BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2496
                                                                  Page  1

          CONCURRENCE IN SENATE AMENDMENTS
          AB 2496 (Nava)
          As Amended  August 18, 2010
          Majority vote
           
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          |ASSEMBLY:  |58-16|(June 1, 2010)  |SENATE: |23-10|(August 23,    |
          |           |     |                |        |     |2010)          |
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           Original Committee Reference:    G.O.

          SUMMARY  :  Amends the California Cigarette and Tobacco Products  
          Licensing Act of 2003 in governing the financial and other  
          obligations of non-participating tobacco manufacturers (NPMs) as  
          part of its diligence obligation.  

           The Senate amendments  :

          1)Require a manufacturer or importer to additionally consent to  
            jurisdiction of the California courts for the purpose of  
            enforcement of the Master Settlement Agreement (MSA) and the  
            Cigarette and Tobacco Products Tax Law or, in lieu of this  
            consent, to post a surety bond, as specified.

          2)Provide that a licensee who does not waive the sovereign  
            immunity defense or post a surety bond is ineligible to obtain  
            or maintain a license and would also make a licensee who  
            raises a sovereign immunity defense in a specified action  
            subject to revocation of its license.

          3)Require the manufacturer or importer to additionally identify  
            the registered agent to the Attorney General.

          4)Clarify the allowance of vendor-assisted, face-to-face  
            delivery sales, as defined, in specified circumstances.   
            Violation of this provision would be a misdemeanor, thus  
            imposing s state-mandated local program.

          5)Add a contingency clause to avoid a chaptering conflict with  
            AB 2733 (Ruskin) relating to cigarettes and tobacco products.

          6)Make technical changes.

           EXISTING FEDERAL LAW  :








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          1)Requires, state Attorneys General and various tobacco product  
            manufacturers to enter into a MSA as a settlement of various  
            lawsuits that provides for the allocation of money to the  
            states and certain territories.  

          2)Enters this state into a memorandum of understanding providing  
            for the allocation of the state's share of funds to be  
            received under the MSA between the state and counties and  
            certain cities within the state.

          3)Requires any tobacco product manufacturer selling cigarettes  
            to consumers in this state to place specified amounts into a  
            qualified escrow fund by April 15 of each year. 
           

          EXISTING STATE LAW  :

          1)Prohibits the sale, offer for sale, distribution, or import of  
            "bidis" or "beedies," defined as a product containing tobacco  
            that is wrapped in temburni leaf or tendu leaf, unless it is  
            sold or intended for sale in business establishments that  
            exclude minors.

          2)Requires, under the Cigarette and Tobacco Products Tax Law, a  
            tax with respect to distributions of cigarettes paid by  
            distributors through the use of stamps or meter impressions,  
            and:

             a)   Requires that these stamps or impressions be affixed to  
               each package of cigarettes sold;

             b)   Requires certification of additional information, as  
               specified; and,

             c)   Requires the State Attorney General to post on the  
               Attorney General's Internet Web site a directory of tobacco  
               product manufacturers that are participating manufacturers  
               that are participating manufacturers under the MSA, and  
               that have made the required escrow payments and provided  
               certification of related information to the Attorney  
               General;

               i)     Requires the Attorney General's Internet Web site to  
                 include specified brand families, as defined, that have  








                                                                  AB 2496
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                 been identified by the by the tobacco product  
                 manufacturers;

               ii)    Requires that a manufacturer and brand families be  
                 excluded from the directory, under certain circumstances;  
                 and,

               iii)   Requires certain cigarette and tobacco products be  
                 forfeited to the state, under certain circumstances, upon  
                 seizure by the State Board of Equalization.

          3)Imposes licensing requirements on tobacco manufacturers,  
            wholesalers, retailers and importers; requires manufacturers  
            to pay a one-time fee; and, imposes additional civil and  
            criminal penalties on individuals and businesses that violate  
            tobacco-related, anti-contraband laws and laws prohibiting  
            tobacco-related sales to minors. (Cigarette and Tobacco  
            Products Licensing Act)

          4)Establishes the Stop Tobacco Access to Kids Enforcement Act to  
            reduce or eliminate the illegal purchase and consumption of  
            tobacco products by minors. 

             a)   Requires retailers from selling cigarettes and tobacco  
               products to minors under the age of 18 and requires that  
               retailers check identification of individuals trying to buy  
               cigarettes and tobacco products who appear under the age of  
               18;

             b)   Increases civil penalties and expands the number of  
               agencies that are permitted to carry out investigations of  
               illegal tobacco sales to minors from the State Department  
               of Public Health to include the Attorney General and other  
               state and local agencies.

           5)AS PASSED BY THE ASSEMBLY  , this bill amends the Cigarette and  
            Tobacco Products Licensing Act in governing the financial and  
            other obligations of the NPMs as part of its diligence  
            obligation.

           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :  The author states, "This bill would bring California  
          law into conformity with Virginia's law and those of the other  








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          states to prevent participating manufacturers (PMs) from arguing  
          in future litigation that California has failed to 'diligently  
          enforce' against NPMs."  This bill is modeled on similar NPM  
          escrow statute enhancements made in Virginia, Kentucky, Kansas,  
          and Idaho.  This bill would protect against the sale of  
          cigarettes below market prices, and would help protect the  
          state's share of tobacco settlement payments under the MSA.

          According to the sponsor, the Department of Justice, this bill  
          will "enhance the department's efforts to enforce existing  
          provisions of state law related to the MSA between California  
          and the major tobacco manufacturers."  In addition, sponsor  
          states that this bill would protect against the sale of  
          cigarettes below market prices, and would help protect the  
          state's share of tobacco settlement payments due to it under the  
          MSA.


           Analysis Prepared by  :      Rod Brewer / G.O. / (916) 319-2531


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