SB 62 — Revises provisions relating to manufacturers and wholesale dealers of tobacco products. (BDR 32-424)

S.B.Senate Bill No.

6262–Committee SENATEon BILLRevenue NOand .Economic Development CHAPTER..........

62–COMMITTEE ON REVENUE AND ECONOMIC D EVELOPMENT (O NB EHALF OF THE ATTORNEY GENERAL ) PREFILED N OVEMBER 19, 2018 ____________ Referred to Committee on Revenue and Economic Development SUMMARY—Revises provisions relating to manufacturers and wholesale dealers of tobacco products.

(BDR 32-424) FISCAL NOTE:

Effect on Local Government:

Increases or Newly Provides for Term of Imprisonment in County or City Effect on the State:

Yes.ity.

~ EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

On November 23, 1998, leading United States tobacco product manufacturers and the State of Nevada entered into a settlement agreement, entitled the “Master Settlement Agreement,” which obligates the manufacturers, in return for a release of past, present and certain future claims against them, to:

and (3) make substantial changes in their advertising and marketing practices and corporatemanufacturers culture.of tobacco products sold in this State to participate in the Masterll Settlement Agreement or to place money in escrow.

(Chapter 370A of NRS) In 1999,2005, the Nevada Legislature enactedmade provisionsa requiringfinding allthat manufacturersviolations of tobaccochapter products370A soldof inNRS thisthreatened Statethe tointegrity participateof in the Master Settlement Agreement orand tothe placefiscal moneysoundness of the State and public health, and enacted procedural safeguards to aid in escrow.the enforcement of the provisions of chapter 370A of NRS.

(Chapter 370A of NRS) In threatened the integrity of the Master Settlement Agreement and the fiscalS - *SB62* – 2 – soundness of the State and public health, and enacted procedural safeguards to aid in the enforcement of the provisions of chapter 370A of NRS.

(1) a requirement that each manufacturer of tobacco products executecertification andwhich delivercertifies tounder thepenalty Department of Taxationperjury and the Attorneymanufacturer’s Generalcompliance a with the Master Settlement Agreement or the requirement to place certain money inncein escrow and includes, without limitation, a list of the manufacturer’s brand families;

(NRS 370.665, 370Section370.Section 2 of this bill requires a manufacturer of tobacco products to indicate its styles of cigarettes in the certification submitted to the Department of Taxation and the Attorney General under existing law.

Section 1 of this bill makes a conforming change so that the provisions of existing law prohibiting the possession or sale of, and authorizing the seizure and dispositionof of, cigarettes ofnot alisted brandin familythe directory.ly not listed in the directory apply to a style of- Under80th existingSession law,(2019) the– Department2 of– Taxation is required to notify each wholesale dealer of cigarettes when a manufacturer or brand family is added to or removed from the directory required to be maintained by the Department.

(NRS 370.675, 370.677) Section 4 of this bill requires these notices to be provided when a style of cigaSection 5 of this bill applies the same criminal penalties that apply to a person who affixes a revenue stamp to, or sells or offers to sell, any cigarettes isof addeda manufacturer of tobacco products or brand family not included in the directory to a person who affixes a revenue stamp to, or removedsells fromor offers to sell, any style of cigarettes not included in the directory.

whowholesale affixesdealers aof revenue stamp to, or sells or offers to sell, any cigarettes ofand aersonmanufacturers manufacturer of tobacco products orthat branddo family not includedparticipate in the directoryMaster toSettlement aAgreement person who affixes a revenue stamp to, or sells or offers to sell,authorize anythe styleimposition of cigarettesthese notcivil includedpenalties: in the directory.

Section(1) 6on ofall thismanufacturers billof revisestobacco provisionsproducts imposingrather certainthan civilonly penalties on wholesale dealers of cigarettes and manufacturers of tobacco products that do not participate in the Master Settlement AgreementAgreement; to authorize the imposition of these civil penalties:

(1)and on(2) allfor manufacturersviolations of tobaccocertain productsregulations ratheradopted thanpursuant onlyto Agreement;existing law governing these wholesale dealers and manufacturers.

andEXPLANATION (2)– forMatter violationsin ofbolded certainitalics regulationsis adoptednew; pursuant tolement existing law governing these wholesale dealers and manufacturers.

matter between brackets [omitted material] is material to be omitted.

- *SB62* – 3 – 3.

- 80th Session (2019) – 3 – Sec.

A manufacturer of tobacco products whose cigarettes are sold in this State, whether or not directly or through a distributor, retailer or similar intermediary or intermediaries shall, not later than April 30 of each year, execute and deliver to the Attorney General and the Department, on a form provided by the Attorney General, a certification which certifies under penalty of perjury that, as of the date of that certification, the manufacturer of tobacco products is:

- *SB62* – 4 – (II) A list of all of its brand families and styles of cigarettes that have been sold in the State at any time during the current calendarca(III) year;The current mailing address of the nonparticipating manufacturer;

(III) The current mailing address of the nonparticipating manufacturer;

- 80th Session (2019) – 4 –  A nonparticipating manufacturer shall update the information required by this paragraph at least 30 calendar days before it adds to or modifies its brand families or styles of cigarettes or sells or distributes cigarettes in this State through a new wholesale dealer by executing and delivering a supplemental certification to the Attorney General and the Department.

In addition to the requirements of subsection 2, the certification of a nonparticipating manufacturer pursuant to this sec(a)section Thatmust thecertify: nonparticipating manufacturer is registered to do business in the State or has appointed an agent for service of process and(b) That the nonparticipating manufacturer has:.680;

business in the State or has appointed an agent for service of process and provided notice thereof as required by NRS 370.680;

(b) That the nonparticipating manufacturer has:

(f) The amount the nonparticipating manufacturer placed in that qualified escrow fund for cigarettes sold in the State during the preceding calendar year, the date and amount of each such deposit, - *SB62* – 5 – and such evidence or verification as may be deemed necessary bybyit, the Department or the Attorney General to confirm the information required by this paragraph;

The Department shall create and maintain on its Internet website and otherwise make available for public inspection a directory that lists, except as otherwise provided in NRS 370.600 to 370.705, inclusive, all manufacturers of tobacco products that - 80th Session (2019) – 5 – have provided current and accurate certifications conforming to the requirements of NRS 370.600 to 370.705, inclusive, and all brand families and styles of cigarettes that are listed in those certifications.

(a) Shall not include or retain in the directory the name or brand families of any nonparticipating manufacturer that has failed to provide the required certification or whose certification the Department determines is not in compliance with NRS 370.600 to 370.705, inclusive, unless the Department has determined that the violationvio(b) hasShall beennot curedinclude toor itsretain satisfaction.in the directory a manufacturer of tobacco products or brand family if the Department concludes, for a nonparticipating manufacturer, that:

tobacco(1) productsAny orescrow brandpayment familyrequired ifpursuant theto Departmentchapter concludes,370A of NRS for aofany period for any brand family, whether or not listed by the nonparticipating manufacturer, that:has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement which has been approved by the Attorney General;

of NRS for any period for any brand family, whether or not listed by the nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement which has been approved by the Attorney General;

Any determination of the Department not to include in or to remove from the directory a manufacturer of tobacco products , [or] brand family or style of cigarettes is a final decision for the purposespurSec. of judicial review.

-4.f *SB62*jNRS –370.677 6is –hereby Sec.amended to read as follows:

4.

NRS 370.677 is hereby amended to read as follows: