AB 1627

Bill Subjects

Abstract

States' attorneys general and various tobacco product manufacturers settled various lawsuits by entering into a Master Settlement Agreement (MSA) , which imposes financial obligations on participating manufacturers and provides for the allocation of money to the states and certain territories for recovery of those governments' tobacco-related health care costs. Existing law requires that a tobacco product manufacturer selling cigarettes to consumers in California either become a participating manufacturer in the MSA or, as a nonparticipating manufacturer, place funds into a qualified escrow fund, as specified. The Cigarette and Tobacco Products Tax Law requires every tobacco products manufacturer whose cigarettes are sold in this state to make an annual certification to the Attorney General that the manufacturer is a participating manufacturer that has made all payments due under the MSA or has placed funds into the qualified escrow fund. That law also requires the certification to include specified information, including a complete list of all of the manufacturer's brand families and, in the case where the nonparticipating manufacturer is not the fabricator or maker of the cigarettes, that the escrow agreement or other forms are signed by the company that fabricates or makes the cigarettes. That law makes a false certification a misdemeanor. That law requires the Attorney General to post on its internet website a directory (Directory) of tobacco product manufacturers that have submitted compliant certifications, as specified, and requires the directory to include the brand families listed in those certifications, except as provided. This bill would specify that listings on the Directory expire on April 29 each year. This bill would require, beginning with the 2021 calendar year, a tobacco products manufacturer to renew its listing on the Directory by providing the annual certification and remitting an annual fee of $1,000 payable to the office of the Attorney General. This bill would require any fees received to be deposited into the California Tobacco Directory Fund, which the bill would create in the State Treasury. This bill would continuously appropriate amounts deposited in the California Tobacco Directory Fund to the office of the Attorney General for the purpose of administering the Directory. The bill would allow the Attorney General to retain a listing for a tobacco products manufacturer on the Directory while the renewal for the certification is pending. This bill would eliminate the requirement, in the case where the nonparticipating manufacturer is not the fabricator or maker of the cigarettes, that the escrow agreement or other forms are signed by the company that fabricates or makes the cigarettes. This bill would require nonparticipating manufactures to certify that its fabricates all of the brand families of the cigarettes that it seeks to certify. This bill would require the Attorney General to list the brand styles of cigarettes that are compliant with the annual certification and the qualified escrow requirements. This bill would also prohibit the Attorney General from including or retaining in the Directory any brand style that has not met specified requirements, including if the brand style has not been tested and marked in compliance with the California Cigarette Fire Safety and Firefighter Protection Act. That law provides that newly qualified and elevated-risk nonparticipating manufacturers are required to file a surety bond with the Attorney General, as specified. That law also prohibits inclusion in the Directory of specified nonparticipating manufacturers and their brand families until a surety bond is filed, as specified. This bill would expand the criteria for when a nonparticipating manufacturer may be deemed to pose an elevated risk, including when, as of January 1, 2021, a nonparticipating manufacturer's cigarettes are sold in or into California by distributors that have not reported their last 12 months of California sales electronically, as prescribed. By expanding the scope of information required to be on the certification and expanding the scope of the surety bond requirement, the false certification of which is a crime, this bill imposes a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. The Cigarette and Tobacco Products Tax Law requires that the tax on the distribution of cigarettes imposed by that law be paid through the use of stamps or meter impressions, and requires that these stamps or meter impressions be affixed to each package of cigarettes distributed. That law prohibits (1) any tax stamp or meter impression to be affixed to a package of cigarettes unless the tobacco product manufacturer and brand family are included on the Directory, (2) the sale, offer, or possession for sale in this state, shipment or distribution into or within this state, or importation for personal consumption in this state, of cigarettes of a tobacco product manufacturer or brand family not included in the Directory, and (3) the possession, transportation, and other specified activities of the cigarettes that the person knows or should have known are intended to be distributed in violation of the other 2 prohibitions. That law requires distributors to submit to the California Department of Tax and Fee Administration or the Attorney General specified information to facilitate compliance with that prohibition and the certification requirements. That law imposes civil penalties for violations of that prohibition and information reporting requirements. This bill would require the department to disclose to the Attorney General any information it receives under the Cigarette and Tobacco Products Tax Law for specified purposes and would authorize the department and the Attorney General to share information provided by distributors with specified entities for specified purposes. This bill would additionally authorize the Attorney General to bring a civil action for civil penalties and injunctive relief against specified persons for specific violations of those prohibitions or information reporting requirements and against any nonparticipating manufacturer that does not submit a timely, complete, and accurate certification as required by the Cigarette and Tobacco Products Tax Law regarding its sales of cigarettes in this state, as provided. This bill would require any civil penalties imposed to be deposited into the General Fund. Existing law requires each tobacco product manufacturer that elects to place funds into a qualified escrow to annually certify to the Attorney General that it is in compliance with specified requirements. Existing law authorizes the Attorney General to bring a civil action against any tobacco product manufacturer that fails to place into escrow the funds required and authorizes the imposition of civil penalties paid to the General Fund. This bill would additionally authorize the Attorney General to bring a civil action for civil penalties and injunctive relief against any nonparticipating manufacturer that does not submit a timely, complete, and accurate certification related to those qualified escrow funds regarding its sales of cigarettes in this state, as provided. This bill would require any civil penalties imposed to be deposited into the General Fund.