SS/SCS/HS/HCS/HB 381 - "GREY MARKET" CIGARETTE SALES - This act provides that any illegally paid or overcharged cigarette taxes shall be either refunded to the person who paid the tax and not the retailer, or retained by the Director of Revenue. No stamp is required to be attached until the package is sold to a retailer or consumer. The act prohibits a tax stamp from being affixed to any package of cigarettes unless certain federal requirements are met. No stamp shall be affixed to any package labeled as not intended for sale inside the United States or has a label that has been altered. Any violation is a Class D felony, whether committed knowingly or recklessly, and is also deemed an unlawful trade practice.

The Department of Revenue may revoke a wholesale license of a person in violation of these provisions, and may impose a civil penalty and seize the items involved. The Attorney General has concurrent power with prosecuting attorneys to enforce the act. Any person who sell, distributes, or manufactures cigarettes and sustains direct economic injury as a result of the gray market provisions may bring an action for injunctive relief. The gray market provisions of this act will become effective February 1, 2002.

This portion of the act is similar to SB 222 from 2001.

TOBACCO SALES TO MINORS - Beginning January 1, 2003, the Division of Liquor Control shall submit an annual report to the General Assembly regarding the effectiveness of reducing tobacco possession by minors and related enforcement activities. The act prohibits sale of tobacco products to any person the seller believes is less than eighteen, punishable by a fine of $250 for the first violation and $500 for subsequent violations. The act requires retailers to post signs reflecting the prohibition.

Individual packs of cigarettes or smokeless tobacco products shall be sold only through vending machines from a display located behind the check-out counter or the unobstructed sight of the sales clerk. Vending machines shall be within sight of the clerk, or equipped with a lock-out device which will allow a single sale when activated. No person or entity shall sell tobacco products to minors, or sell individual cigarettes to any person. Violators shall be fined from $25 to $250. Any owner or operator of the outlet where the products are sold in violation shall be penalized by the Division of Liquor Control, with certain exemptions if the establishment has an in-house training program for employees. If the offense is enforced by state authorities the state penalty applies, if enforced by local authorities local law applies.

A driver's license shall be displayed upon request of a Liquor Control agent or owner or employee of an establishment that sells tobacco. Any person who alters a license shall be guilty of a misdemeanor, punishable by up to a $1000 fine and up to 1 year in jail, or both.

No person under eighteen shall purchase or possess cigarettes, with certain exceptions. A violation shall be an infraction, and the person must complete a tobacco education program upon any subsequent violation.

The act prohibits sale of tobacco products without a state retail sales tax license. The Division shall not use minors in enforcement actions without meeting mandatory guidelines.

The portion of the act pertaining to tobacco sales to minors is similar to portions of SB 598 from 2001.
CINDY KADLEC