BILL ANALYSIS
AB 2733
Page 1
Date of Hearing: April 20, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 2733 (Ruskin) - As Introduced: February 19, 2010
SUBJECT : Cigarettes and Tobacco Products
KEY ISSUE : Should a person who is licensed to sell cigarettes
and tobacco products be prohibited from gifting or displaying
those products during any period of license suspension or
revocation?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
Under existing law, the Cigarette and Tobacco Licensing Act
provides for the licensure of businesses that sell or distribute
cigarettes or tobacco products. When a licensee violates
provisions of the Act, the state Board of Equalization (BOE) is
authorized to suspend or revoke a license. Persons are
currently prohibited from selling or distributing the products
during the period of suspension of revocation. However, some
persons apparently continue to display these products as if for
sale in their stores or places of business during the period of
suspension or revocation. Others sometimes give the products
away, typically as part of a promotional scheme for other
products, during periods of suspension or revocation. This
bill, therefore, would amend existing law by prohibiting the
gifting or displaying of products during periods of suspension
or revocation. In addition, it would require a person who
receives a notice of suspension or revocation to post a copy of
the notice at the place of entry and near the cash register, so
that both employees and customers are aware that the products
cannot be sold. According to BOE, the sponsor, this measure
will prevent allegedly mistaken or inadvertent sales that
sometimes continue to occur, despite the suspension or
revocation of the license. This bill passed out of the
Government Organization Committee on a 17-0 vote. There is no
known opposition.
SUMMARY : Amends the California Cigarette and Tobacco Licensing
Act to prohibit a licensee whose license has been suspended or
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revoked from giving cigarette and tobacco products away or
displaying those products during the period of license
suspension or revocation. Specifically, this bill :
1)Prohibits the transfer of title or possession of cigarettes or
tobacco products without consideration, exchange, or barter if
the products had been purchased for resale under a license
issued pursuant to the California Cigarette and Tobacco
Licensing Act and the transfer occurs after the receipt of a
notice of suspension or revocation of the license. Provides
that a person or entity that violates this provision is guilty
of a misdemeanor.
2)Requires the Board of Equalization (BOE) to serve licensees
with specified notices of suspension and revocation and
prescribes the manner in which such notices must be posted at
the licensee's place of business. Makes violation of posting
requirements subject to a civil penalty of $1000 for each
offense.
3)Prohibits a person or entity whose license has been suspended
or revoked from displaying cigarettes or tobacco products, as
specified. Makes violation of this provision subject to a
civil penalty of $1000 for each offense.
EXISTING LAW :
1)Provides for the licensure by the State Board of Equalization
of manufacturers, distributors, wholesalers, importers, and
retailers of cigarettes and tobacco products that are engaged
in business in California and prohibits manufacturers,
distributors, wholesalers, importers, and retailers from
distributing or selling cigarette and tobacco products unless
licensed. (Business & Professions Code Section 22971 et seq.)
2)Authorizes the Board of Equalization (BOE) to suspend or
revoke the license of any manufacturer, distributor,
wholesaler, importer, or retailer of tobacco products that
violates any provision of the Cigarette and Tobacco Licensing
Act. (Business & Professions Code Section 22980.3(a).)
3)Requires BOE, upon issuance of a notice of suspension or
revocation, to order the licensee to immediately cease the
sale of the products. Provides further that continued sale of
products after receipt of notice of suspension shall result in
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the revocation of the license. (Business & Professions Code
Section 22980.3 (b)-(c).)
4)Sets forth relevant time frames and procedures by which a
suspended license may be reinstated and provides that, after
revocation, a previously licensed applicant may apply for a
new license after six months. (Business & Professions Code
Section 22980.3 (d)-(i).)
COMMENTS : According to the author and sponsor, this bill is
intended to ensure that persons or entities licensed to sell or
distribute cigarettes and tobacco products do not continue to do
so during a period of license suspension or revocation and to
clarify just what licensees (or former licensees) can or cannot
do during a period of suspension or revocation. Specifically,
this bill, in addition to prohibiting the sale of products
during a period of suspension of revocation, would also prohibit
the licensee from displaying those products or giving them away.
Existing Law : Under the California Cigarette and Tobacco
Licensing Act (Act), the state Board of Equalization (BOE)
provides for the licensure of persons or entities engaged in the
selling or distribution of tobacco products. BOE is authorized
to suspend or revoke licenses for violations of the Act.
Initial violations typically result in either a warning or
suspension; subsequent violations result in revocation.
Suspended licenses are reinstated upon completion of the
suspension period and certification by the BOE, whereas a
revoked license requires the previously licensed person or
entity to re-apply for a new license. A previously licensed
applicant may apply for a new license after six months, though
the decision to issue a new license is at the discretion of the
BOE.
This bill would, first, prohibit the display of tobacco products
during the period of suspension or revocation. Existing law, of
course, already prohibits the sale of products after suspension
or revocation. Yet BOE inspectors have discovered that some
persons or entities that have had their licenses suspended or
revoked nevertheless continue to display those products in their
stores or places of business. BOE agents, when conducting a
compliance inspection, have sometimes been successful in buying
products from these displays. According to the sponsor, when
this occurs, the license holder typically claims that the
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employee who sold the product was unaware of the suspension or
revocation. BOE hopes to forestall such "mistakes" by
specifying that, when a license has been suspended or revoked,
the person that received the notice of suspension or revocation
is not only barred from selling those products, but that person
is also barred from displaying those products as if for sale. A
person or entity that continues to display the products after
suspension or revocation will be subject to a civil penalty of
$1000 per violation.
In addition to prohibiting the display of products during the
period of suspension or revocation, this bill would also specify
that the licensee or former licensee shall not "transfer title
or possession [of the products] without consideration, exchange,
or barter" - i.e. the products cannot be given away. According
to BOE, this situation arises in situations in which the
licensee or former licensee gives the products away as part of a
promotion of other products. (For example, in one case,
according to the author, a holder of a suspended license gave
away cigars at a wine tasting.)
Finally, this bill would require a person who has received a
notice of suspension or revocation to post a copy of the notice
at each public entrance and near the cash register. Failure to
post the notice as required is punishable by a civil penalty of
$1000 per violation.
ARGUMENTS IN SUPPORT : According to the author and sponsor, this
bill will prevent the inadvertent sale of cigarettes or tobacco
products during periods of license suspension or revocation by
requiring all cigarettes and tobacco products to be removed from
places where they are visible and appear to be for sale. In
addition, requiring that notices of suspension and revocation be
prominently posted will make it clear to both employees and
customers that the products cannot be sold. Finally, the author
and sponsor contend that prohibiting the "gifting" of these
products will eliminate situations in which such products are
inappropriately distributed, through various promotional
schemes, by a person whose license is not in good standing.
Related Pending Legislation . AB 2486 (Nava, 2010 session)
amends provisions of the California Cigarette and Tobacco
Products Licensing Act dealing with the Master Settlement
Agreement relating to the settlement of several lawsuits
involving the attorneys general of the several states and
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various tobacco product manufacturers. AB 2486 is scheduled to
be heard by this Committee on the same date as this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
State Board of Equalization
Opposition
None on file
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334