BILL ANALYSIS
SENATE REVENUE & TAXATION COMMITTEE
Senator Lois Wolk, Chair
AB 2733 - Ruskin
Amended: May 12, 2010
Hearing: June 23, 2010 Fiscal: Yes
SUMMARY: Amends the California Cigarette and Tobacco
Licensing Act to Prohibit a Licensee whose
License has been Suspended or revoked from giving
Cigarette and Tobacco Products away or Displaying
those Products during the Period of License
Suspension or Revocation.
EXISTING LAW, under the Cigarette and Tobacco Products
Licensing Act of 2003 (Division 8.6 commencing with
Section 22970 of the Business and Professions Code),
requires the Board of Equalization (BOE) to administer a
statewide cigarette and tobacco products license program to
regulate the sale of cigarettes and tobacco products in the
state. Every retailer, distributor, wholesaler,
manufacturer and importer is required to have in place and
maintain a license to engage in the sale of cigarettes or
tobacco products. The Licensing Act contains prohibitions
with respect to the purchase and sale of cigarettes and
tobacco products. In general, no licensee may purchase
from, or sell for resale to, a person not properly licensed
or whose license has been suspended or revoked. This
prohibition does not include retail sales by a retailer to
an end consumer.
THIS BILL would make the following changes to the
AB 2733 - Ruskin
Page 3
Cigarette and Tobacco Products Licensing Act of 2003
(Licensing Act):
Require all cigarettes and tobacco products to be
removed from clearly and easily visible retail stock during
a period of suspension or after a license has been revoked.
Require a suspended or revoked licensee to post a
notice of that suspension or revocation at each public
entrance and each cash register, as provided.
Prohibit licensees who purchased cigarettes or
tobacco products for resale under their license from
gifting such products during the period of suspension or
after a license has been revoked.
FISCAL EFFECT:
According to the BOE, this bill would not affect the
state's revenues.
COMMENTS:
A. Purpose of the Bill
The author provides the following statement:
This bill simply provides the necessary clarification
to licensees that gifting cigarettes or tobacco
products is prohibited during periods of license
suspension or after revocation, thereby avoiding
further violations of the Licensing Act.
AB 2733 - Ruskin
Page 3
Also, by prohibiting the displaying of cigarettes or
tobacco products in retail stock and requiring a
notice of suspension or revocation to be posted, this
bill is intended to avoid sales during a period of
suspension or after a revocation of a license where a
licensee argues that the product was sold mistakenly.
B. Background
Under the Licensing Act, the 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 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 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 BOE, when
this occurs, the license holder typically claims that the
employee who sold the product was unaware of the suspension
or revocation. BOE hopes to preempt such "mistakes" with
this bill by specifying that, when a license has been
suspended or revoked, the person who received the notice of
suspension or revocation is not only barred from selling
AB 2733 - Ruskin
Page 3
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, AB 2733 also
specifies that the licensee shall not "transfer title or
possession [of the products] without consideration,
exchange, or barter" - i.e., the products cannot be
"gifted" or given away. According to the BOE, this
situation arises in situations in which the licensee gives
the products away as part of a promotion of other products.
For example, in one case, the BOE cites 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 $1,000 per violation.
C. Related Legislation
AB 2496 (Nava) 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 various tobacco product manufacturers.
AB 2486 is scheduled to be heard by this Committee on the
same date as this bill.
Support and Opposition
AB 2733 - Ruskin
Page 3
Support:BOE (Sponsor)
Oppose: None on file.
---------------------------------
Consultant: Meg Svoboda