Report Title:

Relating to Tobacco.

Description:

Requires businesses engaged in the sale of cigarettes and other tobacco products at the retail level to acquire a retail tobacco permit from DOTAX. Provides criminal penalties for the retail sale of cigarettes or other tobacco products without a valid retail tobacco permit, and the seizure and forfeiture of cigarettes and other tobacco products sold, possessed, kept, acquired, distributed, or transported without a valid retail tobacco permit. (HB2366 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

2366

TWENTY-SECOND LEGISLATURE, 2004

H.D. 1

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 three new sections to be appropriately designated and to read as follows:

"§245-A Retail tobacco permit. (a) Beginning July 1, 2005, every retailer engaged in the retail sale of cigarettes and other tobacco products, upon which a tax is required to be paid under this chapter, shall obtain a retail tobacco permit.

(b) Beginning October 1, 2005, it shall be unlawful for any retailer to sell, possess, keep, acquire, distribute, or transport cigarettes or other tobacco products for retail sale unless a retail tobacco permit has been issued to the retailer, as hereinafter prescribed, and such retail tobacco permit is in full force and effect.

(c) The retail tobacco permit shall be issued by the department upon application thereto, in such form and manner as prescribed by the department, and the payment of a fee of $20 and shall be renewable annually on July 1 for the twelve months ending the succeeding June 30. Whenever a retail tobacco permit is defaced, destroyed, or lost, or the permittee relocates the permittee's business, the department may issue a duplicate retail tobacco permit to the permittee upon the payment of a fee of $5 per copy.

(d) An application shall be filed and a retail tobacco permit obtained, and fee paid, for each place of business owned, controlled, or operated by a retailer. A retailer that owns or controls more than one place of business shall obtain a separate retail tobacco permit for each place of business, but may submit a single application for those retail tobacco permits.

Each retail tobacco permit issued shall describe clearly the place of business where the operation of the business is conducted.

(e) Any entity who operates as a dealer or wholesaler and also sells cigarettes or other tobacco products to consumers at retail shall acquire a separate retail tobacco permit. Every entity that operates under a retail tobacco permit and that owns or operates more than one place of business shall secure a retail tobacco permit for each place of business.

(f) A retail tobacco permit shall be nonassignable and nontransferable from one entity to another entity. A retail tobacco permit may be transferred from one business location to another business location after an application has been filed with the department requesting that transfer and the approval of the department.

(g) A retail tobacco permit issued under this section shall be displayed at all times in a conspicuous place so that it can be seen within the place of business by the general public.

(h) Any sales of cigarettes or tobacco products made through a cigarette or tobacco product vending machine are subject to the terms, conditions, and penalties relative to the retail sale of cigarettes or tobacco products as set forth in this chapter. A retail tobacco permit need not be displayed on a cigarette or tobacco product vending machine if the retail tobacco permit holder is in fact the owner of the cigarette or tobacco product vending machine and the cigarette or tobacco product vending machine is operated in the location described in the retail tobacco permit.

(i) No retailer shall purchase any pack of cigarettes without the appropriate tax stamp being affixed to the bottom of the pack as required by this chapter.

(j) A vehicle from which cigarettes or tobacco products are sold is considered to be a place of business and shall be required to obtain a retail tobacco permit. A retail tobacco permit for a vehicle shall be issued bearing a specific motor vehicle identification number and is valid only when physically carried in the vehicle having the corresponding motor vehicle identification number. Retail tobacco permits for vehicles may not be moved from one vehicle to another.

(k) A holder of a retail tobacco permit shall be subject to the inspection and investigation requirements of this chapter and shall provide the department or the attorney general with any information deemed necessary to verify compliance with the requirements of this chapter.

(l) A permittee shall keep a complete and accurate record of the permittee's cigarette or tobacco product inventory. The records shall include a written statement containing the name and address of the permittee's source of cigarettes and tobacco products, the date of delivery, the quantity, the trade name or brand, and price of the cigarettes and tobacco products. The permittee shall keep, as part of the permittee's records, a true copy of all purchase orders, invoices, bills of lading, and other written matters substantiating the purchase or acquisition of the cigarettes and tobacco products at the location where the cigarettes and tobacco products are stored or offered for sale. The records shall be offered for inspection and examination at any time upon demand by the department or the attorney general and shall be preserved for a period of three years; provided that specified records may be destroyed if the department and the attorney general both consent to the destruction of the documents within the three-year period; and provided further that either the department or the attorney general may require that specified records be kept longer than a period of three years.

(m) The department may suspend, or after hearing revoke, any retail tobacco permit issued under this chapter whenever it finds that the permittee has failed to comply with this chapter or any rule adopted under this chapter. Upon suspending or revoking any retail tobacco permit, the department shall request the permittee to surrender immediately the retail tobacco permit, or any duplicate thereof issued to the permittee, and the permittee shall surrender the permit or duplicate promptly to the department as requested. Whenever the department suspends a retail tobacco permit, it shall notify the permittee immediately and afford the permittee a hearing, if desired and if a hearing has not already been afforded. After the hearing, the department shall rescind its order of suspension or, for good cause, shall continue the suspension, or revoke the retail tobacco permit.

(n) The department may suspend, revoke, or decline to renew a retail tobacco permit for good cause. Good cause may include but is not limited to instances where a permittee has:

(1) Submitted a false or fraudulent application or provided a false statement in an application;

(2) Possessed or displayed a false or fraudulent retail tobacco permit; or

(3) Has violated any state or federal law pertaining to the sale, acquisition, possession, or

distribution of cigarettes or tobacco products.

(o) Any cigarette, package of cigarettes, carton of cigarettes, container of cigarettes, tobacco product, package of tobacco products, or any container of tobacco products unlawfully sold, possessed, kept, stored, acquired, distributed, or transported in violation of this section may be seized and ordered forfeited pursuant to chapter 712A.

§245-B Unlawful tobacco retailing in the first degree. (a) A person or entity commits the offense of unlawful tobacco retailing in the first degree if the person or entity is not a permittee under section 245-A and, for the purposes of retail sale, knowingly sells, possesses, keeps, stores, acquires, distributes, or transports five thousand or more cigarettes.

(b) Unlawful tobacco retailing in the first degree is a misdemeanor.

§245-C Unlawful tobacco retailing in the second degree. (a) A person or entity commits the offense of unlawful tobacco retailing in the second degree if the person or entity is not a permittee under section 245-A and, for the purposes of retail sale, knowingly sells, possesses, keeps, stores, acquires, distributes, or transports fewer than five thousand cigarettes or any tobacco products.

(b) Unlawful tobacco retailing in the second degree is a petty misdemeanor."

SECTION 2. Section 245-1, Hawaii Revised Statutes, is amended as follows:

1. By adding seven new definitions to be appropriately inserted and to read:

""Business location" or "place of business" means the entire premises occupied by a retail tobacco permit applicant or an entity required to hold a license or retail tobacco permit under this chapter and shall include but is not limited to any store, stand, outlet, vehicle, cart, location, or structure from which cigarettes or tobacco products are sold or distributed to a consumer.

"Consumer" means a person who acquires or possesses a cigarette or a tobacco product for personal consumption and not for resale or distribution.

"Permittee" means the holder of a retail tobacco permit in accordance with this chapter.

"Retailer" means an entity who engages in the practice of selling cigarettes or tobacco products to consumers and includes the owner of a cigarette or tobacco product vending machine.

"Retail tobacco permit" means a permit granted under this chapter that authorizes an entity to engage in the business of selling cigarettes and tobacco products to consumers.

"Retail tobacco permit holder" means an entity that has been issued a retail tobacco permit under this chapter.

"Retail sale" or "tobacco retailing" means the practice of selling cigarettes or tobacco products to consumers and includes the sale of cigarettes or tobacco through a vending machine."

2. By amending the definitions of "license" and "licensee" to read:

""License" means a license granted under this chapter, that authorizes the holder to engage in the business of a wholesaler or dealer of cigarettes or tobacco products in the State. For purposes of any action brought pursuant to section 231-35, the term "license" shall include a retail tobacco permit granted under this chapter.

"Licensee" means the holder of a license [granted under this chapter.] as a wholesaler or dealer granted under this chapter."

SECTION 3. Section 245-2, Hawaii Revised Statutes, is amended to read as follows:

"§245-2 License. (a) It shall be unlawful for any person to engage in the business of a wholesaler or dealer in the State without having received first a license therefor issued by the department of taxation under this chapter; provided that this section shall not be construed to supersede any other law relating to licensing of persons in the same business.

(b) The license shall be issued by the department upon application therefor, in such form and manner as shall be required by rule of the department, and the payment of a fee of $2.50, and shall be renewable annually on July 1 for the twelve months ending the succeeding June 30.

(c) The department may suspend, or after hearing, revoke, any license issued under this chapter whenever it finds that the licensee has failed to comply with this chapter, or any rule adopted under this chapter. Upon suspending or revoking any license, the department shall request the licensee to surrender immediately the license, or any duplicate thereof issued to the licensee, and the licensee shall surrender the license or duplicate promptly to the department as requested. Whenever the department suspends a permit, it shall notify the licensee immediately and afford the licensee a hearing, if desired and if a hearing has not already been afforded. After the hearing, the department shall rescind its order of suspension or, for good cause, shall continue the suspension or revoke the permit."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 7. This Act shall take effect on December 34, 2525; provided that sections 1, 2, and 3 shall take effect on July 34, 2525.