BILL NUMBER: AB 1785	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Garcia

                        FEBRUARY 18, 2014

   An act to amend Section 30165.1 of the Revenue and Taxation Code,
relating to tobacco.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1785, as introduced, Garcia. Cigarette and Tobacco Products Tax
Law: Master Settlement Agreement: information sharing.
   Existing law regulates the promotion and sale of cigarette and
other tobacco products in this state, and requires any tobacco
product manufacturer selling cigarettes to consumers within the state
that is a participating manufacturer, as defined in the Master
Settlement Agreement (MSA), or a non-participating manufacturer that
makes required escrow payments to provide annual certifications to
the Attorney General for purposes of a directory. Under the MSA,
states' attorneys general and various tobacco product manufacturers
have entered into an agreement, in settlement of various lawsuits
against those manufacturers, for recovery of the states'
tobacco-related health care costs, which provides for the allocation
of money to the states and certain territories.
   Existing law authorizes the State Board of Equalization to
disclose to the Attorney General any information received under the
Cigarette and Tobacco Products Tax Law for purposes of determining
compliance with, and enforcing specified provisions of, that law,
laws relating to the Master Settlement Agreement, and any regulations
promulgated pursuant thereto.
   This bill would authorize the board to disclose to the Attorney
General any information received under the Cigarette and Tobacco
Products Tax Law for purposes of determining compliance with and
enforcing the Master Settlement Agreement.
   Existing law requires the board and Attorney General to share with
each other specified information, and allows that information to be
shared with other federal, state, or local agencies for purposes of
enforcement of specified laws.
   This bill would authorize this information also to be shared for
purposes of determining compliance with, and enforcement of,
specified laws and the Master Settlement Agreement. This bill would
allow the Attorney General to share that information with any data
clearinghouse or other entity performing duties under the Master
Settlement Agreement.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  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 tobacco
products defined as a cigarette under that subdivision.
   (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, 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 the 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. A
tobacco product manufacturer located outside of the United States
shall provide to the Attorney General and keep current, the names,
and addresses, including electronic mail addresses, of all importers
that sell or will be selling their cigarettes in this state and shall
cause each importer to provide to the Attorney General a copy of a
valid importer permit issued by the United States Treasury, Alcohol
and Tobacco Tax and Trade Bureau, and the importer license issued by
the board. The importers who sell or will be selling their cigarettes
in this state shall obtain and maintain a license as an importer in
compliance with Division 8.6 (commencing with Section 22970) of the
Business and Professions 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.
   (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:
   (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. The nonparticipating manufacturer shall also provide a copy
of a valid, corresponding federal permit issued by the United States
Treasury, Alcohol and Tobacco Tax and Trade Bureau.
   (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 the manufacturer 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 fees,
costs, attorney's fees, penalties, and refunds imposed or required
under this section, including, but not limited to, all refunds
resulting from the removal of the manufacturer or any of its brand
families from the directory. The declaration shall appoint for the
declarant a resident agent for service of process in California in
accordance with subdivision (f) and affirm that it has caused every
importer that will sell its tobacco products in this state to obtain
and maintain a license as an importer pursuant to 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 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 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.
   (C) A tobacco product manufacturer that does not hold a valid and
current manufacturer's license under Section 22979 of the Business
and Professions Code, including, but not limited to, a manufacturer
whose license has been revoked under subdivision (g) of Section 22979
of the Business and Professions Code.
   (2) Neither a tobacco product manufacturer nor brand family shall
be included or retained in the directory if the Attorney General
concludes that 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, Sections 30101.7 and 30165.2, 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 by reason of
the business plan, business history, trade connections, or compliance
and payment history in California or any other state of any of the
principals thereof, the nonparticipating manufacturer fails to
provide reasonable assurance that it will comply with the
requirements of this section, Section 30165.2, and 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) In the case of a nonparticipating manufacturer, 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.
   (E) If the manufacturer or its importer, as defined in Section
30019, engages in delivery sales and the manufacturer fails to
provide or fails to cause his or her importer to provide reasonable
assurances that the delivery seller has fully complied with all
requirements of applicable federal and state law, including, but not
limited to, all of the following:
   (i) The Prevent All Cigarette Trafficking Act of 2009 (PACT Act;
Public Law 111-154).
   (ii) The Jenkins Act (Chapter 10A (commencing with Section 375) of
Title 15 of the United States Code).
   (iii) The requirements of Section 30101.7.
   (iv) All stamping, marking, and labeling requirements, including,
but not limited to, Section 30163, and any other information or
indicia requirements imposed by state or federal law.
   (v) All other state laws generally applicable to the sale and
distribution of tobacco products.
   (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, Section 30165.2, and Article 3
(commencing with Section 104555) of Chapter 1 of Part 3 of Division
103 of the Health and Safety Code. The Attorney General shall
promptly provide distributors and wholesalers 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) When the Attorney General's office informs a manufacturer that
it will recommend to the Attorney General that the manufacturer or
brand family be delisted for cause, the office shall transmit by
electronic mail, or other practicable means, a copy of the notice of
the pending administrative action to the manufacturer, all licensed
distributors and wholesalers, and to any retailer or other person who
has provided an electronic mail address to the Attorney General for
this purpose.
   (B) A licensed distributor may purchase, stamp, or sell, and a
licensed wholesaler may purchase or sell, products affected by the
notice of pending administrative action for no more than 40 days
following issuance of the notice of pending administrative action.
Prior to the sale of a product affected by the notice of pending
administrative action, and no later than seven days after the notice
of pending administrative action, a distributor or wholesaler shall
notify each of its existing customers of the pending administrative
action.
   (C) Upon removal from the directory of a tobacco product
manufacturer or brand family, the Attorney General shall transmit by
electronic mail, or other practicable means, a notice of removal, to
the manufacturer, all licensed distributors and wholesalers, and to
any retailer or other person who has provided an electronic mail
address to the Attorney General for this purpose. No later than seven
days after issuance of the notice of removal, a distributor or
wholesaler shall provide each of its existing customers a copy of the
notice of removal.
   (D) Notwithstanding subdivision (e), a licensed retailer may
possess, transport, and sell the tax-stamped cigarettes of a
manufacturer or brand family affected by the notice of removal for no
more than 60 days following the effective date of the manufacturer
or brand family's removal from the directory.
   (E) After 60 days following removal from the directory the
cigarettes of a manufacturer or brand family identified in the notice
of removal are contraband and are subject to seizure and destruction
under subdivision (e) of Section 30436 and subdivision (b) of
Section 30449, and may not be purchased or sold in California.
   (F) In the event the Attorney General declines to remove a tobacco
product manufacturer or brand family from the directory following
issuance of the notice of pending administrative action described in
subparagraph (A), the Attorney General shall notify by electronic
mail, or other practicable means, the manufacturer, all licensed
distributors and wholesalers, and any retailer or other person who
has provided an electronic mail address to the Attorney General for
this purpose, of the decision not to pursue administrative action. No
later than seven days after issuance of this notice, a distributor
or wholesaler shall provide each of its existing customers a copy of
this notice, and the purchase, stamping, and sales restrictions
imposed by subparagraph (B) shall have no further effect.
   (G) Upon request of the Attorney General, the board shall provide
the Attorney General all electronic mail addresses for licensed
distributors, wholesalers, and retailers in its possession.
   (4) Newly qualified and elevated-risk nonparticipating
manufacturers shall file with the Attorney General a surety bond in a
form and manner directed by the Attorney General.
   (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,
Section 30165.2, Part 13 (commencing with Section 30001) of Division
2, 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 the largest of its most recent five 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 and payment of all
state taxes for the sale or distribution of cigarettes and tobacco
products in this state during the year in which the certification is
filed and the next succeeding calendar year. The bond may be drawn
upon by the board or the Attorney General to cover unsatisfied escrow
obligations, tax obligations, claims for penalties, claims for
monetary damages, and any other liabilities that are subject to the
licensee's claim of sovereign immunity against enforcement of the
laws specified above.
   (C) A nonparticipating manufacturer may be deemed to pose an
elevated risk for noncompliance with this section, Section 30165.2,
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
final judgment against, the manufacturer or any affiliate thereof for
escrow or for penalties, fees, costs, refunds, 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) Any state has suspended or revoked its license to engage in
any aspect of tobacco business.
   (vii) Any state or federal court has determined that it failed to
comply with state or federal law imposing marking, labeling, and
stamping requirements or requiring information to be affixed to, or
contained in, the labels, markings, or packaging.
   (viii) 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. These
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) 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, or in the case
of a nonparticipating manufacturer, 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, Section 30165.2, or the tobacco
product manufacturer has not complied with any state or federal
delivery sales laws applicable to sales and distribution of tobacco
products in this state. 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 participating manufacturer
has 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 payment, or if a nonparticipating 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 fees, costs, attorney's
fees, penalties, and refunds imposed or required by this section or
Section 30165.2. Each manufacturer and importer, that sells or
intends to sell cigarettes in California, shall obtain and maintain a
license as a manufacturer or importer in compliance with Division
8.6 (commencing with Section 22970) of the Business and Professions
Code. Each nonparticipating manufacturer and its importers shall
report in the manner, including electronically, as required by the
Attorney General, all cigarettes and tobacco products sold in this
state each month, including, but not limited to, the quantity,
including tobacco weight and number of cigarette sticks, the
wholesale cost and sale price of each brand family. Any manufacturer
or importer that fails to file the report as required by the Attorney
General 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, loose tobacco
and smokeless tobacco, or tobacco products defined as cigarettes
under this section that were not reported as required by the Attorney
General.
   (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. 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, Sections 30101.7 and 30165.2, 
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  , and the MSA  .
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,
  agencies. The Attorney General may also share that
information with any data clearinghouse or other entity performing
duties related to the MSA.   That information shall be
shared  only for  the  purposes of  determining
compliance with and  enforcement of this section,  Sections
30101.7 and 30165.2,  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  , and the MSA  .
   (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
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, if applicable
pursuant to subparagraph (C) of paragraph (2) of subdivision (c), has
provided reasonable assurance that it will comply or continue to
comply with this section, Section 30165.2, Part 8 (commencing with
Section 14950) of Division 12 of the Health and Safety Code, 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.
   (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 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 issued to the person by the board,
pursuant to the procedures applicable to the revocation of a license
set forth in 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 that the
board determines to be a violation of subdivision (e), 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.
   (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 30101.7.
   (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.
   (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.