Bill Text: CA SB680 | 2013-2014 | Regular Session | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Tobacco Master Settlement Agreement: qualified escrow funds.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2013-08-27 - Chaptered by Secretary of State. Chapter 168, Statutes of 2013. [SB680 Detail]

Download: California-2013-SB680-Enrolled.html

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BILL NUMBER: SB 680	ENROLLED
	BILL TEXT

	PASSED THE SENATE  MAY 20, 2013
	PASSED THE ASSEMBLY  AUGUST 5, 2013
	AMENDED IN SENATE  MAY 14, 2013
	AMENDED IN SENATE  APRIL 1, 2013

INTRODUCED BY   Senator Wolk

                        FEBRUARY 22, 2013

   An act to amend Section 104556 of the Health and Safety Code,
relating to tobacco settlement moneys.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 680, Wolk. Tobacco Master Settlement Agreement: qualified
escrow funds.
   Under existing law, states' attorneys general and various tobacco
product manufacturers have entered into a Master Settlement Agreement
(MSA), in settlement of various lawsuits, that provides for the
allocation of money to the states and certain territories.
   Existing law requires a tobacco product manufacturer selling
cigarettes to consumers within the state to either become a
participating manufacturer, as defined, and generally perform its
financial obligations under the MSA, or to place specified amounts
into a qualified escrow fund, which are calculated on a per unit sold
basis, as specified. For each tobacco product manufacturer that
places amounts into a qualified escrow fund, existing law requires
that manufacturer to certify to the Attorney General that the
manufacturer has complied with existing law, and the failure to place
all required funds into escrow subjects the manufacturer to civil
penalties, as specified.
   This bill would, for the purposes of calculating the amount a
tobacco product manufacturer is required to place in the qualified
escrow fund, revise the definition of "units sold" to specify that it
means the number of cigarettes sold to a consumer, regardless of
whether the state excise tax was due or collected, but would exclude,
among other things, cigarettes sold at federal military
installations.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 104556 of the Health and Safety Code is amended
to read:
   104556.  The definitions contained in this section shall govern
the construction of this article.
   (a)  "Adjusted for inflation" means increased in accordance with
the formula for inflation adjustment set forth in Exhibit C to the
Master Settlement Agreement.
   (b)  "Affiliate" means a person who directly or indirectly owns or
controls, is owned or controlled by, or is under common ownership or
control with, another person. Solely for purposes of this
definition, the terms "owns," "is owned," and "ownership" mean
ownership of an equity interest, or the equivalent thereof, of 10
percent or more, and the term "person" means an individual,
partnership, committee, association, corporation, or any other
organization or group of persons.
   (c)  "Allocable share" means allocable share as that term is
defined in the Master Settlement Agreement.
   (d)  "Cigarette" means any product that contains nicotine, is
intended to be burned or heated under ordinary conditions of use, and
consists of or contains (1) any roll of tobacco wrapped in paper or
in any substance not containing tobacco; (2) tobacco, in any form,
that is functional in the product, which because of its appearance,
the type of tobacco used in the filler, or its packaging and
labeling, is likely to be offered to, or purchased by, consumers as a
cigarette; or (3) any roll of tobacco wrapped in any substance
containing tobacco which, because of its appearance, the type of
tobacco used in the filler, or its packaging and labeling, is likely
to be offered to, or purchased by, consumers as a cigarette described
in this section. "Cigarette" also includes "roll-your-own" tobacco,
meaning any tobacco which, because of its appearance, type,
packaging, or labeling is suitable for use and likely to be offered
to, or purchased by, consumers as tobacco for making cigarettes. For
purposes of this definition of "cigarette," 0.09 ounces of
"roll-your-own" tobacco shall constitute one individual "cigarette."
   (e)  "Master Settlement Agreement" means the settlement agreement
and related documents entered into on November 23, 1998, by the state
and leading United States tobacco product manufacturers.
   (f)  "Qualified escrow fund" means an escrow arrangement with a
federally or state chartered financial institution having no
affiliation with any tobacco product manufacturer and having assets
of at least one billion dollars ($1,000,000,000) where the
arrangement requires that the financial institution hold the escrowed
funds' principal for the benefit of releasing parties and prohibits
the tobacco product manufacturer placing the funds into escrow from
using, accessing, or directing the use of the funds' principal except
as consistent with subdivision (b) of Section 104557.
   (g)  "Released claims" means released claims as that term is
defined in the Master Settlement Agreement.
   (h)  "Releasing parties" means releasing parties as that term is
defined in the Master Settlement Agreement.
   (i)  "Tobacco product manufacturer" means an entity that after the
date of enactment of this article directly, and not exclusively
through any affiliate:
   (1)  Manufactures cigarettes anywhere that the manufacturer
intends to be sold in the United States, including cigarettes
intended to be sold in the United States through an importer (except
where the importer is an original participating manufacturer as that
term is defined in the Master Settlement Agreement, that will be
responsible for the payments under the Master Settlement Agreement
with respect to such cigarettes as a result of the provisions of
subsection II(mm) of the Master Settlement Agreement and that pays
the taxes specified in subsection II(z) of the Master Settlement
Agreement, and provided that the manufacturer of such cigarettes does
not market or advertise such cigarettes in the United States); or
   (2)  Is the first purchaser anywhere for resale in the United
States of cigarettes manufactured anywhere that the manufacturer does
not intend to be sold in the United States; or
   (3)  Becomes a successor of an entity described in paragraph (1)
or (2).
   The term "tobacco product manufacturer" shall not include an
affiliate of a tobacco product manufacturer unless the affiliate
itself falls within any of paragraphs (1) to (3) of this subdivision.

   (j)  "Units sold" means the number of individual cigarettes sold
to a consumer in the state by the applicable tobacco product
manufacturer, whether directly or through a distributor, retailer, or
similar intermediary or intermediaries, during the year in question,
regardless of whether the state excise tax was due or collected.
"Units sold" shall not include cigarettes sold on federal military
installations, sold by a Native American tribe to a member of that
tribe on that tribe's land, or that are otherwise exempt from state
excise tax pursuant to federal law. The State Board of Equalization
shall adopt any regulations as are necessary to ascertain the amount
of state excise tax paid on the cigarettes of the tobacco product
manufacturer for each year.