HB 834-FN-A – AS INTRODUCED

2007 SESSION

07-0444

05/03

HOUSE BILL 834-FN-A

AN ACT relative to sales of tobacco products in state liquor stores.

SPONSORS: Rep. Burridge, Ches 3

COMMITTEE: Executive Departments and Administration

ANALYSIS

This bill limits the sale of tobacco products to state liquor stores.

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

07-0444

05/03

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seven

AN ACT relative to sales of tobacco products in state liquor stores.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Tobacco Tax; Administration by Liquor Commission. RSA 78 is repealed and reenacted to read as follows:

CHAPTER 78

TOBACCO TAX

78:1 Definitions. In this chapter:

I. “Cigarette” means any roll for smoking made wholly or in part of tobacco, and wrapped in any material except tobacco.

II. “Commissioner” means the commissioner of revenue administration.

III. “Manufacturer” means any person engaged in the business of importing, exporting, producing, or manufacturing tobacco products who sells the product only to licensed wholesalers.

IV. “Tobacco products” means cigarettes, loose tobacco, and smokeless tobacco.

V. “Wholesaler” means any person doing business in this state who shall purchase all of the unstamped tobacco products directly from a licensed manufacturer and who shall sell all of the products to the state liquor commission.

VI. “Wholesale sales price” means the established price for which a manufacturer sells tobacco products other than cigarettes to a wholesaler, exclusive of any discount or other reduction.

78:2 Sale of Tobacco Products at State Liquor Stores.

I. Notwithstanding any other provision of law, beginning on January 1, 2009, state liquor stores shall be the only retail location for the sale of tobacco products.

II. Each state liquor store that sells tobacco products shall display a sign which shall read: “State Law prohibits the sale of tobacco products to persons under age 18 and the purchase, possession, or use of tobacco products by persons under age 18. Warning: violators of these provisions may be subject to a fine.” The sign shall be prominently posted at any state liquor store where tobacco products are sold.

78:3 Unauthorized Sales Prohibited. No person shall sell or offer for sale cigarettes or other tobacco products, except as otherwise permitted by this chapter. Any person violating this section shall be guilty of a violation and shall be subject to a $2,000 fine.

78:4 Licensing of Manufacturers and Wholesalers.

I. The liquor commission shall establish, by rule under RSA 541-A, the licensing procedure for manufactures and wholesalers of tobacco products. The fees for licenses shall be: $100 for a manufacturer’s license and $250 for a wholesaler’s license. Each license shall be prominently displayed on the premises described in it.

II. Any person who shall sell, offer for sale, or possess with intent to sell any tobacco products without such license as provided in this section shall be guilty of a misdemeanor.

78:5 Term of License; Renewals. Licenses issued under RSA 78:4 shall expire on June 30 in each even-numbered year, unless sooner revoked or unless the business in respect to which the license was issued should change ownership. Licenses may be renewed upon signed application as provided in RSA 78:4 and upon paying the prescribed fee, provided that a license shall not be renewed if there are unpaid fees, fines, or penalties resulting from violations of this chapter or RSA 126-K attributable to the license or the licensee.

78:6 Suspension and Revocation of License. The liquor commission may suspend or revoke any license issued under RSA 78:4 for failure to comply with the licensing provisions of this chapter and with any rules adopted thereto. The commissioner shall suspend or revoke any license issued under RSA 78:4 if ordered to do so pursuant to RSA 126-K.

78:7 Tax Imposed. A tax upon the retail consumer is hereby imposed at the rate of $.80 for each package containing 20 cigarettes or at a rate proportional to such rate for packages containing more or less than 20 cigarettes, on all cigarettes sold at retail in this state. The payment of the tax shall be evidenced by affixing stamps to the smallest packages containing the cigarettes in which such products usually are sold at retail. The word “package” as used in this section shall not include individual cigarettes. No tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States.

78:8 Nature of Tax. All taxes upon tobacco products under this chapter are declared to be a direct tax upon the consumer at retail and shall conclusively be presumed to be pre-collected for the purpose of convenience and facility only.

78:9 Exemption. No state tax shall be imposed on tobacco products sold to residents of the New Hampshire veterans’ home; provided, that no such resident shall be permitted to purchase more than 2 such tax exempt cartons of cigarettes in any one week.

78:10 Tax Imposed on Tobacco Products Other Than Cigarettes. A tax upon the retail consumer is hereby imposed on tobacco products other than cigarettes at a rate of 19 percent of the wholesale sales price. The tax under this section may be rounded to the nearest cent if the commissioner determines that the amount of tax would not thereby be made materially disproportionate. No such tax is imposed on any transactions, the taxation of which by this state is prohibited by the Constitution of the United States.

78:11 Stamps.

I. The commissioner shall adopt rules pursuant to RSA 541-A relative to the design and denomination of stamps to be secured by the commissioner for affixing to packages of tobacco products as evidence of the payment of the tax imposed by this chapter. The commissioner shall sell such stamps to each licensed wholesaler. The commissioner may permit a licensed wholesaler to pay for such stamps within 30 days after the date of purchase, provided a bond satisfactory to the commissioner in an amount not less than the sale price of such stamps shall have been filed with the commissioner, conditioned upon the payment of such stamps. The commissioner shall keep accurate records of all stamps sold to each wholesaler and shall pay over all receipts from the sale of such stamps to the state treasurer daily.

II. Any wholesaler who fails to pay any amount owing to the purchase of stamps or meter-registered settings within the time required shall pay, in addition to the amount, interest as prescribed in RSA 21-J:28.

78:12 Resale of Stamps; Redemption. No wholesaler shall sell or transfer any stamps issued under RSA 78:11. The commissioner shall redeem any unused, uncancelled stamps presented by any licensed wholesaler at a price equal to the amount paid by such licensee. In case such stamps are destroyed before they are affixed, the commissioner shall refund the purchase price upon presentation of evidence of such destruction satisfactory to the commissioner. The commissioner shall refund the purchase price for stamps and metered impressions which are destroyed after affixing to outdated, damaged, or unsaleable tobacco products. The commissioner also shall refund or provide a credit for future tax payments on outdated, damaged, or unsaleable tobacco products exempted from bearing stamps by the commissioner under rules adopted under RSA 541-A. The state treasurer shall provide, out of money collected under this chapter, the funds necessary for redemption or refund.

78:13 Metering Machines. The commissioner shall adopt rules pursuant to RSA 541-A relative to the authorization of any licensee to use a metering machine in lieu of stamps and the insuring of the payment of all taxes properly due under RSA 78. The commissioner shall not permit the use of any such machine until prepayment covering the cost of the tax less discount, for which the meter is set, shall have been made or unless a bond satisfactory to the commissioner shall have been filed, conditioned upon the payment of said amount. Cash may be used as security in place of surety bond.

78:14 Affixing Stamps.

I. The commissioner shall adopt rules pursuant to RSA 541-A relative to the affixing of stamps to each package or tobacco products sold by a licensed wholesaler to a state liquor store. At any time before tobacco products are transferred out of the possession of a licensed wholesaler, stamps shall be affixed, at the location for which the license is issued, to each package of tobacco products sold or distributed.

II. The commissioner is authorized to exempt such tobacco products other than cigarettes from the requirement of affixing stamps to their packages under paragraph I, if the commissioner finds that the affixing of stamps is physically impractical due to the size or nature of the package or that the cost of affixing the stamps is unreasonably disproportionate to the tax revenue to be collected. In lieu of stamps, the commissioner may, by rules adopted under RSA 541-A, require the submission of periodic reports to the commissioner by wholesalers thereof exempted under this paragraph, setting forth the total amount of such unstamped tobacco products distributed and transmitting payment of the tax due under this chapter.

III. Any person who violates the provisions of this section by failing to make the reports and to pay the taxes due shall be guilty of a felony.

78:15 Access and Dissemination of Information Required.

I. For the purpose of protecting the public health, the commissioner of the department of health and human services shall obtain annually from the Commonwealth of Massachusetts Department of Public Health, or other sources if they become available, a public report containing the list of additives for each brand of tobacco products sold.

II. The department shall make available to the public any information received under paragraph I.

78:16 Authorization to Affix Stamps or Use Metering Machine. The commissioner may adopt rules, pursuant to RSA 541-A, relative to authorizing any person resident or located outside this state and engaged in a business which would make such person if conducted in this state a wholesaler as defined in this chapter, to affix the stamps required by this chapter. The commissioner may sell stamps to such person or the commissioner may authorize the use of a metering machine as provided in this chapter. No stamps shall be sold or no such authorization shall issue, however, until such nonresident person shall have appointed the secretary of state his or her attorney for the service of process in this state. The commissioner may adopt rules pursuant to RSA 541-A relative to the conditions which must be met upon a grant of authorization to a nonresident to affix stamps. Such conditions shall include the right to inspect the books of the nonresident and the posting of a bond by the nonresident conditioned upon the payment of all taxes imposed under this chapter.

78:17 Forfeiture. Unless the tobacco products are subject to the exemption under RSA 78:14, II, tobacco products found at any place in this state without the necessary stamps affixed to them, unless they shall be in the possession of a licensed manufacturer or wholesaler, or unless they shall be in the course of transit by common carrier from a bonded warehouse and consigned to a licensed manufacturer, wholesaler, or anyone exempted by statute, shall be declared to be contraband goods and subject to forfeiture to the state. The commissioner, the commissioner’s authorized agents, sheriffs, deputy sheriffs, and policemen shall have the power to seize such tobacco products in the manner provided under RSA 617.

78:18 Required Taxpayer Records. The commissioner shall adopt rules, pursuant to RSA 541-A, relative to the form for records of all tobacco products manufactured, produced, purchased, and sold. Each manufacturer and wholesaler shall keep complete and accurate records of all such tobacco products. Such records shall be safely preserved for 3 years in such manner as to insure permanency and accessibility for inspection by the commissioner and the commissioner’s authorized agents. The commissioner and the authorized agents may examine the books, papers, and records of any manufacturer and wholesaler doing business in this state, for the purpose of determining whether the tax imposed by this chapter has been fully paid, and they may investigate and examine the stock of tobacco products in or upon any premises where such tobacco products are possessed, stored, or sold, for the purpose of determining whether the provisions of this chapter are being obeyed.

78:19 Additions to Tax. If after any examination as provided in RSA 78:18, the commissioner or the commissioner’s agent determines that there is a deficiency with respect to the purchase of tax indicia, the commissioner shall assess the tax and all applicable additions due the state. At the time such additional assessment is made, the commissioner shall give notice of the assessment to the person liable and make demand upon the person for immediate payment.

78:20 Inspection Authorized. The commissioner or any agent or employee of the department of revenue administration, any investigator of the bureau of enforcement of the liquor commission, and any policeman, constable, sheriff, or deputy sheriff, may enter in and upon any place or premises where tobacco products are held, kept, located, or stored for the purpose of inspecting such products and ascertaining that the tobacco products at such premises, or any portion thereof, shall not be sold, used, or consumed in this state without the tobacco products tax first having been paid.

78:21 Distribution of Funds.

I. The commissioner shall determine the amount of revenue produced by any tax in excess of 37 cents for each package containing 20 cigarettes or at a rate proportional to such rate for packages containing more or less than 20 cigarettes, on all tobacco products sold at [retail in this] state liquor stores imposed by RSA 78:7 and shall certify such amount to the state treasurer by October 1 of each year for deposit in the education trust fund established by RSA 198:39.

II. The commissioner shall make quarterly estimates of the amount of revenues determined under paragraph I for the next fiscal year and shall certify such amount to the state treasurer for deposit in the education trust fund established by RSA 198:39. Such estimates shall be certified on June 1, September 1, December 1, and March 1 of each year.

78:22 Federal Requirements; Cigarettes and Other Tobacco Products; Placement of Labels; Penalty.

I. No person shall import into this state any package of tobacco products that does not comply with all federal requirements for the placement of labels, warnings, and other information on a package of tobacco products manufactured, packaged, or imported for sale, distribution, or use in the United States, including but not limited to the precise warning labels specified in the Federal Cigarette Labeling and Advertising Act, 15 U.S.C., section 1333.

II. No person shall knowingly sell or offer to sell a package of tobacco products or affix the stamp or imprint required by this chapter on a package of tobacco products unless that package of tobacco products complies with all federal tax laws, federal trademark and copyright laws, and federal laws regarding the placement of labels, warnings, or any other information upon a package of tobacco products.

III. No person shall knowingly sell or offer to sell a package of tobacco products or affix the stamp or imprint required by this chapter on a package of cigarettes if the package bears any mark indicating that the manufacturer did not intend the tobacco products to be sold, distributed, or used in the United States, including but not limited to labels stating “For Export Only,” “U.S. Tax-Exempt,” “For Use Outside U.S.,” or similar wording, or if any label or language has been altered from the manufacturer’s original packaging and labeling to conceal the fact that the product or package was manufactured for use outside of the United States.

IV. No person shall knowingly sell or offer to sell a package of tobacco products or affix the stamp or imprint required by this chapter on a package of cigarettes if the tobacco products were imported into the United States in violation of 26 U.S.C. section 5754 or any other federal law, or implementing federal regulations, or if the person knows or has reason to know that the manufacturer did not intend the tobacco product to be sold, distributed, or used in the United States.

V. No person shall knowingly sell or offer to sell a package of cigarettes or affix the stamp or imprint required by this chapter on a package of cigarettes if there has not been submitted to the United States Secretary of Health and Human Services the list or lists of ingredients added to tobacco in the manufacture of such cigarettes required by the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. section 1335a.

VI.(a) No person shall alter the package of any tobacco product prior to sale to the ultimate consumer, so as to remove, conceal, or obscure the fact that the package was manufactured for use outside of the United States.

(b) No person shall knowingly sell or offer to sell a package of tobacco products that has been altered in violation of subparagraph (a).

VII. The penalty for violation of any provision of this section is loss of license for a period of 90 days for a first offense, loss of license for a period of one year for subsequent offenses, and a fine to be determined by the commissioner which shall not exceed $10,000.

VIII.(a) Any tobacco product or package of tobacco products found for sale at retail or wholesale at any place in this state in violation of this section shall be subject to forfeiture pursuant to RSA 78:17. Nothing in this section shall be construed to require the commissioner to confiscate packages of tobacco products in quantities of one carton or less when the commissioner has reason to believe that the owner possesses the tobacco products for personal use.

(b) Any tobacco products seized by virtue of the provisions of subparagraph (a) shall be confiscated, and the department of revenue administration shall cause such confiscated goods to be destroyed.

IX. This section shall not apply to:

(a) Tobacco products allowed to be imported or brought into the United States for personal use; and

(b) Tobacco products sold or intended to be sold as duty-free merchandise by a duty-free sales enterprise in accordance with the provisions of 19 U.S.C. section 1555(b) and any implementing regulations, provided, however, that this section shall apply to any such tobacco products that are brought back into the customs territory for resale within the customs territory.

2 Youth Access to and Use of Tobacco Products; Reference Change. Amend RSA 126-K:2, III to read as follows:

III. “Licensee” means the person in whose name a license issued pursuant to RSA [78:2] 78:4 was granted.

3 Youth Access to and Use of Tobacco Products; Reference Change. Amend RSA 126-K:2, XIV to read as follows:

XIV. “Wholesaler” means any person doing business in this state who shall purchase all the wholesaler's unstamped tobacco products directly from a licensed manufacturer and who shall sell all of the wholesaler's products to licensed wholesalers, [sub-jobbers, vending machine operators, retailers, samplers,] the liquor commission, and those persons exempted from the tobacco tax under RSA [78:7-b] 78:9.

4 Education Trust Fund; Reference Change. Amend RSA 198:39, I(d) to read as follows:

(d) Funds collected and paid over to the state treasurer by the department of revenue administration pursuant to RSA [78:32] 78:21, relative to tobacco taxes.

5 Reduced Cigarette Ignition Propensity; Reference Change. Amend RSA 339-F:2, III to read as follows:

III. [Consistent with RSA 78:14-a,] Nothing in this chapter shall be construed to prohibit any person or entity from selling or offering for sale cigarettes that have not been certified by the manufacturer in accordance with RSA 339-F:6 if such cigarettes are or will be stamped for sale in another state or are packaged for sale outside the United States.

6 Reduced Cigarette Ignition Propensity; Reference Change. Amend RSA 339-F:9, III to read as follows:

III. Notwithstanding RSA 617, any cigarette sold, offered for sale, or possessed for sale in this state, in violation of RSA 339-F:2 shall be contraband under RSA [78:16] 78:17 and shall be subject to seizure and forfeiture. All cigarettes seized and forfeited shall be destroyed and not resold.

7 Tobacco Product Manufacturers’ Failure to Comply; Reference Change. Amend RSA 541-D:6, II to read as follows:

II. Any cigarettes that have been sold, offered for sale, or possessed for sale in this state, in violation of RSA 541-D:3, III shall be deemed contraband under RSA [78:16] 78:17 and such cigarettes shall be subject to seizure and forfeiture as provided in such section, and all such cigarettes so seized and forfeited shall be destroyed and not resold.

8 Commission on Statutory Changes Established.

I. There is established a commission to study statutory changes made necessary by limiting the sale of tobacco products to state liquor stores as provided in section 1 of this act.

II.(a) The members of the commission shall be as follows:

(1) Three members of the house of representatives, appointed by the speaker of the house of representatives.

(2) Three members of the senate, appointed by the president of the senate.

(3) The commissioner of revenue administration, or designee.

(4) The chairman of the liquor commission, or designee.

(5) Two public members, appointed by the governor.

(b) Legislative members of the commission shall receive mileage at the legislative rate when attending to the duties of the commission.

III. The commission shall identify, for repeal and corresponding statutory changes, references to tobacco retailers and vending machines, and similar references made obsolete by the recodification of RSA 78 in section 1 of this act. The commission shall make detailed recommendations for legislation to accomplish these repeals and statutory changes.

IV. The members of the commission shall elect a chairperson from among the members. The first meeting of the commission shall be called by the first-named house member. The first meeting of the commission shall be held within 45 days of the effective date of this section. Six members of the commission shall constitute a quorum.

V. The commission shall report its findings and recommendations for proposed legislation to the speaker of the house of representatives, the president of the senate, the house clerk, the senate clerk, the governor, and the state library on or before November 1, 2008.

9 Effective Date. This act shall take effect January 1, 2008.

LBAO

07-0444

Revised 03/02/07

HB 834 FISCAL NOTE

AN ACT relative to sales of tobacco products in state liquor stores.

FISCAL IMPACT:

METHODOLOGY: