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HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2003
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO TOBACCO.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. Chapter 245, Hawaii Revised Statutes, is amended by adding a new section immediately following section 245-22 to be designated as section 245-22.5 and to read as follows:
"§245-22.5 Prohibition against stamping or sale of cigarettes not listed in the directory pursuant to chapter 486P.
(a) Beginning December 1, 2003, it shall be unlawful for an entity (1) to affix a stamp to a package or other container of cigarettes belonging to a tobacco product manufacturer or brand family not included in the directory, or (2) to import, sell, offer, keep, store, acquire, transport, distribute, receive, or possess for sale or distribution cigarettes belonging to a tobacco product manufacturer or brand family not included in the directory. This section shall not apply to cigarettes that are exempt from taxes as provided by section 245-3(b). As used in this section the term "directory" means the "directory" established pursuant to section 486P-2.5(b). For purposes of this section "entity" means one or more individuals, a company, corporation, a partnership, an association, licensee, or any other type of legal entity. For purposes of this section the terms "brand family", "cigarette" and "tobacco product manufacturer" shall have the same meaning as those terms are used in chapter 486P.
(b) Any entity that knowingly violates subsection (a) shall be guilty of a class C felony.
(c) Any cigarettes that are unlawfully imported, possessed, kept, stored, acquired, transported, stamped, distributed, received, or sold in violation of this section may be seized and forfeited as contraband pursuant to chapter 712A and all such cigarettes seized and forfeited shall be destroyed."
SECTION 2. Chapter 486P, Hawaii Revised Statutes, is amended by adding a new section immediately following section 486P-2 to be designated as section 486P-2.5 and to read as follows:
"§486P-2.5 Certification; directory. (a) Every tobacco product manufacturer whose cigarettes are sold in this State (whether directly or through a distributor, retailer, or similar intermediary or intermediaries) shall execute and deliver in the manner prescribed by the attorney general a certification to the attorney general no later than September 30, 2003, and no later than the thirtieth day of April each year thereafter, certifying that, as of the date of such certification, such tobacco product manufacturer either: is a participating manufacturer; or is in full compliance with section 675-3(b).
(1) A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update such list thirty days prior to any addition to or modification of such list of brand families by executing and delivering a supplemental certification to the attorney general.
(2) A nonparticipating manufacturer shall include in its certification:
(A) A complete list of all its brand families
(i) separately listing brand families of cigarettes and the number of units sold in the State during the preceding calendar year, (ii) all of its brand families that have been sold in the State at any time during the current calendar year, (iii) indicating by an asterisk, any brand family sold in the State during the preceding calendar year that is no longer being sold in the State as of the date of such certification, and (iv) identifying by name and address any other manufacturer of such brand families in the preceding or current calendar year. The nonparticipating manufacturer shall update such list thirty days prior to any addition to or modification of such list of brand families by executing and delivering a supplemental certification to the attorney general;
(B) That such nonparticipating manufacturer is registered to do business in the State or has appointed an agent for service of process and provided notice thereof as required by subparagraph (C);
(C) That any nonresident or foreign nonparticipating manufacturer that has not registered to do business in the State as a foreign corporation or business entity shall, as a condition precedent to having its brand families listed or retained in the directory, appoint and continually engage without interruption the services of an agent in the United States to act as an agent for the service of process on whom all process, and any action or proceeding against it concerning or arising out of the enforcement of this chapter or chapter 675, may be served in any manner authorized by law. Such service shall constitute legal and valid service of process on the nonparticipating manufacturer. The nonparticipating manufacturer shall provide the name, address, phone number, and proof of the appointment and availability of such agent to the satisfaction of the attorney general;
(D) That such nonparticipating manufacturer has (i) established and continues to maintain a qualified escrow fund as that term is defined in chapter 675, and (ii) executed a qualified escrow agreement that has been reviewed and approved by the attorney general and that governs the qualified escrow fund;
(E) That such nonparticipating manufacturer is in full compliance with this chapter, chapter 675, and any rules adopted to implement this chapter or chapter 675; and
(F) That such nonparticipating manufacturer shall also provide (i) the name, address, and telephone number of the financial institution where the nonparticipating manufacturer has established such qualified escrow fund required pursuant to section 675-3(b)(1); (ii) the account number of such qualified escrow fund or any sub-account number for the State; (iii) the amount such nonparticipating manufacturer placed in such fund for cigarettes sold in the State during the preceding calendar year, the date and amount of each such deposit, and such evidence or verification as may be deemed necessary by the attorney general to confirm the foregoing; and (iv) the amount of and date of any withdrawal or transfer of funds the nonparticipating manufacturer made at any time from such fund or from any other qualified escrow fund into which it ever made escrow payments pursuant to section 675-3(b)(1).
(3) The nonparticipating manufacturer shall provide notice
to the attorney general thirty calendar days prior to termination of the authority of an agent and shall further provide proof to the satisfaction of the attorney general of the appointment of a new agent no less than five calendar days prior to the termination of an existing agent appointment. In the event an agent terminates an agency appointment, the nonparticipating manufacturer shall notify the attorney general of said termination within five calendar days and shall provide proof to the satisfaction of the attorney general of the appointment of a new agent.
(4) A tobacco product manufacturer may not include a brand family in its certification unless (i) in the case of a participating manufacturer, said participating manufacturer affirms that the brand family is to be deemed to be its cigarettes for purposes of calculating its payments under the master settlement agreement for the relevant year, in the volume and shares determined pursuant to the master settlement agreement; and (ii) in the case of a nonparticipating manufacturer, said nonparticipating manufacturer affirms that the brand family is to be deemed to be its cigarettes for purposes of chapter 675. Nothing in this section shall be construed as limiting or otherwise affecting the State's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of chapter 675.
(5) The tobacco product manufacturers shall maintain all invoices and documentation of sales and other such information relied upon for such certification for a period of five years, unless otherwise required by law for a greater period of time.
(6) Information provided to the attorney general pursuant
to this section that tends to identify customers of tobacco product manufacturers, terms of sale (including price), and non-aggregated sales volume data shall be exempt from disclosure under section 92F-11.
(b) Not later than November 1, 2003, the attorney general shall develop and make available for public inspection a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of subsection (a) and all brand families that are listed in such certifications, except as noted below.
(1) The attorney general shall not include or retain in such directory the name or brand families of any nonparticipating manufacturer that fails to provide the required certification or whose certification the attorney general determines is not in compliance with subsections (a)(2) and (a)(3) unless the attorney general has determined that such violation has been cured to the satisfaction of the attorney general.
(2) Neither a tobacco product manufacturer or brand family shall be included or retained in the directory if the attorney general concludes, in the case of a nonparticipating manufacturer, that:
(A) Any escrow payments required pursuant to section
675-3(b)(1) for any period for any brand family, whether or not listed by such nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the attorney general; or
(B) Any outstanding final judgment, including
interest thereon, for violations of chapter 675-3(b) has not been fully satisfied for such brand family or such manufacturer.
(3) The attorney general shall update the directory as necessary in order to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements of this chapter.
(4) Every entity licensed under chapter 245 shall provide and update as necessary an electronic mail address to the attorney general for purposes of receiving any notifications hereunder.
(c) Not later than thirty days after the end of each
month, and more frequently if so directed by the attorney general, an entity licensed pursuant to chapter 245 shall submit to the attorney general such information as the attorney general requires to facilitate compliance with this chapter, including, but not limited to, a list by brand family of the total number of cigarettes or in the case of roll your own, the equivalent stick count for which the licensee affixed stamps during the previous calendar month or otherwise paid the tax due for such cigarettes, and samples of each brand family, as may be necessary to enable the attorney general to determine whether a tobacco product manufacturer or licensed entity is in compliance with this chapter. The licensee shall maintain, and make available to the attorney general, all invoices and documentation of sales of all nonparticipating manufacturer cigarettes and any other information relied upon in reporting to the attorney general for a period of five years.
(d) The information received by the attorney general under this chapter may be used only for purposes of enforcement of this chapter, chapter 245, and chapter 675, except that the attorney general may share such information with authorities in other states for the purpose of enforcement of similar statutes enacted by such other states upon receipt of adequate assurance from such other authorities that such information will be used only for such purpose.
(e) The attorney general may require at any time, from the nonparticipating manufacturer, proof from the financial institution in which a tobacco product manufacturer has established a qualified escrow fund for the purpose of compliance with section 675-3(b)(1) of the amount of money in such fund being held on behalf of the State and the amount and
date of each deposit to such fund, and the amount and date of each withdrawal from such fund."
SECTION 3. Section 245-1, Hawaii Revised Statutes, is amended by amending the definition of "distribute" to read as follows:
""Distribute" means to sell, transfer, give, receive, acquire, or deliver to another, or to leave, barter, or exchange with another, or to offer or agree to do the same."
SECTION 4. Section 245-55, Hawaii Revised Statutes, is amended to read as follows:
§245-55[ ]] Forfeiture. The forfeiture of any cigarette, package of cigarettes, or carton of cigarettes unlawfully possessed, [ or] kept, stored, received, acquired, or retained for the purpose of sale, or sold or offered for sale, in violation of this part, may be [ enforced] ordered forfeited as contraband pursuant to chapter 712A [ by an appropriate administrative or judicial proceeding]. Any cigarette, package of cigarettes, or carton of cigarettes forfeited as provided in this section shall be ordered destroyed."
SECTION 5. Section 486P-1, Hawaii Revised Statutes, is amended by adding seven new definitions to be appropriately inserted and to read as follows:
" "Brand family" means all styles of cigarettes sold under the same trademark and differentiated from one another by means of additional modifiers, including, but not limited to, "menthol," "lights," "kings," and "100s" and includes any brand name (alone or in conjunction with any other word), trademark, logo, symbol, motto, selling message, recognizable pattern of colors, or any other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes.
"Nonparticipating manufacturer" means any tobacco product
manufacturer that is not a participating manufacturer.
"Participating manufacturer" has the meaning given that
term in section II(jj) of the Master Settlement Agreement
and all amendments thereto.
"Tobacco product manufacturer" shall have the same meaning as that term is defined in chapter 675.
"Qualified escrow fund" shall have the same meaning as that term is defined in chapter 675.
"Units sold" shall have the same meaning as that term is defined in chapter 675."
SECTION 6. Section 486P-3, Hawaii Revised Statutes, is amended to read as follows:
"§486P-3 Penalties. (a) The attorney general may bring a civil action against any entity that fails to file the reports required under this chapter.
(b) The attorney general may bring a civil action against any entity engaged in the business of manufacturing, wholesaling, distributing, [
or dealing] importing, or dealing in cigarettes or tobacco products who fails to provide information that the department of the attorney general may deem necessary, for the proper administration of this chapter or chapter 675.
(c) Notwithstanding the existence of other remedies at law, the attorney general may apply for a temporary or permanent injunction restraining any entity from the sale, use, possession, acquisition, receipt, transportation, or distribution of cigarettes manufactured by a tobacco product manufacturer who knowingly fails to report, provide information, or meet the certification requirements of this chapter. The injunction shall be issued without bond.
(c)] (d) The State shall be awarded its attorney's fees and expenses incurred in prosecuting violations of this chapter."
SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 8. This Act shall take effect upon its approval.