BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2496|
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THIRD READING
Bill No: AB 2496
Author: Nava (D)
Amended: 8/18/10 in Senate
Vote: 21
SENATE HEALTH COMMITTEE : 6-2, 6/16/10
AYES: Alquist, Cedillo, Leno, Negrete McLeod, Pavley,
Romero
NOES: Strickland, Aanestad
NO VOTE RECORDED: Cox
SENATE REVENUE & TAXATION COMMITTEE : 3-0, 6/23/10
AYES: Wolk, Alquist, Padilla
NO VOTE RECORDED: Walters, Ashburn
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 58-16, 6/1/10 - See last page for vote
SUBJECT : Cigarette and tobacco products
SOURCE : Department of Justice
DIGEST : This bill amends the California Cigarette and
Tobacco Products Licensing Act of 2003 in governing the
financial and other obligations of non-participating
tobacco manufacturers as part of its diligence obligation.
Senate Floor Amendments of 8/18/10 revise certain sections
of the bill to make clear the division of administrative
CONTINUED
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duties between the Board of Equalization (BOE) and the
Department of Justice (DOJ) in administering the Cigarette
and Tobacco Products Tax Law and the Cigarette and Tobacco
Products Licensing Act and make certain provisions of the
bill more workable to tobacco distributors and retailers,
and double-joints the bill to AB 2733 (Ruskin). The
amendments specifically: (1) clarify certain sections of
the bill to make clear the division of administrative
duties between the BOE and the DOJ in administering the
Cigarette and Tobacco Products Tax Law and the Cigarette
and Tobacco Products Licensing Act of 2003, (2) revise the
proposed Tobacco Directory Law that requires notice to, and
sell-off period for, a distributor's customer so that they
are workable for distributors and retailers, (3) clarify
that the sell-off period deadlines don't apply for the
distributors if the DOJ decides not to take administrative
action against a manufacturer that has been notified of
potential administrative action, and (4) add findings
language regarding the public health hazards posed by cheap
cigarettes and tobacco products.
ANALYSIS : Existing federal law:
1.Requires, state Attorneys General (AG) and various
tobacco product manufacturers to enter into a Master
Settlement Agreement (MSA) as a settlement of various
lawsuits, that provides for the allocation of money to
the states and certain territories.
2.Enters California 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
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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 (Tax Law), a tax with respect to distributions of
cigarettes paid by distributors through the use of stamps
or meter impressions:
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 AG to post on the AG'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 AG:
i. Requires the AG's Internet Web site to
include specified brand families, as defined,
that have 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 BOE.
3.Enacts the Cigarette and Tobacco Products Licensing Act,
which 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.
4.Establishes the Stop Tobacco Access to Kids Enforcement
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Act (STAKE 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; and,
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 Department of Public Health to include the AG and
other state and local agencies.
This bill:
1. Requires a manufacturer or importer to consent to
jurisdiction of the California courts for the purpose of
enforcement of the MSA and the Cigarette and Tobacco
Products Tax Law, or, in lieu of consent, post a surety
bond in a from and manner directed by the AG.
2. Requires the manufacturer or importer to additionally
identify the registered agent to DOJ.
3. Authorizes a peace officer or board employee granted
limited peace officer status to inspect any site with
respect to violations of a specified provision of the
Tax Law.
4. Prohibits 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 DOJ, as specified.
5. Deletes the DOJ's fee on manufacturers for implementing
and maintaining the directory.
6. Authorizes 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.
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7. Requires 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.
8. Requires a stamp or meter impression to be made on rolls
of tobacco, as specified, and makes conforming changes
to related provisions.
9. Requires certification of additional information, as
specified.
10.Establishes circumstances under which a manufacturer and
brand families are to be excluded from the directory of
tobacco product manufacturers that are participating
manufacturers and brand families under the MSA, and
require DOJ to provide distributors and wholesalers with
written notice of each tobacco product that is added to
or removed from the directory and to provide notice to
each licensed distributor, wholesaler, other person who
has provided an electronic mail address for this
purpose.
11.Requires a newly qualified NPM or a NPM that poses an
elevated risk of noncompliance with the Tax Law or the
MSA, to post a surety bond, as specified before
inclusion onto the DOJ's directory of tobacco product
manufacturers that are participating manufacturers under
the MSA.
12.Specifies that a person is prohibited from shipping or
distributing into or within this state for personal
consumption in California cigarettes of a tobacco
manufacturer or brand family not included in the
directory, and would provide that this specification is
declaratory of existing law.
13.Requires any NPM not located in 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 manufacturer.
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14.Requires, as a condition of selling cigarettes in
California, a tobacco product manufacturer, as
specified, to submit, or authorize to disclose, a copy
of its applicable return.
15.Provides that a failure to comply with that provision
would subject the manufacturer and its brand companies
to removal from the directory.
16.Imposes a civil penalty on any manufacturer that
intentionally provides an applicable return with
materially false information.
17.Requires the BOE and the DOJ to share the data,
including e-mail addresses, for distributors, importers,
manufacturers, and wholesalers, upon the request of the
AG.
18.Eliminates the reference to the track and trace
provisions under state law that is applicable to
delivery sales.
19.Defines "Delivery Sales Laws" as any state or federal
laws applicable to delivery sale under to existing state
law.
20.Amends the definition of "bidis" or "beedies," as
defined, to include any product that is marked as sold
as "bidis" or "beedies", and clarifies that persons who
violate the prohibition prescribed under existing law
are subject to both criminal and civil liability.
21.Provides that the provisions of this bill are severable.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/18/10)
Department of Justice (source)
American Lung Association
Breathe California
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ARGUMENTS IN SUPPORT : DOJ states that this bill will
"enhance the department's efforts to enforce existing
provisions of state law related to the Master Settlement
Agreement between California and the major tobacco
manufacturers. The measure 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 Master Settlement Agreement."
The American Lung Association supports this bill because it
will "strengthen existing law regarding payments from
'non-participating manufacturers' under the Master Tobacco
Settlement Agreement." The American Lung Association
believes that this bill will "provide the state with
additional tools to ensure payment of NPMs, especially for
new, foreign, and elevated risk NPMs." The American Lung
Association also supports the provision in this bill that
allows NPMs to assign their interest in the funds to the
State, so that such funds may ultimately be directed toward
tobacco prevention efforts.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Arambula, Bass, Beall, Blakeslee,
Block, Blumenfield, Bradford, Brownley, Buchanan,
Caballero, Charles Calderon, Carter, Chesbro, Coto,
Davis, De La Torre, De Leon, Emmerson, Eng, Evans, Feuer,
Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Lieu, Bonnie
Lowenthal, Ma, Mendoza, Miller, Monning, Nava, Nestande,
Nielsen, V. Manuel Perez, Portantino, Ruskin, Salas,
Saldana, Skinner, Solorio, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada, John A. Perez
NOES: Anderson, Bill Berryhill, Conway, DeVore, Fletcher,
Gaines, Garrick, Gilmore, Hagman, Harkey, Jeffries,
Knight, Logue, Niello, Norby, Smyth
NO VOTE RECORDED: Tom Berryhill, Cook, Fuller, Silva,
Audra Strickland
CTW:nl 8/19/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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