(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
those licensure requirements.
The act requires a manufacturer or importer to comply with
specified requirements in order to be eligible for obtaining and
maintaining a license under that act, including consent to
jurisdiction of the California courts for the purpose of enforcement
of that act and appointment of a registered agent for service of
process in this state.
This bill would require a manufacturer or importer to additionally
consent to jurisdiction of the California courts for the purpose of
enforcement of the Master Settlement Agreement and a specified
provision of the Cigarette and Tobacco Products Tax Law. This bill
would require the manufacturer or importer to additionally identify
the registered agent to the Attorney General.
The act authorizes a peace officer or board employee granted
limited peace officer status to conduct inspections at any site where
evidence of activities involving evasion of cigarette or tobacco
products tax may be discovered.
This bill would additionally authorize those officers to inspect
any site whit respect to violations of a specified provision of the
Cigarette and Tobacco Products Tax Law.
This act prohibits an importer, distributor, or wholesaler, or
distributor functioning as a wholesaler, or retailer, to purchase,
obtain, or otherwise acquire any package of cigarettes to which a
stamp or meter impression may not be affixed in accordance with the
Cigarette and Tobacco Products Tax Law. A violation of this provision
is a misdemeanor.
This bill would additionally prohibit those persons from acquiring
a package of cigarettes unless the brand family or product
manufacturer of the cigarettes is included on a directory posted by
the Attorney General described in (3). By changing the definition of
a crime, this bill would impose a state-mandated local program.
(2) Under existing law, states' attorneys general and various
tobacco product manufacturers have entered into a Master Settlement
Agreement (MSA), in settlement of various lawsuits, that provides for
the allocation of money to the states and certain territories. The
state has entered into a memorandum of understanding providing for
the allocation of the state's share of moneys to be received under
the MSA between the state and counties and certain cities in the
state. Existing law requires any tobacco product manufacturer selling
cigarettes to consumers in California to place specified amounts
into a qualified escrow fund by April 15 of each year.
This bill would authorize a tobacco product manufacturer that
elects to place funds into a qualified escrow fund to make an
irrevocable assignment of its interest in the funds to the benefit of
the State of California, as specified. This bill would require any
funds assigned to the state that are withdrawn to be deposited into
the General Fund as a credit against any judgment or settlement which
may be obtained against the tobacco product manufacturer who has
assigned the funds.
(3) The Cigarette and Tobacco Products Tax 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 impressions,
and requires that these stamps or impressions be affixed to each
package of cigarettes sold.
This bill would additionally require a stamp or meter impression
to be made on rolls of tobacco, as specified, and would make
conforming changes to other related provisions.
The Cigarette and Tobacco Products Tax Law requires every tobacco
product manufacturer whose cigarettes are sold in this state to make
a certification to the Attorney General regarding certain
information. That law makes a false certification a misdemeanor.
This bill would require certification of additional information,
as specified. By changing the definition of a crime, this bill would
impose a state-mandated local program.
The Cigarette and Tobacco Products Tax Law requires the Attorney
General to post on the Attorney General's Internet Web site a
directory of tobacco product manufacturers that are participating
manufacturers under the MSA, and that have made all required escrow
payments and provided certification of related information to the
Attorney General. That law also requires the Attorney General's
Internet Web site to include specified brand families, as defined,
that have been identified by the tobacco product manufacturers.
Existing law also requires that a manufacturer and brand families be
excluded from the directory, if any of certain circumstances occur.
This bill would establish circumstances under which a manufacturer
and brand families are to be excluded from the directory of
manufacturers and brand families, and would require distributors,
after receiving notice from the Attorney General, to provide notice
to its customers of any manufacturer or brand family removed or
excluded from the directory.
This bill would also require a newly qualified nonparticipating
manufacturer, as defined, or a nonparticipating manufacturer who
poses an elevated risk of noncompliance with that law or the MSA, to
post a surety bond, as specified before inclusion onto the directory.
This bill would specify that a person is prohibited from shipping
or distributing into or within this state for personal consumption in
this state cigarettes of a tobacco product manufacturer or brand
family not included in the directory, and would provide that this
specification is declaratory of existing law.
This bill would require any nonparticipating manufacturer located
outside of the United States, as an additional condition precedent to
having its brand families listed or retained in the directory, to
cause its importers to appoint an agent, as specified, and would
impose additional specified responsibilities upon such a
manufacturer.
This bill would give the Attorney General additional specified
authority regarding the administration of that law.
This bill would, as a condition of selling cigarettes in the
state, require a tobacco product manufacturer, as specified, to
submit, or authorize to disclose, a copy of its applicable return.
This bill would provide that failure to comply with that provision
would subject the manufacturer and its brand families to removal from
the directory. This bill would impose a civil penalty on any
manufacturer that intentionally provides an applicable return with
materially false information.
(4) The Cigarette and Tobacco Products Tax Law requires that
certain cigarette and tobacco products be forfeited to the state
under specified circumstances, upon seizure by the State Board of
Equalization.
This bill would add to the forfeiture list cigarette and tobacco
products of a tobacco product manufacturer or its brand families that
do not appear on the directory maintained by the Attorney General.
(5) Existing law prohibits the offer, sale, distribution, or
importation of a tobacco product know as "bidis" or "beedies," as
defined, unless it is sold or intended for sale in business
establishments that exclude minors.
This bill would amend the definition of "bidis" or "beedies" to
include any product that is marketed and sold as "bidis" or "beedies"
, and would clarify that persons who violate this prohibition are
subject to both criminal and civil liability.
By changing the definition of related crimes, this bill would
impose a state-mandated local program.
(6) This bill would provide that the provisions of this bill are
severable.
(7) 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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 22979 of the Business and Professions Code is
amended to read:
22979. (a) Commencing on January 1, 2004, every manufacturer and
every importer, as defined in subdivision (b) of Section 22971, shall
obtain and maintain a license to engage in the sale of cigarettes.
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:
(1) Submit to the board a list of all brand families that they
manufacture or import.
(2) Update the list of all brand families that they manufacture or
import whenever a new or additional brand is manufactured or
imported, or a listed brand is no longer manufactured or imported.
(3) Consent to jurisdiction of the California courts for the
purpose of enforcement of this division , Sections 104555 to
104557, inclusive, of the Health and Safety Code, Section 30165.1 of
the Revenue and Taxation Code and regulations adopted pursuant
thereto, and appoint a registered agent for service of process
in this state and identify the registered agent to the board and
the Attorney General .
(b) In order to be eligible for obtaining and maintaining a
license under this division, a manufacturer or importer that is a
"tobacco product manufacturer" in subdivision (i) of Section 104556
of the Health and Safety Code, shall do all of the following in the
manner specified by the board:
(1) Certify to the board that it is a "participating manufacturer"
as defined in subsection II(jj) of the "Master Settlement Agreement"
(MSA), or is in full compliance with paragraph (2) of subdivision
(a) of Section 104557 of the Health and Safety Code. Any person who
makes a certification 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 the imprisonment and the fine.
(2) Submit to the board a list of all brand families that fit
under the category applicable to the manufacturer or importer, in
accordance with the following:
(A) Brand families that are to be counted, in the unit volume and
market shares determined pursuant to subsections II(z) and II(mm) of
the MSA and Exhibit E thereto, in calculating the manufacturer's
annual payments under the MSA.
(B) Brand families that are to be counted in calculating the
manufacturer's escrow deposits under paragraph (2) of subdivision (a)
of Section 104557 of the Health and Safety Code.
(C) The manufacturer or importer shall update the list whenever a
new or additional brand is manufactured or imported or a listed brand
is no longer manufactured or imported.
(c) The board may not grant or permit the maintenance of a license
to any manufacturer or an importer of cigarettes that does not
affirmatively certify, both at the time the license is granted and
annually thereafter, that all packages of cigarettes manufactured or
imported by that person and distributed in this state fully comply
with subdivision (b) of Section 30163 of the Revenue and Taxation
Code, and that the cigarettes contained in those packages are the
subject of filed reports that fully comply with all requirements of
the federal Cigarette Labeling and Advertising Act (15 U.S.C. Sec.
1331 et seq.) for the reporting of ingredients added to cigarettes.
For purposes of the federal Cigarette Labeling and Advertising Act
requirement, cigars weighing three pounds or less per 1,000 are
excluded from the definition of cigarette.
(d) A license issued to a manufacturer or an importer under this
division is only valid with respect to the manufacturer or importer
designated on the license and may not be transferred or assigned to
another manufacturer or importer.
(e) Any manufacturer or importer that is issued a license under
this division that does not commence business in the manner specified
or designated in the license, ceases to do business in the manner
specified or designated in the license, or is notified that the
license is suspended or revoked, shall immediately surrender that
license to the board.
(f) (1) Any manufacturer or any importer who is denied a license
may petition for a redetermination of the board's denial of the
license within 30 days after service upon that manufacturer or that
importer of the notice of the denial of the license. If a petition
for redetermination is not filed within the 30-day period, the
determination of denial becomes final at the expiration of the 30-day
period.
(2) Every petition for redetermination shall be in writing and
shall state the specific grounds upon which the petition is founded.
The petition may be amended to state additional grounds at anytime
prior to the date on which the board issues its order or decision
upon the petition for redetermination.
(3) If the petition for redetermination is filed within the 30-day
period, the board shall reconsider the determination of the denial
and, if the manufacturer or the importer has so requested in the
petition, shall grant an oral hearing and shall give the manufacturer
or the importer at least 10 days' notice of the time and place of
the hearing. The board may continue the hearing from time to time as
may be necessary.
(4) The order or decision of the board upon a petition for
redetermination becomes final 30 days after mailing of notice
thereof.
(5) Any notice required by this subdivision shall be served
personally or by mail. If by mail, the notice shall be placed in a
sealed envelope, with postage paid, addressed to the manufacturer or
the importer at the address as it appears in the records of the
board. The giving of notice shall be deemed complete at the time of
deposit of the notice in the United States Post Office, or a mailbox,
subpost office, substation or mail chute or other facility regularly
maintained or provided by the United States Postal Service, without
extension of time for any reason. In lieu of mailing, a notice may be
served personally by delivering to the person to be served and
service shall be deemed complete at the time of the delivery.
Personal service to a corporation may be made by delivery of a notice
to any person designated in the Code of Civil Procedure to be served
for the corporation with summons and complaint in a civil action.
SEC. 2. Section 22980 of the Business and Professions Code is
amended to read:
22980. (a) (1) Any peace officer, or board employee granted
limited peace officer status pursuant to paragraph (6) of subdivision
(a) of Section 830.11 of the Penal Code, upon presenting appropriate
credentials, is authorized to enter any place as described in
paragraph (3) and to conduct inspections in accordance with the
following paragraphs, inclusive.
(2) Inspections shall be performed in a reasonable manner and at
times that are reasonable under the circumstances, taking into
consideration the normal business hours of the place to be entered.
(3) Inspections may be at any place at which cigarettes or tobacco
products are sold, produced, or stored or at any site where evidence
of activities involving evasion of cigarette or tobacco products tax
and violations of Section 30165.1 of the Revenue and Taxation
Code may be discovered.
(4) Inspections shall be requested or conducted no more than once
in a 24-hour period.
(b) Any person that refuses to allow an inspection shall be
subject to the penalties imposed pursuant to Section 22981.
SEC. 3. 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 or subdivision (e) of Section 30165.1 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. 4. Section 104557.1 is added to the Health and Safety Code,
to read:
104557.1. (a) Notwithstanding subdivision (b) of Section 104557,
a tobacco product manufacturer that elects to place funds into escrow
pursuant to paragraph (2) of subdivision (a) of Section 104557 may
make an irrevocable assignment of its interest in the funds to the
benefit of the State of California. Such assignment shall be
permanent and apply to all funds in the subject escrow account or
that may subsequently come into the account, including those
deposited into the escrow account prior to the assignment being
executed, those deposited into the escrow account after the
assignment is executed, and interest or other appreciation on the
funds. The tobacco product manufacturer, the Attorney General, and
the financial institution where the escrow amount is maintained may
make such amendments to the qualified escrow account agreement as may
be necessary to effectuate an assignment of rights executed pursuant
to this subdivision or a withdrawal of funds from the escrow amount
pursuant to subdivision (b). An assignment of rights executed
pursuant to this section shall be in writing, signed by a duly
authorized representative of the tobacco products manufacturer making
the assignment, and shall become effective upon delivery of the
assignment to the Attorney General and the financial institution
where the escrow account is maintained.
(b) Notwithstanding subdivision (b) of Section 104557, any escrow
funds assigned to the state pursuant to subdivision (a) shall be
withdrawn by the state upon the request by the Treasurer and approval
of the Attorney General. Any funds withdrawn pursuant to this
subdivision shall be deposited into the General Fund and shall be
calculated on a dollar-for-dollar basis as a credit against any
judgment or settlement described in subdivision (b) of Section 104557
which may be obtained against the tobacco product manufacturer who
has assigned the funds in the subject escrow account. Nothing in this
section shall be construed to relieve a tobacco product manufacturer
from any past, current, or future obligations the manufacturer may
have pursuant to this chapter.
SEC. 5. Section 308.1 of the Penal Code is amended to read:
308.1. (a) Notwithstanding any other provision of
law, no person shall sell, offer for sale, distribute, or
import any tobacco product commonly referred to as "bidis" or
"beedies," unless that tobacco product is sold, offered for sale, or
intended to be sold in a business establishment that prohibits the
presence of persons under 18 years of age on its premises.
(b) For purposes of this section, "bidis" or "beedies" means
a product any of the following:
(1) A product containing tobacco
that is wrapped in temburni leaf (diospyros melanoxylon) or tendu
leaf (diospyros exculpra).
(2) A product that is marketed and sold as "bidis" or "beedies."
(c) Any person who violates this section is guilty of a
misdemeanor or and is also subject to a
civil action brought by the Attorney General, a city attorney,
county counsel, or district attorney for an injunction and a civil
penalty of up to two thousand dollars ($2,000) per violation. This
subdivision does not affect any other remedies available for a
violation of this section.
SEC. 6. Section 30163 of the Revenue and Taxation Code is amended
to read:
30163. (a) Except as otherwise provided in this section, an
appropriate stamp shall be affixed to, or an appropriate meter
impression shall be made on each package of cigarettes , or of
any rolls of tobacco with a cellulose acetate or other integrated
filter, or which has filler tobacco consisting primarily of
flue-cured, burley, oriental, or unfermented tobaccos or yields
smoking characteristics of those tobaccos or is wrapped in paper or
any substance not containing tobacco, prior to the distribution
of the cigarettes or the rolls of tobacco .
(b) No stamp or meter impression may be affixed to, or made upon,
any package of cigarettes if any one of the following occurs:
(1) The package does not comply with all requirements of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. Sec. 1331
and following) for the placement of labels, warnings, or any other
information upon a package of cigarettes that is to be sold within
the United States.
(2) The package is labeled "For Export Only," "U.S. Tax Exempt,"
"For Use Outside U.S.," or similar wording indicating that the
manufacturer did not intend that the product be sold in the United
States.
(3) The package, or a package containing individually stamped
packages, has been altered by adding or deleting the wording, labels,
or warnings described in paragraph (1) or (2).
(4) The package was imported into the United States after January
1, 2000, in violation of Section 5754 of Title 26 of the United
States Code.
(5) (A) The package bears a cigarette brand name which is a
registered U.S. trademark of a participating manufacturer and the
package was imported by anyone other than the participating
manufacturer of that cigarette brand.
(B) For purposes of this paragraph, "participating manufacturer"
has the same meaning as defined in paragraph (1) of subdivision (a)
of Section 104557 of the Health and Safety Code and in Section II(jj)
of the Master Settlement Agreement described in Article 3
(commencing with Section 104555) of Chapter 1 of Part 3 of Division
103 of the Health and Safety Code.
(c) Pursuant to its authority under Section 30148, the board shall
revoke the license issued to a distributor that is determined to be
in violation of this section.
(d) A violation of subdivision (b) shall constitute unfair
competition under Section 17200 of the Business and Professions Code.
SEC. 7. Section 30165.1 of the Revenue and Taxation Code is
amended to read:
30165.1. (a) The following definitions shall apply for purposes
of this section:
(1) "Board" means the State Board of Equalization.
(2) "Brand family" means all styles of cigarettes sold under the
same trademark and differentiated from one another by means of
additional modifiers, including, but not limited to, "menthol,"
"lights," "kings," and "100s" and includes any brand name, alone or
in conjunction with any other word, trademark, logo, symbol, motto,
selling message, recognizable pattern of colors, or any other indicia
of product identification identical or similar to, or identifiable
with, a previously known brand of cigarettes.
(3) "Cigarette" has the same meaning as in subdivision (d) of
Section 104556 of the Health and Safety Code and includes , but
is not limited to, tobacco products defined as a cigarette
under that subdivision and any roll of tobacco with a cellulose
acetate or other integrated filter, or which has filler tobacco
consisting primarily of flue-cured, barley, oriental, or unfermented
tobaccos or yielding smoking characteristics of those tobaccos or is
wrapped in paper or any substance not containing tobacco, or any such
cigarette that is distributed within the meaning of Section 30008
.
(4) "Distributor" has the same meaning as in Section 30011.
(5) "MSA" means the Master Settlement Agreement, as defined in
subdivision (e) of Section 104556 of the Health and Safety Code.
(6) "Nonparticipating manufacturer" means any tobacco product
manufacturer that is not a participating manufacturer.
(7) "Participating manufacturer" has the same meaning as in
subsection II(jj) of the MSA.
(8) "Qualified escrow fund" has the same meaning as in subdivision
(f) of Section 104556 of the Health and Safety Code.
(9) "Tobacco product manufacturer" has the same meaning as in
subdivision (i) of Section 104556 of the Health and Safety Code.
(10) "Units sold" has the same meaning as in subdivision (j) of
Section 104556 of the Health and Safety Code.
(b) Every tobacco product manufacturer whose cigarettes are sold
in this state, whether directly or through a distributor, retailer,
or similar intermediary or intermediaries, shall execute and deliver
on a form and in the manner prescribed by the Attorney General ,
information as the Attorney General deems reasonably
necessary to make the determinations required by subdivision (c),
a certification to the Attorney General no later than the 30th
day of April each year that, as of the date of the certification, the
tobacco product manufacturer is either a participating manufacturer
that has made all payments calculated by the independent auditor
to be due under the Master Settlement Agreement, except to the
extent the participating manufacturer is disputing any of
payments , or is in full compliance with Article 3 (commencing
with Section 104555) of Chapter 1 of Part 3 of Division 103 of the
Health and Safety Code, including all installment payments required
by that article and this section, and any regulations promulgated
pursuant thereto. Any person who makes a certification 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 the imprisonment and
the fine.
(1) A participating manufacturer shall include in its
certification a complete list of its brand families. The
participating manufacturer shall update the list 30 days prior to any
addition to or modification of its brand families by executing and
delivering a supplemental certification to the Attorney General.
(2) A nonparticipating manufacturer shall include in its
certification a complete list of all of its brand families, in
accordance with the following requirements:
(A) Separately listing brand families of cigarettes and the number
of units sold for each brand family that were sold in the state
during the preceding calendar year.
(B) Separately listing all of its brand families that have been
sold in the state at any time during the current calendar year.
(C) Indicating by an asterisk any brand family sold in the state
during the preceding calendar year that is no longer being sold in
the state as of the date of the certification.
(D) Identifying by name and address any other manufacturer,
including all fabricators or makers of the brand families in the
preceding or current calendar year in a form, manner, and detail as
required by the Attorney General. The nonparticipating manufacturer
shall update the list 30 days prior to any change in a fabricator for
any brand family or any addition to or modification of its brand
families by executing and delivering a supplemental certification to
the Attorney General.
(3) In the case of a nonparticipating manufacturer, the
certification shall further certify all of the following:
(A) That the nonparticipating manufacturer is registered to do
business in the state, or has appointed a resident agent for service
of process and provided notice thereof as required by subdivision
(f).
(B) That the nonparticipating manufacturer has done all of the
following:
(i) Established and continues to maintain a qualified escrow fund
as that term is defined in subdivision (f) of Section 104556 of the
Health and Safety Code and implementing regulations.
(ii) Executed a qualified escrow agreement that has been reviewed
and approved by the Attorney General and that governs the qualified
escrow fund.
(iii) If the nonparticipating manufacturer is not the fabricator
or maker of the cigarettes, that the escrow agreement, certification,
reports, and any other forms required by Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code and implementing regulations are signed by the
company that fabricates or makes the cigarettes and in the manner
required by the Attorney General.
(C) That the nonparticipating manufacturer is in full compliance
with both of the following: Article
(i) Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code, including paragraph (2) of subdivision (a) of
Section 104557 of the Health and Safety Code, this section, and any
regulations promulgated pursuant thereto.
(ii) Division 8.6 (commencing with Section 22970) of the Business
and Professions Code, and any regulations promulgated pursuant
thereto.
(D) That the manufacturer has provided all of the following:
(i) The name, address, and telephone number of the financial
institution where the nonparticipating manufacturer has established
the qualified escrow fund required pursuant to Article 3 (commencing
with Section 104555) of Chapter 1 of Part 3 of Division 103 of the
Health and Safety Code and all regulations promulgated thereto.
(ii) The account number of the qualified escrow fund and
subaccount number for the State of California.
(iii) The amount the nonparticipating manufacturer placed in the
fund for cigarettes sold in the state during the preceding calendar
year, the date and amount of each deposit, and any confirming
evidence or verification as may be deemed necessary by the Attorney
General.
(iv) The amounts and dates of any withdrawal or transfer of funds
the nonparticipating manufacturer made at any time from the fund or
from any other qualified escrow fund into which it ever made escrow
payments pursuant to Article 3 (commencing with Section 104555) of
Chapter 1 of Part 3 of Division 103 of the Health and Safety Code and
all regulations promulgated thereto.
(E) In the case of a nonparticipating manufacturer located outside
the United States, that has provided a declaration in a form
prescribed by the Attorney General from each of its importers into
the United States of any of its brand families to be sold in
California, that the importer accepts joint and several liability
with the nonparticipating manufacturer for all escrow deposits due in
accordance with Article 3 (commencing with Section 104555), for all
penalties assessed in accordance with Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code, and for payment of all costs and attorney's fees
imposed in accordance with this section. The declaration shall
appoint for the declarant a resident agent for service of process in
California in accordance with subdivision (f) and that the importer
is in compliance with Division 8.6 (commencing with Section 22970) of
the Business and Professions Code.
(4) (A) A tobacco product manufacturer may not include a brand
family in its certification unless either of the following is true:
(i) In the case of a participating manufacturer, the participating
manufacturer affirms that the brand family is to be deemed to be its
cigarettes for purposes of calculating its payments under the MSA
for the relevant year, in the volume and shares determined pursuant
to the MSA.
(ii) In the case of a nonparticipating manufacturer, the
nonparticipating manufacturer affirms that the brand family is to be
deemed to be its cigarettes for
purposes of Article 3 (commencing with Section 104555) of
Chapter 1 of Part 3 of Division 103 of the Health and Safety Code,
including paragraph (2) of subdivision (a) of Section 104557 of the
Health and Safety Code, and any regulations promulgated pursuant
thereto and this section.
(B) Nothing in this section shall be construed as limiting or
otherwise affecting the state's right to maintain that a brand family
constitutes cigarettes of a different tobacco product manufacturer
for purposes of calculating payments under the MSA or for purposes of
Article 3 (commencing with Section 104555) of Chapter 1 of Part 3 of
Division 103 of the Health and Safety Code and any regulations
promulgated pursuant thereto.
(5) A tobacco product manufacturer shall maintain all invoices and
documentation of sales and other information relied upon for the
certification for a period of five years, unless otherwise required
by law to maintain them for a longer period of time.
(c) Not later than June 30, 2004, the Attorney General shall
develop and publish on its Internet Web site a directory listing
of all tobacco product manufacturers that have
provided current, timely, and accurate certifications conforming to
the requirements of subdivision (b) and all brand families that are
listed in the certifications, except as specified below.
(1) The Attorney General may not include or retain in the
directory the name or brand families of any nonparticipating
the following:
(A) Any participating manufacturer that
fails to provide the required certification or to make a payment
calculated by the independent auditor to be due from it under the
Master Settlement Agreement except to the extent that it is disputing
the payment.
(B) Any nonparticipating
manufacturer that fails to provide the required certification or
whose certification the Attorney General determines is not in
compliance with subdivision (b), unless the Attorney General has
determined that the violation has been cured to the satisfaction of
the Attorney General.
(2) Neither a tobacco product manufacturer nor brand family shall
be included or retained in the directory if the Attorney General
concludes that either any of the
following is true:
(A) In the case of a nonparticipating manufacturer, any escrow
deposit required pursuant to Section 104557 of the Health and Safety
Code for any period for any brand family, whether or not listed by
the nonparticipating manufacturer, has not been fully deposited into
a qualified escrow fund governed by a qualified escrow agreement that
has been approved by the Attorney General.
(B) Any outstanding final judgment, including interest thereon,
for violations of Article 3 (commencing with Section 104555) of
Chapter 1 of Part 3 of Division 103 of the Health and Safety Code,
this section, and any regulations promulgated pursuant thereto, has
not been fully satisfied for the brand family and the manufacturer.
(C) In the case of a nonparticipating manufacturer or a tobacco
product manufacturer that became a participating manufacturer after
the Master Settlement Agreement execution date, as defined by Section
II (aa) of the Master Settlement Agreement, by reason of the
business plan, business history, trade connections, or compliance and
payment history under the Master Settlement Agreement in California
or any other state, or the business history, trade connections, or
compliance and payment history under the Master Settlement Agreement
in California or any other state of any of the principals thereof,
the nonparticipating manufacturer or the tobacco product manufacturer
fails to provide reasonable assurance that it will comply with the
requirements of this section or Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code. As used in this section, "reasonable assurance" may
include information and documentation establishing to the
satisfaction of the Attorney General that a failure to pay in
California or elsewhere was the result of a good faith dispute over
the payment obligation.
(D) The manufacturer has knowingly failed to disclose any material
information required or knowingly made any material false statements
in the certification of any supporting information or documentation
provided.
(3) The Attorney General shall update the directory as necessary
in order to correct mistakes and to add or remove a tobacco product
manufacturer or brand family to keep the directory in conformity with
the requirements of this section. The Attorney General shall
promptly provide distributors with written notice of each tobacco
product manufacturer and brand family that the Attorney General has
added to, or excluded or removed from the list.
(A) The Attorney General shall transmit, by electronic mail or
other practicable means, notice to each distributor of any addition
to, or removal from, the directory of any tobacco product
manufacturer or brand family.
(B) Within seven days of receiving a removal notice from the
Attorney General, each distributor shall provide:
(i) A copy of the removal notice to each of the distributor's
customers who purchased the cigarettes of the tobacco product
manufacturer or brand family that has been removed from the
directory.
(ii) To the board, a list of the customers to whom the removal
notices were sent.
(C) (i) The customer shall have 60 days from the effective date of
the removal notice to sell the affected cigarettes that the customer
purchased prior to the removal from the directory. On and after the
61st day from the effective date of the removal notice, the
cigarettes are contraband and become subject to seizure and
destruction under subdivision (e) of Section 30436 and subdivision
(b) of Section 30449.
(ii) On and after the 61st day from the effective date of the
removal notice, the customer shall not sell any cigarettes of a
tobacco manufacturer or brand family that has been removed from the
directory.
(4) Every distributor shall provide to the Attorney General and
update, as necessary, an electronic mail address for the purpose of
receiving any notifications as may be required by this section.
Licensed retailers and wholesalers may also provide electronic mail
addresses to the Attorney General for the purposes of
receiving such notifications.
(5) Newly qualified and elevated-risk nonparticipating
manufacturers shall post surety bonds as follows:
(A) Notwithstanding any other law, if a newly qualified
nonparticipating manufacturer is to be listed in the directory or if
the Attorney General reasonably determines that any nonparticipating
manufacturer who has filed a certification pursuant to subdivision
(b) poses an elevated risk for noncompliance with this section or
with Article 3 (commencing with Section 104555) of Chapter 1 of Part
3 of Division 103 of the Health and Safety Code, neither the
nonparticipating manufacturer nor any of its brand families shall be
included in the directory unless and until the nonparticipating
manufacturer, or its United States importer that undertakes joint and
several liability for the manufacturer's performance in accordance
with subparagraph (E) of paragraph (3) of subdivision (b), has posted
a bond in accordance with this section.
(B) The bonds shall be posted by a corporate surety located within
the United States in an amount equal to the greater of fifty
thousand dollars ($50,000) or the amount of escrow the manufacturer
in either its current or predecessor form was required to deposit as
a result of its previous calendar year's sales in California. The
bond shall be written in favor of the State of California and shall
be conditioned on the performance by the nonparticipating
manufacturer, or its United States importer that undertakes joint and
several liability for the manufacturer's performance in accordance
with subparagraph (E) of paragraph (3) of subdivision (b), of all its
duties and obligations under this section and Article 3 (commencing
with Section 104555) of Chapter 1 of Part 3 of Division 103 of the
Health and Safety Code during the year in which the certification is
filed and the next succeeding calendar year.
(C) A nonparticipating manufacturer may be deemed to pose an
elevated risk for noncompliance with this section or Article 3
(commencing with Section 104555) of Chapter 1 of Part 3 of Division
103 of the Health and Safety Code if:
(i) The nonparticipating manufacturer or any affiliate thereof has
failed to deposit fully the amount due on an escrow obligation with
respect to any state at any time during the calendar year or within
the past three calendar years unless either of the following occur:
(I) The manufacturer did not underdeposit knowingly or recklessly
and the manufacturer promptly cured the underdeposit within 180 days
of notice of it.
(II) The underdeposit or lack of deposit is the subject of a good
faith dispute as documented to the satisfaction of the Attorney
General and the underdeposit is cured within 180 days of entry of a
final order establishing the amount of the required escrow deposit.
(ii) Any state has removed the manufacturer or its brands or brand
families or an affiliate or any of the affiliate's brands or brand
families from the state's tobacco directory for noncompliance with a
state escrow deposit or tobacco tax law at any time during the
calendar year or within the past three calendar years.
(iii) Any state has litigation pending against, or an unsatisfied
judgment against, the manufacturer or any affiliate thereof for
escrow or for penalties, costs, or attorney's fees related to
noncompliance with state escrow laws.
(iv) The nonparticipating manufacturer sells its cigarettes or
tobacco products directly to consumers via remote or other
non-face-to-face means.
(v) A state or federal court determining that the nonparticipating
manufacturer has violated any tobacco tax or tobacco control law or
engaged in unfair business practice or unfair competition.
(vi) The nonparticipating manufacturer fails to submit or complete
any required forms, documents, certification, or notices, in a
timely manner or, to the satisfaction of the Attorney General or the
State Board of Equalization.
(D) As used in this section, "newly qualified nonparticipating
manufacturer" means a nonparticipating manufacturer that has not
previously been listed in the California Tobacco Directory or
proposes to sell a brand family that has not been previously listed
in the directory. Such manufacturers may be required to post a bond
in accordance with this section for the first three years of their
listing, or longer if they have been determined to pose an elevated
risk for noncompliance.
(5)
(6) The Attorney General shall provide each tobacco
product manufacturer that has provided all certifications and other
information required by this section with a written acknowledgment of
receipt within seven business days after receiving the
certifications and other materials. Each tobacco product manufacturer
shall provide to each distributor to whom it sells or ships
cigarettes, or any tobacco product defined as a cigarette under this
section, a copy of each acknowledgment of receipt provided to the
manufacturer by the Attorney General. Upon request, the Attorney
General shall provide any distributor with a copy of the most recent
written acknowledgment of receipt provided to the tobacco product
manufacturer.
(d) (1) The Attorney General may exclude or remove from the list
required by subdivision (c) a tobacco product manufacturer or any of
its brand families, based on a determination that the manufacturer is
not a participating manufacturer that has provided the required
certification and made all payments calculated by the independent
auditor to be due from it under the Master Settlement Agreement,
except to the extent that it is disputing the payment, and has
not made all escrow payments required by paragraph (2) of subdivision
(a) of Section 104557 of the Health and Safety Code, in accordance
with that subdivision, or has not complied with this section ,
or any applicable state or federal laws . Before the exclusion
or removal may take effect, the Attorney General shall notify the
manufacturer of this determination.
(2) Upon receiving notice from the Attorney General pursuant to
paragraph (1), the manufacturer may challenge the Attorney General's
determination as erroneous, and may seek relief from the
determination, by filing a petition for writ of mandate pursuant to
Section 1085 of the Code of Civil Procedure for that purpose in the
Superior Court for the County of Sacramento, or as otherwise provided
by law. The filing of the petition shall operate to stay the
Attorney General's determination, if the manufacturer has paid into
escrow the full amount of any deficiency in the escrow payments that
the Attorney General has determined the tobacco product manufacturer
was required to have made under paragraph (2) of subdivision (a) of
Section 104557 of the Health and Safety Code, including any
installment payments required under subdivision (h), pending final
resolution of the action.
(e) (1) No person shall affix, or cause to be affixed, any tax
stamp or meter impression to a package of cigarettes pursuant to
subdivision (a) of Section 30163, or pay the tax levied pursuant to
Sections 30123 and 30131.2 on a tobacco product defined as a
cigarette under this section, unless the brand family of the
cigarettes or tobacco product, and the tobacco product manufacturer
that makes or sells the cigarettes or tobacco product, are included
on the list posted by the Attorney General pursuant to subdivision
(c).
(2) No person shall sell, offer, or possess for sale in this
state, ship or otherwise distribute into or within this state
or import for personal consumption in this state, cigarettes of
a tobacco product manufacturer or brand family not included in the
directory.
(3) No person shall do either of the following:
(A) Sell or distribute cigarettes that the person knows or should
know are intended to be distributed in violation of paragraphs (1)
and (2).
(B) Acquire, hold, own, possess, transport, import, or cause to be
imported cigarettes that the person knows or should know are
intended to be distributed in violation of paragraphs (1) and (2).
(f) (1) Any nonresident or foreign nonparticipating manufacturer
that has not registered to do business in the state as a foreign
corporation or business entity shall, as a condition precedent to
having its brand families listed or retained in the directory,
appoint and continually engage without interruption the services of
an agent in this state to act as agent for the service of process on
whom all process, and any action or proceeding against it concerning
or arising out of the enforcement of this section, Article 3
(commencing with Section 104555) of Chapter 1 of Part 3 of Division
103 of the Health and Safety Code, and any regulations promulgated
pursuant thereto, may be served in any manner authorized by law. This
service shall constitute legal and valid service of process on the
nonparticipating manufacturer. The nonparticipating manufacturer
shall provide the name, address, telephone number, and proof of the
appointment and availability of the agent to the satisfaction of the
Attorney General. Any nonparticipating manufacturer located
outside of the United States shall, as an additional condition
precedent to having its brand families listed or retained in the
directory, cause each of its importers into the United States of any
of its brand families to be sold in California to appoint and
continually engage without interruption the services of an agent in
the state in accordance with this section. All obligations of a
nonparticipating manufacturer imposed by this section with respect to
appointment of its agent shall likewise apply to
importers with respect to appointment of their agents.
(2) The nonparticipating manufacturer shall provide notice to the
Attorney General 30 calendar days prior to termination of the
authority of an agent and shall further provide proof to the
satisfaction of the Attorney General of the appointment of a new
agent no less than five calendar days prior to the termination of an
existing agent appointment. In the event an agent terminates an
agency appointment, the nonparticipating manufacturer shall notify
the Attorney General of said termination within five calendar days
and shall include proof to the satisfaction of the Attorney General
of the appointment of a new agent.
(3) Any nonparticipating manufacturer whose products are sold in
this state without appointing or designating an agent as herein
required shall be deemed to have appointed the Secretary of State as
its agent, as provided in Section 2105 of the Corporations Code, and
may be proceeded against in courts of this state by service of
process upon the Secretary of State. However, the appointment of the
Secretary of State pursuant to this provision as the agent for
service of process does not satisfy the condition precedent specified
in paragraph (1) to having its brand families listed or retained in
the directory.
(4) For each nonparticipating manufacturer located outside the
United States, each importer into the United States of any
nonparticipating manufacturer's brand families that are sold in
California shall bear joint and several liability with the
nonparticipating manufacturer for deposit of all escrow due under
Section 104557 of the Health and Safety Code, payment of all costs
and attorney's fees imposed in accordance with Section 104557 of the
Health and Safety Code, and payment of all costs and attorney's fees
imposed in accordance with this section. Each manufacturer and
importer shall comply with Division 8.6 (commencing with Section
22970) of the Business and Professions Code. Each manufacturer and
its importers shall report in the manner, including electronically,
as required by the Attorney General and the board, all cigarettes and
tobacco products, including, but not limited to, the quantity of
each brand family, and shall make all escrow deposits and pay state
taxes due before the importer or manufacturer releases the cigarettes
and tobacco products for transport to or sale in California. Any
manufacturer or importer that fails to file the report as required by
the Attorney General or board shall be liable for a civil penalty in
an amount not to exceed the greater of either of the following:
(A) Five times the retail value of the cigarettes or tobacco
products defined as cigarettes under this section that were not
reported prior to release for shipment to or sale in California.
(B) Five thousand dollars ($5,000).
(g) (1) Not later than 25 days after the end of each calendar
quarter, and more frequently if so directed by the board or the
Attorney General, each distributor shall submit any information as
the board or Attorney General requires to facilitate compliance with
this section, including, but not limited to, a list by brand family
of the total number of cigarettes or in the case of roll your own,
the total ounces for which the distributor affixed stamps during the
previous calendar month or otherwise paid the tax due for those
cigarettes. The distributor shall maintain, and shall make available
to the board and the Attorney General, all invoices and documentation
of sales of all nonparticipating manufacturer cigarettes and any
other information relied upon in reporting to the board and the
Attorney General for a period of five years.
(2) Notwithstanding Section 30455, the board is authorized to
disclose to the Attorney General any information received under this
part for purposes of determining compliance with and enforcing the
provisions of this section and Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code, and any regulations promulgated pursuant thereto. The
board and Attorney General shall share with each other the
information received under this section, and may share that
information with other federal, state, or local agencies, only for
purposes of enforcement of this section, Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code, and any regulations promulgated pursuant thereto, or
corresponding laws of other states.
(3) At any time, the Attorney General may require from the
nonparticipating manufacturer proof from the financial institution in
which the manufacturer has established a qualified escrow fund for
the purpose of compliance with Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code, and any regulations promulgated pursuant thereto, of the
amount of money in the fund being held on behalf of the state and
the dates of deposits, and listing the amounts of all withdrawals
from the fund and the dates thereof.
(4) In addition to the information required to be submitted
pursuant to this section or Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code and any regulations promulgated pursuant thereto, the
board or the Attorney General may require a retailer, wholesaler,
distributor, importer, or tobacco product manufacturer to
submit any additional information, including, but not limited to,
samples of the packaging or labeling of each brand family, as is
necessary to enable the Attorney General to determine whether a
tobacco product manufacturer or importer has complied, is
in compliance , and will continue in compliance with this
section, or Article 3 (commencing with Section 104555) of Chapter 1
of Part 3 of Division 103 of the Health and Safety Code, and any
regulations promulgated pursuant thereto.
(h) To promote compliance with this section, the Attorney General
may promulgate regulations requiring a tobacco product manufacturer
subject to the requirements of paragraph (2) of subdivision (a) of
Section 104557 to make the escrow deposits required in quarterly or
other specified installments during the year in which the sales
covered by the deposits are made. The Attorney General may require
production of information sufficient to enable the Attorney General
to determine the adequacy of the amount of the installment deposit.
(i) (1) In addition to any other civil or criminal penalty
provided by law, upon a finding that a distributor
person has violated subdivision (e), or paragraph (1) of
subdivision (g), the board may take the following actions:
(A) In the case of the first offense, the board may revoke or
suspend the license or licenses of the distributor
issued to the person by the board, pursuant to the
procedures applicable to the revocation of a license set forth in
Section Sections 30148 and 30158,
and Section 22980.3 of the Business and Professions Code. Each stamp
affixed and each sale or offer to sell cigarettes in violation of
subdivision (e) shall constitute a separate violation .
(B) In the case of a second or any subsequent offense , which
the board determines to be a violation of subdivision (e) or any
regulations adopted pursuant to this section , in addition to
the action authorized under subparagraph (A), the board may impose a
civil penalty in an amount not to exceed the greater of either of the
following:
(i) Five times the retail value of the cigarettes or tobacco
products defined as cigarettes under this section.
(ii) Five thousand dollars ($5,000).
(2) A distributor in any action for a violation of subdivision (e)
shall have a defense provided that either of the following is true:
(A) At the time of the violation, the cigarettes or tobacco
products claimed to be the subject of the alleged violation belonged
to a brand family that was included on the list required by
subdivision (c).
(B) At the time of the violation, the distributor possessed a copy
of the Attorney General's most recent written acknowledgment of
receipt of the certifications and other information required as a
condition of including the brand family on the list required by
subdivision (c).
(3) The defense described in subparagraph (B) of paragraph (2) is
not available to a distributor if, at the time of the violation, the
Attorney General had provided the distributor with written notice
that the brand family had been excluded or removed from the list
required by subdivision (c), or the distributor failed to provide the
Attorney General with a current address for the receipt of written
notice through electronic mail as required by paragraph (4) of
subdivision (c).
(4) A violation of paragraph (3) of subdivision (e) shall
constitute a misdemeanor.
(j) If a distributor affixes a stamp or meter impression to a
package of cigarettes under subdivision (a) of Section 30163, or pays
the tax levied under Sections 30123 and 30131.2 on a tobacco product
defined as a cigarette under this section, during the period between
the date on which the brand
family of the cigarettes or tobacco product was excluded or
removed from the list required by subdivision (c) and the date on
which the distributor received notice of the exclusion or removal
under paragraph (4) of subdivision (c), then both of the following
shall apply:
(1) The distributor shall be entitled to a credit for the tax paid
by the distributor with respect to the cigarette or tobacco product
to which the stamp or meter impression was affixed, or the tax paid
during that period. The distributor shall comply with regulations
prescribed by the board regarding refunds and credits that are
adopted pursuant to Section 30177.5. If the distributor has sold the
cigarette or tobacco product to a wholesaler or retailer, and has
received payment from the wholesaler or retailer, the distributor
shall provide the credit to the wholesaler or retailer.
(2) The brand family may not be included on or restored to the
list until the tobacco product manufacturer has reimbursed the
distributor for the cost to the distributor of the cigarettes or
tobacco product to which the stamp or meter impression was affixed,
or the tax paid, during that period.
(k) Any tobacco product manufacturer that falsely represents any
of the following to any person shall be guilty of a misdemeanor for
each false representation:
(1) Any information required under subdivision (b).
(2) That the tobacco product manufacturer is a participating
manufacturer.
(3) That the tobacco product manufacturer or any other person has
made any or all escrow payments required by paragraph (2) of
subdivision (a) of Section 104557 of the Health and Safety Code, if
applicable to the manufacturer.
(4) That it has complied with subdivision (b), or with paragraph
(1) of subdivision (g), if applicable to the manufacturer.
( l ) A violation of subdivision (e) shall constitute
unfair competition under Section 17200 of the Business and
Professions Code.
(m) No person shall be issued a distributor's license, pursuant to
Section 30140, unless that person has certified in writing that the
person will comply fully with this section. Any person who makes a
certification 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 the imprisonment and the fine.
(n) For the year 2003, if the effective date of the act that added
this section is later than March 16, 2003, the first report of
distributors required by paragraph (1) of subdivision (g) shall be
due 30 days after that effective date, the certifications by a
tobacco product manufacturer described in subdivision (b) shall be
due 45 days after that effective date, and the directory described in
subdivision (c) shall be published or made available within 90 days
after that effective date.
(o) The Attorney General may adopt rules and regulations to
implement this section. The rules and regulations may establish
procedures for including in the list described in subdivision (c)
tobacco product manufacturers that are not participating
manufacturers and were not required to make escrow payments under
paragraph (2) of subdivision (a) of Section 104557 of the Health and
Safety Code, for sales made during any preceding calendar year, and
brand families of those manufacturers. The rules and regulations may
also establish procedures for seizure and destruction of cigarettes
forfeited to the state pursuant to Section 30436 or Section 30449,
including, but not limited to, the state facilities that may be used
for the destruction of contraband cigarettes. Nothing in this section
shall affect the authority of local law enforcement and local
government officials to seize and destroy contraband under existing
state or local law. The regulations adopted to effect the purposes of
this section are emergency regulations in accordance with Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code. For purposes of that chapter, including
Section 11349.6 of the Government Code, the adoption of the
regulations shall be considered by the Office of Administrative Law
to be necessary for the immediate preservation of the public peace,
health and safety, and general welfare. Notwithstanding subdivision
(e) of Section 11346.1 of the Government Code, the regulations shall
be repealed 180 days after their effective date, unless the adopting
authority or agency complies with that chapter, as provided in
subdivision (e) of Section 11346.1 of the Government Code.
(p) In any action brought by the state to enforce this section,
the state shall be entitled to recover the costs of investigation,
expert witness fees, costs of the action, and reasonable attorney's
fees.
(q) The Attorney General or his or her authorized representative
shall have the authority to:
(1) Conduct audits and investigations of the following:
(A) A nonparticipating manufacturer and its importers or a tobacco
product manufacturer as defined in subdivision (i) of Section 104556
of the Health and Safety Code that became a participating
manufacturer after the Master Settlement execution date, as defined
in Section II (aa) of the Master Settlement Agreement, and its
importers.
(B) Exclusive distributors, retailers, stamping agents, and
wholesalers, as defined in Division 8.6 (commencing with Section
22970) of the Business and Profession Code, and this part.
(C) Persons or entities engaged in delivery sales as defined in
Section 22963 of the Business and Professions Code.
(2) Upon reasonable cause to believe that a violation of this
article or of Article 3 (commencing with Section 104555) of Chapter 1
of Part 3 of Division 103 of the Health and Safety Code, or of
Section 22963 of the Business and Professions Code, or of Section
30101.7, has occurred or is reasonably likely to occur, issue
subpoenas, compel the attendance of witnesses, administer oaths,
certify to official acts, take depositions within and without the
state, as now provided by law, and compel the production of pertinent
books, payrolls, accounts, papers, records, documents, and testimony
relevant to investigations. If a person refuses, without good cause,
to be examined or to answer a legal and pertinent question, or to
produce a document or other evidence when ordered to do so by the
Attorney General or his or her authorized representative, the
Attorney General or his or her authorized representative may apply to
the superior court of the county where the person is in attendance
or located, upon affidavit, for an order returnable in no less than
two nor more than five days, directing the person to show cause why
he or she should not be examined, answer a legal or pertinent
question or produce a document, record or other evidence. Upon the
hearing, if the court determines that the person, without good cause,
has refused to be examined or to answer legal or pertinent
questions, or to produce a document, record, or other evidence, the
court may order compliance with the subpoena and assess all costs and
reasonable attorney's fees against the person. If the motion for an
order is granted and the person thereafter fails to comply with the
order, the court may make orders as are provided for by law.
Subpoenas shall be served and witness fees and mileage paid as
allowed in civil cases in the courts of the State of California.
(r) In any action regarding a violation of this article or of
Article 3 (commencing with Section 104555) of Chapter 1 of Part 3 of
Division 103 of the Health and Safety Code, or of Section 22963 of
the Business and Professions Code, or of Section 30101.7, or of
Section 17200 of the Business and Professions Code, reports submitted
to the board pursuant to Section 30182 or Section 22978.1, 22978.4,
or 22978.5 of the Business and Professions Code, shall be admissible
in evidence and shall be presumed to accurately state the number of
cigarettes stamped during the time period by the stamping agent that
submitted the report absent a contrary showing by the
nonparticipating manufacturer or importer. Nothing in this section
shall be construed as limiting or otherwise affecting the right of
the state to maintain that reports are incorrect or do not accurately
reflect a nonparticipating manufacturer's sales in the state during
the time period in question, and the presumption shall not apply in
the event the state does so maintain.
(s) In any action regarding a violation of this article or of
Article 3 (commencing with Section 104555) of Chapter 1 of Part 3 of
Division 103 of the Health and Safety Code, or of Section 22963 of
the Business and Professions Code, or of Section 30101.7, or of
Section 17200 of the Business and Professions Code, sufficient notice
of the action to the alleged violator shall be given by complaint
written in the English language. The state shall not be required to
bear any expense of translating complaint into another language.
(q)
(t) Unless otherwise expressly provided, the remedies
or penalties provided by this section are cumulative to each other
and to the remedies or penalties available under all other laws of
this state.
SEC. 8. Section 30165.2 is added to the Revenue and Taxation Code,
to read:
30165.2. (a) For purposes of this section, "applicable returns"
means the following returns or reports relating to cigarettes that
are filed or required to be filed with the Alcohol and Tobacco Tax
and Trade Bureau of the United States Department of Treasury, after
the effective date of the act adding this section:
(1) Alcohol and Tobacco Tax and Trade Bureau Form 5000.24.
(2) Alcohol and Tobacco Tax and Trade Bureau Form 5210.5.
(3) Alcohol and Tobacco Tax and Trade Bureau Form 5220.6.
(4) Any successor returns or reports intended to replace Alcohol
and Tobacco Tax and Trade Bureau Form 5000.24, 5210.5, or 5220.6.
(b) As a condition of selling cigarettes in the state, every
tobacco product manufacturer, as defined in paragraph (9) of
subdivision (a) of Section 30165.1, whose cigarettes are to be sold
in the state whether directly or through a distributor, importer,
retailer, or similar intermediary or intermediaries shall, at the
election of tobacco product manufacturer, either:
(1) Submit to the Attorney General a true and correct copy of each
and every applicable return of tobacco product manufacturer.
(2) Submit to the United States Treasury a request or consent
under Internal Revenue Code Section 6103(c) authorizing the Alcohol
and Tobacco Tax and Trade Bureau to disclose the applicable returns
of manufacturer to the Attorney General. A foreign tobacco product
manufacturer whose cigarettes are imported into the United States by
an importer or importers shall submit, or shall case each of its
importers to submit, to the Attorney General each and every
applicable return that includes any information about cigarettes of
that foreign tobacco product manufacturer imported into the United
States. The Attorney General shall not disclose any applicable
returns or any information contained therein, except as necessary to
carry out the functions and duties of the Department of Justice or
State Board of Equalization, or as provided in subdivision (c).
(c) The Attorney General may compile data on cigarette shipments
from the applicable returns and may share data with other states that
are signatories to the Master Settlement Agreement, as defined
paragraph (5) of subdivision (a) of Section 30165.1, provided that
states impose protections against disclosure of the applicable
returns, or any information from applicable returns, that are
equivalent to the protections provided under subdivision (b).
(d) A tobacco product manufacturer who does not comply with the
requirements of subdivision (b) shall, after 30 days notice by the
state to the tobacco product manufacturer of the failure to comply,
be removed, along with its brand families, from the tobacco directory
unless the tobacco product manufacturer has brought itself into
compliance by the end of the 30-day period.
(e) (1) Any tobacco manufacturer or importer that intentionally
provides any applicable return containing materially false
information shall be liable for a civil penalty in an amount not to
exceed the greater of either of the following:
(A) Five times the retail value of the cigarettes or tobacco
products defined as cigarettes under this section and about which
false information was provided.
(B) Five thousand dollars ($5,000).
(2) The provisions of each applicable return containing one or
more false statements shall constitute a separate offense.
(f) The Attorney General may promulgate regulations to implement
and carry out this section.
SEC. 9. Section 30436 of the Revenue and Taxation Code is amended
to read:
30436. The following property, upon seizure by the board, is
hereby forfeited to the state:
(a) Cigarettes or tobacco products transported upon the highways,
roads, or streets of this state in violation of Section 30431 or
Section 30432.
(b) Cigarettes not contained in packages to which are affixed
California cigarette tax stamp or meter impressions or tobacco
products upon which the tobacco products surtax has not been paid,
which are offered for sale, possessed, kept, stored, or owned by any
person with the intent of the person to sell the cigarettes or
tobacco products without payment of the taxes imposed by this part.
(c) Any cigarette or tobacco product vending machine, together
with the cigarettes, tobacco products, money or other contents
thereof, that has been loaded, in whole or in part, with packages of
cigarettes that do not have California cigarette tax stamps or meter
impressions affixed or tobacco products upon which the tobacco
products surtax has not been paid.
(d) Cigarettes contained in packages to which are affixed
California cigarette tax stamps or meter impressions in violation of
Section 30163.
(e) Cigarettes or tobacco products of a tobacco product
manufacturer or its brand families that do not appear on the
directory maintained by the Attorney General pursuant to subdivision
(c) of Section 30165.1 or to which are affixed California
cigarette tax stamps or meter impressions, or for which tax is paid
pursuant to Sections 30123 and 30131.2, in violation of Section
30165.1, regardless of whether the violation is subject to the
defense described in paragraph (2) of subdivision (i) of Section
30165.1.
SEC. 10. The amendments made to paragraph (2) of subdivision (e)
of Section 30165.1 of the Revenue and Taxation Code by Section 7 of
this act are declaratory of, and do not constitute a change in,
existing law.
SEC. 11. Nothing in this act preempts or supersedes any local
tobacco control law or ordinance other than those laws or ordinances
that are related to the collection of state taxes. Local licensing
laws or ordinances may provide for the suspension or revocation of
licenses issued by a local government or agency for a violation of
the laws imposed under the Cigarette and Tobacco Products Tax Law
(Part 13 (commencing with Section 30001) of Division 2 of the Revenue
and Taxation Code).
SEC. 12. The provisions of this act are severable. If any
provision of this act or its application is held invalid, that
invalidity does not affect other provisions of applications that can
be given effect without the invalid provision or application.
SEC. 13. 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.