39-28-203

Requirements

Any tobacco product manufacturer selling cigarettes to consumers within the state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, after July 1, 1999, shall either:
(1) 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
(2)(a) 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:
(I) 1999:  $.0094241 per unit sold after July 1, 1999;
(II) 2000:  $.0104712 per unit sold;
(III) For each of 2001 and 2002:  $.0136125 per unit sold;
(IV) For each of 2003 through 2006:  $.0167539 per unit sold;
(V) For each of 2007 and each year thereafter:  $.0188482 per unit sold.
(b) A tobacco product manufacturer that places funds into escrow pursuant to paragraph (a) of this subsection (2) 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:
(I) 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 subparagraph (I):
(A) In the order in which they were placed into escrow;  and
(B) Only to the extent and at the time necessary to make payments required under such judgment or settlement;
(II)(A) 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 the 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 shall be released from escrow and revert back to such tobacco product manufacturer;
(B) If Senate Bill 04-182,  1 enacted at the second regular session of the sixty-fourth general assembly, or any portion of the amendment to sub-subparagraph (A) of this subparagraph (II) made by Senate Bill 04-182 is held by a court of competent jurisdiction to be unconstitutional, then sub-subparagraph (A) of this subparagraph (II) shall be deemed to be repealed in its entirety.  If this paragraph (b) shall thereafter be held by a court of competent jurisdiction to be unconstitutional, then Senate Bill 04-182 shall be deemed repealed, and sub-subparagraph (A) of this subparagraph (II) shall be restored as if no such amendments had been made.   Neither any holding of unconstitutionality nor the repeal of sub-subparagraph (A) of this subparagraph (II) shall affect, impair, or invalidate any other portion of this section, and such remaining portions of this section shall at all times continue in full force and effect.
(III) To the extent not released from escrow under subparagraph (I) or (II) of this paragraph (b), funds shall be released from escrow and revert back to such tobacco product manufacturer twenty-five years after the date on which the funds were placed into escrow.
(c)(I) Each tobacco product manufacturer that elects to place funds into escrow pursuant to this subsection (2) shall annually certify to the attorney general that it is in compliance with this subsection (2).  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 fifteen 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 subsection (2), 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 one hundred percent of the original amount improperly withheld from escrow;
(B) In the case of a knowing violation, be required within fifteen 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 subsection (2), may impose a civil penalty, to be paid to the general fund of the state, in an amount not to exceed fifteen percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed three hundred percent of the original amount improperly withheld from escrow;  and
(C) In the case of a second or subsequent knowing violation, be prohibited from selling cigarettes to consumers within the state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, for a period not to exceed two years.
(II) Each failure to make an annual deposit required under this section shall constitute a separate violation.