REPORT TITLE:
Tobacco


DESCRIPTION:
Targets the sale of tobacco to minors in order to reduce sales;
establishes a youth smoking intervention task force in each
county; reduces the illegal sales of untaxed cigarettes.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
THE SENATE                              S.B. NO.           1213
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                     A BILL FOR AN ACT

RELATING TO TOBACCO.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1                              PART I.
 
 2      SECTION 1.  The legislature finds there is a need to enact
 
 3 comprehensive legislation relating to tobacco to address the
 
 4 following:  (1) reduction of sales of cigarettes and other
 
 5 tobacco products to underage minors, (2) reduction of use by
 
 6 underage minors of cigarettes and tobacco products, and the
 
 7 implementation of programs for monitoring and reducing smoking by
 
 8 minors, and (3) reduction of illegal sales of untaxed cigarettes.
 
 9      The first purpose of this Act is to reduce the sale of
 
10 cigarettes and tobacco products to minors under the age of
 
11 eighteen.  The legislature believes that, while higher prices for
 
12 cigarettes may have some effect in reducing the consumption of
 
13 cigarettes by minors, because there exists at least some degree
 
14 of price inelasticity in the demand for cigarettes, the magnitude
 
15 of the effect of higher prices alone is uncertain.  Additionally,
 
16 the effect of higher prices on consumption by minors is likely to
 
17 be reduced at least in part by increased illegal sales of untaxed
 
18 cigarettes.  Accordingly, the legislature believes that the State
 
19 should not rely only upon higher cigarettes prices as the sole
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 means for reducing the consumption of cigarettes by minors, but
 
 2 should also implement other measures to combat directly the sale
 
 3 to and use by minors of cigarettes and other tobacco products.  
 
 4      This Act would directly target sales to minors by: 
 
 5      (1)  Establishing a system for the licensing by the county
 
 6           liquor commissions of persons who sell cigarettes and
 
 7           tobacco at retail; 
 
 8      (2)  Strengthening existing prohibitions against the sale
 
 9           and distribution of cigarettes and tobacco to minors; 
 
10      (3)  Prohibiting the purchase or receipt of tobacco by
 
11           minors; 
 
12      (4)  Banning the sale of cigarettes and tobacco through
 
13           vending machines, effective January 1, 2000; 
 
14      (5)  Prohibiting minors from possessing cigarettes in public
 
15           places; 
 
16      (6)  Requiring the training of retail salespersons; and 
 
17      (7)  Providing for random, unannounced inspections of
 
18           locations where cigarettes or tobacco are sold or
 
19           distributed at retail.
 
20      The second purpose of this Act is to establish in each
 
21 county a youth smoking intervention task force.  The proceeds of
 
22 the settlement of the State's litigation against the tobacco
 
23 industry, together with a portion of the receipts from fines and
 

 
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 1 the tax stamp fee, provide a unique opportunity to fund the
 
 2 implementation of such a task force to monitor and reduce smoking
 
 3 by minors.  Because of the need for coordination with county
 
 4 prosecuting attorneys and law enforcement personnel, and because
 
 5 conditions among the various counties differ, the legislature
 
 6 believes that the task force should be established and operated
 
 7 at the county level.
 
 8      The legislature also believes that the task force could be
 
 9 assisted by an advisory council whose members might include
 
10 representatives of the chief of the county police department, the
 
11 county prosecuting attorney, the county liquor commission, the
 
12 superintendent of education, the director of health, the family
 
13 court, the executive director of the office of youth services,
 
14 and individual businesses or organizations of businesses which
 
15 sell cigarettes or other tobacco products at retail.
 
16      The third purpose of this Act is to reduce the illegal sale
 
17 of untaxed cigarettes in order to reduce illegal sales to
 
18 underage minors and to protect the revenue received by the State
 
19 from the cigarette tax, by requiring that each package of
 
20 cigarettes sold within the State be identified with a tax stamp.
 
21 The legislature finds that although the cigarette tax imposed by
 
22 the State increased from $0.60 per pack to $0.80 on September 1,
 
23 1997, and from $0.80 to $1.00 per pack on July 1, 1998, the
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 reported cigarette tax revenues collected by the State have not
 
 2 increased at a level consistent with the increase in the tax
 
 3 rates, even though the volume of cigarettes shipped into the
 
 4 State has not significantly decreased.  Thus, the cigarette tax
 
 5 revenue receipts, when compared to the volume of cigarettes
 
 6 shipped into the State, indicate that there has been a decline in
 
 7 the number of taxable cigarettes sold within the State, even
 
 8 though the total number of cigarettes has remained relatively
 
 9 constant.  This shift in sales from taxable to nontaxable
 
10 cigarettes not only represents a loss of potential tax revenues
 
11 to the State, but, to the extent that these sales are illegal,
 
12 represents sales which are not subject to regulation by the
 
13 State, including regulations restricting sales to minors.  The
 
14 legislature therefore believes that reducing illegal sales of
 
15 untaxed cigarettes will not only preserve the State's cigarette
 
16 tax revenue, but also will reduce the sale of cigarettes to
 
17 minors. 
 
18      SECTION 2.  Title 16, Hawaii Revised Statutes, is amended by
 
19 amending the title to read as follows:
 
20           "TITLE 16.  INTOXICATING LIQUOR AND TOBACCO"
 
21      SECTION 3.  Chapter 281, Hawaii Revised Statutes is amended
 
22 by amending the title to read as follows:
 
23                           "CHAPTER 281
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1                 INTOXICATING LIQUOR AND TOBACCO"
 
 2      SECTION 4.  Chapter 281, Hawaii Revised Statutes, is amended
 
 3 by adding a new part to be appropriately designated and to read
 
 4 as follows:
 
 5                        "PART   . TOBACCO
 
 6      281-A  Retail tobacco licenses.  (a)  A retail tobacco
 
 7 license may be granted by the liquor commission as provided in
 
 8 this section.  For purposes of this section, a retail tobacco
 
 9 license authorizes the retail sale of cigarettes and tobacco
 
10 products as defined in section 281-1.  The liquor commission
 
11 shall certify to the department of taxation from time to time and
 
12 within forty-eight hours after a license is issued the name of
 
13 every licensee, together with the licensee's place of business,
 
14 and the period covered by the licensee's license.
 
15      (b)  A retail tobacco license shall authorize the licensee
 
16 to sell cigarettes and tobacco at retail.  The retail tobacco
 
17 licensee shall be responsible for providing a training program to
 
18 employees that includes training in the laws governing the sale
 
19 of cigarettes and tobacco, methods for recognizing and handling
 
20 underage customers, and procedures for proper identification to
 
21 verify that customers are not underage.
 
22      (c)  Effective January 1, 2000, the annual fee for the
 
23 retail tobacco license shall be $          for each license where
 

 
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 1 tobacco products are sold over the counter at retail.
 
 2      (d)  The annual fee for a retail tobacco license may be
 
 3 modified by the commission subject to the same limitations as are
 
 4 applicable to liquor license fees under section 281-17.5;
 
 5 provided that each county may enact a revised annual fee by
 
 6 ordinance.
 
 7      (e)  Retail tobacco license fees collected under this
 
 8 chapter shall be established at a level sufficient to offset the
 
 9 commission's costs under this part.
 
10      281-B Application; retail tobacco licenses.  (a)  Every
 
11 application for a retail tobacco license or for the renewal of a
 
12 retail tobacco license shall be in writing and signed by the
 
13 applicant, or in the case of a corporation, limited liability
 
14 company, or unincorporated association, by the proper officer or
 
15 officers thereof, or if a partnership, by a general partner
 
16 thereof, and shall be addressed to the liquor commission, and
 
17 shall include:
 
18      (1)  (A)  For an individual, the full name, age, and place
 
19                of residence of the applicant;
 
20           (B)  For a corporation, limited liability company, or
 
21                joint-stock company, its full name and the names
 
22                of its officers and directors;
 
23           (C)  For a co-partnership, the names, ages, and
 

 
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 1                respective places of residence of all the
 
 2                partners; and
 
 3           (D)  For any other association of individuals, the
 
 4                names, ages, and respective places of residence of
 
 5                its officers and members;
 
 6      (2)  A particular description of the place or premises where
 
 7           the proposed retail tobacco license is to be exercised,
 
 8           so that the exact location and extent thereof may be
 
 9           clearly and definitely determined; provided that:
 
10           (A)  If a retail tobacco license applicant has or
 
11                intends to have more than one place of business
 
12                dealing with the sale of cigarettes or tobacco
 
13                products, a separate application must be made for
 
14                each place of business;
 
15           (B)  Each place of business shall be approved for the
 
16                conduct of a commercial business; and
 
17           (C)  No application for a retail tobacco license shall
 
18                be granted to a person who conducts business from
 
19                a mobile vehicle within one thousand feet of any
 
20                public or private elementary or secondary school
 
21                grounds.  The commission may enact rules requiring
 
22                applicants or retail tobacco licensees conducting
 
23                business from a vehicle to submit to the
 

 
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 1                commission a route map indicating the locations at
 
 2                which the applicant intends to, or the retail
 
 3                tobacco licensee does, offer cigarettes or tobacco
 
 4                products for sale; and
 
 5      (3)  Any other matter of information pertinent to the
 
 6           subject matter which may be required by the rules of
 
 7           the commission.
 
 8      (b)  An application for a retail tobacco license may be
 
 9 granted without notice or hearing by the commission pursuant to
 
10 commission rules.  Licenses shall be posted in a conspicuous
 
11 place for public viewing.
 
12      (c)  A retail tobacco license shall be valid for a term
 
13 beginning January 1 to December 31 of the following year, and
 
14 shall be subject to renewal pursuant to commission rules.
 
15 Licenses shall not be transferable.
 
16      (d)  In its discretion, the commission may refuse to grant
 
17 or renew a retail tobacco license to any person determined by the
 
18 commission or the liquor control adjudication board to have
 
19 committed substantial violations of this chapter during the year
 
20 preceding the date on which the license or renewal application is
 
21 filed with the commission.  Before refusing to grant or renew a
 
22 retail tobacco license, the commission shall give the applicant
 
23 an opportunity, at least fourteen days after written notice is
 

 
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 1 served personally or by mail upon the applicant, to show why the
 
 2 denial or nonrenewal is unwarranted or unjust.
 
 3      281-C Prohibitions; tobacco.  (a)  At no time under any
 
 4 circumstances may any retail tobacco licensee or its employee
 
 5 knowingly sell or furnish any tobacco to:
 
 6      (1)  A minor; or
 
 7      (2)  Any person over the age of eighteen for the
 
 8           distribution to or use by a minor.
 
 9      (b)  Every retail tobacco licensee shall notify each
 
10 individual employed by that licensee as a retail salesperson that
 
11 state law:
 
12      (1)  Prohibits:
 
13           (A)  The sale or distribution of tobacco products to
 
14                any person under eighteen years of age;
 
15           (B)  The purchase or receipt of tobacco products by any
 
16                person under eighteen years of age; and
 
17           (C)  Sales of single cigarettes, packs of cigarettes
 
18                containing fewer than twenty cigarettes, and
 
19                cigarettes in other than sealed packages
 
20                originating with the manufacturer, and bearing the
 
21                health warning required by law; and
 
22      (2)  Requires that proof of age be demanded from a
 
23           prospective purchaser or recipient if the employee has
 

 
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 1           reason to believe that the prospective purchaser or
 
 2           recipient is under eighteen years of age.
 
 3 For the purposes of this subsection, "proof of age" means an
 
 4 official state driver's license, a military identification card,
 
 5 or other official government identification containing a
 
 6 photograph.  The documents shall be unaltered, undamaged, and
 
 7 laminated.  School identification cards, identification cards
 
 8 issued for the purpose of check cashing, or other identification
 
 9 cards not issued by a government agency shall be unacceptable.
 
10 This notice shall be provided by the licensee before an
 
11 individual commences work as a retail salesperson or, in the case
 
12 of an individual employed as a retail salesperson on January 1,
 
13 2000, or when determined by commission rules.  The individual
 
14 shall signify that the individual has received the notice
 
15 required by this section by signing a form stating as follows:
 
16      "I understand that state law prohibits the sale or
 
17      distribution of tobacco products to persons under eighteen
 
18      years of age and sales of single cigarettes, packs of
 
19      cigarettes containing less than twenty cigarettes, and
 
20      cigarettes in other than sealed packages originating with
 
21      the manufacturer and bearing the health warning required by
 
22      law, and requires that proof of age be demanded from a
 
23      prospective purchaser or recipient if I have reason to
 

 
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 1      believe that the prospective purchaser or recipient is under
 
 2      eighteen years of age.  I promise, as a condition of my
 
 3      employment, to observe this law."
 
 4 Each form signed by an individual shall indicate the date of
 
 5 signature.  The licensee shall retain the form signed by each
 
 6 individual employed as a retail salesperson until one-hundred-
 
 7 twenty days after the individual has left the licensee's employ.
 
 8      (c)  Effective January 1, 2000, no retail tobacco licensee
 
 9 shall sell tobacco from a cigarette vending machine.
 
10      (d)  No retail tobacco licensee shall sell tobacco unless
 
11 the licensee shall have posted signage stating that the sale of
 
12 tobacco to persons under eighteen is prohibited in compliance
 
13 with section 708-908(2).
 
14      (e)  Any person who violates this section shall be fined not
 
15 more than $           for the first offense.  Any subsequent
 
16 offenses shall subject the person to a fine not less than
 
17 $           nor more than $          .  One half of the proceeds
 
18 of a fine imposed for a violation of this section shall be
 
19 deposited with the county for the purpose of funding the county's
 
20 youth smoking intervention task force.  The balance of the
 
21 proceeds of the fine shall be remitted to the commission for the
 
22 costs of administering the provisions of this chapter relating to
 
23 tobacco.
 

 
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 1      281-D Prohibitions involving minors, cigarettes, tobacco;
 
 2 penalty.  (a)  No minor shall purchase cigarettes or tobacco
 
 3 products from a retail tobacco licensee.
 
 4      (b)  No minor shall possess cigarettes or tobacco products
 
 5 under a retail tobacco license, except that custody of cigarettes
 
 6 or tobacco products by the minor in the course of delivery
 
 7 pursuant to the direction of the minor's employer lawfully
 
 8 engaged in business necessitating the delivery, is not
 
 9 prohibited.
 
10      (c)  No minor shall falsify any identification or use any
 
11 false identification or identification of another person or of a
 
12 fictitious person for the purpose of buying or attempting to buy
 
13 cigarettes or tobacco products.
 
14      (d)  No minor shall be permitted to sell cigarettes or
 
15 tobacco products.
 
16      (e)  A minor who violates this section shall be referred to
 
17 the youth smoking intervention task force established under
 
18 section 328K-A for supervision and monitoring; provided that a
 
19 minor who within the immediately preceding twelve months has been
 
20 referred to the youth smoking intervention task force for a
 
21 violation of this section, section 281-E or 709-908(3) also shall
 
22 be required to perform not less than forty-eight hours nor more
 
23 than seventy-two hours of community service during hours when the
 

 
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 1 person is not employed and is not attending school.
 
 2      281-E Prohibitions involving minors, cigarettes, tobacco;
 
 3 public places; penalty.  (a)  No person age eighteen or older
 
 4 shall purchase for use by, or offer or distribute cigarettes or
 
 5 tobacco products to, a minor.
 
 6      (b)  No minor shall possess or consume cigarettes or tobacco
 
 7 products on a public highway, public sidewalk, public beach,
 
 8 public park, or a public place including a premise which is not a
 
 9 valid holder of a retail tobacco license, except as allowed by
 
10 section 281-D(b).
 
11      (c)  Any person age eighteen or older who violates
 
12 subsection (a) shall be guilty of a petty misdemeanor.
 
13      (d)  Any minor who violates subsection (b) shall be referred
 
14 to the youth smoking intervention task force established under
 
15 section 328K-A for supervision and monitoring; provided that a
 
16 minor who within the immediately preceding twelve months has been
 
17 referred to the youth smoking intervention task force for a
 
18 violation of this section, section 281-D or 709-908(3) also shall
 
19 be required to perform not less than forty-eight hours nor more
 
20 than seventy-two hours of community service during hours when the
 
21 person is not employed and is not attending school.
 
22      281-F Unannounced inspections; use of minors.  (a)  The
 
23 commission shall enforce this chapter in a manner that can
 

 
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 1 reasonably be expected to reduce the extent to which cigarettes
 
 2 and tobacco products are sold or distributed to persons under
 
 3 eighteen years of age.  The commission shall conduct random,
 
 4 unannounced inspections at locations where cigarettes and tobacco
 
 5 products are sold or distributed at retail to measure compliance
 
 6 with the provisions relating to tobacco products in this chapter.
 
 7      (b)  Persons under eighteen years of age may be enlisted by
 
 8 the commission to measure compliance with this the provisions
 
 9 relating to tobacco in this chapter in accordance with section
 
10 709-908(3).
 
11      281-G Program operation and administration; revolving
 
12 fund.  There is established a revolving fund, the purpose of
 
13 which shall be to enable the county liquor commission's retail
 
14 cigarettes and tobacco license program to operate at a level
 
15 which will adequately meet the demands of each commission.  The
 
16 fund shall be used for the operation and administration of the
 
17 licensing program to meet its goals of monitoring and enforcing
 
18 retailers who sell cigarettes and tobacco products to obtain
 
19 licenses, and reducing the amount of tobacco products being sold
 
20 to minors under the age of eighteen.  The fund shall be
 
21 administered by each county liquor commission.  All sums
 
22 withdrawn from the fund shall be reimbursed or restored from the
 
23 proceeds realized through the retailer license fees.
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1      281-H Application of part to retail tobacco licenses.
 
 2 Except for part VI, the provisions in this chapter shall not
 
 3 apply to retail tobacco licenses or retail tobacco licensees
 
 4 unless expressly stated to be applicable to retail tobacco
 
 5 licenses."
 
 6      SECTION 5.  Section 281-1, Hawaii Revised Statutes, is
 
 7 amended as follows:
 
 8      1.  By adding five new definitions to be appropriately
 
 9 inserted and to read:
 
10      ""Cigarette" means any roll for smoking made wholly or in
 
11 part of tobacco, regardless of size or shape and whether the
 
12 tobacco is flavored, adulterated, or mixed with any other
 
13 ingredient, the wrapper or cover of which is made of paper or any
 
14 other substance or material except tobacco.
 
15      "Cigarette vending machine" means a mechanical self-service
 
16 device that dispenses cigarettes, cigars, tobacco, or any other
 
17 product containing tobacco.
 
18      "Retail tobacco license" or "tobacco license" means a
 
19 license issued by the commission pursuant to this chapter
 
20 authorizing the retail sale of cigarettes and tobacco products.
 
21      "Retail tobacco licensee" or "tobacco licensee" means the
 
22 holder of a retail tobacco license issued by the commission
 
23 pursuant to this chapter authorizing the retail sale of
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 cigarettes and tobacco products.
 
 2      "Tobacco" or "tobacco products" means tobacco in any form
 
 3 prepared or intended for consumption by, or the personal use of,
 
 4 humans, including cigars and cigarettes or any substitutes
 
 5 thereof which bear the semblance thereof, snuff, chewing tobacco,
 
 6 and smoking tobacco."
 
 7      2.  By amending the definition of "minor" to read:
 
 8      ""Minor" means any person below the age of twenty-one
 
 9 years[.]; provided that, where applicable to cigarettes and
 
10 tobacco as provided in part   , a minor means any person under
 
11 the age of eighteen."
 
12      3.  By amending the definitions of "sell" or "to sell", and
 
13 "seller" to read:
 
14      "Sell" or "to sell" includes to solicit and receive an order
 
15 for; to have or keep or offer or expose for sale; to deliver for
 
16 value or in any other way than purely gratuitously; to peddle; to
 
17 keep with intent to sell; to traffic in; and the word "sale"
 
18 includes every act of selling as herein defined[.]; provided that
 
19 in the case of cigarettes and tobacco, "sell", "to sell", and
 
20 "sale" shall be limited to retail transactions.  Notwithstanding
 
21 the provisions above, the delivery of liquor, cigarettes, or
 
22 tobacco, by a licensee's vehicle or the vehicle of a licensee's
 
23 agent shall be deemed delivery for value.
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1      "Seller" includes the agents and employees of a seller;
 
 2 provided that any person shall be deemed to be a seller, who in
 
 3 the State, whether acting as agent or representative of a
 
 4 nonresident principal or otherwise, solicits the placing of or
 
 5 takes, receives, or forwards orders for liquor, cigarettes, or
 
 6 tobacco, to be shipped into the State from any place without the
 
 7 State to be delivered to customers, by direct shipment or
 
 8 otherwise[.]; provided that in the case of cigarettes and
 
 9 tobacco, "seller" shall be limited to persons performing
 
10 transactions at retail."
 
11      SECTION 6.  Section 281-3, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "281-3 Illegal manufacture, importation, or sale of
 
14 liquor[.] or retail sale of cigarettes or tobacco.  It shall be
 
15 unlawful for any person not having a valid license to manufacture
 
16 or sell any liquor except as otherwise provided in this chapter;
 
17 provided that the head of any family may produce for family use
 
18 and not for sale an amount of wine not exceeding two hundred
 
19 gallons a year, and an amount of beer not exceeding one hundred
 
20 gallons a year.
 
21      It shall also be unlawful for any person, not having a valid
 
22 wholesale license or a valid manufacturer's (including
 
23 rectifier's) license, to import any liquor from without the
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 State, except as otherwise provided in this chapter.  Liquor
 
 2 imported into this State shall come to rest at the warehouse of
 
 3 the manufacturer (including rectifier) or the wholesaler
 
 4 importing the liquor, shall be unloaded into [such] the
 
 5 warehouse, and shall be held in [such] the warehouse for at least
 
 6 forty-eight hours before further sale by [such] the manufacturer
 
 7 (including rectifier) or wholesaler.
 
 8      It shall also be unlawful for any person to label,
 
 9 designate, or sell any liquor using the word "Hawaii",
 
10 "Hawaiian", "Aloha State", "50th State", "Kauai", "Maui", "Oahu",
 
11 or "Honolulu" unless [such] the liquor is wholly or partially
 
12 manufactured in the State, and all of the primary ingredients are
 
13 wholly rectified or combined in the State of Hawaii in compliance
 
14 with the Bureau of Alcohol, Tobacco and Firearms standards.
 
15      It shall also be unlawful for any person not having a valid
 
16 retail tobacco license to sell at retail any cigarettes or
 
17 tobacco except as otherwise authorized in this chapter.
 
18      A license shall constitute authority for the licensee to
 
19 sell only the liquor, cigarettes, or tobacco, thereby authorized
 
20 to be sold by the licensee."
 
21      SECTION 7.  Section 281-17, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 
23      "281-17  Jurisdiction and powers.  The liquor commission,
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 within its own county, shall have the sole jurisdiction, power,
 
 2 authority, and discretion, subject only to this chapter:
 
 3      (1)  To grant, refuse, suspend, and revoke any licenses for
 
 4           the manufacture, importation, and sale of liquors[;],
 
 5           or the retail sale of cigarettes or tobacco;
 
 6      (2)  To take appropriate action against a person who,
 
 7           directly or indirectly, manufactures or sells any
 
 8           liquor or sells at retail any cigarettes or tobacco
 
 9           without being authorized pursuant to this chapter;
 
10           provided that in counties which have established by
 
11           charter a liquor control adjudication board, the board
 
12           shall have the jurisdiction, power, authority, and
 
13           discretion to hear and determine administrative
 
14           complaints of the director regarding violations of the
 
15           liquor and tobacco laws of the State or of the rules of
 
16           the liquor commission, and impose penalties [[for]]
 
17           violations thereof as may be provided by law;
 
18      (3)  To control, supervise, and regulate the manufacture,
 
19           importation, and sale of liquors, and the retail sale
 
20           of cigarettes or tobacco by investigation, enforcement,
 
21           and education; provided that [any]:
 
22           (A)  Any educational program shall be limited to the
 
23                commission's staff, licensees, and their employees
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1                [and];
 
 2           (B)  Liquor education programs shall be financed
 
 3                through the money collected from the assessment of
 
 4                fines against liquor licensees; and
 
 5           (C)  Education related to retail tobacco licensees may
 
 6                be financed through the money collected from the
 
 7                assessment of fines set by the commission against
 
 8                retail tobacco licensees and may be coordinated
 
 9                with the department of health, and where state or
 
10                federal appropriations exist to fund tobacco
 
11                education programs, each commission shall be
 
12                entitled to receive from the appropriations the
 
13                funds necessary for implementing this chapter
 
14                related to cigarettes and tobacco; 
 
15      (4)  From time to time to make, amend, and repeal such
 
16           rules, not inconsistent with this chapter, as in the
 
17           judgment of the commission seem appropriate for
 
18           carrying out this chapter and for the efficient
 
19           administration thereof, and the proper conduct of the
 
20           business of all licensees, including every matter or
 
21           thing required to be done or which may be done with the
 
22           approval or consent or by order or under the direction
 
23           or supervision of or as prescribed by the commission;
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1           which rules, when adopted as provided in chapter 91
 
 2           shall have the force and effect of law;
 
 3      (5)  Subject to chapters 76 and 77, to appoint and remove an
 
 4           administrator, who may also be appointed an
 
 5           investigator and who shall be responsible for the
 
 6           operations and activities of the staff.  The
 
 7           administrator may hire and remove hearing officers,
 
 8           investigators, and clerical or other assistants as its
 
 9           business may from time to time require, to prescribe
 
10           their duties, and fix their compensation; to engage the
 
11           services of experts and persons engaged in the practice
 
12           of a profession, if deemed expedient.  Every
 
13           investigator, within the scope of the investigator's
 
14           duties, shall have the powers of a police officer.  No
 
15           employee of any commission, aside from exercising the
 
16           right to vote, shall support, advocate, or aid in the
 
17           election or defeat of any candidate for public office,
 
18           and upon satisfactory proof of such prohibited activity
 
19           the offender shall be summarily dismissed;
 
20      (6)  To limit the number of liquor licenses of any class or
 
21           kind within the county, or the number of liquor
 
22           licenses of any class or kind to do business in any
 
23           given locality, when in the judgment of the commission
 

 
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 1           [such] the limitations are in the public interest;
 
 2      (7)  To prescribe the nature of the proof to be furnished,
 
 3           the notices to be given, and the conditions to be met
 
 4           or observed in case of the issuance of a duplicate
 
 5           license in place of one alleged to have been lost or
 
 6           destroyed, including a requirement of any indemnity
 
 7           deemed appropriate to the case;
 
 8      (8)  To fix the hours between which licensed premises of any
 
 9           liquor class or classes may regularly be open for the
 
10           transaction of business, which shall be uniform
 
11           throughout the county as to each class respectively;
 
12      (9)  To prescribe all forms to be used for the purposes of
 
13           this chapter not otherwise provided for in this
 
14           chapter, and the character and manner of keeping of
 
15           books, records, and accounts to be kept by liquor
 
16           licensees in any matter pertaining to their business;
 
17     (10)  To investigate violations of this chapter, chapter 244D
 
18           or 245, and, notwithstanding any law to the contrary,
 
19           violations of the applicable department of health's
 
20           allowable noise levels, through its investigators or
 
21           otherwise, to include covert operations, and to report
 
22           violations to the prosecuting officer for prosecution
 
23           and, where appropriate, the director of taxation to
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1           hear and determine complaints against any licensee;
 
 2     (11)  To prescribe, by rule, the terms, conditions, and
 
 3           circumstances under which persons or any class of
 
 4           persons may be employed by holders of licenses;
 
 5     (12)  To prescribe, by rule, the term of any license or
 
 6           solicitor's and representative's permit authorized by
 
 7           this chapter, the annual or prorated amount, the manner
 
 8           of payment of fees for the licenses and permits, and
 
 9           the amount of filing fees; and
 
10     (13)  To prescribe, by rule, the circumstances and penalty
 
11           for the unauthorized manufacturing or selling of any
 
12           liquor[.] or the unauthorized selling at retail of any
 
13           cigarettes or tobacco.
 
14      Subject only to this chapter, the commission or board and
 
15 each member thereof shall have the same powers [respecting] with
 
16 respect to the administering of oaths, compelling the attendance
 
17 of witnesses and the production of documentary evidence, and
 
18 examining the witnesses as are possessed by a circuit court,
 
19 except that the commission or board and each member thereof shall
 
20 not be bound by the strict legal rules of evidence.  In addition,
 
21 the commission or board shall have the power to require the
 
22 production of, and to examine any books, papers, and records of
 
23 any liquor or retail tobacco licensee which may pertain to the
 

 
Page 24                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 licensee's business under the license or which may pertain to a
 
 2 matter at a hearing before the commission or board or to an
 
 3 investigation by the commission or board.
 
 4      The exercise by the commission or board of the power,
 
 5 authority, and discretion vested in it pursuant to this chapter
 
 6 shall be final and shall not be reviewable by or appealable to
 
 7 any court or tribunal, except as otherwise provided in this
 
 8 chapter or chapter 91."
 
 9      SECTION 8.  Section 281-20, Hawaii Revised Statutes, is
 
10 amended to read as follows:
 
11      "281-20  General right of inspection.  Any investigator
 
12 may, at all times, without notice and without any search warrant
 
13 or other legal process, visit and have immediate access to every
 
14 part of the premises of every liquor and retail tobacco licensee
 
15 for the purpose of making any examination or inspection thereof
 
16 or inquiry into the books and records therein, to ascertain
 
17 whether all of the conditions of the license and all provisions
 
18 of this chapter, and [chapter] chapters 244D and 245 are being
 
19 complied with by the licensee."
 
20      SECTION 9.  Section 281-79, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "281-79  Entry for examination; obstructing liquor
 
23 commission operations; penalty.  Every investigator shall, and
 

 
Page 25                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 any officer having police power may, at all reasonable times, and
 
 2 at any time whatsoever if there is any reasonable ground for
 
 3 suspicion that the conditions of any liquor or retail tobacco
 
 4 license are being violated, without warrant enter into and upon
 
 5 any licensed premises and inspect the same and every part
 
 6 thereof, and any books or records therein, to ascertain whether
 
 7 or not all conditions of the license and all provisions of this
 
 8 chapter and chapter 244D or 245 are being complied with by the
 
 9 licensee.
 
10      If any investigator or officer, or any person called by the
 
11 investigator or officer to the investigator's or officer's aid,
 
12 is threatened with the use of violence, force, or physical
 
13 interference or obstacle, or is hindered, obstructed, or
 
14 prevented by any licensee, the licensee's employees, or any other
 
15 person from entering into any such premises, or whenever any
 
16 investigator or officer is by any licensee, the licensee's
 
17 employees, or any other person opposed, obstructed, or molested
 
18 in the performance of the officer's duty in any respect, the
 
19 licensee, the licensee's employee, or any other person shall be
 
20 fined not more than $2,000 or imprisoned not more than one year,
 
21 or both.
 
22      Whenever any investigator or officer, having demanded
 
23 admittance into any licensed premises and declared the
 

 
Page 26                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 investigator's or officer's name and office, is not admitted by
 
 2 the licensee or the person in charge of the premises, it shall be
 
 3 lawful for the investigator or officer to forcibly and in any
 
 4 manner to break into and enter the premises."
 
 5      SECTION 10.  Section 281-97, Hawaii Revised Statutes, is
 
 6 amended to read as follows:
 
 7      "281-97  When sale without license authorized.  (a)  In
 
 8 case a liquor or retail tobacco license is revoked [or],
 
 9 canceled, or not renewed, the licensee [may], with the permission
 
10 of and upon the conditions set by the liquor commission, may sell
 
11 intoxicating liquors, cigarettes, or tobacco then in the
 
12 licensee's possession within sixty days, or within such
 
13 additional time allowed by the commission, unless under this
 
14 chapter the same are seized or forfeited.
 
15      (b)  Any bank, trust company, or financial institution
 
16 owning or possessing intoxicating liquor [which], cigarettes, or
 
17 tobacco that was acquired by the bank, trust company, or
 
18 financial institution in the ordinary course of its business, may
 
19 sell the intoxicating liquor, cigarettes, or tobacco with the
 
20 permission of and upon conditions set by the commission.
 
21      (c)  Any person acting as personal representative, or
 
22 guardian of a licensee's estate, or any receiver, assignee for
 
23 benefit of creditors, or trustee in bankruptcy, may sell the
 

 
Page 27                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 stock of intoxicating liquor, cigarettes, or tobacco with the
 
 2 permission of and upon conditions set by the commission, except
 
 3 as otherwise provided in this chapter.
 
 4      (d)  Any insurance company, or any common carrier acting as
 
 5 an insurer for losses to persons shipping intoxicating liquor,
 
 6 cigarettes, or tobacco, may take possession of and sell the
 
 7 intoxicating liquor, cigarettes, or tobacco, the containers of
 
 8 which have been damaged by fire or otherwise, with the permission
 
 9 of and upon conditions set by the commission.
 
10      (e)  Any person in possession of a stock of lawfully
 
11 acquired intoxicating liquor, cigarettes, or tobacco under a
 
12 foreclosure proceeding, proceedings for enforcement of a lien,
 
13 civil execution, or under any other proceeding or process, may
 
14 sell [such] the intoxicating liquor, cigarettes, or tobacco with
 
15 the permission of and upon conditions set by the commission."
 
16      SECTION 11.  Section 281-101, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "281-101  Manufacture or sale without license; penalty.  If
 
19 any person, acting in person or by or through any agent, servant,
 
20 or employee, manufactures or sells any liquor, or sells at retail
 
21 any cigarettes or tobacco, either directly or indirectly, or upon
 
22 any pretense or by any subterfuge, except as authorized pursuant
 
23 to this chapter, the person shall be fined not more than $2,000
 

 
Page 28                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 or imprisoned not more than one year, or both."
 
 2      SECTION 12.  Section 281-101.4, Hawaii Revised Statutes, is
 
 3 amended to read as follows:
 
 4      "281-101.4  Hearing, illegal manufacture, importation, or
 
 5 sale of liquor[.] or illegal retail sale of cigarettes or
 
 6 tobacco.  The liquor commission or liquor control adjudication
 
 7 board may assess and collect a penalty, or reprimand a person for
 
 8 not having a valid license to manufacture or sell any liquor, or
 
 9 to sell at retail any cigarettes or tobacco, in violation of this
 
10 chapter or of any rule [or regulation] applicable thereto.
 
11      In every case where the administrator elects to conduct
 
12 proceedings under this section where it is proposed to assess and
 
13 collect a penalty from a person for not having a valid license to
 
14 manufacture or sell any liquor, or to sell at retail any
 
15 cigarettes or tobacco, in violation of this chapter or of any
 
16 rule [or regulation] applicable thereto, that person shall be
 
17 entitled to notice and hearing in conformity with chapter 91.
 
18      At the hearing, before final action is taken by the
 
19 commission or board, the person shall be entitled to be heard in
 
20 person or through counsel and shall be given a full and fair
 
21 opportunity to present facts showing that the alleged cause or
 
22 causes for the proposed action do not exist, or any reason why no
 
23 penalty should be imposed.  The testimony taken at the hearing
 

 
Page 29                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 shall be under oath and recorded stenographically, or by machine,
 
 2 but the parties shall not be bound by the strict rules of
 
 3 evidence[; certified].  Certified copies of any transcript and of
 
 4 any other record made of or at the hearing shall be furnished to
 
 5 a person upon that person's request and at that person's expense.
 
 6      Any order, reprimand, or penalty imposed by the commission
 
 7 or board upon a person for not having a valid license to
 
 8 manufacture or sell any liquor, or to sell at retail any
 
 9 cigarettes or tobacco, in violation of this chapter or of any
 
10 rule [or regulation] applicable thereto shall be in addition to
 
11 any penalty that might be imposed upon that person's conviction
 
12 in a court of law for any violation of this chapter.  The amount
 
13 of penalty assessed and collected by the commission or board from
 
14 any person under this section for not having a valid license to
 
15 manufacture or sell any liquor, or to sell at retail any
 
16 cigarettes or tobacco, shall not exceed the sum of $2,000 for
 
17 each charge.
 
18      Whenever the service of any order or notice shall be
 
19 required by this section, the service shall be made in the
 
20 following manner:  in the case of any violation based upon the
 
21 personal observation of any investigator, a written notice of the
 
22 violation shall be given to the person charged with a violation
 
23 within a reasonable period of time after the alleged violation
 

 
Page 30                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 occurred, the person charged shall be requested to acknowledge
 
 2 receipt of the alleged violation, or, if the person cannot be
 
 3 found after diligent search, by leaving a certified copy thereof
 
 4 at the person's dwelling house or usual place of abode with some
 
 5 person of suitable age and discretion residing therein; and if
 
 6 the person cannot be found after diligent search, and service
 
 7 cannot be made, then service may be made by depositing another
 
 8 certified copy thereof in the certified mail of the United States
 
 9 post office, postage prepaid, addressed to the person at the
 
10 person's last known residence address; provided, that in the case
 
11 of a partnership, corporation, unincorporated association, or
 
12 limited liability company, service may be made upon any partner,
 
13 officer, or member thereof."
 
14      SECTION 13.  There is appropriated out of the general
 
15 revenues of the State of Hawaii the following sums, or so much
 
16 thereof as may be necessary for fiscal year 1999-2000 to assist
 
17 the counties in implementing sections 2 to 12 of this Act:
 
18      (1)  For the city and county of Honolulu    $
 
19      (2)  For the county of Kauai                $
 
20      (3)  For the county of Maui                 $
 
21      (4)  For the county of Hawaii               $___________
 
22                               TOTAL              $
 
23      The sums appropriated shall be expended by the respective
 

 
Page 31                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 county for the purposes of sections 2 to 12 of this Act.
 
 2      SECTION 14.  The legislature finds that sections 2 to 12 of
 
 3 this Act provide authority to county liquor commissions to make
 
 4 the provisions of sections 2 to 12 of this Act self-supporting
 
 5 and, therefore, sections 2 to 12 of this Act do not constitute a
 
 6 mandated program under article VIII, section 5, of the Hawaii
 
 7 State Constitution.
 
 8                             PART II.
 
 9      SECTION 15.  Chapter 328K, Hawaii Revised Statutes, is
 
10 amended by adding a new part to be appropriately designated and
 
11 to read as follows:
 
12                     "PART   .  YOUTH SMOKING
 
13      328K-A  Youth smoking intervention task force.  (a)  Each
 
14 county shall establish a youth smoking intervention task force.
 
15      (b)  The duties of the task force shall include:
 
16      (1)  Developing and implementing strategies and programs for
 
17           monitoring and reducing smoking within the county by
 
18           minors; and
 
19      (2)  Monitoring youths within the county referred to the
 
20           supervision of the task force pursuant to section
 
21           281-D(e), 281-E(d) or 708-709(4).
 
22      (c)  The task force shall enter into agreements with
 
23 established private nonprofit organizations that provide
 

 
Page 32                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 developmental, preventive, protective, recreational, or
 
 2 rehabilitative services for youth at risk to provide these
 
 3 services deemed necessary or useful to carry out the purposes of
 
 4 this section."
 
 5      SECTION 16.  Section 709-908, Hawaii Revised Statutes, is
 
 6 amended by amending subsections (3) and (4) to read as follows:
 
 7      "(3)  It shall be unlawful for a minor under eighteen years
 
 8 of age to purchase any tobacco product, as described under
 
 9 subsection (1).  This provision does not apply if a person under
 
10 the age of eighteen, with parental authorization, is
 
11 participating in a controlled purchase as part of a law
 
12 enforcement activity, including an inspection by a county liquor
 
13 commission to measure compliance with the provisions relating to
 
14 tobacco in chapter 281, or a study authorized by the department
 
15 of health under the supervision of law enforcement to determine
 
16 the level of incidence of tobacco sales to minors.
 
17      (4)  Any person who violates subsection (1) or (2), or both,
 
18 shall be fined $500 for the first offense.  Any subsequent
 
19 offenses shall subject the person to a fine not less than $500
 
20 nor more than $2,000.  Any minor under eighteen years of age who
 
21 violates subsection (3) shall be fined $10 for the first offense.
 
22 Any subsequent offense shall subject the violator to a fine of
 
23 $50, no part of which shall be suspended, or the person shall be
 

 
Page 33                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 required to perform not less than forty-eight hours nor more than
 
 2 seventy-two hours of community service during hours when the
 
 3 person is not employed and is not attending school.  In addition,
 
 4 any minor under the age of eighteen years of age who violates
 
 5 subsection (3) shall be referred to the youth smoking
 
 6 intervention task force established under section 328K-A for
 
 7 supervision and monitoring."
 
 8      SECTION 17.  There is appropriated out of the general
 
 9 revenues of the State of Hawaii the following sums, or so much
 
10 thereof as may be necessary for fiscal year 1999-2000 to assist
 
11 the counties in implementing section 15 of this Act:
 
12      (1)  For the city and county of Honolulu    $
 
13      (2)  For the county of Kauai                $
 
14      (3)  For the county of Maui                 $
 
15      (4)  For the county of Hawaii               $___________
 
16                                 TOTAL            $
 
17      The sums appropriated shall be expended by the respective
 
18 county for the purposes of section 15 of this Act.
 
19                             PART III
 
20      SECTION 18.  Chapter 245, Hawaii Revised Statutes, is
 
21 amended by adding a new part to be designated as part II and to
 
22 read as follows:
 
23                 "PART II.  STAMPING OF CIGARETTES
 

 
Page 34                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1      245-A  Payment of tax through use of stamps.  (a)  The
 
 2 tobacco tax imposed by this chapter with respect to the sale or
 
 3 use of cigarettes shall be paid by wholesalers and dealers
 
 4 through the use of stamps.
 
 5      (b)  The department shall furnish stamps for sale.
 
 6      245-B  Sales through financial institutions; rules.  The
 
 7 department may enter into agreements to permit the sale of stamps
 
 8 by designated financial institutions located within the State.  A
 
 9 list of financial institutions designated to sell stamps shall be
 
10 made available at the department.  The department may adopt
 
11 necessary rules for this purpose.
 
12      245-C  Designs, specifications, and denominations of
 
13 stamps; affixation; cancellation.  Stamps shall be of designs,
 
14 specifications, and denominations that may be prescribed by the
 
15 department.  The department shall adopt by rule the method and
 
16 manner in which stamps are to be affixed to packages of
 
17 cigarettes and may provide for the cancellation of stamps.
 
18      245-D  Affixation prior to distribution.  A wholesaler,
 
19 dealer, or the authorized agent or designee of a wholesaler or
 
20 dealer shall affix an appropriate stamp to the bottom of each
 
21 package of cigarettes prior to the distribution by a wholesaler
 
22 or dealer of cigarettes.
 
23      245-E  Department approval required for transfer of stamps.
 

 


 

Page 35                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 Unaffixed stamps shall not be sold, exchanged, or in any manner
 
 2 transferred by a wholesaler or dealer to another person without
 
 3 prior written approval of the department.  Any person who
 
 4 violates this section shall be fined not less than $500 nor more
 
 5 than $1,000 for each violation thereof.
 
 6      245-F  Payment of tax without use of stamps in certain
 
 7 transactions; rules.  The department by rule may provide that the
 
 8 tax imposed by this chapter with respect to cigarettes shall be
 
 9 paid without the use of stamps in connection with a particular
 
10 type of transaction.
 
11      245-G  Price; payment; deferred payment purchases.  (a)
 
12 Stamps shall be sold to licensed wholesalers and dealers at their
 
13 denominated values, plus a stamp fee of    per cent.  On a
 
14 quarterly basis,            of the proceeds of the stamp fee
 
15 shall be deposited with the county finance directors for the
 
16 purpose of funding each county's youth smoking intervention task
 
17 force in the following proportion:
 
18      (1)  For the city and county of Honolulu            per cent
 
19      (2)  For the county of Kauai                        per cent
 
20      (3)  For the county of Maui                         per cent
 
21      (4)  For the county of Hawaii                       per cent
 
22 The balance of the proceeds of the stamp fee shall be remitted to
 
23 the State to pay for the cost to the State of providing the
 

 
Page 36                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 stamps; provided that the department by rule may modify the stamp
 
 2 fee payable to the State to reflect the actual costs incurred by
 
 3 the State in providing the stamps.
 
 4      (b)  Wholesalers and dealers may include in the price of
 
 5 cigarettes to which there is affixed the stamp required under
 
 6 this part a fee of       per cent of the denominated value of the
 
 7 stamp to cover the stamp fee paid to the State and other costs
 
 8 incurred by wholesaler or dealer to affix the stamp; provided
 
 9 that the department by rule may modify the fee which may be
 
10 included in the price of cigarettes by a wholesaler or dealer to
 
11 reflect the actual costs incurred by wholesalers and dealers to
 
12 acquire and affix the stamps.
 
13      (c)  Payment for stamps shall be made at the time of
 
14 purchase; provided that the department by rules shall permit a
 
15 licensed wholesaler or dealer to defer payments therefor as
 
16 provided for in section 245-H.
 
17      245-H  Application to fix maximum amount of deferred
 
18 payment purchases; financial security.  (a)  A licensed
 
19 wholesaler or dealer may apply to the department to fix the
 
20 maximum amount of deferred-payment purchases of stamps that the
 
21 wholesaler or dealer may have unpaid at any time.  Upon receipt
 
22 of the application and any financial security required pursuant
 
23 to subsection (b), the department shall fix the amount.
 

 
Page 37                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1      (b)  The department by rule may require that a wholesaler or
 
 2 dealer who submits an application for deferred-payment purchases
 
 3 of stamps post a bond or provide a letter of credit or other
 
 4 financial security in an amount of up to one hundred per cent of
 
 5 the maximum amount of the deferred-payment purchases as a
 
 6 condition to the approval by the department of the application.
 
 7 Any rules adopted by the department requiring financial security
 
 8 for deferred-payment purchases shall include the terms and
 
 9 conditions under which exemptions to those requirements may be
 
10 authorized by the department and provide for reasonable
 
11 alternative methods of providing financial security.
 
12      245-I  Time for payment of deferred-payment purchases;
 
13 manner of payment.  Amounts owing for stamps purchased on the
 
14 deferred-payment basis in any calendar month shall be due and
 
15 payable on or before the last day of the following calendar
 
16 month.  Payment shall be made by a remittance payable to the
 
17 department.
 
18      245-J  Authority to order purchases for wholesaler or
 
19 dealer; duration; revocation.  A wholesaler or dealer shall
 
20 authorize in writing those persons who may order purchases of
 
21 stamps for the account of the wholesaler or dealer at a location
 
22 where stamps are sold.  The authorization shall continue in
 
23 effect until written notice of revocation of the authority is
 

 
Page 38                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 delivered at the sales location in a manner that may be
 
 2 prescribed by the department.
 
 3      245-K  Suspension of privilege to purchase on deferred
 
 4 payment basis or reduction of amount of permissible purchases.
 
 5 The department may suspend without prior notice, a wholesaler's
 
 6 or a dealer's privilege to purchase stamps on the deferred-
 
 7 payment basis or may reduce the amount of permissible deferred
 
 8 payment purchases fixed for the wholesaler or dealer, if:
 
 9      (1)  The wholesaler or dealer fails to promptly pay for
 
10           stamps when payment is due;
 
11      (2)  Any bond, letter of credit, or other financial security
 
12           required of the wholesaler or dealer is canceled, or
 
13           becomes void, impaired, or unenforceable for any
 
14           reason; or
 
15      (3)  In the opinion of the department, collection of any
 
16           amounts unpaid or due from the wholesaler or dealer
 
17           under this chapter is jeopardized.
 
18      245-L  Penalty for failure to make timely payment.  Any
 
19 wholesaler or dealer who fails to pay any amount owing for the
 
20 purchase of stamps within the time required, shall pay a penalty
 
21 of ten per cent of the amount due in addition to the amount due
 
22 plus interest at the rate specified in section 231-39, from the
 
23 date on which the amount became due and payable until the date of
 

 
Page 39                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 payment.
 
 2      245-M  Unused stamps.  The department, by rule, shall
 
 3 refund or credit to a wholesaler or dealer the denominated values
 
 4 of any unused stamps.
 
 5      245-N  Cigarettes and tobacco products shipped outside of
 
 6 the State for sale or use outside of the State; refund or credit
 
 7 of taxes.  (a)  The department, pursuant to rules, shall refund
 
 8 or credit to a wholesaler or dealer the tobacco tax imposed on
 
 9 cigarettes and tobacco products pursuant to this chapter that is
 
10 paid on the distribution of cigarettes or tobacco products that
 
11 are shipped to a point outside of the State for subsequent use or
 
12 sale outside of the State.
 
13      (b)  This section shall not apply to cigarettes or tobacco
 
14 products delivered to the consumer in this State and subsequently
 
15 taken outside of the State.
 
16      245-O  Monthly report on distributions of cigarettes and
 
17 tobacco products, and purchases of stamps.  (a)  On or before the
 
18 last day of each month, every wholesaler and dealer shall file on
 
19 a form prescribed by the department a report of the wholesaler's
 
20 or dealer's distributions of cigarettes and purchases of stamps
 
21 during the preceding month, and any other information that the
 
22 department may require to carry out this section.
 
23      (b)  On or before the last day of each month, every
 

 
Page 40                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 wholesaler and dealer shall file on forms prescribed by the
 
 2 department a report of the wholesaler's or dealer's distributions
 
 3 of tobacco products and their wholesale cost during the preceding
 
 4 month, and any other information that the department may require
 
 5 to carry out this section.
 
 6      245-P  Counterfeiting stamps.  Any person who:
 
 7      (1)  Falsely or fraudulently makes, forges, alters, reuses,
 
 8           or counterfeits any stamp provided for or authorized
 
 9           under this part;
 
10      (2)  Causes or procures to be falsely or fraudulently made,
 
11           forged, altered, reused, or counterfeited, any stamp;
 
12           or
 
13      (3)  Knowingly and wilfully utters, publishes, passes, or
 
14           tenders as genuine, any false, forged, altered, reused,
 
15           or counterfeited stamp;  
 
16 for the purpose of evading the tax imposed by this chapter, shall
 
17 be guilty of a class C felony.
 
18      245-Q  Sale of packages of cigarettes without stamps; fines
 
19 end penalties.  Any person who knowingly possesses, keeps,
 
20 stores, or retains for the purpose of sale, or sells or offers to
 
21 sell, any package of cigarettes to which there is not affixed the
 
22 stamp required to be affixed under this part, when those
 
23 cigarettes have been obtained from any source whatever, shall be
 

 
Page 41                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 guilty of a class C felony and, upon conviction thereof, shall be
 
 2 fined not more than $100,000 or imprisoned for not more than five
 
 3 years, or both; provided that a corporation shall be fined not
 
 4 more than $500,000.
 
 5      245-R  Vending unstamped cigarettes; offense; punishment.
 
 6 Any person in possession or control of, or having access to, a
 
 7 cigarette vending machine who knowingly or wilfully places for
 
 8 sale in the vending machine any cigarettes not contained in
 
 9 packages to which are affixed Hawaii tax stamps, shall be guilty
 
10 of a class C felony and, upon conviction thereof, shall be fined
 
11 not more than $100,000 or imprisoned for not more than five
 
12 years, or both; provided that a corporation shall be fined not
 
13 more than $500,000.
 
14      245-S  Enforcement; injunction; disposition of fines.  (a)
 
15 Enforcement of this part shall be under the concurrent
 
16 jurisdiction of the department of taxation and the liquor
 
17 commission of each county.
 
18      (b)  The department of taxation or a county liquor
 
19 commission may apply for and the court may grant a temporary or
 
20 permanent injunction restraining any person from violating or
 
21 continuing to violate this part notwithstanding the existence of
 
22 other remedies at law.  The injunction shall be issued without
 
23 bond.
 

 
Page 42                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1      (c)  Where a county liquor commission initiates and conducts
 
 2 an investigation resulting in the imposition and collection of a
 
 3 fine or penalty pursuant to this part,       per cent of the fine
 
 4 or penalty shall be distributed to the liquor commission whose
 
 5 officers or employees initiated and conducted the investigation,
 
 6 and the balance shall be distributed to the State.
 
 7      245-T  Confiscation of unstamped cigarettes.  The
 
 8 department of taxation and the liquor commission of each of the
 
 9 counties are authorized to seize and confiscate any cigarette,
 
10 package of cigarettes, or carton of cigarettes which is
 
11 possessed, kept, stored, or retained for the purpose of sale, or
 
12 sold or offered for sale in violation of this part.
 
13      245-U  Forfeitures; disposition of proceeds.  (a)  The
 
14 forfeiture of any cigarette, package of cigarettes, or carton of
 
15 cigarettes unlawfully possessed, or kept, stored, or retained for
 
16 the purpose of sale, or sold or offered for sale, in violation of
 
17 this part, may be enforced pursuant to chapter 712A by an
 
18 appropriate administrative or judicial proceeding.  Any
 
19 cigarette, package of cigarettes, or carton of cigarettes
 
20 forfeited as provided in this section may be ordered destroyed,
 
21 or may be ordered sold to a licensed wholesaler or dealer, wholly
 
22 or partially.
 
23      (b)  Where a liquor commission or the department initiates
 

 
Page 43                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 and conducts an investigation resulting in the forfeiture and
 
 2 sale of cigarettes pursuant to this section,       per cent of
 
 3 the net proceeds of the sale, after payment of the cigarette tax
 
 4 and costs of the sale, shall be distributed to the liquor
 
 5 commission whose officers or employees initiated and conducted
 
 6 the investigation, and the balance shall be distributed to the
 
 7 State.
 
 8      245-V  Sale other than at retail of packages of cigarettes
 
 9 without stamps; fines and penalties.  Beginning           , any
 
10 person who knowingly possesses, or keeps, stores, or retains for
 
11 the purpose of sale other than at retail, or sells other than at
 
12 retail or offers to sell other than at retail, any package of
 
13 cigarettes to which there is not affixed the stamp required to be
 
14 affixed under this chapter, when those cigarettes have been
 
15 obtained from any source whatever, shall be guilty of a class C
 
16 felony and, upon conviction, shall be fined not more than
 
17 $100,000, or imprisoned not more than five years, or both;
 
18 provided that a corporation shall be fined not more than
 
19 $500,000.
 
20      245-W  Purchase of packages of cigarettes without stamps;
 
21 fines and penalties.  Beginning October 1, 1999, any wholesaler
 
22 or dealer who knowingly purchases from any other wholesaler or
 
23 dealer any package of cigarettes to which there is not affixed
 

 
Page 44                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1 the stamp required to be affixed under this chapter, shall be
 
 2 guilty of a class C felony and, upon conviction thereof, shall be
 
 3 fined not more than $100,000, or imprisoned not more than five
 
 4 years, or both; provided that a corporation shall be fined not
 
 5 more than $500,000.
 
 6      245-X  Retail sale of packages of cigarettes without
 
 7 stamps; fines and penalties.  Beginning January 1, 2000, any
 
 8 person who knowingly possesses, or keeps, stores, or retains for
 
 9 the purpose of sale at retail, or sells at retail or offers to
 
10 sell at retail, any package of cigarettes to which there is not
 
11 affixed the stamp required to be affixed under this chapter, when
 
12 those cigarettes have been obtained from any source whatever,
 
13 shall be guilty of a class C felony and, upon conviction thereof,
 
14 shall be fined not more than $100,000, or imprisoned not more
 
15 than five years, or both; provided that a corporation shall be
 
16 fined not more than $500,000.
 
17      245-Y  Funding of youth smoking intervention task force.
 
18            of the proceeds of fines collected for violation of
 
19 section 245-X or shall be deposited with the county finance
 
20 directors for the purpose of funding the youth smoking
 
21 intervention task force established pursuant to section 328K-A in
 
22 the following proportion:
 
23      (1)  For the city and county of Honolulu            per cent
 

 
Page 45                                                    
                                     S.B. NO.           1213
                                                        
                                                        

 
 1      (2)  For the county of Kauai                        per cent
 
 2      (3)  For the county of Maui                         per cent
 
 3      (4)  For the county of Hawaii                       per cent
 
 4 The balance of the proceeds of fines collected for violation of
 
 5 section 245-X or shall be deposited to the general fund of the
 
 6 State.
 
 7      245-Z  Cooperation between department and liquor
 
 8 commission.  The department of taxation and the liquor
 
 9 commission, if the commission exercises its authority under this
 
10 chapter, shall cooperate in the enforcement of this chapter.  The
 
11 department of taxation shall notify the proper liquor commission
 
12 of the name and address of every licensee whose license has been
 
13 revoked, and any license issued to the licensee under chapter 281
 
14 with respect to tobacco law thereupon shall be deemed forfeited. 
 
15      The department of taxation may notify the proper liquor
 
16 commission of the name and address of every person who has failed
 
17 to file any return required, or to pay any tax prescribed, or to
 
18 secure a permit, or to perform any other duty or act imposed
 
19 under this chapter, and the liquor commission shall thereupon
 
20 suspend any license which may have been issued to that person
 
21 under the chapter 281 with respect to tobacco law until that
 
22 person complies with this chapter. 
 
23      The liquor commission, if the commission exercises its
 

 
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 1 authority under this chapter, shall provide to the department of
 
 2 taxation the results of any examination the commission has
 
 3 undertaken pursuant to section 245-9 and upon request, shall
 
 4 furnish to the department of taxation any information in its
 
 5 possession relative to any person having a license issued by it,
 
 6 and its records shall be open to examination by the department of
 
 7 taxation."
 
 8      SECTION 19.  Section 245-1, Hawaii Revised Statutes, is
 
 9 amended by adding two new definitions to be appropriately
 
10 inserted and to read as follows:
 
11      ""Department" means the department of taxation.
 
12      "Liquor commission" or "commission" means the liquor
 
13 commission of each county."
 
14      SECTION 20.  Section 245-3, Hawaii Revised Statutes, is
 
15 amended by amending subsection (a) to read as follows:
 
16      "(a)  Every wholesaler or dealer, in addition to any other
 
17 taxes provided by law, shall pay for the privilege of conducting
 
18 business and other activities in the State an:
 
19      (1)  Excise tax equal to:
 
20           (A)  4.00 cents for each cigarette sold, used, or
 
21                possessed by the wholesaler or dealer, after
 
22                August 31, 1997; and
 
23           (B)  5.00 cents for each cigarette sold, used, or
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1                possessed by a wholesaler or dealer after June 30,
 
 2                1998,
 
 3           whether or not sold at wholesale, or if not sold then
 
 4           at the same rate upon the use by the wholesaler or
 
 5           dealer; and
 
 6      (2)  Excise tax equal to forty per cent of the wholesale
 
 7           price of each article or item of tobacco products sold
 
 8           by the wholesaler or dealer, whether or not sold at
 
 9           wholesale, or if not sold then at the same rate upon
 
10           the use by the wholesaler or dealer.
 
11      Where the tax imposed has been paid on cigarettes or tobacco
 
12 products which thereafter become the subject of a casualty loss
 
13 deduction allowable under chapter 235, the tax paid shall be
 
14 refunded or credited to the account of the wholesaler or dealer.
 
15 In applying the tax[,] to tobacco products, the tax shall be
 
16 applied against the latest of the activities of selling, using,
 
17 or possessing[.] the tobacco products.  The tax shall be imposed
 
18 at the time of the last of the following activities to occur:
 
19 the sale; the use; or the possession of [cigarettes or] tobacco
 
20 products.  The tax shall be applied to cigarettes through the use
 
21 of stamps."
 
22      SECTION 21.  Section 245-5, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1      "245-5 Returns.  Every licensee, on or before the last day
 
 2 of each month, shall file with the department [of taxation] a
 
 3 return showing the cigarettes and tobacco products sold,
 
 4 possessed, or used by the licensee during the preceding calendar
 
 5 month and of the taxes chargeable against the taxpayer in
 
 6 accordance with this chapter.  The form of the return shall be
 
 7 prescribed by the department and shall contain such information,
 
 8 including a separate statement of the number and wholesale price
 
 9 of cigarettes, the amount of stamps purchased and used, and the
 
10 wholesale price of tobacco products, sold, possessed, or used, as
 
11 it may deem necessary for the proper administration of this
 
12 chapter."
 
13      SECTION 22.  Section 245-6, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "245-6 Payment of taxes; penalties.  At the time of the
 
16 filing of the return required under section 245-5 and within the
 
17 time prescribed therefor, each licensee shall pay to the
 
18 department [of taxation] the unpaid amount of taxes imposed by
 
19 this chapter, required to be shown by the return.
 
20      Penalties and interest shall be added to and become a part
 
21 of the taxes, when and as provided by section 231-39."
 
22      SECTION 23.  Section 245-8, Hawaii Revised Statutes, is
 
23 amended by amending subsection (a) to read as follows:
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1      "(a)  Every wholesaler and dealer shall keep a record of
 
 2 [every]:
 
 3      (1)  Every sale or use of cigarettes and tobacco products by
 
 4           the wholesaler or dealer[, the];
 
 5      (2)  The number and wholesale price of cigarettes[,]; and
 
 6           [the]
 
 7      (3)  The wholesale price of tobacco products, sold,
 
 8           possessed, or used, and of the taxes payable thereon,
 
 9           if any, together with the amounts of stamps purchased
 
10           and used,
 
11 in such form as the department [of taxation] may prescribe.  The
 
12 records shall be offered for inspection and examination at any
 
13 time upon demand by the department or the commission and shall be
 
14 preserved for a period of five years, except that the department,
 
15 in writing, may consent to their destruction within the five-year
 
16 period or may require that they be kept longer.  The department,
 
17 by rule, may require the licensee to keep such other records as
 
18 it may deem necessary for the proper enforcement of this
 
19 chapter."
 
20      SECTION 24.  Section 245-9, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "245-9 Inspection.  The department [of taxation], the
 
23 liquor commission, or the duly authorized agent of either the
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 department or commission, may examine all records required to be
 
 2 kept under this chapter, and books, papers, and records of any
 
 3 person engaged in the business of wholesaling or dealing
 
 4 cigarettes and tobacco products, to verify the accuracy of the
 
 5 payment of the taxes imposed by this chapter.  Every person in
 
 6 possession of any books, papers, and records, and the person's
 
 7 agents and employees, are directed and required to give to the
 
 8 department, the commission, or the duly authorized agent of
 
 9 either of them, the means, facilities, and opportunities for the
 
10 examinations."
 
11      SECTION 25.  Section 245-11, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "245-11  Chapter 235 and chapter 237 applicable.  All of
 
14 the provisions of chapter 235 and chapter 237 not inconsistent
 
15 with this chapter and which may appropriately be applied to the
 
16 taxes, persons, circumstances, and situations involved in this
 
17 chapter, including (without prejudice to the generality of the
 
18 foregoing) provisions as to penalties and interest, and
 
19 provisions granting administrative powers to the department [of
 
20 taxation], and provisions for the assessment, levy, and
 
21 collection of taxes, shall be applicable to the taxes imposed by
 
22 this chapter, and to the assessment, levy, and collection
 
23 thereof[.] except that returns, return information, or reports
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 under this chapter and relating only to this chapter may be made
 
 2 known to the liquor commission by the department, if not in
 
 3 conflict with section 231-18."
 
 4      SECTION 26.  Section 245-15, Hawaii Revised Statutes, is
 
 5 amended to read as follows:
 
 6      "245-15  Disposition of revenues.  All moneys collected
 
 7 pursuant to this chapter shall be paid into the state treasury as
 
 8 state realizations to be kept and accounted for as provided by
 
 9 law[.], except for the amounts designated by sections 245-S and
 
10 245-U for distribution to county liquor commissions."
 
11      SECTION 27.  Sections 245-1 to 245-15, Hawaii Revised
 
12 Statutes, are designated as:
 
13                   "PART I.  GENERAL PROVISIONS"
 
14      SECTION 28.  This Act does not affect rights and duties that
 
15 matured, penalties that were incurred, and proceedings that were
 
16 begun, before its effective date.
 
17      SECTION 29.  In codifying the new sections added by sections
 
18 4, 15 and 19, and referred to in this Act, the revisor of
 
19 statutes shall substitute appropriate section numbers for the
 
20 letters used in designating the new sections in this Act. 
 
21      SECTION 30.  Statutory material to be repealed is bracketed.
 
22 New statutory material is underscored.
 
23      SECTION 31.  This Act shall take effect upon its approval,
 

 
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                                     S.B. NO.           1213
                                                        
                                                        

 
 1 except for sections 2 to 12 of this Act, which shall take effect
 
 2 on January 1, 2000, and sections 13 and 18 of this Act which
 
 3 shall take effect on July 1, 1999.
 
 4 
 
 5                           INTRODUCED BY:  _______________________