Any tobacco product manufacturer selling cigarettes to consumers within the State (whether directly or through a distributor, retailer, or similar intermediary or intermediaries) after the date of enactment of this act shall do one of the following:
(a) become a participating manufacturer, (as that term is defined in section II(jj) of the Master Settlement Agreement) and generally perform its financial obligations under the Master Settlement Agreement; or
(b)(1) place into a qualified escrow fund by April 15 of the year following the year in question the following amounts (as such amounts are adjusted for inflation)-
1999: $.0094241 per unit sold after the date of enactment of this act;
2000: $.0104712 per unit sold;
for each of 2001 and 2002: $.0136125 per unit sold;
for each of 2003 through 2006: $.0167539 per unit sold;
for each of 2007 and each year thereafter: $.0188482 per unit sold.
(2) A tobacco product manufacturer that places funds into escrow pursuant to subitem (1) shall receive the interest or other appreciation on such funds as earned. Such funds themselves shall be released from escrow only under the following circumstances:
(A) to pay a judgment or settlement on any released claim brought against such tobacco product manufacturer by the State or any releasing party located or residing in the State. Funds shall be released from escrow under this subsubitem (i) in the order in which they were placed in escrow and (ii) only to the extent and at the time necessary to make payments required under such judgment or settlement;
(B) to the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow on account of units sold in this State in a particular year was greater than the Master Settlement Agreement payments, as determined pursuant to Section IX(i) of that agreement including after final determination of all adjustments that such manufacturer would have been required to make on account of such units sold had it been a participating manufacturer, the excess must be released from escrow and revert back to such tobacco product manufacturer; or
(C) to the extent not released from escrow under subsubitems (A) or (B), funds shall be released from escrow and revert back to such tobacco product manufacturer twenty-five years after the date on which they were placed into escrow.
(3) Each tobacco product manufacturer that elects to place funds into escrow pursuant to this item shall annually certify to the Attorney General that it is in compliance with this item. The Attorney General may bring a civil action on behalf of the State against any tobacco product manufacturer that fails to place into escrow the funds required under this section. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this section shall:
(A) be required within 15 days to place such funds into escrow as shall bring it into compliance with this section. The court, upon a finding of a violation of this item, may impose a civil penalty to be paid to the general fund of the State in an amount not to exceed five percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 100 percent of the original amount improperly withheld from escrow;
(B) in the case of a knowing violation, be required within 15 days to place such funds into escrow as shall bring it into compliance with this section. The court, upon a finding of a knowing violation of this item, may impose a civil penalty to be paid to the general fund of the State in an amount not to exceed 15 percent of the amount improperly withheld from escrow for each day of the violation and in a total amount not to exceed 300 percent of the original amount improperly withheld from escrow;
(C) in the case of a second knowing violation, be prohibited from selling cigarettes to consumers within the State, (whether directly or through a distributor, retailer, or similar intermediary) for a period not to exceed 2 years; and
(D) be required to pay the reasonable costs and attorney's fees incurred by the State in its successful enforcement of this chapter.
(4) Each failure to make an annual deposit required under this item shall constitute a separate violation.
HISTORY: 1999 Act No. 47, Section 2; 2005 Act No. 61, Section 1.B.
Editor's Note
2005 Act No. 61, Section 1. C, provides as follows:
"If any part of the amendment to Section 11-47-30(b)(2)(B) of the 1976 Code made by this section is held by a court of competent jurisdiction to be unconstitutional, then Section 11-47-30(b)(2) of the 1976 Code is deemed to have been amended by deleting subsubitem (B) in its entirety. If thereafter a court of competent jurisdiction holds that Section 11-47-30(b)(2) as then in effect is unconstitutional, then Section 11-47-30(b)(2)(B) of the 1976 Code is deemed to have been amended to the form in which that subsubitem existed before its amendment by this section. Neither a holding of unconstitutionality nor the deleting of Section 11-47-30(b)(2)(B) as contemplated by this section affects, impairs, or invalidates any other part of Section 11-47-30 on the application of that section to any person or circumstance and the remaining parts of Section 11-47-30 continue in effect."