Tobacco Product Licensure

Creates statewide licensure mechanism for retail tobacco sales
that provides for licensing retail tobacco vendors, inspections
and enforcement, adjudication of fines and penalties, training
and education for retail merchants and public awareness of the
State's statute governing the sale of tobacco to minors.  (SD2)

THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT


 1      SECTION 1.  Chapter 281, Hawaii Revised Statutes, is amended
 2 by adding a new part to be appropriately designated and to read
 3 as follows:
 4                   "PART    .  TOBACCO PRODUCTS
 5      281-      Legislative intent and purpose.  The use of
 6 tobacco products by Hawaii's youth represents a public health
 7 problem of significant magnitude and concern.  The legislature
 8 finds that tobacco use by minors in Hawaii is widespread and is
 9 increasing.  The present law prohibiting the sale of tobacco
10 products to minors is not effective by itself to reduce illegal
11 sales to minors.  Tobacco industry advertising targets children
12 in order to replace the over 1,100 Hawaii residents who die each
13 year as a result of tobacco-related illness.  Of today's smokers,
14 ninety per cent began their addictive habit before the age of
15 eighteen years.  The economic loss created by tobacco use in
16 Hawaii represents an ongoing and escalating financial burden
17 borne by every business, large and small, and every person,
18 smoker and nonsmoker.  These figures also represent a health and
19 economic drain created by each new generation of children who
20 begin using tobacco products and become addicted to nicotine.

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                                     S.B. NO.           S.D. 2

 1 The purposes of this part are to promote, protect, and preserve
 2 the health of Hawaii's children by (1) reducing youth access to
 3 tobacco products; (2) reducing the illegal sale of tobacco
 4 products to minors; and (3) increasing the compliance with
 5 existing laws prohibiting the sale of tobacco products to minors.
 6      281-    Tobacco licenses, classes.(a)  A tobacco license
 7 may be granted by the liquor commission as provided in this
 8 section.  For purposes of this section, a tobacco license
 9 authorizes the importation or sale of tobacco products as defined
10 in this chapter and chapter 245.
11      (b)  Class 1.  Wholesale tobacco dealer.  A license for the
12 sale of tobacco at wholesale shall authorize the licensee to
13 import and sell only to retail tobacco dealer licensees or
14 others who are authorized by law to resell, but are not required
15 to hold a license by law.  Nothing in this subsection shall
16 prevent a wholesaler from selling tobacco to post exchanges,
17 ships' service stores, Army or Navy officers' clubs, or like
18 organizations located on Army or Navy reservations, or to any
19 vessel performing a regular water transportation service between
20 any two or more ports in the State.
21      (c)  Class 2.  Retail tobacco dealers.  A license under this
22 class shall authorize the dealer to sell tobacco products at
23 retail.  The retail tobacco dealer licensee shall be responsible

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 1 for providing a training program to all employees that shall
 2 include training in the laws governing the sale of tobacco,
 3 methods for recognizing and handling underage customers, and
 4 procedures for proper identification to verify that customers are
 5 not underage.
 6      (d)  It shall be unlawful for any retail tobacco dealer
 7 licensee to purchase or acquire tobacco from any person other
 8 than a wholesale tobacco dealer licensed pursuant to this
 9 chapter.  It shall be unlawful for any retail tobacco dealer to
10 offer or sell tobacco products from vending machines, except that
11 the sale of tobacco products from vending machines may be
12 permitted in an on-premises liquor licensed establishment
13 pursuant to section 328K-7.
14      281-    Application; tobacco licenses.  Every application
15 for a tobacco license or the renewal of a tobacco license shall
16 be in writing and signed by the applicant, by the proper officer
17 or officers of a corporation or unincorporated association, or by
18 a general partner of a partnership, or other official of a legal
19 entity responsible for the application.  The application shall be
20 addressed to the liquor commission and shall include:
21      (1)  (A)  For an individual, the full name, age, and place
22                of residence of the applicant;
23           (B)  For a corporation or joint-stock company, its full

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 1                name and the names of its officers and directors;
 2           (C)  For a partnership, the names, ages, and respective
 3                places of residence of all the partners; and
 4           (D)  For any other association of individuals or other
 5                legal entity, the names, ages, and respective
 6                places of residence of its officers or members;
 7      (2)  A particular description of the place or premises where
 8           the proposed license is to be exercised, so that the
 9           exact location and extent thereof may be clearly and
10           definitely determined therefrom; provided that if the
11           applicant has or intends to have more than one place of
12           business dealing with cigarettes or tobacco, a separate
13           application shall be made for each place of business;
14           and provided further that no application for a retail
15           tobacco dealer license shall be accepted from a person
16           who conducts business from a vehicle;
17      (3)  The class of license applied for; and
18      (4)  Any other matter of information pertinent to the
19           subject matter that may be required by the rules of the
20           commission.
21      An application for a tobacco license may be granted without
22 notice or hearing by the liquor commission pursuant to commission
23 rules, and the license shall be posted on the premises of the

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                                     S.B. NO.           S.D. 2

 1 place identified in the application in a conspicuous place for
 2 public viewing.
 3      A tobacco license shall be valid for a term beginning July 1
 4 through June 30 of the following year and shall be subject to
 5 renewal pursuant to commission rules; provided that no license
 6 shall be transferable.
 7      281-    Prohibitions; tobacco licensee.(a)  At no time
 8 under any circumstances shall any tobacco licensee or its
 9 employees sell or furnish any tobacco to:
10      (1)  A minor; or
11      (2)  Any person over the age of eighteen for distribution to
12           or use by a minor.
13      (b)  Any person who violates this section or any rule
14 adopted by the commission pursuant to this part shall be guilty
15 of a violation for each separate offense.  Each occurrence of
16 violation shall constitute a separate offense.
17      281-    Prohibitions involving minors, cigarettes, tobacco;
18 liquor commission; penalty.(a)  No minor shall purchase
19 cigarettes or tobacco.
20      (b)  Subsection (a) shall not apply if a person under the
21 age of eighteen, with parental authorization, is participating in
22 a controlled purchase as part of a law enforcement activity or a
23 study authorized by the department of health to determine the

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 1 level of incidence of tobacco sales to minors.
 2      (c)  Only a government issued photo identification shall be
 3 considered as valid proof of age.
 4      (d)  No minor shall possess cigarettes or tobacco under a
 5 retail tobacco dealer's license except that custody of cigarettes
 6 or tobacco by the minor may be permitted in the course of
 7 delivery pursuant to the direction of the minor's employer
 8 lawfully engaged in business necessitating the delivery.
 9      (e)  No minor shall falsify any identification or use any
10 false identification or identification of another person or of a
11 fictitious person for the purpose of buying or attempting to buy
12 cigarettes or tobacco.
13      (f)  No minor shall be permitted to sell cigarettes or
14 tobacco.
15      (g)  A minor who violates this section shall be subject to
16 the jurisdiction of the liquor commission or board who shall be
17 authorized to issue citations to those persons for referral and
18 disposition by the family court.
19      281-    Prohibitions involving minors, cigarettes, tobacco;
20 public places; penalty.  (a)  No person age eighteen or older
21 shall purchase cigarettes or tobacco for use by, or offer or
22 distribute cigarettes or tobacco to, a minor.
23      (b)   Any person age eighteen or older who violates

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 1 subsection (a) shall be guilty of a petty misdemeanor.
 2      281-    Fines collected.  (a)  One half of all the fines
 3 collected pursuant to this part shall be transferred to the
 4 liquor commission for the county in which the citation
 5 originated.
 6      (b)  The moneys transferred pursuant to subsection (a) shall
 7 be allocated for the purpose of education and training of retail
 8 tobacco merchants pursuant to section 281-17(a)(3)."
 9      SECTION 2.  Title 16, Hawaii Revised Statutes, is amended by
10 amending its title to read as follows:
12      SECTION 3.  Chapter 281, Hawaii Revised Statutes, is amended
13 by amending its title to read as follows:
14                           "CHAPTER 281
16      SECTION 4.  Section 281-1, Hawaii Revised Statutes, is
17 amended by adding four new definitions to be appropriately
18 inserted and to read as follows:
19      ""Cigarettes" means any roll for smoking made wholly or in
20 part of tobacco, irrespective of size or shape and regardless of
21 whether the tobacco is flavored, adulterated, or mixed with any
22 other ingredient, the wrapper or cover of which is made of paper
23 or any other substance or material except tobacco.

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                                     S.B. NO.           S.D. 2

 1      "Cigarette vending machine" means a self-service device that
 2 dispenses cigarettes, cigars, tobacco, or any other product
 3 containing tobacco.
 4      "Tobacco" or "tobacco products" means products made from
 5 tobacco leaves in any form that are prepared or intended for
 6 consumption by, or the personal use of, humans, including
 7 cigarettes, cigars, and any other substitutes bearing the
 8 semblance thereof; cheroots; stogies; periques; granulated, plug
 9 cut, crimp cut, ready rubbed, and other smoking tobacco; snuff or
10 snuff flour; cavendish; plug and twist tobacco; fine cut and
11 other chewing tobaccos; shorts; refuse scraps, clippings,
12 cuttings, and sweepings of tobacco, and other kinds and forms of
13 tobacco, prepared in a manner as to be suitable for chewing or
14 smoking in a pipe or otherwise, or both for chewing and smoking."
15      SECTION 5.  Section 281-1, Hawaii Revised Statutes, is
16 amended by amending the definitions of "liquor control
17 adjudication board", "minor", "retail license", "sell" or "to
18 sell", and "seller" to read:
19      ""Liquor control adjudication board" or "board" means a
20 board established by county charter, within a county, that shall
21 have the jurisdiction to hear and determine complaints or
22 violations of liquor and tobacco laws and to impose penalties as
23 may be provided in this chapter.

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                                     S.B. NO.           S.D. 2

 1      "Minor" means any person below the age of twenty-one
 2 years[.]; provided that, where applicable to tobacco as provided
 3 in this chapter, minor means any person under the age of
 4 eighteen.
 5      "Retail licensee" means any licensee holding a class 2 or
 6 class 4 through class 14 license[.] and class 2 license under
 7 section 281-   , related to its retail operation.
 8      "Sell" or "to sell" includes:  to solicit and receive an
 9 order for; to have or keep or offer or expose for sale; to
10 deliver for value or in any other way than purely gratuitously;
11 to peddle; to keep with intent to sell; to traffic in; and the
12 word "sale" includes every act of selling as herein defined.
13 Notwithstanding the provisions above, the delivery of liquor or
14 tobacco by a licensee's vehicle or the vehicle of a licensee's
15 agent shall be deemed delivery for value.
16      "Seller" includes the agents and employees of a seller;
17 provided that any person shall be deemed to be a seller, who in
18 the State, whether acting as agent or representative of a
19 nonresident principal or otherwise, solicits the placing of or
20 takes, receives, or forwards orders for liquor or tobacco to be
21 shipped into the State from any place without the State to be
22 delivered to customers, by direct shipment or otherwise."
23      SECTION 6.  Section 281-3, Hawaii Revised Statutes, is

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                                     S.B. NO.           S.D. 2

 1 amended to read as follows:
 2      "281-3  Illegal manufacture, importation, or sale of
 3 liquor[.] and tobacco.  (a)  It shall be unlawful for any person
 4 not having a valid license to manufacture or sell any liquor
 5 except as otherwise provided in this chapter; provided that the
 6 head of any family may produce for family use and not for sale an
 7 amount of wine not exceeding two hundred gallons a year, and an
 8 amount of beer not exceeding one hundred gallons a year.
 9      (b)  It shall [also] be unlawful for any person who does not
10 have a valid wholesale license or a valid manufacturer's
11 (including rectifier's) license, to import any liquor from
12 without the State, except as otherwise provided in this chapter.
13 Liquor imported into this State shall come to rest at the
14 warehouse of the manufacturer (including rectifier) or the
15 wholesaler importing the liquor, shall be unloaded into such
16 warehouse, and shall be held in such warehouse for at least
17 forty-eight hours before further sale by such manufacturer
18 (including rectifier) or wholesaler.
19      (c)  It shall [also] be unlawful for any person to label,
20 designate, or sell any liquor using the [word] words "Hawaii",
21 "Hawaiian", "Aloha State", "50th State", "Kauai", "Maui", "Oahu",
22 or "Honolulu" unless [such] the liquor is wholly or partially
23 manufactured in the State, and all of the primary ingredients are

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                                     S.B. NO.           S.D. 2

 1 wholly rectified or combined in the State [of Hawaii] in
 2 compliance with the Bureau of Alcohol, Tobacco and Firearms
 3 standards.
 4      (d)  It shall be unlawful for any person who does not have a
 5 valid tobacco license to sell any tobacco product except as
 6 provided in this chapter.
 7      (e)  It shall be unlawful for any person who does not have a
 8 valid wholesale tobacco dealer license to import any tobacco
 9 product from without the State, except as provided in this
10 chapter.
11      (f)  A license shall constitute authority for the licensee
12 to sell only the liquor or tobacco thereby authorized to be sold
13 by the licensee.
14      (g)  The commission or board shall establish minimum
15 standards by rule under which the commission or board shall
16 suspend or revoke a license."
17      SECTION 7.  Section 281-17, Hawaii Revised Statutes, is
18 amended to read as follows:
19      "281-17  Jurisdiction and powers.  (a)  The liquor
20 commission, within its own county, shall have the sole
21 jurisdiction, power, authority, and discretion, subject only to
22 this chapter:
23      (1)  To grant, refuse, suspend, and revoke any licenses for

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                                     S.B. NO.           S.D. 2

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

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                                     S.B. NO.           S.D. 2

 1                through the money collected from the assessment of
 2                fines against liquor licensees; and
 3           (C)  Tobacco education programs shall be financed
 4                through the money collected from the assessment of
 5                fines against tobacco licensees under section
 6                281 -     .
 7      (4)  From time to time to make, amend, and repeal such
 8           rules, not inconsistent with this chapter, as in the
 9           judgment of the commission seem appropriate for
10           carrying out this chapter and for the efficient
11           administration thereof, and the proper conduct of the
12           business of all licensees, including every matter or
13           thing required to be done or which may be done with the
14           approval or consent or by order or under the direction
15           or supervision of or as prescribed by the commission;
16           which rules, when adopted as provided in chapter 91,
17           shall have the force and effect of law;
18      (5)  Subject to chapters 76 and 77, to appoint and remove an
19           administrator, who may also be appointed an
20           investigator and who shall be responsible for the
21           operations and activities of the staff.  The
22           administrator may hire and remove hearing officers,
23           investigators, and clerical or other assistants as its

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                                     S.B. NO.           S.D. 2

 1           business may from time to time require, to prescribe
 2           their duties, and fix their compensation; to engage the
 3           services of experts and persons engaged in the practice
 4           of a profession, if deemed expedient.  Every
 5           investigator, within the scope of the investigator's
 6           duties, shall have the powers of a police officer.  No
 7           employee of any commission, aside from exercising the
 8           right to vote, shall support, advocate, or aid in the
 9           election or defeat of any candidate for public office,
10           and upon satisfactory proof of such prohibited activity
11           the offender shall be summarily dismissed;
12      (6)  To limit the number of licenses of any class or kind
13           within the county, or the number of licenses of any
14           class or kind to do business in any given locality,
15           when in the judgment of the commission such limitations
16           are in the public interest;
17      (7)  To prescribe the nature of the proof to be furnished,
18           the notices to be given, and the conditions to be met
19           or observed in case of the issuance of a duplicate
20           license in place of one alleged to have been lost or
21           destroyed, including a requirement of any indemnity
22           deemed appropriate to the case;
23      (8)  To fix the hours between which licensed premises of any

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                                     S.B. NO.           S.D. 2

 1           class or classes may regularly be open for the
 2           transaction of business, which shall be uniform
 3           throughout the county as to each class respectively;
 4      (9)  To prescribe all forms to be used for the purposes of
 5           this chapter not otherwise provided for in this
 6           chapter, and the character and manner of keeping of
 7           books, records, and accounts to be kept by licensees in
 8           any matter pertaining to their business;
 9     (10)  To investigate violations of this chapter, chapter 244D
10           or 245, and, notwithstanding any law to the contrary,
11           violations of the applicable department of health's
12           allowable noise levels, through its investigators or
13           otherwise, to include covert operations, and to report
14           violations to the prosecuting officer for prosecution
15           and, where appropriate, the director of taxation to
16           hear and determine complaints against any licensee;
17     (11)  To prescribe, by rule, the terms, conditions, and
18           circumstances under which persons or any class of
19           persons may be employed by holders of licenses;
20     (12)  To prescribe, by rule, the term of any license or
21           solicitor's and representative's permit authorized by
22           this chapter, the annual or prorated amount, the manner
23           of payment of fees for the licenses and permits, and

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                                     S.B. NO.           S.D. 2

 1           the amount of filing fees; and
 2     (13)  To prescribe, by rule, the circumstances and penalty
 3           for the unauthorized manufacturing or selling of any
 4           liquor[.] or tobacco.
 5      (b)  Subject only to this chapter, the commission or board
 6 and each member thereof shall have the same powers respecting the
 7 administering of oaths, compelling the attendance of witnesses
 8 and the production of documentary evidence, and examining the
 9 witnesses as are possessed by a circuit court, except that the
10 commission or board and each member thereof shall not be bound by
11 the strict legal rules of evidence.  In addition, the commission
12 or board shall have the power to require the production of, and
13 to examine any books, papers, and records of any licensee which
14 may pertain to the licensee's business under the license or which
15 may pertain to a matter at a hearing before the commission or
16 board or to an investigation by the commission or board.
17      (c)  The exercise by the commission or board of the power,
18 authority, and discretion vested in it pursuant to this chapter
19 shall be final and shall not be reviewable by or appealable to
20 any court or tribunal, except as otherwise provided in this
21 chapter or chapter 91.
22      (d)  The legislature declares its intent not to preempt the
23 field of regulation of the use and sale of tobacco products.

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                                     S.B. NO.           S.D. 2

 1 Counties may regulate smoking or tobacco use in a manner
 2 consistent with this chapter."
 3      SECTION 8.  Section 281-17.5, Hawaii Revised Statutes, is
 4 amended to read as follows:
 5      "281-17.5  Fees; justified, method of change, limitation.
 6 (a)  Any liquor or tobacco license fee or any increase in an
 7 existing liquor or tobacco license fee sought to be implemented
 8 by any commission shall have, as its justification, a direct and
 9 proportionate relationship to costs and expenses of the
10 commission in its control, supervision, or regulation of the
11 manufacture, importation, and sale of liquors, cigarettes, or
12 tobacco, or otherwise directly relate to actual costs and
13 expenses of administration of the commission as is set forth in
14 this chapter.
15      (b)  Any such [liquor] license fees or any moneys collected
16 or received by any liquor commission under this chapter may only
17 be used for costs and expenses directly relating to operational
18 and administrative costs actually incurred by the liquor
19 commission collecting or receiving such [liquor] license fees or
20 moneys.  Such fees or moneys shall not be used for any costs or
21 expenses other than those directly relating to its operation and
22 administration.
23      (c)  Any increase in the [liquor] license fee structure

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                                     S.B. NO.           S.D. 2

 1 shall only be initiated by the liquor commission seeking the
 2 change with the approval of the county's legislative body and
 3 mayor.
 4      (d)  Any liquor commission seeking a change in [liquor]
 5 license fee structure shall notify all licensees under this
 6 chapter affected by the change of the proposed change and shall
 7 notify each such licensee of the outcome and resolution of the
 8 change.
 9      (e)  Any liquor commission [which] that currently receives a
10 license fee from a licensee in excess of the amount prescribed by
11 this section shall immediately revise its [liquor] license fee
12 structure to conform with the requirements of this section.  All
13 liqour license fees and all tobacco license fees shall be
14 maintained in separate accounts.  Any funds in excess of twenty
15 per cent of the commission's current budget shall be returned or
16 credited annually to existing licensees."
17      SECTION 9.  Section 281-20, Hawaii Revised Statutes, is
18 amended to read as follows:
19      "281-20  General right of inspection.  Any investigator
20 [may], at all times, without notice and without any search
21 warrant or other legal process, may visit and have immediate
22 access to every part of the premises of every liquor and tobacco
23 licensee, for the purpose of making any examination or inspection

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                                     S.B. NO.           S.D. 2

 1 thereof or inquiry into the books and records therein, to
 2 ascertain whether all of the conditions of the license and all
 3 provisions of this chapter and chapter 244D or 245 are being
 4 complied with by the licensee."
 5      SECTION 10.  Section 281-79, Hawaii Revised Statutes, is
 6 amended to read as follows:
 7      "281-79  Entry for examination; obstructing liquor
 8 commission operations; penalty.  (a)  Every investigator shall,
 9 and any officer having police power may, at all reasonable times,
10 and at any time whatsoever if there is any reasonable ground for
11 suspicion that the conditions of any liquor or tobacco license
12 are being violated, without warrant, enter into and upon any
13 licensed premises and inspect the [same] premises and every part
14 thereof, and any books or records therein, to ascertain whether
15 [or not] all conditions of the license and all provisions of this
16 chapter and chapter 244D or 245 are being complied with by the
17 licensee.
18      (b)  If any investigator or officer, or any person called by
19 the investigator or officer to the investigator's or officer's
20 aid, is threatened with the use of violence, force, or physical
21 interference or obstacle, or is hindered, obstructed, or
22 prevented by any licensee, the licensee's employees, or any other
23 person from entering into any such premises, or whenever any

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                                     S.B. NO.           S.D. 2

 1 investigator or officer is by any licensee, the licensee's
 2 employees, or any other person opposed, obstructed, or molested
 3 in the performance of the officer's duty in any respect, the
 4 licensee, the licensee's employee, or any other person shall be
 5 fined not more than $2,000 or imprisoned not more than one year,
 6 or both.
 7      (c)  Whenever any investigator or officer, having demanded
 8 admittance into any licensed premises and declared the
 9 investigator's or officer's name and office, is not admitted by
10 the licensee or the person in charge of the premises, it shall be
11 lawful for the investigator or officer to forcibly and in any
12 manner to break into and enter the premises."
13      SECTION 11.  Section 281-97, Hawaii Revised Statutes, is
14 amended to read as follows:
15      "281-97  When sale without license authorized.  (a)  In
16 case a liquor or tobacco license is revoked [or], canceled, or
17 not renewed, the licensee [may], with the permission of and upon
18 the conditions set by the liquor commission, may sell
19 intoxicating liquors or tobacco then in the licensee's possession
20 within sixty days, or within such additional time allowed by the
21 commission, unless under this chapter the same are seized or
22 forfeited.
23      (b)  Any bank, trust company, or financial institution

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                                     S.B. NO.           S.D. 2

 1 owning or possessing intoxicating liquor or tobacco which was
 2 acquired by the bank, trust company, or financial institution in
 3 the ordinary course of its business, may sell the intoxicating
 4 liquor or tobacco with the permission of and upon conditions set
 5 by the commission.
 6      (c)  Any person acting as personal representative[,] or
 7 guardian of a licensee's estate, or any receiver, assignee for
 8 benefit of creditors, or trustee in bankruptcy, may sell the
 9 stock of intoxicating liquor or tobacco with the permission of
10 and upon conditions set by the commission, except as otherwise
11 provided in this chapter.
12      (d)  Any insurance company, or any common carrier acting as
13 an insurer for losses to persons shipping intoxicating liquor[,]
14 or tobacco, may take possession of and sell the intoxicating
15 liquor[,] or tobacco, the containers of which have been damaged
16 by fire or otherwise, with the permission of and upon conditions
17 set by the commission.
18      (e)  Any person in possession of a stock of lawfully
19 acquired intoxicating liquor or tobacco under a foreclosure
20 proceeding, proceedings for enforcement of a lien, civil
21 execution, or under any other proceeding or process, may sell
22 such intoxicating liquor or tobacco with the permission of and
23 upon conditions set by the commission."

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                                     S.B. NO.           S.D. 2

 1      SECTION 12.  Section 281-101, Hawaii Revised Statutes, is
 2 amended to read as follows:
 3      "281-101  Manufacture or sale without license; penalty.  If
 4 any person, acting in person or by or through any agent, servant,
 5 or employee, manufactures or sells any liquor[,] or tobacco,
 6 either directly or indirectly, or upon any pretense or by any
 7 subterfuge, except as authorized pursuant to this chapter, the
 8 person shall be fined not more than $2,000 or imprisoned not more
 9 than one year, or both."
10      SECTION 13.  Section 281-101.4, Hawaii Revised Statutes, is
11 amended to read as follows:
12      "281-101.4  Hearing, illegal manufacture, importation, or
13 sale of liquor[.] or tobacco.  (a)  The liquor commission or the
14 liquor control adjudication board may assess and collect a
15 penalty, or reprimand a person for not having a valid license to
16 manufacture or sell any liquor or tobacco in violation of this
17 chapter or of any rule [or regulation] applicable thereto.
18      (b)  In every case where the administrator elects to conduct
19 proceedings under this section where it is proposed to assess and
20 collect a penalty from a person for not having a valid license to
21 manufacture or sell any liquor or tobacco in violation of this
22 chapter or of any rule [or regulation] applicable thereto, that
23 person shall be entitled to notice and hearing in conformity with

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                                     S.B. NO.           S.D. 2

 1 chapter 91.
 2      (c)  At the hearing, before final action is taken by the
 3 commission or board, the person shall be entitled to be heard in
 4 person or through counsel and shall be given a full and fair
 5 opportunity to present facts showing that the alleged cause or
 6 causes for the proposed action do not exist, or any reason why no
 7 penalty should be imposed.  The testimony taken at the hearing
 8 shall be under oath and recorded stenographically, or by machine,
 9 but the parties shall not be bound by the strict rules of
10 evidence; certified copies of any transcript and of any other
11 record made of or at the hearing shall be furnished to a person
12 upon that person's request and at that person's expense.
13      (d)  Any order, reprimand, or penalty imposed by the
14 commission or board upon a person for not having a valid license
15 to manufacture or sell any liquor or tobacco in violation of this
16 chapter or of any rule [or regulation] applicable thereto shall
17 be in addition to any penalty that might be imposed upon that
18 person's conviction in a court of law for any violation of this
19 chapter.  The amount of penalty assessed and collected by the
20 commission or board from any person under this section for not
21 having a valid license to manufacture or sell any liquor or
22 tobacco shall not exceed the sum of $2,000 for each charge.
23      (e)  Whenever the service of any order or notice shall be

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 1 required by this section the service shall be made in the
 2 following manner:  in the case of any violation based upon the
 3 personal observation of any investigator, a written notice of the
 4 violation shall be given to the person charged with a violation
 5 within a reasonable period of time after the alleged violation
 6 occurred, the person charged shall be requested to acknowledge
 7 receipt of the alleged violation, or, if the person cannot be
 8 found after diligent search, by leaving a certified copy thereof
 9 at the person's dwelling house or usual place of abode with some
10 person of suitable age and discretion residing therein[; and if].
11 If the person cannot be found after diligent search, and service
12 cannot be made, then service may be made by depositing another
13 certified copy thereof in the certified mail of the United States
14 post office, postage prepaid, addressed to the person at the
15 person's last known residence address; provided[,] that in the
16 case of a partnership, corporation, unincorporated association,
17 or limited liability company, service may be made upon any
18 partner, officer, or member thereof."
19      SECTION 14.  This Act does not affect rights and duties that
20 matured, penalties that were incurred, and proceedings that were
21 begun, before its effective date.
22      SECTION 15.  Statutory material to be repealed is bracketed.
23 New statutory material is underscored.

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 1      SECTION 16.  This Act shall take effect on July 1, 2000.